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Through this process, we aim to reduce the cost to produce a loan and in the future to create a platform with all homeownership products embedded into a highly automated, single flow, allowing us to pass along savings to our customers.
−Removed: We generate substantially all of our mortgage platform revenue by selling our Home Finance mortgage loans and related MSRs to our loan purchaser network, recognizing revenue for each transaction.
−Removed: We also generate revenue through our Better Plus marketplace of non-mortgage, homeownership products.
−Removed: Better Plus includes Better Real Estate (real estate agent services and our Better Cash Offer product), Better Settlement Services (title insurance and settlement services), and Better Cover (homeowners insurance).
−Removed: Generally, we have historically sold substantially all of our loans and related MSRs shortly after closing, which reduces our balance sheet risk and capital requirements.
−Removed: For the year ended December 31, 2023, 88% of our Total Loans were eligible for purchase by GSEs, providing access to liquidity for our loans through market cycles.
−Removed: For the remaining loans, which are not GSE eligible, we typically enter into sale agreements with purchasers prior to lock in order to mitigate our balance sheet and capital risk.
−Removed: As of December 31, 2023, we had approximately $425.0 million in mortgage funding capacity through our warehouse facilities.
We are focused on improving our platform and plan to continue making investments to build our business and prepare for future growth.
−Removed: We believe that our success will depend on many factors, including our ability to drive customers to our platform, and convert them once they come to us, through both our direct-to-consumer (“D2C”) channel and our partner relationship (“B2B”) channel, achieve leverage on our operational expenses, execute on our strategy to fund more purchase loans and diversify our revenue by expanding and enhancing our Better Plus offerings.
−Removed: We plan to continue to invest in technology to improve customer experience and to reduce labor costs per funded loan through automation, making our platform more efficient and scalable.
−Removed: For the year ended December 31, 2023, our aggregate dollar amount of loans funded based on the principal amount of the loan at funding (the “Funded Loan Volume”) was $3.0 billion compared to $11.4 billion for the year ended December 31, 2022.
−Removed: Our revenue was $76.8 million (including Better Cash Offer revenue of $0.3 million) for the year ended December 31, 2023 compared to $378.0 million (including Better Cash Offer revenue of $229 million, representing gross purchase price of homes purchased under the program) for the year ended December 31, 2022.
−Removed: Our net loss was $536.4 million for the year ended December 31, 2023, compared to net loss of $877.1 million for the year ended December 31, 2022.
+Added: We believe that our success will depend on many factors, including our ability to drive customers to our platform, and convert them once they come to us, through both our direct-to-consumer (“D2C”) channel and our partner relationship (“B2B”) channel, achieve leverage on our operational expenses, execute on our strategy to fund more purchase loans and diversify our revenue by expanding and enhancing our offerings.
+Added: We plan to continue to invest in technology to improve customer experience and further drive down labor costs through automation, making our platform more efficient and scalable.
Our Business Model
We generate revenue through the production and sale of loans and other product offerings through our platform.
−Removed: The revenue and mix of revenue as a percentage of total revenue attributable to our sale of loan production (Mortgage platform revenue, net) and Better Plus (Cash offer program revenue and Other platform revenue) for the years ended December 31, 2023 and 2022 is as follows:
+Added: The revenue and mix of revenue as a percentage of total revenue attributable to our sale of loan production (Gain on loans, net) and Better Plus (Other revenue) and net interest income for the years ended December 31, 2024 and 2023 is as follows:
Year Ended Ended December 31,
(Amounts in thousands, except percentage amounts)
−Removed: Revenues - Sale of loan production
−Removed: Mortgage platform revenue, net
−Removed: $ 61,328 80 % $ 101,285 27 %
−Removed: Revenues - Better Plus & net interest income (expense)
−Removed: Cash offer program revenue
−Removed: 304 — % 228,721 61 %
−Removed: Other platform revenue
−Removed: 11,293 15 % 38,362 10 %
−Removed: Net interest income (expense)
−Removed: 3,895 5 % 9,655 3 %
+Added: Gain on loans, net $ 78,098 72 % $ 58,796 81 %
+Added: Other revenue 12,888 12 % 16,109 22 %
+Added: Net interest income/(loss) 17,502 16 % (2,565) (4) %
Total net revenues
−Removed: As the table indicates, revenue from our loan production and Better Plus businesses has decreased substantially in 2023 compared to 2022.
−Removed: Our total net revenues for the year ended December 31, 2023 decreased by 80% compared to the year ended December 31, 2022.
−Removed: Our total net revenues excluding the Better Cash Offer program revenue for the year ended December 31, 2023 decreased by 49% compared to the year ended December 31, 2022.
−Removed: Revenue from the Better Cash Offer program includes the purchase price of homes paid to us by customers using our Better Cash Offer program, while expenses from the Better Cash Offer program are comprised of the purchase price of the home, which in nearly all cases is the same as the purchase price paid by the customer to Better Home & Finance that is recognized as revenue.
−Removed: Home Finance Mortgage Platform, Net Revenue Model
−Removed: We produce a wide selection of mortgage loans and leverage our platform to quickly sell these loans and related MSRs to our loan purchaser network.
+Added: Home Finance Mortgage Model—Gain on loans, net
+Added: We produce a wide selection of mortgage loans and leverage our platform to quickly sell these loans and related mortgage servicing rights (“MSRs”) to our loan purchaser network.
We source our customers through two channels:
our D2C channel and our B2B channel.
−Removed: Through our D2C channel, we generate mortgage platform revenue, net by selling loans and MSRs to our loan purchaser network, recognizing D2C revenue per loan.
−Removed: Through our B2B channel, we generate revenue from integrated relationships (in which our technology platform and team members power the end-to-end home finance experience on behalf of a third-party lender, through an integrated, co-branded customer experience) and advertising relationships (in which we drive customers to the Better Home & Finance-branded platform through advertising on a third party’s platform and offering incentives and discounts to those consumers).
−Removed: Through our advertising relationships, we generate mortgage platform revenue, net the same way we do in our D2C channel, by selling loans to our loan purchaser network.
−Removed: Through our integrated relationships, we generate a fixed fee per loan originated, which we recognize as revenue upon the funding of the loan by the partner.
+Added: Through our D2C channel, we generate gain on loans, net by selling loans and MSRs to our loan purchaser network, recognizing D2C revenue per loan.
+Added: Through our B2B channel, we generate revenue from integrated relationships and advertising relationships.
+Added: Through our advertising relationships, we generate gain on loans, net the same way we do in our D2C channel, by selling loans to our loan purchaser network.
+Added: Through our integrated
+Added: relationships, we generate a fixed fee per loan originated, which we recognize as revenue upon the funding of the loan by the partner.
We may also purchase certain of the loans from our integrated relationship partner, which we may subsequently sell to our loan purchaser network at our discretion.
For loans subsequently sold to our loan purchaser network, the partner receives a portion of the sale proceeds.
−Removed: Although we aim to expand our B2B channel, as of December 31, 2023, the only partnership generating material Funded Loan Volume and revenue was our integrated relationship with Ally Bank.
−Removed: The components of mortgage revenue include the gain, or loss, on sale from loans that we produce and then sell into the secondary market, the gain, or loss, from integrated relationships, and the revenue generated from changes in the fair value of interest rate lock commitments and forward sale commitments.
−Removed: We define Gain on Sale Margin as mortgage platform revenue, net, as presented on our statements of operations and comprehensive loss, divided by Funded Loan Volume, which for 2023 and prior years was positive.
−Removed: For clarity, Gain on Sale Margin represents the difference in value of loan production compared to the price received on the sale of such loan production, net of any mark-to-market revenue impact from fluctuating interest rates on certain loan and financial assets that is reflected in mortgage platform revenue, net, and is not a measure of profitability based on the cost to produce such loans.
−Removed: The table below presents a summary view of the components of mortgage platform revenue, net.
−Removed: For the year ended December 31, 2023, the $61.3 million in mortgage platform revenue, net was comprised of $37.7 million revenue from net gain on sale of loans, $13.3 million gain from integrated relationships, and $10.4 million gain from changes in fair value interest rate lock commitments and forward sale commitments.
−Removed: For the year ended December 31, 2022, the $101.3 million in mortgage platform revenue, net was comprised of $68.2 million net loss on sale of loans, $8.7 million loss from integrated relationships, and $178.2 million gain from changes in fair value interest rate lock commitments and forward sale commitments.
−Removed: Mortgage platform revenue, net consisted of the following:
−Removed: Year Ended December 31,
−Removed: (Amounts in thousands)
−Removed: Net gain (loss) on sale of loans
−Removed: $ 37,667 $ (68,231)
−Removed: Integrated partnership revenue (loss)
−Removed: 13,308 (8,680)
−Removed: Changes in fair value of IRLCs and forward sale commitments
−Removed: 10,353 178,196
−Removed: Mortgage platform revenue, net
−Removed: $ 61,328 $ 101,285
−Removed: Home Finance Funding Sources
−Removed: In our normal course of business, we fund substantially all of our Funded Loan Volume on a short-term basis primarily through our warehouse lines of credit.
−Removed: Our borrowings are repaid with the proceeds we receive from the sale of our loans to our loan purchaser network, which includes GSEs.
−Removed: We had $0.4 billion and $1.5 billion of available capacity under our warehouse facilities as of December 31, 2023 and December 31, 2022, respectively, which represents a decrease of 73% in available capacity as of December 31, 2023 compared to December 31, 2022.
−Removed: Better Plus Revenue Model
−Removed: Better Plus revenue consists of revenue from non-mortgage product offerings including real estate agent services and Better Cash Offer products (Better Real Estate), title insurance and settlement services (Better Settlement Services), and homeowners insurance (Better Cover).
−Removed: Through Better Settlement Services, we offer title insurance primarily as an agent and work with third-party providers that fulfill and underwrite the title insurance policies.
−Removed: Alongside our partners, we offer settlement services during the mortgage transaction, which include title policy preparation, title search, wire services, document preparation, and other mortgage settlement services.
−Removed: For the years ended December 31, 2023 and 2022, we recognized revenue of $14.6 thousand and $4.2 million from settlement services, respectively.
−Removed: For the years ended December 31, 2023 and 2022, we recognized revenue of $0.1 million and $7.0 million from title insurance, respectively.
−Removed: Through Better Real Estate we offer real estate services through our national network of third-party partner real estate agents, which is capable of referring agents in all 50 states and the District of Columbia.
+Added: Although we aim to expand our B2B relationships, as of December 31, 2024, this channel was primarily comprised of our integrated relationship with Ally Bank, which we are currently winding down.
+Added: Better Plus Model—Other revenue
+Added: Better Plus revenue consists of revenue from non-mortgage product offerings including real estate services (Better Real Estate) and insurance services, which includes title insurance (Better Cover).
+Added: Through Better Real Estate services, we offer settlement services during the mortgage transaction, which include wire services, document preparation, and other mortgage settlement services.
+Added: As part of Better Real Estate we offer real estate services through our national network of real estate agents, primarily third-party partner real estate agents.
Our technology matches prospective buyers with local agents, who help them identify houses, see houses, and navigate the purchase process.
−Removed: In addition to real estate services offered through our network of third-party partner real estate agents, Better Home & Finance historically has offered real estate services through in-house, Better Home & Finance-employed real estate agents.
−Removed: In the second quarter of 2023, we made the decision to wind down our in-house real estate agent business and focus on partnering with third-party real estate agents to provide our mortgage customers with real estate agent services.
−Removed: We believe that offering real estate services through our network of third-party partner agents better aligns our costs with transaction volumes, particularly in market environments with decreased mortgage volumes, since our mortgage business serves as the primary lead source for Better Real Estate.
In the partner agent model, we refer customers to a network of external agents that assist them with searching for a home for which we receive a cooperative brokerage fee.
−Removed: For the years ended December 31, 2023 and 2022, we recognized revenue from Better Real Estate of $7.1 million and $23.1 million, respectively.
Through Better Cover we offer customers access to a range of homeowners insurance policy options through our digital marketplace of third-party insurance partners.
We act as an agent to insurance carriers and receive an agency fee from the insurance carriers for policies sold and renewed.
−Removed: Revenue from Better Cover was $1.6 million and $1.6 million for the years ended December 31, 2023 and 2022, respectively.
−Removed: In the fourth quarter of 2021, we began to offer the Better Cash Offer program that enables a prospective buyer to find a home, obtain pre-approval with the completion of initial mortgage due diligence, and make an all-cash offer, without a financing contingency.
−Removed: We believe the Better Cash Offer program attracts customers to our mortgage lending services and our Better Plus services by providing customers with a differentiated home purchase offering.
−Removed: Customers using our Better Cash Offer program may be viewed as more competitive by sellers because they are able to submit a cash bid and waive the financing contingency, enabling buyers to sell an existing home and close on their new home simultaneously.
−Removed: Revenue from the Better Cash Offer program includes the purchase price of homes paid to us by customers using our Better Cash Offer program, as well as any fee or rental revenue paid to us by customers using our Better Cash Offer program.
−Removed: Expenses from the Better Cash Offer program are comprised of the purchase price of the home, which in nearly all cases is the same as the purchase price paid by the customer to Better Home & Finance that is recognized as revenue.
−Removed: For the years ended December 31, 2023 and 2022, we recognized revenue from the Better Cash Offer program in the amount of $0.3 million
−Removed: and $228.7 million, respectively.
−Removed: While Better Home & Finance maintains the functionality and would be able to serve inbound demand, we are not actively seeking Better Cash Offer customers.
−Removed: Our Better Plus revenue decreased 96% for the year ended December 31, 2023 compared to the year ended December 31, 2022, decreasing to $11.6 million for the year ended December 31, 2023 (of which $0.3 million was revenue from the Better Cash Offer program), from $267.1 million for the comparable period in 2022 (of which $228.7 million was revenue from the Better Cash Offer program).
−Removed: For the years ended December 31, 2023 and 2022, Better Plus revenue comprised approximately 15% and 71% of our total net revenue, respectively.
+Added: We also offer title insurance primarily as an agent and work with third-party providers that fulfill and underwrite the title insurance policies.
+Added: International Lending Revenue—Other revenue
+Added: International lending revenue consists of revenue from our international lending activities, primarily in the U.K., which has expanded via acquisitions in prior years.
+Added: International lending activities primarily include broker fees earned via our digital mortgage broker in the U.K.
+Added: During the fourth quarter of 2024, management enacted a plan to sell several entities in the U.K., which management expects to complete the sales within one year, as such the revenue from our international lending activities is winding down.
Factors Affecting Our Performance
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However, increasing interest rates are also indicative of overall economic growth and inflation that could generate demand for more cash-out refinancings, purchase mortgage loan transactions and home equity loans, which may partially offset the decline in rate and term refinancings resulting from a rising interest rate environment.
−Removed: In addition, the majority of our assets are subject to interest rate risk, including (i) loans held for sale (“LHFS”), which consist of mortgage loans held on our consolidated balance sheet for a short period of time after origination until we are able to sell them;
+Added: In addition, the majority of our assets are subject to interest rate risk, including (i) loans held for sale (“LHFS”), which consist of mortgage loans and home equity line of credit and closed-end second lien loans held on our consolidated balance sheet for a short period of time after origination until we are able to sell them;
(ii) interest rate lock commitments (“IRLCs”);
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In order to mitigate direct exposure to interest rate risk between the time at which a borrower locks a loan and the sale of the loan into our purchaser network, we enter into IRLCs and other hedging agreements.
−Removed: For many years, including in particular the year ended December 31, 2020 and the first quarter of 2021, there was a prolonged period of historically low and declining interest rates.
Beginning in April 2021, the United States began experiencing a significant rise in interest rates, which increased for a variety of reasons, including inflation, increases to the federal funds rate and other monetary policy tightening, market capacity constraints and other factors, which continued in 2023 and 2024, resulting in a decrease in overall funding activities in the mortgage market generally.
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This competition manifests in industry-wide gain on sale compression and decreased industry origination volume in higher rate environments.
−Removed: Starting in the second half of 2021, and continuing through the majority of 2023, we experienced this trend where our volume declined, and our Gain on Sale Margin compressed due to heightened interest rates and an increasingly competitive market for lenders.
−Removed: As a result, in 2022 and continuing in 2023, we experienced a substantial decline in Funded Loan Volume together with compression in our Gain on Sale Margin, which in 2023 was more than offset by market volatility that positively impacted our Gain on Sale Margin.
−Removed: The table below shows, for each specified period, the average MBA 30-year fixed rate, Better Home & Finance’s average 30-year fixed rate and Better Home & Finance’s Gain on Sale Margin.
−Removed: Year Ended December 31,
−Removed: MBA Average 30-year fixed rate
−Removed: 6.97 % 5.60 %
−Removed: Better Home & Finance Average 30-year fixed rate
−Removed: 6.58 % 5.32 %
−Removed: Better Home & Finance Gain on Sale Margin
−Removed: 2.03 % 0.89 %
We expect that our results will continue to fluctuate based on a variety of factors, including interest rates, and that as we continue to seek to increase our business and our Funded Loan Volume, we may continue to incur net losses in the future.
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The consumer lending market and the associated loan origination volumes for mortgage loans are influenced by general economic conditions, including the interest rate environment, unemployment rates, home price appreciation and consumer confidence.
−Removed: Purchase mortgage loan origination volumes are generally affected by a broad range of economic factors, including interest rate fluctuations, the overall strength of the economy, unemployment rates and home prices, as well as seasonality, as home sales typically rise in the second and third quarters.
−Removed: However, in 2022 and 2023, such housing market seasonality was outweighed by increases in interest rates and continued constrained housing supply.
−Removed: We continue to see diminished impact of seasonality on our business as a result of these and other factors.
+Added: Purchase loan origination volumes are generally affected by a broad range of economic factors, including interest rate fluctuations, the overall strength of the economy, unemployment rates and home prices, as well as seasonality, as home sales typically rise in the second and third quarters.
Mortgage loan refinancing volumes are primarily driven by fluctuations in mortgage loan interest rates.
While borrower demand for consumer credit has typically remained strong in most economic environments, potential borrowers could defer seeking financing during periods with elevated or unstable interest rates or poor economic conditions.
−Removed: As a result, our revenues vary significantly from quarter to quarter, and recent increases to interest rates and inflationary macroeconomic conditions significantly affect our financial performance.
+Added: As a result, our revenues can vary significantly from quarter to quarter, and recent increases to interest rates and inflationary macroeconomic conditions significantly affect our financial performance.
Constrained Home Supply Ultimately Drives Further Construction and Purchase Volume
The supply of homes available for purchase and the market prices for homes on offer are significant drivers of purchase mortgage volume.
−Removed: We believe that constrained home supply has contributed to constrained new home sales and purchase mortgage volume.
−Removed: Concurrently, constrained home supply, including as a result of rising interest rates, and substantial demand has led to higher home prices, which in turn slows both growth of new home sales and purchase mortgage volume.
−Removed: In the longer term, however, we believe that such imbalances of supply and demand could drive greater homebuilding to bring additional home supply into the market and create additional purchase mortgage volume going forward.
+Added: We believe that constrained home supply contributes to constrained new home sales and purchase mortgage volume.
+Added: Concurrently, constrained home supply, including as a result of elevated interest rates, and substantial demand has led to higher home prices, which in turn slows both growth of new home sales and purchase mortgage volume.
+Added: In the longer term, however, we believe that such imbalances of supply and demand could drive greater home building to bring additional home supply into the market and create additional purchase mortgage volume going forward.
Continued Growth and Acceptance of Digital Loan Solutions
Our ability to attract new customers depends, in large part, on our ability to provide a seamless and superior customer experience, maintain competitive pricing and meet and exceed the expectations of our customers.
−Removed: Consumers are increasingly willing to execute large and complex purchases through digital platforms, a trend that has been accelerated by COVID.
−Removed: Over the last few years, we have witnessed increased consumer desire to transact online in larger spend categories, including furniture, travel, and auto, a tailwind that was further accelerated by COVID.
+Added: Consumers are increasingly willing to execute large and complex purchases through digital platforms.
+Added: Over the last few years, we have witnessed increased consumer desire to transact online in larger spend categories, including furniture, travel, and auto.
We believe this trend will also impact consumer preferences in loans, particularly as homeownership rates among Millennials and Generation Z rise.
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Expanding our Technological Innovation
−Removed: Our proprietary technology is built to optimize our customers’ experiences, increase speed, decrease cost, and enhance loan production quality.
+Added: Our proprietary technology is built to optimize our customers’ experiences, increase speed, decrease loan manufacturing cost, and enhance loan production quality.
Through our investment in proprietary technology, we are automating and streamlining tasks within the origination process for our consumers, employees and partners.
−Removed: Our customized user interfaces replace paper applications and human interaction, allowing our customers and partners to quickly and efficiently identify, price, apply for and execute mortgage loans.
+Added: Our customized user interfaces replace paper applications and human interaction, allowing our customers and partners to
+Added: quickly and efficiently identify, price, apply for and execute mortgage loans.
We expect to continue to invest in developing technology, tools and features that further automate the loan manufacturing process, reducing our manufacturing and customer acquisition costs and improving our customer experience.
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We expect to continue to add new types of Home Finance mortgage loans and integrated Better Plus marketplace offerings to our platform over time, providing our customers with a one-stop shop for all of their homeownership needs.
−Removed: We have invested significantly and expect to continue to invest in our proprietary technology, which is designed to allow us to seamlessly add new offerings, partners and marketplace participants without incurring significant additional marketing and advertising and product development cost, which allows for lower costs for our customers.
+Added: We have invested significantly and expect to continue to invest in our proprietary technology, which is designed to allow us to seamlessly add new offerings, partners and marketplace participants without incurring significant additional marketing and advertising and product development cost.
Ability to Acquire New Customers and Scale Customer Acquisitions
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Refinance Loan Volume
−Removed: $ 203 $ 5,129
Purchase Loan Volume
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Better Real Estate Transaction Volume
−Removed: $ 503 $ 1,699
Insurance Coverage Written
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Funded Loan Volume represents the aggregate dollar amount of all loans funded in a given period based on the principal amount of the loan at funding.
−Removed: Our Funded Loan Volume of $3,015 million for the year ended December 31, 2023 decreased by approximately 73% from $11,350 million for the year ended December 31, 2022.
−Removed: Beginning in 2023, we also include HELOC loans in our Funded Loan Volume.
−Removed: For the year ended December 31, 2023, purchase and refinance loans comprised $2,948 million and HELOC loans comprised $67 million of Funded Loan Volume.
+Added: Our Funded Loan Volume of $3,594 million for the year ended December 31, 2024 increased by approximately 19% from $3,015 million for the year ended December 31, 2023.
+Added: Beginning in 2023, we also include HELOC and closed-end second lien loans in our Funded Loan Volume.
+Added: For the year ended December 31,
+Added: 2024, purchase and refinance loans comprised $3,115 million and HELOC and closed-end second lien loans comprised $479 million of Funded Loan Volume.
Refinance Loan Volume represents the aggregate dollar amount of refinance loans funded in a given period based on the principal amount of the loan at refinancing date.
−Removed: Our Refinance Loan Volume of $203 million for the year ended December 31, 2023 decreased by approximately 96% from $5,129 million for the year ended December 31, 2022.
+Added: Our Refinance Loan Volume of $463 million for the year ended December 31, 2024 increased by approximately 128% from $203 million for the year ended December 31, 2023.
Purchase Loan Volume represents the aggregate dollar amount of purchase loans funded in a given period based on the principal amount of the loan at purchase date.
Our Purchase Loan Volume of $2,652 million for the year ended December 31, 2024 decreased by approximately 3% from $2,745 million for the year ended December 31, 2023.
−Removed: HELOC Loan Volume represents the aggregate dollar amount of HELOC loans funded in a given period based on the principal amount of the loan at funding.
−Removed: The HELOC product was launched during the first half of 2023.
−Removed: Our HELOC Loan volume increased to $67 million for the year ended December 31, 2023 from none for the year ended December 31, 2022.
+Added: HELOC Loan Volume represents the aggregate dollar amount of HELOC and closed-end second lien loans funded in a given period based on the principal amount of the loan at funding.
+Added: The HELOC product was launched during the first half of 2023, and the closed-end second lien product was launched towards the end of 2023, with volume becoming material in the first half of 2024.
+Added: Our HELOC Loan volume increased to $479 million for the year ended December 31, 2024 from $67 million for the year ended December 31, 2023.
D2C Loan Volume represents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated from direct interactions with customers using all marketing channels other than our B2B partner relationships.
−Removed: Our D2C Loan Volume of $1,649 million for the year ended December 31, 2023 decreased by approximately 76% from $6,903 million for the year ended December 31, 2022.
+Added: Our D2C Loan Volume of $2,562 million for the year ended December 31, 2024 increased by approximately 55% from $1,649 million for the year ended December 31, 2023.
B2B Loan Volume represents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated through one of our B2B partner relationships.
Our B2B Loan Volume of $1,032 million for the year ended December 31, 2024 decreased by approximately 24% from $1,366 million for the year ended December 31, 2023.
−Removed: Total Loans represents the total number of loans funded in a given period, including purchase loans, refinance loans and HELOC loans.
−Removed: Our Total Loans of 8,569 for the year ended December 31, 2023 decreased by approximately 71% from 29,818 for the year ended December 31, 2022.
−Removed: Purchase and refinance loans comprised 7,922 of the Total Loans the year ended December 31, 2023 and HELOC loans comprised 647 of the Total Loans the year ended December 31, 2023.
+Added: Total Loans represents the total number of loans funded in a given period, including purchase loans, refinance loans, HELOC loans and closed-end second lien loans.
+Added: Our Total Loans of 11,755 for the year ended December 31, 2024 increased by approximately 37% from 8,569 for the year ended December 31, 2023.
+Added: Purchase and refinance loans comprised 7,795 of the Total Loans the year ended December 31, 2024 and HELOC and closed-end second lien loans comprised 3,960 of the Total Loans the year ended December 31, 2024.
Average days loans held for sale for the years ended December 31, 2024 and 2023, were approximately 21 and 22 days, respectively.
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As of each such reporting date, we had an immaterial amount of loans either 90 days past due or non-performing, as Better Home & Finance generally aims to sell loans shortly after production.
−Removed: Average Loan Amount represents Total Funded Loan Volume divided by number of loans funded in a period.
+Added: Average Loan Amount represents Funded Loan Volume divided by Total Loans in a period.
Our Average Loan Amount decreased by approximately 13% to $305,757 for the year ended December 31, 2024 from $351,877 for the year ended December 31, 2023.
−Removed: In general, HELOC loans have lower average loan amounts than purchase or refinance loans, and therefore Average Loan Amount has decreased as a result of HELOC growth in 2023.
−Removed: Gain on Sale Margin represents mortgage platform revenue, net, as presented on our statements of operations and comprehensive income (loss), divided by Funded Loan Volume.
+Added: In general, HELOC and closed-end second lien loans have lower average loan amounts than purchase or refinance loans, and therefore Average Loan Amount has decreased as a result of the growth of HELOC and closed-end second lien growth as a percentage of our fundings.
+Added: Gain on Sale Margin represents gain on loans, net, as presented on our consolidated statements of operations and comprehensive loss, divided by Funded Loan Volume.
Gain on Sale Margin increased by approximately 11% year-over-year to 2.17% for the year ended December 31, 2024 from 1.95% for the year ended December 31, 2023.
−Removed: We saw an increase in our Gain on Sale Margin for the year ended December 31, 2023 compared to the year ended December 31, 2023, as a result of increasing our pricing to drive improved profitability, as well as market volatility which positively impacted our mortgage platform revenue, net.
−Removed: Total Market Share represents Funded Loan Volume in a period divided by total value of loans funded in the industry for the same period, as presented by Fannie Mae.
−Removed: Our Total Market Share of 0.2% for the year ended December 31, 2023 decreased by 60% from 0.5% for the year ended December 31, 2022.
−Removed: The mortgage market remains competitive among lenders, given the interest rate environment and we continue to focus on originating the most profitable business available to us.
−Removed: As a result, we have pulled back on our most unprofitable channels, resulting in further declines to market share.
+Added: We saw an increase in our Gain on Sale Margin for the year ended December 31, 2024 compared to the year ended December 31, 2024, as a result of improved pricing on loans funded.
+Added: Total Market Share represents Funded Loan Volume in a period divided by total value of loans funded in the industry for the same period, as presented by FNMA.
+Added: Our Total Market Share of 0.2% for the year ended December 31, 2024 remained substantially the same as 0.2% for the year ended December 31, 2023.
+Added: The mortgage market remains competitive among lenders, given the interest rate environment, resulting in relatively flat market share on a percentage basis.
+Added: We continue to focus on originating the most profitable business available to us and seek to avoid growing through highly unprofitable channels..
Better Real Estate Transaction Volume represents the aggregate dollar amount of real estate volume transacted in a given period across both in-house agents and third-party network agents.
−Removed: Insurance Coverage Written represents the aggregate dollar amount of insurance liability coverage provided to customers on behalf of insurance carrier partners across all insurance products on Better Home & Finance’s marketplace, specifically title and homeowners insurance offered through Better Settlement Services and Better Cover.
+Added: Insurance Coverage Written represents the aggregate dollar amount of insurance liability coverage provided to customers on behalf of insurance carrier partners across all insurance products on the Company’s marketplace, specifically title and homeowners insurance offered through Better Settlement Services and Better Cover.
This includes the value of the loan for lender’s title insurance and dwelling coverage for homeowners insurance.
+Added: Insurance Coverage Written amounts for Better Cover have been updated for all periods presented to include both new policies and policy renewals, which in prior periods included only new policies.
Description of Certain Components of Our Financial Data
Components of Revenue
−Removed: Our sources of revenue include mortgage platform revenue, net, cash offer program revenue, other platform revenue, and net interest income (comprised of mortgage interest income and expense on warehouse lines of credit), net.
−Removed: Home Finance (Mortgage Platform Revenue, Net)
−Removed: Mortgage platform revenue, net, includes revenue generated from our mortgage production process.
−Removed: The components of mortgage platform revenue, net, are as follows:
−Removed: Net gain (loss) on sale of loans—This represents the premium we receive in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market.
−Removed: Net gain (loss) on sale of loans includes unrealized changes in the fair value of LHFS, which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the secondary market.
+Added: Our sources of revenue include gain on loans, net, other revenue, and net interest income.
+Added: Home Finance (Gain on Loans, Net)
+Added: Gain on loans, net, includes revenue generated from our mortgage production process.
+Added: The components of Gain on loans, net, are as follows:
+Added: Gain on sale of loans, net–This represents the premium we receive in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market.
+Added: Gain on sale of loans, net includes unrealized changes in the fair value of mortgage loans held for sale (“LHFS”), which are recognized on a loan-by-loan basis as part of current period earnings until the loan is sold on the secondary market.
The fair value of LHFS is measured based on observable market data.
−Removed: Also included within net gain on sale (loss) of loans is the day one recognition of the fair value of MSRs and any subsequent changes in the measurement of the fair value of the MSRs for loans sold servicing retained, including any gain or loss on subsequent sales of MSRs, and the reduction of revenue related to early payoff fees.
−Removed: We do not manage our business to optimize for Gain on Sale for either our Purchase Loan or Refinance Loan offerings specifically and do not observe material differences in Gain on Sale between such products over time.
−Removed: Integrated relationship revenue (loss)—Includes fees that we receive for originating loans on behalf of an integrated relationship partner, which are recognized as revenue (loss) upon the integrated relationship partner’s funding of the loan.
−Removed: Some of the loans originated on behalf of the integrated relationship partner are purchased by us.
−Removed: Subsequent changes in the fair value of loans purchased by us are included as part of current period earnings.
−Removed: These loans may be sold in the secondary market at our discretion for which any gain on sale is included in this account.
−Removed: For loans sold on the secondary market, the integrated relationship partner will receive a portion of the execution proceeds.
−Removed: A portion of the execution proceeds that is to be allocated to the integrated relationship partner is accrued as a reduction of integrated relationship revenue (loss) when the loan is initially purchased from the integrated relationship partner.
−Removed: Changes in fair value of IRLCs and forward sale commitments—IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market.
+Added: This also includes activity for loans originated on behalf of the integrated partnership that are subsequently purchased by us as well the portion of the sale proceeds to be received by the integrated partner.
+Added: The portion of the sale proceeds that is to be allocated to the integrated partner is accrued as a reduction of gain on sale of loans, net when the loan is initially purchased by us from the integrated relationship partner.
+Added: Gain on sale of loans, net also includes the changes in fair value of IRLCs and forward sale commitments.
+Added: IRLCs include the fair value upon purchase/issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market.
Fair value of forward commitments hedging IRLCs and LHFS are measured based on quoted prices for similar assets.
−Removed: Since our mortgage platform revenue is driven primarily by the number of funded loans and our net gain on sale from each Funded Loan, fluctuations in interest rates significantly affect our revenues.
−Removed: As described above, in an increasing interest rate environment, mortgage loan refinance volumes and home purchase volumes typically decline, with refinance volumes being particularly sensitive to increasing interest rates.
−Removed: Furthermore, fluctuations in interest rates that affect the price at which we are able to sell our mortgage loan production in the secondary market also could affect our revenues and may even result in significant losses.
−Removed: We mitigate our risk of loss associated with changes in interest rates by entering into forward sale commitments and IRLCs.
−Removed: As a result, our revenue from net gain on sale of loans may vary significantly from quarter to quarter.
−Removed: Better Cash Offer Program
−Removed: Our product offerings include the Better Cash Offer program where we work with a home buyer (the “Buyer”) to identify and purchase a home directly from a property Seller to subsequently sell the home to the Buyer.
−Removed: The Buyer may lease the home from us while the Buyer and Better Home & Finance go through the customary closing process to transfer ownership of the home to the Buyer.
−Removed: Arrangements where the Buyer leases the home from us are accounted for under ASC 842 as a sales-type lease.
−Removed: Revenue and expenses for sales-type leases under ASC 842 are recognized at the commencement of the lease.
−Removed: Revenue is recognized for the lease payments, which includes the sales price of the home and the related expenses include the cost of the home as well as transaction closing costs.
−Removed: Arrangements where the Buyer does not lease the home are accounted for under ASC 606 we recognize revenue at the time of the closing of the home sale when title to and possession of the home are transferred to the Buyer.
−Removed: The Buyer does not directly or indirectly contract with the seller.
−Removed: For arrangements that do not involve a lease, upon closing on the sale of the home from the Seller to us, we hold legal title to the home.
−Removed: We are responsible for any obligations related to the home while we hold title and are the legal owner and
−Removed: as such we are considered the principal in the transaction.
−Removed: We hold in inventory any homes where the Buyer does not subsequently purchase from us as well as homes held while we are waiting to transfer the home to the Buyer.
−Removed: For each Better Cash Offer transaction, the vast majority of revenue is comprised of the purchase price of the home paid by the customer to Better Home & Finance, and the vast majority of expense is comprised of the purchase price of the home paid by Better Home & Finance to the seller, which in nearly all cases is the same as the purchase price of the home paid by the customer to Better Home & Finance that is recognized as revenue.
−Removed: Relative to the purchase price of the home, leasing and fee revenue is immaterial.
−Removed: Better Plus (Other Platform Revenue)
−Removed: We generate other platform revenue through our Better Plus offerings, which includes Better Settlement Services (title insurance and settlement services), Better Real Estate (real estate agent services), and Better Cover (homeowners insurance).
−Removed: Our other platform revenue primarily consists of Better Settlement Services (title insurance and settlement services).
+Added: Integrated Partnership Fees–Includes fees that we receive for originating loans on behalf of an integrated partner, which are recognized as revenue upon the integrated partner’s funding of the loan.
+Added: Provision for Loan Repurchase Reserve–In connection with our sale of loans on the secondary market, we make customary representations and warranties to the relevant loan purchasers about various characteristics of each loan, such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws.
+Added: In the event of a breach of its representations and warranties, we may be required to repurchase the loan with the identified defects.
+Added: The provision for loan repurchase reserve, represents the charge for these potential losses.
+Added: Better Plus, International Lending Revenue, and Other (Other Revenue)
+Added: We generate other revenue through our Better Plus offerings, which includes Better Real Estate (real estate services), Better Cover (insurance), and international lending revenue.
+Added: For Better Real Estate, we generate revenues from fees related to real estate agent services, mainly cooperative brokerage fees from our network of third-party real estate agents, to assist our customers in the purchase or sale of a home.
+Added: For settlement services, we generate revenues from fees on services, such as policy preparation, title search, wire, and other services, required to close a loan, which were provided by third parties through our platform.
+Added: We recognize revenues from fees on settlement services upon the completion of the performance obligation, which was when the loan transaction closes.
+Added: For Better Cover, we generate revenues from agent fees on homeowners insurance policies obtained by our customers through our marketplace of third-party insurance carriers.
For title insurance, we generate revenues from agent fees on title policies written by third parties and sold to our customers in loan transactions.
1 unchanged sentence
As an agent, we do not control the ability to direct the fulfillment of the service, are not primarily responsible for fulfilling the performance of the service, and do not assume the risk in a claim against the policy.
−Removed: For settlement services, we generate revenues from fees on services, such as policy preparation, title search, wire, and other services, required to close a loan, which were provided by third parties through our platform.
−Removed: We recognized revenues from fees on settlement services upon the completion of the performance obligation, which is when the loan transaction closes.
−Removed: For settlement services, we may use a third party to fulfill these services, but we are considered the principal in the transaction as we direct the fulfillment of the services and ultimately bear the risk of nonperformance.
−Removed: As we were considered the principal, revenues from settlement services were presented on a gross basis.
−Removed: In December 2022, the Company terminated the service with the third party.
−Removed: And in March 2023, we entered into a work share agreement and a revenue share agreement with another third party to fulfill the settlement service and we are no longer considered the principal as we do not control the ability to direct the fulfillment of the service, are not primarily responsible for fulfilling the performance of the service, and do not assume the risk in a claim against the service.
−Removed: Our performance obligations for title insurance and settlement services are typically completed 40 to 60 days after the commencement of the loan origination process and are recognized in revenue upon the closing of the loan transaction.
−Removed: The remaining amount of other platform revenue consists of our Better Real Estate (real estate agent services) and Better Cover (homeowners insurance) offerings.
−Removed: For Better Real Estate, we generate revenues from fees related to real estate agent services, including cooperative brokerage fees from our network of third-party real estate agents, as well as brokerage fees earned when we provide our in-house real estate agents to assist our customers in the purchase or sale of a home.
−Removed: For Better Cover, we generate revenues from agent fees on homeowners insurance policies obtained by our customers through our marketplace of third-party insurance carriers.
−Removed: Net Interest Income (Expense)
−Removed: Net interest income (expense) includes interest income from LHFS calculated based on the note rate of the respective loan as well as interest expense on warehouse lines of credit.
−Removed: Components of Our Operating Expenses
−Removed: Our expenses consist of mortgage platform expenses, cash offer program expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses.
−Removed: Mortgage Platform Expenses
−Removed: Mortgage platform expenses consist primarily of origination expenses, appraisal fees, processing expenses, underwriting, closing fees, servicing costs, and sales and operations personnel-related expenses.
−Removed: Sales and operations personnel-related expenses include compensation and related benefits, stock-based compensation, and allocated occupancy expenses and related overhead based on headcount.
−Removed: These expenses are expensed as incurred with the exception of stock-based compensation which is recognized over the requisite service period.
−Removed: Our mortgage platform expenses are primarily driven by our origination volume, principally the headcount required to produce funded loans.
−Removed: We expect that mortgage platform expenses will grow if our origination volume grows and decline if our origination volume declines.
−Removed: Cash Offer Program Expenses
−Removed: Cash offer program expenses include the full cost of the home, including transaction closing costs and costs for maintaining the home before the title is transferred to the buyer.
−Removed: For each Better Cash Offer transaction, the vast majority of expenses are comprised of the purchase price of the home paid by Better Home & Finance to the seller, which in nearly all cases, is the same as the purchase price paid by the Buyer to Better Home & Finance that is recognized as revenue.
−Removed: Relative to the purchase price of the home, closing costs and other maintenance costs are immaterial.
−Removed: Cash offer program expenses are recognized when title is transferred to the Buyer for arrangements recognized under ASC 606 and when the lease commences for arrangements recognized under ASC 842.
−Removed: Other Platform Expenses
−Removed: Other platform expenses relate to other non-mortgage homeownership activities, including settlement service expenses, lead generation, and personnel related costs.
−Removed: Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents.
−Removed: Personnel related expenses include compensation and related benefits, stock-based compensation, and allocated occupancy expenses and related overhead based on headcount.
−Removed: Other platform expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period.
−Removed: We expect other platform expenses to increase if we grow our Better Plus products and services and decline if business from Better Plus products and services declines.
−Removed: Other platform expense includes personnel expense associated with our in-house real estate agent business.
−Removed: In the second quarter of 2023, we made the decision to wind down our in-house real estate agent business and focus on partnering with third-party real estate agents to provide our mortgage customers with real estate agent services.
+Added: Our performance obligations for settlement services and title insurance are typically completed 40 to 60 days after the commencement of the loan origination process and are recognized in revenue upon the closing of the loan transaction.
+Added: For international lending revenue, we generate revenue primarily from broker fees earned via our digital mortgage broker in the U.K.
+Added: During the fourth quarter of 2024, management enacted a plan to sell several entities in the U.K.
+Added: which are being actively marketed, as such the revenue from our international lending activities is winding down.
+Added: Net Interest Income
+Added: Net interest income includes interest income from LHFS, including HELOCs, calculated based on the note rate of the respective loan, interest income from short-term investments, and interest income on loans held for investment, through our U.K.
+Added: banking operations.
+Added: Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, through our U.K.
+Added: banking operations, as well as interest expense on the convertible note, a senior subordinated convertible note in the aggregate principal amount of $528.6 million issued to SB Northstar LP, a related party (the “Convertible Note”).
+Added: Components of Our Expenses
+Added: Our expenses consist of compensation and benefits, general and administrative, technology expenses, marketing and advertising expenses, loan origination expenses, depreciation and amortization, and other expenses.
+Added: Compensation and Benefits Expenses
+Added: Compensation and benefits expenses includes salaries, wages, and incentive pay as well as stock compensation, employee health benefits, 401(k) plan benefits, and social security and unemployment taxes.
+Added: Stock-based compensation includes expenses associated with restricted stock unit grants, performance stock unit grants, and stock option grants under our stock plans.
+Added: We recognize compensation expense for the stock-based payments based on the fair value of the awards on the grant date.
+Added: The expense is recorded on a straight-line basis over the requisite service period.
+Added: Compensation and benefits excludes amounts capitalized for internal developed software.
General and Administrative Expenses
−Removed: General and administrative expenses include personnel-related expenses, including stock-based compensation and benefits for executive, finance, accounting, legal, and other administrative personnel.
−Removed: In addition, general and administrative expenses include external legal, tax and accounting services, and allocated occupancy expenses and related overhead based on headcount.
−Removed: General and administrative expenses are generally expensed as incurred, with the exception of stock-based compensation, which is recognized over the requisite service period.
−Removed: We expect general and administrative expenses to increase in absolute terms as a result of our transition to being a public company.
−Removed: However, we expect general and administrative expenses to change at a slower rate than the changes in origination volumes.
−Removed: As we reduced headcount drastically in previous years and have continued headcount reductions in 2023, and expect to continue to do so, we expect employee related costs to decrease as a smaller administrative function is needed to support an organization with a much lower headcount but we expect this to be offset by increased costs related to legal and professional services with our transition to a public company.
+Added: General and administrative expenses include rent and occupancy expenses, travel and entertainment expenses, insurance expenses, and external legal, tax and accounting services.
+Added: General and administrative expenses are expensed as incurred.
+Added: Technology Expenses
+Added: Technology expenses consist of expenses related to vendors engaged in product management, design, development and testing of our websites and products.
+Added: Technology and product development expenses are generally expensed as incurred.
Marketing and Advertising Expenses
−Removed: Marketing and advertising expenses consist of customer acquisition expenses, brand costs, paid marketing and personnel-related costs for brand teams.
+Added: Marketing and advertising expenses consist of customer acquisition expenses, brand costs, and paid marketing.
For customer acquisition expenses, we primarily generate loan origination leads through third-party financial service websites for which we incur “pay-per-click” expenses.
A majority of our marketing expenses are incurred from leads that we purchase from these third-party financial service websites.
−Removed: Personnel-related expenses include compensation and related benefits, including stock-based compensation, and allocated occupancy expenses and related overhead based on headcount.
−Removed: Marketing expenses are generally expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period.
−Removed: Although we are working towards increasing organic traffic and demand from B2B partners to drive a growing portion of our loan origination volume, we also expect that advertising expenses will continue to be important to drive loan origination volume and revenue growth, and therefore we expect that these expenses will increase if origination volume increases, and decrease if origination volume decreases.
−Removed: Marketing expenses may also vary based on the costs of leads that we purchase from digital lead aggregators, which we expect will increase in more challenging mortgage lending markets.
−Removed: Technology and Product Development Expenses
−Removed: Technology and product development expenses consist of employee compensation, amortization of capitalized internal-use software costs related to our technology platform and expenses related to vendors engaged in product management, design, development and testing of our websites and products.
−Removed: Employee compensation consists of stock-based compensation and benefits related to our technology team, product and creative team and engineering team.
−Removed: Technology and product development expenses also include allocated occupancy expenses and related overhead based on headcount.
−Removed: Technology and product development expenses are generally expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period.
−Removed: We expect technology and product development expenses to increase if we choose to continue to develop our platform and add new features and functionalities, including additional homeownership products and services.
−Removed: Stock-based Compensation
−Removed: We measure and record the expense related to stock-based compensation awards based on the fair value of those awards as determined on the date of grant.
−Removed: We recognize stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period, and use the straight-line method to recognize stock-based compensation.
−Removed: For stock-based compensation with performance conditions, we record stock-based compensation expenses when it is deemed probable that the performance condition will be met.
−Removed: We use the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to determine the fair value of stock options.
−Removed: The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, which determine the fair value of stock-based compensation awards, including the option’s expected term and the price volatility of the underlying stock.
−Removed: We calculate the fair value of options granted using the following assumptions:
−Removed: Expected volatility—We estimated volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the options’ expected term.
−Removed: Expected term—The expected term of our options represents the period that the stock-based awards are expected to be outstanding.
−Removed: We have elected to use the midpoint of the stock options vesting term and contractual expiration period to compute the expected term, as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.
−Removed: Risk-free interest rate—The risk-free interest rate is based on the implied yield currently available on US Treasury zero-coupon issues with a term that is equal to the options’ expected term at the grant date.
−Removed: Dividend yield—We have not declared or paid dividends to date and do not anticipate declaring dividends.
−Removed: As such, the dividend yield has been estimated to be zero.
−Removed: Forfeitures of stock options are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from initial estimates.
−Removed: We record compensation expenses related to stock options issued to non-employees, including consultants, based on the fair value of the stock options on the grant date over the service performance period as the stock options vest.
+Added: Marketing expenses are generally expensed as incurred.
+Added: Loan Origination Expenses
+Added: Loan origination expenses consist primarily of origination expenses, appraisal fees, processing expenses, underwriting, closing fees, and servicing costs.
+Added: These expenses are expensed as incurred.
+Added: Other Expenses
+Added: Other expenses relate to other non-mortgage homeownership activities, including settlement service expenses, lead generation expenses, expenses incurred in relation to our international lending activities, and gains and losses from the warrant and equity related liabilities.
+Added: Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents.
+Added: Other expenses are expensed as incurred.
Results of Operations
2 unchanged sentences
(Amounts in thousands, except per share amounts)
−Removed: Mortgage platform revenue, net (1)
−Removed: $ 61,328 $ 101,285
−Removed: Cash offer program revenue
−Removed: Other platform revenue
−Removed: 11,293 38,362
−Removed: Net interest income (expense):
+Added: Gain on loans, net $ 78,098 $ 58,796
+Added: Other revenue 12,888 16,109
+Added: Net interest income
Interest income 38,990 29,031
−Removed: 15,575 26,714
−Removed: Warehouse interest expense
−Removed: (11,680) (17,059)
−Removed: Net interest income (expense)
+Added: Interest expense (21,488) (31,596)
+Added: Net interest income/(loss) 17,502 (2,565)
Total net revenues 108,488 72,340
−Removed: 76,820 378,023
−Removed: Mortgage platform expenses (2)(3)
−Removed: 84,083 321,621
−Removed: Cash offer program expenses
−Removed: Other platform expenses (2)(3)
−Removed: 13,048 59,501
−Removed: General and administrative expenses (2)(3)
−Removed: 147,214 185,876
−Removed: Marketing and advertising expenses (2)(3)
−Removed: 22,080 69,008
−Removed: Technology and product development expenses (2)(3)
−Removed: 83,815 124,308
−Removed: Restructuring and impairment expenses (2)(3)
−Removed: 17,459 246,485
+Added: Compensation and benefits 141,089 181,735
+Added: General and administrative 52,230 60,150
+Added: Technology 26,110 39,431
+Added: Marketing and advertising 33,984 19,523
+Added: Loan origination expense 9,864 9,476
+Added: Depreciation and amortization 33,227 42,891
+Added: Other expenses/(Income) 17,424 253,556
Total Expenses 313,928 606,762
−Removed: 368,096 1,236,943
−Removed: Loss from operations
−Removed: (291,276) (858,920)
−Removed: Interest and other expense, net:
−Removed: Other income (expense)
−Removed: Interest and amortization on non-funding debt
−Removed: (19,916) (13,450)
−Removed: Interest on Bridge Notes
−Removed: Change in fair value of warrants (507) —
−Removed: Change in fair value of convertible preferred stock warrants
−Removed: Change in fair value of bifurcated derivative
−Removed: (236,603) 236,603
−Removed: Total interest and other expenses, net
−Removed: (243,146) (17,057)
−Removed: Loss before income tax expense
−Removed: (534,422) (875,977)
+Added: Loss before income tax (benefit)/expense (205,440) (534,422)
Income tax expense (benefit) 850 1,998
−Removed: $ (536,420) $ (877,077)
+Added: Net loss $ (206,290) $ (536,420)
Earnings (loss) per share attributable to common stockholders (Basic)
2 unchanged sentences
$ (13.65) $ (58.09)
−Removed: __________________
−Removed: (1) The components of mortgage platform revenue, net for the periods presented were as follows:
+Added: Year Ended December 31, 2024 as Compared to Year Ended December 31, 2023
+Added: The components of our revenues for the period were:
Year Ended December 31,
(Amounts in thousands)
−Removed: Net gain (loss) on sale of loans
−Removed: $ 37,667 $ (68,231)
−Removed: Integrated relationship revenue (loss)
−Removed: 13,308 (8,680)
−Removed: Changes in fair value of IRLCs and forward sale commitments
−Removed: 10,353 178,196
−Removed: Total mortgage platform revenue, net
−Removed: $ 61,328 $ 101,285
−Removed: __________________
−Removed: (2) Includes stock-based compensation expense as follows:
+Added: Gain on loans, net $ 78,098 $ 58,796
+Added: Other revenue 12,888 16,109
+Added: Net interest income
+Added: Interest income 38,990 29,031
+Added: Interest expense (21,488) (31,596)
+Added: Net interest income/(loss) 17,502 (2,565)
+Added: Total net revenues 108,488 72,340
+Added: Gain on loans, net
+Added: The components of our gain on loans, net for the period were:
Year Ended December 31,
(Amounts in thousands) 2024 2023
−Removed: Mortgage platform expenses
−Removed: $ 8,643 $ 4,602
−Removed: Other platform expenses
−Removed: General and administrative expenses
−Removed: 37,204 19,910
−Removed: Marketing and advertising expenses
−Removed: Technology and product development
−Removed: Total stock-based compensation expense
−Removed: $ 54,145 $ 30,542
−Removed: __________________
−Removed: (3) Includes depreciation and amortization expense as follows:
+Added: Gain on sale of loans, net $ 59,242 $ 46,678
+Added: Integrated partnership fees 8,933 10,295
+Added: Loan repurchase reserve recovery/(provision) 9,923 1,823
+Added: Total gain on loans, net $ 78,098 $ 58,796
+Added: Gain on sale of loans, net increased $12.6 million or 27% to $59,242 for the year ended December 31, 2024 compared to $46,678 for the year ended December 31, 2023.
+Added: The increase was largely driven by increases in revenue related to HELOC loan volume which increased to $479 million for the year ended December 31, 2024 from $67 million for the year ended December 31, 2023.
+Added: Integrated partnership fees decreased $1.4 million, or 13% to $8.9 million for the year ended December 31, 2024, compared to $10.3 million for the year ended December 31, 2023.
+Added: The decrease in integrated partnership fees was primarily driven by the reduction in B2B Loan Volume.
+Added: Our integrated relationship is in the process of winding down due to a shift in strategic direction for the integrated partner.
+Added: Loan repurchase reserve recovery increased $8.1 million or 444%, to $9.9 million for the year ended December 31, 2024, compared to a recovery of $1.8 million for the year ended December 31, 2023.
+Added: This recovery is a component of the loan repurchase reserve liability, which decreased because of the reduction in our estimate of loss exposure during the periods when we had a significantly higher funded loan volume.
+Added: The reduction in the loan repurchase reserve liability is recognized as a recovery within gain on loans, net.
+Added: Other Revenue
+Added: The components of other revenue for the period were:
Year Ended December 31,
(Amounts in thousands) 2024 2023
−Removed: Mortgage platform expenses
−Removed: $ 3,537 $ 8,206
−Removed: Other platform expenses
−Removed: General and administrative expenses
−Removed: Marketing and advertising expenses
−Removed: Technology and product development
−Removed: 37,054 36,338
−Removed: Total depreciation and amortization
−Removed: $ 42,891 $ 49,042
−Removed: Year Ended December 31, 2023 as Compared to Year Ended December 31, 2022
−Removed: The components of our revenues for the period were:
−Removed: Year Ended December 31,
−Removed: (in thousands)
−Removed: Mortgage platform revenue, net
−Removed: $ 61,328 $ 101,285
−Removed: Cash offer program revenue
−Removed: Other platform revenue
−Removed: 11,293 38,362
−Removed: Net interest income (expense):
−Removed: Interest income
−Removed: 15,575 26,714
−Removed: Warehouse interest expense
−Removed: (11,680) (17,059)
+Added: International lending revenue $ 3,999 $ 3,410
+Added: Insurance Services 3,466 3,026
+Added: Real estate services 2,470 7,396
+Added: Other revenue $ 2,953 $ 2,277
+Added: Total other revenue $ 12,888 $ 16,109
+Added: International lending revenue increased $0.6 million, or 17% to $4.0 million for the year ended December 31, 2024 compared to $3.4 million for the year ended December 31, 2023.
+Added: The increase in international lending revenue was primarily driven by increased operations in the U.K.
+Added: brokerage businesses.
+Added: Insurance services increased $0.4 million, or 15% to $3.5 million for the year ended December 31, 2024 compared to $3.0 million for the year ended December 31, 2023.
+Added: The minimal increase in insurance services revenue was driven by increases in revenue per policy due to increases in policy values, increased title insurance premiums due to an increase in originations, and a small amount of growth in U.K.
+Added: insurance products.
+Added: Real estate services decreased $4.9 million, or 67% to $2.5 million for the year ended December 31, 2024 compared to $7.4 million for the year ended December 31, 2023.
+Added: The decrease in real estate services was primarily driven by a reduction in Better Real Estate Transaction Volume as well as earning lower revenue per transaction for the year ended December 31, 2024 as we no longer employed any in-house real estate agents and all activity was through our network of third party real estate agents, which results in lower revenue per transaction.
+Added: Other revenue increased by $0.7 million, or 30% to $3.0 million for the year ended December 31, 2024 compared to $2.3 million for the year ended December 31, 2023.
+Added: The change in other revenue was driven by changes in mortgage and non-mortgage loan servicing activities in the U.S.
+Added: as well as other miscellaneous income.
Net Interest Income
−Removed: Total net revenues
−Removed: $ 76,820 $ 378,023
−Removed: Mortgage Platform Revenue, Net
−Removed: Mortgage platform revenue, net decreased $40.0 million or 39% to $61.3 million for the year ended December 31, 2023 compared to $101.3 million for the year ended December 31, 2022.
−Removed: The decrease in mortgage platform revenue, net was largely driven by the reduction of Funded Loan Volume.
−Removed: This was partially offset by an increase in Gain on Sale Margin to 2.03% for the year ended December 31, 2023 from 0.89% for the year ended December 31, 2022, resulting from increased market volatility and increased pricing discipline which positively impacted our Mortgage platform revenue.
−Removed: Further, net gain (loss) on sale of loans increased $105.9 million, or 155%, to a gain of $37.7 million for the year ended December 31, 2023 compared to a loss of $68.2 million for the year ended December 31, 2022, driven by the removal of the negative revenue impact that resulted from the decline in fair value of loans held for sale for the year ended December 31, 2023.
−Removed: Integrated relationship revenue increased $22.0 million to a gain of $13.3 million for the year ended December 31, 2023, compared to loss of $8.7 million for the year ended December 31, 2022.
−Removed: The increase in integrated relationship revenue was primarily driven by the increase in the fair value of loans purchased from the integrated relationship partner due to fluctuations in interest rates and other market factors.
−Removed: The increase in revenue was offset by a decrease in origination
−Removed: fees received for originating loans on behalf of the integrated relationship partner driven by decreased loan origination volume.
−Removed: Changes in the fair value of IRLCs and forward sale commitments decreased $167.8 million, or 94%, to a gain of $10.4 million for the year ended December 31, 2023, compared to a gain of $178.2 million for the year ended December 31, 2022.
−Removed: We record the fair value of our IRLCs, net of any related changes in the recorded fair value of our forward sale commitments.
−Removed: The decrease in the fair value of IRLCs and forward sale commitments were primarily driven by a reduction in Funded Loan Volume as hedging a smaller portfolio of loans results in a decrease to changes in the fair value of IRLCs and forward sale commitments.
−Removed: Additionally, increased market volatility for the year ended December 31, 2022 resulted in higher gain from our hedging activities to offset a net loss on sale of loans and loss from integrated relationships during this period.
−Removed: We did not see this same market dynamics for the year ended December 31, 2023, as we saw a positive net gain on sale of loans and gain from integrated relationships.
−Removed: The changes in fair value of IRLCs and forward sale commitments were also driven by increased average 30-year mortgage rates for the year ended December 31, 2023, compared to the year ended December 31, 2022.
−Removed: Generally, as interest rates increase, the fair value of our IRLCs decrease and the fair value of our forward sale commitments increases.
−Removed: Cash Offer Program Revenue
−Removed: Cash offer program revenue decreased $228.4 million or 100%, to $0.3 million for the year ended December 31, 2023 compared to $228.7 million for the year ended December 31, 2022.
−Removed: We began offering the Better Cash Offer program in the fourth quarter of 2021 and grew the offering significantly in the first half of 2022.
−Removed: Starting in the second half of 2022, revenue from the Better Cash Offer program scaled back significantly due to market conditions which softened significantly compared to the first half of 2022.
−Removed: By the start of 2023, revenue and expenses from the Better Cash Offer program were immaterial.
−Removed: Although we believe this product will enhance the competitiveness of our platform in a suitable market, we are not actively seeking Better Cash Offer customers, although we maintain the functionality and would be able to serve inbound demand.
−Removed: For the years ended December 31, 2023 and 2022, we completed 1 and 405 Better Cash Offer transactions, respectively.
−Removed: Other Platform Revenue
−Removed: Other platform revenue decreased $27.1 million or 71% to $11.3 million for the year ended December 31, 2023 compared to $38.4 million for the year ended December 31, 2022.
−Removed: The decrease in other platform revenue was primarily driven by a decline in our real estate transaction volume and title insurance and settlement services due to lower mortgage volume, as our mortgage business serves as the primary lead generation source for the Better Plus businesses.
−Removed: Starting in the second quarter of 2023, we have focused on partnering with third-party real estate agents to provide our customers with real estate agent services which has negatively impacted other platform revenue, as in-house agents provide higher revenue per transaction than third-party real estate agents.
−Removed: Net Interest Income (Expense)–Interest Income
−Removed: Interest income decreased $11.1 million, or 42% to $15.6 million for the year ended December 31, 2023 compared to $26.7 million for the year ended December 31, 2022.
−Removed: The decrease in interest income was primarily driven by the decrease in origination volume and the interest income earned on the unpaid principal balance for loans held and serviced during the interim between the origination of the loan and its sale on the secondary market.
−Removed: Net Interest Income (Expense)–Warehouse Interest Expense
−Removed: Warehouse interest expense decreased $5.4 million, or 32% to $11.7 million for the year ended December 31, 2023 compared to $17.1 million for the year ended December 31, 2022.
−Removed: The decrease in warehouse interest expense was primarily driven by decreased borrowings on funding facilities used in the mortgage production process to meet the decreased origination volume and was offset by a higher cost of borrowing on our funding facilities driven by significant increases in the reference rate, SOFR.
−Removed: For the years ended December 31, 2023 and 2022, the average 1-month SOFR rate was 4.90% and 0.99%, respectively.
−Removed: Operating Expenses
−Removed: The components of our operating expenses for the period were:
+Added: The components of our net interest income for the period were:
Year Ended December 31,
−Removed: (in thousands)
−Removed: Mortgage platform expenses
−Removed: 84,083 321,621
−Removed: Cash offer program expenses
−Removed: Other platform expenses
−Removed: 13,048 59,501
−Removed: General and administrative expenses
−Removed: 147,214 185,876
−Removed: Marketing and advertising expenses
−Removed: 22,080 69,008
−Removed: Technology and product development expenses
−Removed: 83,815 124,308
−Removed: Restructuring and impairment expenses
−Removed: 17,459 246,485
−Removed: Total operating expenses
−Removed: $ 368,096 $ 1,236,943
−Removed: Mortgage platform expenses were $84.1 million for the year ended December 31, 2023, a decrease of $237.5 million or 74% as compared with $321.6 million for the year ended December 31, 2022.
−Removed: The decrease in mortgage platform expenses was primarily driven by reductions in Funded Loan Volume, which led to a reduction in variable loan origination expenses to support lower volume, as well as reductions in headcount related expenses such as compensation and benefits including stock-based compensation.
−Removed: One-time termination benefits, such as employee severance are recorded in restructuring and impairment expenses within the statements of operations and comprehensive loss.
−Removed: Cash Offer program expenses were $0.4 million for the year ended December 31, 2023, a decrease of $229.7 million or approximately 100% as compared with $230.1 million for the year ended December 31, 2022.
−Removed: Cash offer program expenses primarily consist of the full cost of the home, including transaction closing costs and costs for maintaining the home before the title is transferred to the buyer, and these costs move in line with cash offer program revenue.
−Removed: We scaled back the Better Cash Offer program significantly in the second half of 2022 due to weaker market conditions and for the year ended December 31, 2023 we did not actively seek Better Cash Offer customers.
−Removed: As we scaled back Better Cash Offer revenue, expenses from the Better Cash Offer program also scaled back commensurately.
−Removed: Other platform expenses were $13.0 million for the year ended December 31, 2023, a decrease of $46.5 million or 78% as compared with $59.5 million for the year ended December 31, 2022.
−Removed: The decrease in other platform expenses was driven primarily by decreases in headcount which reduced personnel related expenses such as cash compensation, related benefits, and stock-based compensation.
−Removed: The decreases in these expenses are due to the reduction in headcount related to our restructuring initiatives which accelerated during 2022 and continued through 2023.
−Removed: One-time termination benefits, such as employee severance are recorded in restructuring and impairment expenses within the statements of operations and comprehensive loss.
−Removed: General and administrative expenses were $147.2 million for the year ended December 31, 2023, an decrease of $38.7 million or 21% as compared with $185.9 million for the year ended December 31, 2022.
−Removed: The change in general and administrative expenses was driven primarily by decreases in headcount which reduced personnel related expenses such as cash compensation, and related benefits, as well as decreases in vendor-related expenses through cost management initiatives which decreased our legal, accounting, and other professional services expenses.
−Removed: This was offset by increases in stock-based compensation which increased as we recognized expense for awards that met both the time vested criteria and the liquidity event of the Closing of the Business Combination.
−Removed: The following table presents a disaggregation of our general and administrative expenses as follows:
+Added: (Amounts in thousands) 2024 2023
+Added: Mortgage interest income $ 19,839 $ 15,317
+Added: Interest Income from Investments 19,151 13,714
+Added: Warehouse interest expense (13,766) (11,680)
+Added: Other interest expense $ (7,722) $ (19,916)
+Added: Total net interest income/(loss) $ 17,502 $ (2,565)
+Added: Mortgage interest income increased $4.5 million, or 30% to $19.8 million for the year ended December 31, 2024 compared from $15.3 million of the year ended December 31, 2023.
+Added: The increase in Mortgage interest income was driven by increased Funded Loan Volume and Total Loans originated.
+Added: Interest income from investments increased $5.4 million, or 40% to $19.2 million for the year ended December 31, 2024 compared to $13.7 million for the year ended December 31, 2023.
+Added: The increase in interest income from investment was primarily driven by increased investments in 2024 in securities with maturities less than 1 year, driven by our cash management strategies and increased available liquidity resulting from the capital raised in August 2023 through the closing of the Business Combination.
+Added: Warehouse interest expense increased $2.1 million, or 18% to $13.8 million for the year ended December 31, 2024 compared to $11.7 million for the year ended December 31, 2023.
+Added: The increase in warehouse interest expense was primarily driven by carrying a higher average warehouse balance over the year ended December 31, 2024 compared to year ended December 31, 2023.
+Added: The increase for the year was driven by higher funded loan volume.
+Added: Other interest expense decreased $12.2 million, or 61% to $7.7 million for the year ended December 31, 2024 compared to $19.9 million for the year ended December 31, 2023.
+Added: Other interest expense for the year ended December 31, 2024 is related to interest expense on the Convertible Note, which is at a lower interest rate of 1% in kind interest.
+Added: Interest expense for the year ended December 31, 2023 is related to interest expense on our corporate line of credit, which was at a higher interest rate, with one tranche incurring a fixed rate of 8.5% and a second tranche incurring at the 30-day term SOFR plus 9.5%, and was subsequently paid off in full in August 2023.
+Added: The components of our expenses for the period were:
Year Ended December 31,
−Removed: (in thousands)
+Added: (Amounts in thousands) 2024 2023
Compensation and benefits 141,089 181,735
−Removed: 52,283 82,304
−Removed: Stock-based compensation
−Removed: 37,204 19,910
+Added: General and administrative 52,230 60,150
+Added: Technology 26,110 39,431
+Added: Marketing and advertising 33,984 19,523
+Added: Loan origination expense 9,864 9,476
Depreciation and amortization 33,227 42,891
−Removed: Legal, accounting, and other professional services
−Removed: 51,415 78,332
−Removed: Total general and administrative expenses
−Removed: $ 147,214 $ 185,876
−Removed: Marketing and advertising expenses were $22.1 million for the year ended December 31, 2023, a decrease of $46.9 million or 68% as compared with $69.0 million for the year ended December 31, 2022.
−Removed: Substantially all of the decrease in marketing and advertising expenses was driven by decreases in customer acquisition-related expenses, as our lower origination volume resulted in less required customer acquisition spend in the aggregate.
−Removed: Technology and product development expenses were $83.8 million for the year ended December 31, 2023, a decrease of $40.5 million or 33% as compared with $124.3 million for the year ended December 31, 2022.
−Removed: The decrease in technology and product development expenses was driven primarily by decreased personnel-related compensation expenses due to decreased engineering, product and data headcount as well as decreases in rent and occupancy expenses required to support a smaller engineering and product workforce.
−Removed: The decrease in technology and product development expenses was also driven by a reduction in technology vendor expenses as we terminated or renegotiated vendor contracts that were designed for a much larger workforce.
−Removed: One-time termination benefits, such as employee severance are recorded in restructuring and impairment expenses within the statements of operations and comprehensive loss.
−Removed: Interest And Other Expense, Net
−Removed: The components of our Interest and other expense, net for the period were:
−Removed: Year Ended December 31,
−Removed: (in thousands)
−Removed: Other income (expense)
−Removed: Interest and amortization on non-funding debt
−Removed: (19,916) (13,450)
−Removed: Interest on Pre-Closing Bridge Notes
−Removed: Change in fair value of warrants and equity related liabilities (507) —
−Removed: Change in fair value of convertible preferred stock warrants
−Removed: Change in fair value of bifurcated derivative
−Removed: (236,603) 236,603
−Removed: Total interest and other expense, net
+Added: Other expenses/(Income) 17,424 253,556
+Added: Total operating expenses
$ 313,928 $ 606,762
−Removed: Other income (expense) was a gain of $13.6 million for the year ended December 31, 2023, an increase of $10.1 million or 283% as compared with a gain of $3.6 million for the year ended December 31, 2022.
−Removed: The increase is due to income on cash invested in short term marketable securities with maturities of 90 days or less as well as income from short-term investments which are made up of U.K.
−Removed: government Treasury securities with maturities ranging from 91 days to one year.
−Removed: Interest and amortization on non-funding debt was $19.9 million for the year ended December 31, 2023, a increase of $6.5 million or 48% as compared with $13.5 million for the year ended December 31, 2022.
−Removed: The increase in interest expense is due to the repayment of the remaining principal balance on our Corporate Line of Credit in August 2023 which required payment of a make-whole amount that represents minimum interest for the Lender of $4.5 million as well as the write off of the remaining capitalized debt issuance expenses that were yet to be amortized on repayment.
−Removed: The increase in interest expense also includes $2.2 million of interest related to the Convertible Note which was issued in August 2023.
−Removed: Interest on Pre-Closing Bridge Notes was zero for the year ended December 31, 2023, a decrease of $272.7 million or 100% as compared with $272.7 million for the year ended December 31, 2022.
−Removed: The decrease is due to the discount on the Pre-Closing Bridge Notes being fully accreted up to $750.0 million by November 2022, the contractual maturity, as such there was no interest expense related to the Pre-Closing Bridge Notes for the year ended December 31, 2023.
−Removed: Change in fair value of warrants and equity related liabilities was a loss of $0.5 million for the year ended December 31, 2023, an increase of $0.5 million as compared with zero for the year ended December 31, 2022.
−Removed: Change in fair value of convertible preferred stock warrants was $0.3 million for the year ended December 31, 2023, a decrease of $28.6 million or 99% as compared with a gain $28.9 million for the year ended December 31, 2022.
−Removed: The change in fair value of convertible preferred stock warrants is driven by changes in the significant unobservable inputs used to determine the fair value, mainly the fair value of our preferred stock, and upon the Closing of the Business Combination warrant holders exercised their warrants which resulted in no further changes in fair value as the exercise was recognized through additional paid-in-capital.
−Removed: Change in fair value of bifurcated derivative was a loss of $236.6 million for the year ended December 31, 2023, a decrease of $473.2 million or 200% as compared with a gain $236.6 million for the year ended December 31, 2022.
−Removed: The changes in the bifurcated derivative are largely driven by changes in the fair value of this embedded conversion feature in the Pre-Closing Bridge Notes that required bifurcated accounting.
−Removed: The fair value of the embedded conversion feature is based on significant unobservable inputs used to determine the fair value, mainly the changes in the fair value of our preferred stock.
−Removed: For the year ended December 31, 2023, the bifurcated derivative had a loss of $236.6 million as upon the Closing of the Business Combination the Pre-Closing Bridge Notes converted to or were exchanged for Common Stock and as such embedded conversion feature had no value at that time.
+Added: Compensation and benefits expenses were $141.1 million for the year ended December 31, 2024, a decrease of $40.6 million or 22% as compared with $181.7 million for the year ended December 31, 2023.
+Added: We reduced our headcount between the two periods, which lead to a decrease in compensation and benefits.
+Added: Further, we had a significantly higher
+Added: stock based compensation expense during year ended December 31, 2023 of $54.2 million compared to $26.8 million during the year ended December 31, 2024, which was primarily due to awards that had met the liquidity event criteria with the Closing of the Business Combination in August 2023 as well as service based conditions during that period.
+Added: General and administrative expenses were $52.2 million for the year ended December 31, 2024, a decrease of $8.0 million or 13% as compared with $60.2 million in the year ended December 31, 2023.
+Added: The decrease in general and administrative expenses was driven primarily by decreases in rent and occupancy expenses, as we have taken measures to reduce our real estate footprint, as well as decreases in professional services as we were incurring higher legal and professional expenses leading up to the Closing of the Business Combination for the year ended December 31, 2023 in comparison to the year ended December 31, 2024.
+Added: This decrease was offset by increased operating expenses associated with maintaining public company infrastructure for the year ended December 31, 2024.
+Added: Technology expenses were $26.1 million for the year ended December 31, 2024, a decrease of $13.3 million or 34% as compared with $39.4 million in the year ended December 31, 2023.
+Added: The decrease in technology expenses were driven primarily by a reduction in costs associated with software vendors.
+Added: This was driven by the reduced headcount, due to which we required fewer software licenses, replacement of certain vendors with more cost-efficient alternatives, as well as the termination of non-critical vendors, which occurred in early 2023.
+Added: Marketing and advertising expenses were $34.0 million for the year ended December 31, 2024, an increase of $14.5 million or 74% as compared with $19.5 million in the year ended December 31, 2023.
+Added: The increase is due to a focus on growth to drive volume which started at the end of the first quarter in 2024.
+Added: Marketing and advertising is composed of performance advertising and pilot marketing, which performance advertising scales with volume through existing channels while pilot marketing is market spend to test new channels along with testing brand marketing, which generally costs more upfront.
+Added: Loan origination expenses were $9.9 million for the year ended December 31, 2024, and increase of $0.4 million or 4%, as compared with $9.5 million in the year ended December 31, 2023.
+Added: The small increase in loan origination expenses was driven by increased funded loan volume which was offset by improved technology efficiencies that reduced the reliance on certain loan origination vendors.
+Added: Other expenses/(income) was an expense of $17.4 million for the year ended December 31, 2024, a decrease of $236.1 million or 93%, as compared with expenses of $253.6 million in the year ended December 31, 2023.
+Added: The decrease in other expenses was primarily driven by a loss of $236.6 million on the fair value of the embedded derivative included within the Pre-Closing Bridge Notes which converted to common stock in connection with the Closing of the Business Combination during year ended December 31, 2023.
Other Changes in Financial Condition
−Removed: The following table sets forth material changes to our summary condensed balance sheet between December 31, 2023 and December 31, 2022:
+Added: The following table sets forth material changes to our summary balance sheet between December 31, 2024 and December 31, 2023:
(Amounts in thousands, except share and per share amounts)
3 unchanged sentences
$ 211,101 $ 503,591 $ (292,490)
+Added: Short-term investments 53,774 25,597 28,177
Mortgage loans held for sale, at fair value
399,241 170,150 229,091
−Removed: Bifurcated derivative
−Removed: — 236,603 (236,603)
−Removed: Loan commitment asset — 16,119 (16,119)
+Added: Loans held for investment 111,477 4,793 106,684
+Added: Right-of-use assets 1,387 19,988 (18,601)
Other combined assets
1 unchanged sentence
$ 913,057 $ 905,554 $ 7,503
−Removed: Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)
+Added: Liabilities and Stockholders’ (Deficit)/Equity
Warehouse lines of credit
$ 244,070 $ 126,218 $ 117,852
−Removed: Corporate line of credit, net
−Removed: — 144,403 (144,403)
Convertible Note 519,749 514,644 5,105
−Removed: Pre-Closing Bridge Notes
−Removed: — 750,000 (750,000)
+Added: Customer Deposits 134,130 11,839 122,291
+Added: Lease liabilities 4,081 31,202 (27,121)
Other combined liabilities
2 unchanged sentences
971,227 782,954 188,273
−Removed: Convertible preferred stock
−Removed: — 436,280 (436,280)
−Removed: Stockholders’ Equity (Deficit)
+Added: Stockholders’ (Deficit) /Equity
Additional paid-in capital 1
+Added: 1,863,288 1,838,499 24,789
Accumulated deficit
6 unchanged sentences
$ 913,057 $ 905,554 $ 7,503
−Removed: Total Cash and cash equivalents increased $185.6 million or 58%, to $503.6 million at year ended December 31, 2023 compared to $318.0 million at year ended December 31, 2022.
−Removed: The increase in Cash and cash Equivalents was largely driven by net cash provided by financing activities during the period.
−Removed: The Company raised $568.0 million in proceeds from the Closing of the Business Combination.
−Removed: For further details, see “— Liquidity and Capital Resources .”
−Removed: Mortgage loans held for sale, at fair value decreased $78.7 million, or 32%, to $170.2 million at year ended December 31, 2023 compared to $248.8 million at year ended December 31, 2022.
−Removed: The decrease in Mortgage loans held for sale, at fair value was largely driven by a bulk sale of LHFS during the third quarter of 2023 as well as an overall decrease in funded loan volume year over year.
−Removed: Bifurcated derivative decreased $236.6 million, or 100%, to zero at year ended December 31, 2023 compared to $236.6 million at year ended December 31, 2022.
−Removed: The Bifurcated derivative was written off as upon the Closing of the Business Combination the Pre-Closing Bridge notes converted to or were exchanged for Common Stock and as such the embedded conversion feature had no value at that time.
−Removed: Loan commitment asset decreased $16.1 million or 100% to zero at year ended December 31, 2023 compared to $16.1 million at year ended December 31, 2022.
−Removed: Upon issuing the Convertible Note, the loan commitment asset on our balance sheet was reclassified as a discount on the Convertible Note which will be amortized as part of interest expense over the term of the Convertible Note.
−Removed: Loans outstanding under warehouse lines of credit decreased $17.8 million, or 12%, to $126 million at year ended December 31, 2023 compared to $144.0 million at year ended December 31, 2022.
−Removed: The decrease in loans outstanding under warehouse lines of credit was commensurate with the decrease in Mortgage loans held for sale at fair value discussed above, all driven by decreases in funded loan volume year over year.
−Removed: Corporate line of credit, net decreased $144.4 million, or 100%, to zero at year ended December 31, 2023 compared to $144.4 million at year ended December 31, 2022.
−Removed: In August 2023, the Company paid off the remaining principal balance on its 2023 Credit Facility of $144.4 million.
−Removed: Through the repayment of the Corporate Line of Credit, the facility was terminated and may no longer be utilized for borrowings.
−Removed: The Convertible Note increased $514.6 million to $514.6 million at year ended December 31, 2023 compared to zero at year ended December 31, 2022.
+Added: Periods have been adjusted to reflect the 1-for-50 reverse stock split on August 16, 2024.
+Added: See Note 1 Organization and Nature of the Business - Reverse Stock Split, for additional information.
+Added: Total Cash and cash equivalents decreased $292.5 million or 58%, to $211.1 million as of December 31, 2024 compared to $503.6 million as of December 31, 2023.
+Added: See the liquidity and capital resources section below for further details on cash flows from operating, investing, and financing activities.
+Added: Short-term investments increased $28.2 million, or 110%, to $53.8 million as of December 31, 2024 compared to $25.6 million as of December 31, 2023.
+Added: The increase in short-term investments was driven by our cash management strategies in deploying excess cash as a result of the Closing of the Business Combination.
+Added: Short-term investments consist of fixed income securities, typically U.S.
+Added: government treasury securities with maturities ranging from 91 days to one year.
+Added: Mortgage loans held for sale, at fair value increased $229.1 million, or 135%, to $399.2 million as of December 31, 2024 compared to $170.2 million as of December 31, 2023.
+Added: The increase in Mortgage loans held for sale, at fair value was largely driven by a significant increase in HELOC which we have put efforts in growing this product line in 2024.
+Added: The increase was also driven by increases in refinanced loan volume which have been impacted by the fluctuations in interest rates over 2024.
+Added: Loans held for investment increased $106.7 million, or 2226%, to $111.5 million as of December 31, 2024 compared to $4.8 million as of December 31, 2023.
+Added: The increase in loans held for investment was driven by our growth efforts in the U.K., namely our banking entity.
+Added: The majority of the Loans Held for Investment portfolio consists of property - buy to let loans, which increased $110.5 million, or 10045%, to $111.6 million as of December 31, 2024 compared to $1.1 million as of December 31, 2023.
+Added: Loans held for investment are originated with our cash on hand as well as with increases in customer deposits at our U.K.
+Added: banking entity.
+Added: Right-of-use assets decreased $18.6 million, or 93%, to $1.4 million as of December 31, 2024 compared to $20.0 million as of December 31, 2023, while lease liabilities decreased $27.1 million, or 87%, to $4.1 million as of
+Added: December 31, 2024 compared to $31.2 million as of December 31, 2023.
+Added: The decrease in right-of-use assets and lease liabilities was primarily driven by a lease modification of our corporate headquarters where we reduced the lease term from June 30, 2030 to November 1, 2024 which resulted in a remeasurement and reduction of the right-of-use asset and respective lease liability.
+Added: Funds outstanding under our warehouse lines of credit increased $117.9 million, or 93%, to $244 million as of December 31, 2024 compared to $126.2 million as of December 31, 2023.
+Added: The increase in loans outstanding under our warehouse lines of credit was commensurate with the increase in mortgage loans held for sale at fair value, excluding HELOC as those loans are funded with our operations.
+Added: The Convertible Note increased $5.1 million to $519.7 million as of December 31, 2024 compared to $514.6 million as of December 31, 2023.
+Added: The increase in the Convertible Note was generated by the in kind interest expense on the Convertible Note accrued at fair value as well as accretion of the discount on the Convertible Note.
In connection with the Closing of the Business Combination, the Company issued to SB Northstar the Convertible Note, which is a senior subordinated convertible note in the aggregate principal amount of $528.6 million, less the unamortized debt discount.
−Removed: Pre-Closing Bridge Notes decreased $750.0 million to zero at year ended December 31, 2023 compared to $750.0 million at year ended December 31, 2022.
−Removed: In connection with the Closing of the Business Combination, the Pre-Closing Bridge Notes held by SB Northstar and Novator Capital Sponsor Ltd., a Cyprus limited liability company (the “Sponsor”), were converted or exchanged for Common Stock.
−Removed: Additional paid-in capital increased $1,220.3 million, or 197%, to $1,838.4 million at year ended December 31, 2023 compared to 618,111 at year ended December 31, 2022.
−Removed: The increase in additional paid-in capital was primarily driven by the Closing of the Business Combination and the conversion of the Pre-Closing Bridge Notes and convertible preferred stock to Common Stock among other equity activity as discussed in Item 8.
−Removed: Footnote 3 elsewhere in this Annual Report.
−Removed: Accumulated deficit increased $536.4 million, or 46%, to $1,704.1 million at year ended December 31, 2023 compared to $1,167.7 million at year ended December 31, 2022.
−Removed: The increase in accumulated deficit was driven by the net loss of $536.4 million generated for the year ended December 31, 2023.
+Added: Customer deposits increased $122.3 million, or 1033%, to $134.1 million, as of December 31, 2024 compared to $11.8 million as of December 31, 2023.
+Added: The increase is primarily due to growth efforts at our banking entity in the U.K., which customer deposits are used to fund loans held for investment.
+Added: Additional paid-in capital increased $24.8 million, or 1%, to $1,863.3 million as of December 31, 2024 compared to $1,838.5 million as of December 31, 2023.
+Added: The increase in additional paid-in capital was primarily driven by stock-based compensation that was generated over the period.
+Added: Accumulated deficit increased $206.3 million, or 12%, to $1,910.4 million as of December 31, 2024 compared to $1,704.1 million as of December 31, 2023.
+Added: The increase in accumulated deficit was driven by the net loss of $206.3 million incurred for the year ended December 31, 2024 as discussed in our results of operations in the section above.
Non-GAAP Financial Measures
16 unchanged sentences
• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
−Removed: • Adjusted EBITDA does not reflect (i) interest expense, or the cash requirements necessary to service interest or principal payments on our non-funding debt, which reduces cash available to us;
+Added: • Adjusted EBITDA does not reflect (i) interest expense, or the cash requirements necessary to service interest or principal payments on our Convertible Note, which reduces cash available to us;
or (ii) tax accruals or tax payments that represent a reduction in cash available to us;
2 unchanged sentences
Adjusted Net Loss and Adjusted EBITDA
−Removed: We calculate Adjusted Net Loss as net income (loss) adjusted for the impact of stock-based compensation expense, change in the fair value of warrants, change in the fair value of bifurcated derivative, interest on Pre-Closing Bridge Notes, and other non-core operational expenses.
−Removed: We calculate Adjusted EBITDA as net income (loss) adjusted for the impact of stock-based compensation expense, change in the fair value of warrants, change in the fair value of bifurcated derivative, interest on Pre-Closing Bridge Notes, and other non-recurring or non-core operational expenses, as well as interest and amortization on non-funding debt (which includes interest on the Convertible Note), depreciation and amortization expense, and income tax expense.
−Removed: The following table presents a reconciliation of Net Income (Loss) to Adjusted Net Loss and Adjusted EBITDA for the periods indicated:
+Added: We calculate Adjusted Net Loss as net income (loss) adjusted for the impact of stock-based compensation expense, change in the fair value of warrants and equity related liabilities, change in fair value of convertible preferred stock warrants, change in fair value of bifurcated derivative, and restructuring, impairment, and other expenses.
+Added: We calculate Adjusted EBITDA as net income (loss) adjusted for the impact of stock-based compensation expense, change in the fair value of warrants and equity related liabilities, change in fair value of convertible preferred stock warrants, change in the fair value of bifurcated derivative, and restructuring, impairment, and other expenses, as well as interest and amortization on non-funding debt (which includes interest on the Convertible Note), depreciation and amortization expense, and income tax expense.
+Added: The following table presents a reconciliation of net income (loss) to Adjusted Net Loss and Adjusted EBITDA for the years indicated:
Year Ended December 31,
+Added: (Amounts in thousands)
Adjusted Net Loss
3 unchanged sentences
26,753 54,160
−Removed: Change in fair value of warrants (2)
+Added: Change in fair value of warrants and equity related liabilities (2)
Change in fair value of convertible preferred stock warrants (2)
−Removed: (266) (28,901)
Change in fair value of bifurcated derivative (3)
−Removed: 236,603 (236,603)
−Removed: Interest on Pre-Closing Bridge Notes (4)
Restructuring, impairment, and other expenses (4)
11 unchanged sentences
Interest and amortization on non-funding debt (6)
−Removed: 19,916 13,450
−Removed: Interest on Pre-Closing Bridge Notes (4)
Restructuring, impairment, and other expenses (4)
17,659 17,459
−Removed: Change in fair value of warrants (2)
+Added: Change in fair value of warrants and equity related liabilities (2)
Change in fair value of convertible preferred stock warrants (2)
−Removed: (266) (28,901)
Change in fair value of bifurcated derivative (3)
−Removed: 236,603 (236,603)
Adjusted EBITDA
4 unchanged sentences
We exclude this expense from our internal operating plans and measurement of financial performance (although we consider the dilutive impact to our stockholders when awarding stock-based compensation and value such awards accordingly).
−Removed: (2) Change in fair value of convertible preferred stock warrants and other warrants which comprises the Public Warrants and Private Warrants as well as the Sponsor Locked-Up Shares, represents the change in fair value of liability-classified warrants as presented in our Consolidated Statements of Operations and Comprehensive Loss.
−Removed: This charge is a non-cash charge.
+Added: (2) Change in fair value of warrants and equity related liabilities which comprise the Public Warrants and Private Warrants as well as the Sponsor Locked-Up Shares, represents the change in fair value of liability-classified warrants as presented in our Consolidated Statements of Operations and Comprehensive Loss.
+Added: Change in fair value of convertible preferred stock warrants represents change in fair value of liability-classified warrants as related to our convertible preferred stock before the completion of the Business Combination.
+Added: These charges are non-cash charge.
(3) Change in fair value of bifurcated derivative represents the change in fair value of embedded features within the Pre-Closing Bridge Notes that require bifurcation and are a separate unit of accounting.
1 unchanged sentence
This expense is a non-cash expense, and we believe that it does not correlate to the performance of our business during the periods presented.
−Removed: (4) Interest on Pre-Closing Bridge Notes represents the amortization of the discount recognized upon issuance of the Pre-Closing Bridge Notes which is amortized into interest expense under the effective interest method over the term of the Pre-Closing Bridge Notes.
−Removed: This expense is a non-cash expense, and we believe that it does not correlate to the performance of our business during the periods presented.
−Removed: (5) Restructuring, impairment, and other expenses are primarily comprised of employee one-time termination benefits and impairment of Loan Commitment Asset.
+Added: (4) Restructuring, impairment, and other expenses are primarily comprised of employee one-time termination benefits, real estate restructuring losses, and impairment of property and equipment.
For details on the breakout, please refer to Note 5 to our consolidated financial statements included elsewhere in this Annual Report.
1 unchanged sentence
These expenses are non-cash expenses, and we believe that they do not correlate to the performance of our business during the periods presented.
−Removed: (7) Interest and amortization on non-funding debt represents interest and amortization on a corporate line of credit as presented in our Consolidated Statements of Operations and Comprehensive Income (Loss).
−Removed: Interest and amortization on non-funding debt excludes interest income from mortgage loans held for sale and warehouse interest expense on warehouse facilities, which are both core to our operations and recorded in the “total net revenues” caption of our Consolidated Statements of Operations and Comprehensive Income (Loss).
+Added: (6) Interest and amortization on non-funding debt represents interest and amortization on a corporate line of credit as well as the Convertible Note, both of which are included within net interest income in our Consolidated Statements of Operations and Comprehensive Loss.
Liquidity and Capital Resources
−Removed: To date, our principal sources of liquidity have been borrowings through warehouse lines of credit and our corporate line of credit, cash flow from our operations, including the sale of loans we produce and sell into the secondary market and interest income on loans held for sale, issuance of convertible debt, and the net proceeds we receive through private sales of our equity securities.
−Removed: On August 22, 2023, the Company consummated the Business Combination.
−Removed: Gross proceeds from the Business Combination totaled approximately $568 million, which included funds held in Aurora’s trust account of $21.4 million, the purchase for $17.0 million by the Sponsor of 1.7 million shares of Class A Common Stock, and $528.6 million from SB Northstar in return for issuance by Better Home & Finance of the Convertible Note.
−Removed: Borrowings under our warehouse lines of credit (as described further below) are used to produce loans.
+Added: In our normal course of business, excluding HELOCs, we fund substantially all of our Funded Loan Volume on a short-term basis primarily through our warehouse lines of credit.
+Added: Our borrowings are repaid with the proceeds we receive from the sale of our loans to our loan purchaser network, which includes government-sponsored enterprises (“GSEs”).
As of December 31, 2024, we had 3 warehouse lines of credit in different amounts and with various maturities, with an aggregate available amount of $425 million.
−Removed: Future Capital Requirements
−Removed: In connection with the Closing of the Business Combination, we obtained $568 million in additional capital, primarily from issuance of the Convertible Note.
−Removed: This provided us with increased financial flexibility to execute our strategic objectives, including developing our platform and continuing to improve our technology and making strategic investments in complementary businesses, technologies and other assets.
−Removed: Subject to the continued listing of our Class A Common Stock on Nasdaq, we believe that we have sufficient liquidity to enable us to meet our obligations for at least twelve months from the date the consolidated financial statements were issued.
−Removed: Our ability to generate cash from operations, however, is subject to our performance, general economic conditions, industry trends and other factors.
−Removed: We expect to continue to incur net losses in future periods due to fluctuations and increases in interest rates and continued investments that we intend to make in our business (including investments to expand our product offerings).
−Removed: To the extent that funds from the Business Combination, including the drawdown of the Convertible Note, combined with existing cash, cash equivalents, short-term investments and assets and operating cash flow, are insufficient to fund our future activities and requirements, we would need to raise additional funds through public or private equity or debt financing.
−Removed: If we issue equity securities in order to raise additional funds, substantial dilution to existing stockholders may occur.
+Added: On August 22, 2023, the Company consummated the Business Combination.
+Added: Gross proceeds from the Business Combination totaled approximately $568 million, which included funds held in Aurora’s trust account of $21.4 million, the purchase for $17.0 million by the Sponsor of 1.7 million shares of Class A Common Stock, and $528.6 million from SB Northstar LP in return for issuance by Better Home & Finance of the Convertible Note.
Warehouse Lines of Credit
−Removed: We fund substantially all of the loans we close on a short-term basis primarily through our warehouse lines of credit and from our operations.
−Removed: Loan production activities generally require short-term liquidity in excess of amounts generated by our operations.
−Removed: The loans we produce are financed through several warehouse lines of credit.
−Removed: Our borrowings are in turn generally repaid with the proceeds we receive from loan sales.
Our warehouse lines of credit are primarily in the form of master repurchase agreements and loan participation agreements.
−Removed: Loans financed under these facilities are generally financed at approximately 95% to 100% of the principal balance of the loan (although certain types of loans are financed at lower percentages of the principal balance of the loan), which requires us to fund the balance from cash generated from our operations.
+Added: Loans financed under these facilities are generally financed at approximately 95% to 98% of the principal
+Added: balance of the loan (although certain types of loans are financed at lower percentages of the principal balance of the loan), which requires us to fund the balance from cash generated from our operations.
Once closed, the underlying residential loan that is held for sale is pledged as collateral for the borrowing or advance that was made under our warehouse lines of credit.
3 unchanged sentences
As of December 31, 2024 and 2023, we had the following outstanding warehouse lines of credit:
−Removed: (Amounts in thousands)
+Added: (Amounts in thousands) Maturity
Facility Size
2 unchanged sentences
Funding Facility 1 (1)
−Removed: January 31, 2024 100,000 61,709 89,673
−Removed: Funding Facility 2 (2)
−Removed: August 4, 2023 — — 9,845
+Added: September 30, 2025 100,000 60,747 61,709
Funding Facility 2 (2)
−Removed: December 6, 2024 150,000 40,088 44,531
+Added: March 6, 2025 150,000 74,472 40,088
Funding Facility 3 (3)
3 unchanged sentences
(1) Interest charged under the facility is at the 30-day term SOFR plus 2.125%.
−Removed: Cash collateral deposit of $15.0 million is maintained.
−Removed: Subsequent to December 31, 2023, the Company extended the maturity to July 31, 2024.
−Removed: (2) Interest charged under the facility was at the 30-day term SOFR plus 1.77%.
−Removed: Funding Facility 2 matured on August 4, 2023 and the Company did not extend beyond maturity.
−Removed: Prior to maturity, the size of the facility was 150.0 million.
+Added: Cash collateral deposit of $15.0 million is maintained and included in restricted cash.
(2) Interest charged under the facility is at the 30-day term SOFR plus 2.10%-2.25%.
−Removed: Cash collateral deposit of $3.8 million was maintained and included in restricted cash.
+Added: Cash collateral deposit of $3.8 million is maintained and included in restricted cash.
+Added: Subsequent to December 31, 2024, the Company extended the maturity to March 6, 2026.
(3) Interest charged under the facility is at the 30-day term SOFR plus 1.75% - 3.75%.
6 unchanged sentences
Our warehouse lines of credit also generally require us to comply with certain operating and financial covenants, and the availability of funds under these facilities is subject to, among other conditions, our continued compliance with these covenants.
−Removed: These financial covenants include, but are not limited to, maintaining (1) a certain minimum tangible net worth and adjusted tangible net worth, (2) minimum liquidity, (3) a maximum ratio of total liabilities or total debt to adjusted tangible net worth, (4) pre-tax net income requirements and (5) minimum cash deposits in certain deposit accounts.
+Added: These financial covenants include, but are not limited to, maintaining (1) a certain minimum tangible net worth and adjusted tangible net worth, (2) minimum liquidity, and (3) a maximum ratio of total liabilities or total debt to adjusted tangible net worth.
A breach of these covenants can result in an event of default under these facilities and as such allows the lenders to pursue certain remedies.
In addition, each of these facilities includes cross default or cross acceleration provisions that could result in all facilities terminating if an event of default or acceleration of maturity occurs under any facility.
−Removed: As a result of our operating losses and enhanced financial requirements, we amended our warehouse lines to align in both capacity and financial requirements.
−Removed: We may need to request an amendment, forbearance, or a waiver in 2024 in order to remain compliant with the financial covenants of our warehouse lenders.
−Removed: Our lenders are not required to grant us any such amendment, extension, forbearance or waiver and may determine not to do so.
−Removed: As of the date hereof, following certain amendments, we are in full compliance with all financial covenants under these agreements.
−Removed: Although these financial covenants limit our liquidity through minimum cash and tangible net worth requirements, we believe that these covenants currently provide us with sufficient flexibility to operate our business and obtain the financing necessary for that purpose.
−Removed: Corporate Line of Credit
−Removed: Historically, our principal source of non-funding debt was our Corporate Line of Credit.
−Removed: In July 2023, the Company made principal payments of $12.9 million on the Corporate Line of Credit.
−Removed: In August 2023, the Company repaid the remaining principal balance on its Corporate Line of Credit of $110.7 million before the Closing of the Business Combination.
−Removed: The August 2023 repayment of $110.7 million consisted of $98.4 million that was remitted directly to the Lender from the sale of pledged Company funded LHFS, a security deposit of $7.0 million that was in escrow, and an additional cash payment of $5.4 million.
−Removed: As the Company repaid the Corporate Line of Credit in full earlier than what was contractually required, the Company paid a make-whole amount that represents minimum interest for the Lender of $4.5 million.
−Removed: Through the repayment of the Corporate Line of Credit, the facility was terminated and is no longer available for borrowings.
−Removed: Pre-Closing Bridge Notes
−Removed: In connection with the Closing of the Business Combination, the Pre-Closing Bridge Notes held by SB Northstar in an aggregate principal amount of $650.0 million automatically converted into Class C Common Stock at a conversion price of $10.00 per share (the “Bridge Note Conversion”).
−Removed: In connection with the Bridge Note Conversion, the Company issued an aggregate 65.0 million shares of Class C Common Stock to a trust designated by SB Northstar.
−Removed: In addition, the Pre-Closing Bridge Notes held by the Sponsor in an aggregate principal amount of $100.0 million were exchanged for 40.0 million shares of Class A Common Stock.
+Added: As of the date hereof, we are in full compliance with all financial covenants under our warehouse lines of credit.
+Added: We believe that the covenants required under the warehouse lines of credit currently provide us with sufficient flexibility to operate our business and obtain the financing necessary for that purpose.
Issuance of Convertible Note
−Removed: In August 2023, we issued to SB Northstar the Convertible Note pursuant to an Indenture, dated as of August 22, 2023 (the “Indenture”).
+Added: In August 2023 in connection with the Closing of the Business Combination, we issued to SB Northstar LP the Convertible Note pursuant to an Indenture, dated as of August 22, 2023 (the “Indenture”), in the aggregate principal amount of $528.6 million.
The Convertible Note bears 1% interest per annum and matures on August 22, 2028, unless earlier converted or redeemed.
−Removed: The Convertible Note is convertible, at the option of SB Northstar, into shares of the Company’s Class A Common Stock, with an initial conversion rate per $1,000 principal amount of Convertible Note equal to (a) $1,000 divided by (b) a dollar amount equal to 115% of the First Anniversary VWAP (as defined in the Indenture), subject to adjustments as described therein.
+Added: Per the Indenture, we may elect to pay all or any portion of interest in kind by issuing to the holder of such note an additional note or in cash.
+Added: The Convertible Note is convertible, at the option of SB Northstar LP, into shares of the Company’s Class A Common Stock, with an initial conversion rate per $1,000 principal amount of Convertible Note equal to (a) $1,000 divided by (b) a dollar amount equal to 115% of the First Anniversary VWAP (as defined in the Indenture), subject to adjustments as described therein.
The Indenture provides that the First Anniversary VWAP may be no less than $8.00 and no greater than $12.00, subject to adjustments as described therein.
−Removed: The Convertible Note may be redeemed at the option of the Company at a redemption price of 115% of par plus accrued interest in cash, at any time on or before the 30th trading day prior to the maturity date of the Convertible Note if the last reported sale price of the Class A Common Stock
−Removed: has been at least 130% of the conversion price then in effect for at least 20 trading days during the 30 trading day period ending on, and including, the trading day immediately preceding the date of notice of optional redemption.
+Added: The Convertible Note may be redeemed at the option of the Company at a redemption price of 115% of par plus accrued interest in cash, at
+Added: any time on or before the 30th trading day prior to the maturity date of the Convertible Note if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days during the 30 trading day period ending on, and including, the trading day immediately preceding the date of notice of optional redemption.
The Convertible Note permits the Company to designate up to $150 million of indebtedness that is senior to the Convertible Note, in addition to certain other customary exceptions.
1 unchanged sentence
Nasdaq Compliance Requirements
−Removed: On October 12, 2023, the Company was notified by the Nasdaq Staff that the Company is not in compliance with the Bid Price Rule for continued listing and that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
−Removed: If our Class A Common Stock ceases to be listed on the Nasdaq, such delisting would constitute a fundamental change under the indenture for the Convertible Note that would require the Company to redeem the Convertible Note prior to maturity for an amount in cash equal to the principal amount of such Convertible Note plus accrued and unpaid interest to the redemption date.
−Removed: As of December 31, 2023, the Company had cash and cash equivalents, together with short-term investments and restricted cash, of $554 million, compared to $528.6 million principal amount outstanding under the Convertible Note.
−Removed: If the Company is required to redeem the Convertible Note prior to maturity, the Company may not have sufficient available cash and cash equivalents or be able to obtain additional liquidity, on acceptable terms or at all, to enable the Company to redeem or refinance the Convertible Note.
−Removed: See “ Risk Factors—Risks Related to Ownership of Common Stock and Better Home & Finance Operating as a Public Company—Since the Class A Common Stock is currently trading under $1.00, Nasdaq may delist our securities from trading on its exchange, which would limit investors’ ability to make transactions in our securities, subject us to additional trading restrictions and require us to redeem the Convertible Note.
−Removed: The Company is evaluating options for regaining compliance with the $1.00 minimum bid price rule.
−Removed: On March 19, 2024, the Company's Board approved a proposal for its annual meeting of stockholders in 2024 to seek stockholder approval to declare and effect one or more reverse stock splits designed to increase the price of the Class A Common Stock above the $1.00 minimum bid price rule to maintain its Nasdaq listing.
−Removed: Directors and officers, certain senior employees, and significant stockholders, who together hold a majority of the voting power of our outstanding Common Stock, have indicated that they will vote to approve the reverse stock splits at the Company’s 2024 annual meeting of stockholders.
+Added: On August 16, 2024, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation, effecting the 1-for-50 reverse stock split of the Company’s common stock (the “Reverse Stock Split”) for the primary purpose of increasing the per share trading price of the Company’s Class A common stock to enable us to regain compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market (the “Nasdaq”).
+Added: Our Class A common stock began trading on a split-adjusted basis on the Nasdaq upon the market open on Monday, August 19, 2024.
+Added: Effective August 16, 2024, as a result of the Reverse Stock Split, every 50 shares of the our issued and outstanding common stock was converted into one issued and outstanding share of Class A common stock, Class B common stock and Class C common stock, as applicable, without any change to the par value per share, the voting rights of the common stock, any stockholder’s percentage interest in the Company’s equity or any other aspect of the common stock.
+Added: As previously reported, on October 12, 2023, the Company was notified by the Listing Qualifications Staff (the “Staff”) of Nasdaq that the Company’s common stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Listing Rules of Nasdaq.
+Added: If the Class A common stock is no longer listed on Nasdaq, or another national securities exchange, such delisting would constitute a fundamental change under the indenture for the Convertible Note that would require us to redeem the Convertible Note prior to maturity for an amount in cash equal to the principal amount of the Convertible Note plus accrued and unpaid interest to the redemption date.
+Added: On September 3, 2024, the Company received a letter from Nasdaq notifying us that the Staff has determined that for the last 10 consecutive business days, from August 19, 2024, to August 30, 2024, the closing bid price of the our common stock has been at $1.00 per share or greater, and accordingly, we have regained compliance with Listing Rule 5550(a)(2) and the matter is now closed.
The following table summarizes our cash flows for the periods presented:
9 unchanged sentences
Operating Activities
−Removed: Net cash used by operating activities was $160 million for the year ended December 31, 2023, a decrease of $1,098 million, or 117%, compared to net cash provided by operating activities of $938 million for the year ended December 31, 2022.
−Removed: Cash used by operating activities primarily consisted of net losses and changes in operating assets and liabilities.
−Removed: Cash used by operating activities was offset by adjustments for non-cash items such as changes in fair value of bifurcated derivative, stock-based compensation, depreciation and amortization, and proceeds from sales of LHFS in excess of originations of LHFS.
−Removed: The net cash provided by operating activities for the year ended December 31, 2022, primarily reflects the proceeds from sales of mortgage loans in excess of new originations offset by net losses.
+Added: Net cash used by operating activities was $380 million for the year ended December 31, 2024, an increase of $220 million, or 138%, compared to net cash used by operating activities of $160 million for the year ended December 31, 2023.
+Added: The increase in net cash used by operating activities was primarily due to originations of mortgage loans held for sale in excess of proceeds from sale of mortgage loans held for sale as the Company originated more loans towards the end of the current period.
+Added: Also contributing to cash used by operating activities were net losses over the period.
Investing Activities
Net cash used in investing activities was $144 million for the year ended December 31, 2024, an increase in cash used of $105 million, or 269%, compared to net cash used in investing activities of $39 million for the year ended December 31, 2023.
−Removed: The increase in cash used in investing activities primarily consists of the acquisition of businesses and net purchase
−Removed: of short-term investments.
−Removed: The increase in cash used in investing activities was offset by a reduction in cash used for additions to our internal use software when compared to the year ended December 31, 2022 as we have looked to reduce cash burn we have also reduced certain investments in internal use software not deemed critical.
+Added: The increase in cash used in investing activities primarily consists of originations of short-term investments and loans held for investment, namely through our U.K.
+Added: banking entity which the Company has focused on growing during the year ended December 31, 2024.
+Added: Loans held for investment are funded from our cash on hand as well as growth in customer deposits held by our U.K.
+Added: banking entity.
Financing Activities
−Removed: Net cash provided by financing activities was $381 million for the year ended December 31, 2023, an increase of $1,919 million, or 125%, compared to net cash used by financing activities of $1,537 million for the year ended December 31, 2022.
−Removed: The increase in cash provided by financing activities was primarily driven the Closing of the Business Combination which resulted in cash proceeds of $568 million from the issuance of the Convertible Note, exercise of preferred stock warrants, proceeds from the Business Combination, and proceeds from the issuance of Common Stock, offset by the full repayment of our Corporate Line of Credit as well as repayments on our warehouse lines of credit in excess of borrowings on our warehouse lines of credit.
−Removed: Cash used in investing activities for the year ended December 31, 2022 was primarily driven by repayments on our warehouse lines of credit in excess of borrowings on our warehouse lines of credit which was significantly higher for the year ended December 31, 2022 as the volume of loans sold was much higher during that period when compared to the year ended December 31, 2023.
+Added: Net cash provided by financing activities was $239 million for the year ended December 31, 2024, an decrease of $142 million, or 37%, compared to net cash provided by financing activities of $381 million for the year ended December 31, 2023.
+Added: The decrease in cash provided by financing activities was primarily driven by the Closing of the Business Combination during the year ended December 31, 2023, which led to a cash increase of $401 million mainly from the issuance of the Convertible Note, issuance of common stock, and proceeds of the Business Combination, offset by the repayment of the Corporate Line of Credit.
+Added: During the year ended December 31, 2024, our cash provided by financing activities was mainly driven by an increase in customer deposits, namely through our U.K.
+Added: banking entity, and as well as borrowings on our warehouse lines of credit in excess of payments on our warehouse lines of credit used to fund loans towards the end of the year.
Material Cash Requirements
Operating lease commitments
−Removed: While we have many small offices across the country for licensing purposes, we lease significant office space under operating leases with various expiration dates through June 2030 in New York, California, North Carolina, India, and in the U.K.
+Added: While we have many small offices across the country for licensing purposes, we lease significant office space under operating leases with various expiration dates through June 2030 in New York, California, North Carolina, Texas, Michigan, India, and in the U.K.
For the years ended December 31, 2024 and 2023, our operating lease costs were $10 million and $12 million, respectively.
−Removed: Due to our reduced headcount, we also began to reduce our real estate footprint.
+Added: In 2021, we began to reduce our real estate footprint in response to our restructuring and headcount reduction initiatives.
We have impaired right-of-use assets related to office space that is no longer in use or has been completely abandoned.
−Removed: Leases where we are unable to terminate or amend the lease with the landlord remain on the balance sheet under operating lease liabilities.
−Removed: In February 2023, we entered into a lease amendment with a landlord to surrender an office floor and reassign the lease to a third party.
−Removed: We had a right-of-use asset and operating lease liability of $13.0 million related to the office space and as part of the amendment we paid $4.7 million in cash to the third party.
−Removed: The amendment relieves us of the primary obligation under the original lease and is considered a termination of the original lease and as such the related right-of-use asset and lease liability are no longer on our balance sheet as of December 31, 2023.
+Added: Leases where we were unable to terminate or amend the lease with the landlord remain on the balance sheet under operating lease liabilities.
+Added: Although these restructuring initiatives have concluded as of December 31, 2024, we will continue to assess our cost structure and make adjustments were necessary.
As of December 31, 2024 and 2023, we had lease liabilities of $4.1 million and $31.2 million, respectively.
16 unchanged sentences
Actual results could differ from those estimates.
+Added: Our management evaluates our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.
Our significant accounting policies are described in “Note 2.
Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this Annual Report.
−Removed: We believe that the accounting policies described below reflect our most critical accounting policies and estimates, which represent those that involve a significant degree of judgment and complexity and are based on management’s best estimates.
−Removed: Our management evaluates our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.
−Removed: Loans Held for Sale, at Fair Value
−Removed: We sell our loans held for sale to secondary market loan purchasers.
−Removed: These loans can be sold in one of two ways:
−Removed: (1) servicing released or (2) servicing retained.
−Removed: If a loan is sold servicing released, we have sold all the rights to the loan and the associated servicing rights.
−Removed: If a loan is sold servicing retained, we have sold the loan and kept the servicing rights, and thus we are responsible for collecting monthly principal and interest payments and performing certain escrow services for the Loan Purchaser.
−Removed: The Loan Purchaser, in turn, pays a fee for these services.
−Removed: Other than in periods of market dislocation, we generally aim to sell all of our loans servicing released.
−Removed: For loans sold servicing retained, we engage a third-party sub-servicer to collect monthly payments and perform associated services.
−Removed: Loans held for sale include residential loans produced for sale through our loan lender subsidiary, Better Mortgage Corporation.
−Removed: We elect the fair value option, in accordance with Financial Accounting Standards Board's Accounting Standards Codification Topic ("ASC") 825- Financial Instruments, for all loans held for sale with changes in fair value recorded in Mortgage platform revenue, net.
−Removed: Our management believes that the election of the fair value option for loans held for sale improves financial reporting by presenting the most relevant market indication of loans held for sale.
−Removed: The fair value of loans held for sale is based on market prices and yields, at period end, in normal outlets used by us.
−Removed: We account for the gains or losses resulting from sales of loans based on the guidance of ASC 860-20- Sales of Financial Assets .
−Removed: At the time of funding, we recognize the loan held for sale on our consolidated balance sheet at fair value with subsequent changes in fair value recorded as gains and losses on our consolidated statement of operations until the loan is sold to the Loan Purchaser.
−Removed: Interest income on loans held for sale is calculated based upon the note rate of the loan.
−Removed: Loan production fees and certain other fees are expensed as incurred, or at the time of funding for the respective loan.
−Removed: Loans held for sale are considered sold when we surrender control over the loans.
−Removed: Control is considered to have been surrendered when all of the following have been satisfied:
−Removed: the transferred loans have been isolated from us, beyond the reach of us and our creditors, and the loan purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred loans.
−Removed: We typically consider the above criteria to have been met upon receipt of sales proceeds from the loan purchaser.
−Removed: Derivatives and Hedging Activities
−Removed: We enter into IRLCs to originate mortgage loans, at specified interest rates and within a specified period of time, with potential borrowers who have applied for a loan and meet certain credit and underwriting criteria.
−Removed: These IRLCs are not designated as accounting hedging instruments and are reflected in the consolidated balance sheets as derivative assets or liabilities at fair value with changes in fair value recorded in current period earnings.
−Removed: The fair value of IRLCs are measured based on the value of the underlying mortgage loan, quoted MBS prices, estimates of the fair value of the MSRs, and adjusted by the estimated loan funding probability, or “pull-through factor.” Significant changes in the pull-through factor of the IRLCs, in isolation, could result in significant changes in the IRLCs’ fair value measurement.
−Removed: Movements in interest
−Removed: rates can pose a risk to us in either a rising or declining interest rate environment.
−Removed: Additionally, when interest rates rise, loans held for sale and any applications in process with IRLCs decrease in value.
−Removed: We manage our exposure to movements in interest rates by entering into forward sales commitment contracts for the sale of our mortgage loans held for sale or mortgage loans in the pipeline.
−Removed: These contracts are loan sales agreements in which we commit in principle to delivering a mortgage loan of a specified principal amount and quality to a loan purchaser at a specified price on or before a specified date.
−Removed: Generally, the price the loan purchaser will pay us is agreed upon prior to the loan being funded (i.e., on the same day we commit to lend funds to a potential borrower).
−Removed: The fair value of forward sales commitments are determined based on quoted prices for similar instruments, dealer quotes, and pricing models that are primarily sensitive to market observable data.
−Removed: Under the majority of the forward sales commitment contracts, if we fail to deliver the agreed-upon mortgage loans by the specified date, we must pay a “pair-off” fee to compensate the loan purchaser.
−Removed: We enter into forward sales commitment contracts with counterparties under Master Securities Forward Transaction Agreements, which contain a legal right to offset amounts due to and from the same counter party and can be settled on a net basis.
−Removed: Our forward sale commitments are not designated as accounting hedging instruments and are reflected in the consolidated balance sheets as derivative assets or liabilities at fair value with changes in fair value recorded in current period earnings.
−Removed: We do not utilize any other derivative instruments to manage risk.
−Removed: We account for income taxes under the asset and liability method.
−Removed: Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between financial statements carrying amounts of existing assets and liabilities and their respective tax bases, as well as from net operating loss and tax credit carryforwards.
−Removed: Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
−Removed: The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.
−Removed: A valuation allowance is established when necessary to reduce deferred income tax assets to the amount expected to be realized based on management’s consideration of all positive and contradictory evidence available, including taxable income in carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies.
−Removed: We evaluate uncertainty in income tax positions based on a more-likely-than-not recognition standard.
−Removed: If that threshold is met, the tax position is then measured at the largest amount that is greater than 50% likely of being realized upon ultimate settlement.
−Removed: We recorded an income tax provision of $2 million (0.38%) effective income tax rate) and $1.1 million (0.13%) effective income tax rate)) in 2023 and 2022 respectively.
−Removed: Our effective tax rate on income varies between periods due, in part, to the impact of changes in pre-tax income and non-deductible expenses relative to our pre-tax earnings.
−Removed: Our effective income tax rate in 2023 decreased by (0.25%) compared to 2022.
−Removed: Deferred tax assets, net of deferred tax liabilities and valuation allowances, were approximately $203.0 thousand as of December 31, 2023, a decrease of $84.0 thousand from December 31, 2022.
−Removed: The decrease in our net deferred tax assets was primarily driven by the increase in valuation allowance, partially offset by the increase in net operating losses which is the largest deferred tax asset.
−Removed: We recorded valuation allowances of $347 million and $270 million as of December 31, 2023 and 2022, respectively.
−Removed: We provide additional information on income taxes in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ” and “ Note 19.
−Removed: Income Taxes” to our consolidated financial statements included with this Annual Report.
−Removed: Stock-Based Compensation
−Removed: We account for stock-based compensation in accordance with ASC Topic 718, “ Compensation-Stock Compensation .” We calculate the fair value of stock options on the date of grant using the Black-Scholes option-pricing model, and the expense is recognized over the requisite service period for awards expected to vest using the straight-line method.
−Removed: This model requires various significant judgmental assumptions in order to derive a final fair value determination for each type of award, including the expected term, expected volatility, expected dividend yield, risk-free interest rate, and fair value of our stock on the date of grant.
−Removed: The requisite service period for stock options is generally four years.
−Removed: Prior to the Closing of the Business Combination, there was no public market for our Common Stock, and as such the fair value of our equity had historically been approved by our Board as of the date stock-based awards were granted.
−Removed: In estimating the fair value of our Common Stock, we used the assistance of a third-party valuation specialist and considered factors we believed are material to the valuation process, including, but not limited to, the price at which recent equity was issued by us to independent third parties or transacted between third parties, actual and projected financial results, risks, prospects, and economic and market conditions, among other factors.
−Removed: We believe the combination of these factors provided
−Removed: an appropriate estimate of our expected fair value and reflects the best estimate of the fair value of our Common Stock at each grant date.
−Removed: For awards issued subsequent to the Closing of the Business Combination, the fair value of our Common Stock on the public market is used to determine the fair value of stock options issued.
Recent Accounting Pronouncements
9 unchanged sentences
We will cease to be an EGC on the date that is the earliest of (i) the end of the Company’s fiscal year in which its total annual gross revenue exceeds $1.235 billion, (ii) the last day of the Company’s fiscal year following March 8, 2026 (the fifth anniversary of the date on which Aurora consummated its initial public offering), (iii) the date on which the Company has issued more than $1.0 billion in non-convertible debt during the preceding three-year period or (iv) the last day of the Company’s fiscal year in which the market value of the Company’s Class A Common Stock held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second quarter.
−Removed: As of June 30, 2023, the last business day of our second quarter, the market value of Aurora’s class A ordinary shares held by non-affiliates was less than $700 million.
−Removed: As a result, the Company continues to be an EGC as of December 31, 2023.
−Removed: Additionally, we are a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act.
−Removed: As such, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not smaller reporting companies.
−Removed: In addition, for so long as we continue to qualify as a non-accelerated filer, we will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.
−Removed: We will continue to be a smaller reporting company as long as either (i) the market value of our Class A Common Stock held by non-affiliates is less than $250 million as of the last business day of our most recently completed second quarter or (ii) our annual revenue is less than $100 million during the most recently completed year and the market value of our Class A Common Stock held by non-affiliates is less than $700 million as of the last business day of our most recently completed second quarter.
−Removed: As of June 30, 2023, the last business day of the Company’s most recent second quarter (prior to the Closing of the Business Combination), the market value of Aurora’s class A ordinary shares held by non-affiliates was less than $250 million.
−Removed: As a result, the Company continues to be a smaller reporting company as of December 31, 2023.
+Added: We expect to cease to be an EGC on the last day of our fiscal year following March 8, 2026, which is the fifth anniversary of the date on which Aurora consummated its initial public offering.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.