Better Home & Finance Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 6, 2026

Key Takeaways

  • Negative Sentiment: Q3 guidance was weaker than expected, with loan volume projected at $1.375 billion–$1.525 billion, revenue of $49 million–$52 million, and an adjusted EBITDA loss of $18 million–$15 million. Management also withdrew its prior expectation of reaching adjusted EBITDA breakeven by September.
  • Positive Sentiment: Better reported Q2 loan volume growth of 38% year over year to $1.67 billion, while net revenue rose 28% to $54.7 million and the adjusted EBITDA loss improved 39% year over year to $14 million. HELOCs increased to 18% of volume from 12% in Q1 and generated higher revenue per loan than first-lien products.
  • Positive Sentiment: Management raised its annual cost-savings expectation to more than $45 million, up from the original $25 million target, with approximately $8 million of additional quarterly operating-expense savings expected in Q3. The company said cost reductions will continue flowing through the income statement over the remainder of the year.
  • Neutral Sentiment: Better is narrowing its focus to scalable enterprise distribution, HELOC growth, Tinman automation, and simpler operations, while de-emphasizing complex integrations that have produced limited returns. Several signed HELOC partnerships are expected to begin launching or ramping in Q4, but timing remains outside the company’s control.
  • Negative Sentiment: The company cited a persistently elevated interest-rate environment and industrywide softness in mortgage applications, particularly affecting refinance volumes. Better ended Q2 with approximately $102 million in cash and $10 million in restricted cash, while continuing to pursue the sale of its U.K. subsidiary.
AI Generated. May Contain Errors.
Earnings Conference Call
Better Home & Finance Q2 2026
00:00 / 00:00

There are 8 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. My name is Kelsey and I'll be your conference operator today. At this time, I would like to welcome you to the Better Home & Finance Holding Company second quarter 2026 results. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I would now like to turn the conference over to Tarek Afifi, Corporate Finance and Investor Relations Manager. Tarek, please go ahead.

Speaker 1

Welcome to Better Home & Finance Holding Company second quarter 2026 earnings conference call. My name is Tarek Afifi. I'm Better's Corporate Finance team. Joining me on today's call are Daniel Lewis, Interim Chief Executive Officer of Better, and Lavine Advani, Chief Financial Officer of Better. In addition to this conference call, please direct your attention to our second quarter earnings release, which is available on our investor relations website. Also available on our website is an investor presentation. Certain statements we make today may constitute forward-looking statements within the meaning of federal securities laws that are based on current expectations and assumptions. These expectations and assumptions are subject to risks, uncertainties and other factors, as discussed further in our SEC filings, that could cause our actual results to differ materially from our historical results. We assume no responsibility to update forward-looking statements other than as required by law.

Speaker 1

During today's discussion, management will discuss certain non-GAAP financial measures which we believe are relevant in assessing the company's financial performance. These non-GAAP financial measures should not be considered replacements for and should be read together with our GAAP results. These non-GAAP financial measures are reconciled to GAAP financial measures in today's earnings release and investor presentation, both of which are available on the investor relations section of Better's website, and when filed in our quarterly report on Form 10-Q with the SEC. More information as of and for the period ended June 30th, 2026, will be provided upon filing our quarterly report on Form 10-Q with the SEC. I will now turn the call over to Daniel.

Speaker 2

Good afternoon, everyone, and thank you for joining us. This week, the board announced a leadership change and asked me to serve as interim chief executive officer. Better is not new to me. I've been working alongside management for the past three months after Vishal invited me to work directly with the business. I've attended virtually every management meeting in that time and contributed to many of the strategic initiatives we'll be discussing today. I've been a significant shareholder for some time and I've worked closely with our founder, Vishal Garg, over the past year. My initial mandate was straightforward: help strengthen execution and improve operational efficiency, delivering the company's strategic priorities. That work expanded into enterprise partnerships development and the day-to-day operations of the business. Along the way, I developed a deep understanding of the business, its leadership team, and the opportunities and challenges in front of us.

Speaker 2

I spent the last 30 years as an investor, board member, founder and operator at highly regulated financial institutions. I want to address our forward outlook at the beginning of this call. Our third quarter guidance reflects the muted refinancing environment and the uncertain timing of several partnership launches. In Q3, we expect loan volume of $1.375 billion-$1.525 billion, total net revenues of $49 million-$52 million, and an adjusted EBITDA loss of $18 million-$15 million. Regarding our previously guided goal of reaching adjusted EBITDA breakeven by September, we now expect to fall short. I remain optimistic about Better's opportunity, but our objective is to establish credibility through execution. I do not want to anchor adjusted EBITDA breakeven expectations to a specific month, because achieving it depends on transaction volumes, revenue mix, and the timing of our cost reductions.

Speaker 2

Our cost reductions are expected to continue to flow to the P&L over the remainder of the year. At the same time, the timing of partnership launches and other revenue initiatives will naturally influence quarterly results. Sustainable profitability is a clear priority, and we will strengthen our financial position without sacrificing the opportunity in front of us. We now expect our annual cost savings to exceed $45 million, well above our original target of $25 million. That represents meaningful progress, but is not where we intend to stop. Better has always been innovative, defined by our founder's spirit and creativity. As is often the case, an organization moving into an enterprise strategy needs focus as complexity slows execution. Going forward, we will concentrate on fewer priorities and execute them exceptionally well. No group is more excited about that focus than our AI engineering team.

Speaker 2

I'm pleased to say that July was our most productive month for engineering in some time, largely because of clear prioritization. Sustainable profitability and long-term growth are not competing priorities. When capital is allocated with discipline and execution is consistent, they reinforce one another. What gives me the greatest confidence is the team. Better has exceptional people who are energized by the opportunity ahead. Across the company, I see leaders who are eager to build, move fast, and execute at a higher standard. Just as importantly, we will not depend on a refinancing cycle or wait for interest rates to fall. We already have a compelling HELOC product. What we need is thoughtful distribution and continued improvement in customer acquisition costs, not additional demand or a different macro environment. We are building operating leverage in businesses where demand already exists.

Speaker 2

Our growth will come from better execution, not from waiting for the market to improve. I know our enterprise results can improve significantly. Our partnership support infrastructure still requires work, which reflects our direct-to-consumer heritage. The expansion from direct-to-consumer to an enterprise model is not a simple evolution. Why are the board and I enthusiastic about Better's future? The demand for Tinman and Betsy is no longer in question. It is coming from enterprise customers, independent mortgage brokers, and our own loan officers. Independent mortgage brokers have expressed interest in our Tinman solution, built specifically for the wholesale channel, and we are now preparing for launch. We have demonstrated product market fit in one of the largest financial markets in the world, spanning personal mortgages, home equity lending, and an enterprise mortgage infrastructure. That brings me to our operating priorities. Our first priority is distribution.

Speaker 2

We will focus on enterprise partners whose businesses naturally align with Tinman and our API-driven operating model. We will win by manufacturing mortgages efficiently, not by outspending competitors on customer acquisition. That includes consumer platforms like Credit Karma and Coinbase, our NEO operation, as well as wholesale brokers and other enterprise partners whose customers can move seamlessly onto the Tinman platform. We are not simply interested in partnership announcements. Our objective is to build an organization that consistently implements, supports, and grows them. Since my appointment, we have spoken with each of our enterprise partners and those that are still in the pipeline. We talked about the exciting future ahead, and those conversations reinforced my conviction about this opportunity. We are excited about a few select verticals. Today I will highlight the wholesale channel. There's real interest from independent mortgage brokers who are already waiting for Tinman.

Speaker 2

We intend to serve them, but only when we can deliver a best-in-class loan officer experience, faster funding, lower cost, and better customer outcomes. We are interested in winning for the long term. Our second priority is product. We will continue investing aggressively in HELOC. Our offering combines sophisticated underwriting with a differentiated experience for both borrowers and loan officers. The wholesale market's interest has exceeded our expectations, and we intend to pursue the opportunity aggressively but thoughtfully. Today, HELOC's still largely a direct-to-consumer product. Over time, we expect it to become an important enterprise product as well. Our third priority is Tinman. Tinman is an AI-native, modular, end-to-end solution supporting the mortgage process from lead to fund. It is not a wrapper on someone else's technology. It is the manufacturing system itself. Further automation reduces expense, but it also enables a faster closing experience for customers.

Speaker 2

Our near-term objectives are simple: give loan officers the best experience and continue driving automation throughout the platform. Let me explain why we expect to win here. D2C and NEO are our innovation platform and our feedback loop on the loan officer experience. Every day, our loan officers tell us what works, what does not, and what needs to improve. That feedback loop is how Tinman becomes an AI platform built by loan officers rather than just for them, and ultimately a platform that enterprise customers and independent brokers can adopt with confidence. Because our AI strategy is fundamental to Better's long-term success, I've asked our board member, Prabhu Narasimhan, to continue serving as a strategic advisor on enterprise artificial intelligence. As the founder and CEO of Brahma AI, Prabhu brings deep experience helping enterprises deploy AI at scale. Finally, we will continue simplifying operations.

Speaker 2

Our NEO and Better Mortgage operations are being combined, creating efficiencies while improving execution. A more focused company needs clear priorities, aligning engineering resources, disciplined capital allocation, and an operating model built around execution. Let me turn to how we intend to communicate with you, our shareholders. Today, I am signaling confidence in Better's future. Our objective is to establish credibility through execution. We will report on our prospects, our progress against stated objectives, and our cost structure, including the impact of stock-based compensation. At my request, I will receive the minimum salary permitted by law and no cash bonus. My compensation will consist of performance-based equity with the final terms to be determined by the board and disclosed in our public filings. That is the structure I requested because I believe in Better's future, and I want my incentives aligned with those of our shareholders.

Speaker 2

The board's incentives are also aligned with yours. They have elected to receive their compensation in equity rather than cash. The board and I are aligned on my interim designation. The interim designation provides complete flexibility for the board as it considers the company's long-term leadership while allowing us to devote our full attention to executing the plan in front of us. My confidence is not built on hope, but on the information and experience I have gained over the past several months. It comes from employees rallying around a clear plan and shared sense of purpose. It comes from the opportunities I see to grow this business. It comes from my belief that Better has the people, technology, and foundation to execute if we remain disciplined and focused. We will build partnerships we can support properly and put our engineers on the work that matters most.

Speaker 2

Better exists to solve deeply human problems. Helping someone buy a first home, giving a growing family more space, enabling a retiree to lower monthly payments, or allowing a business owner to invest by unlocking home equity. The strongest impression I formed at Better was not about the technology. It was about the people who do that work. Finally, I want to thank Vishal Garg. Better would not exist without his vision, and the technology we are discussing today is the product of years of investment and innovation under his leadership. I appreciate his partnership through this transition. With that, I'll turn the call over to Navneet.

Speaker 3

Thank you, Daniel, for clearly laying out the priorities ahead. We look forward to supporting you on their execution. On the macro environment, the rate backdrop got more difficult as the quarter progressed, mortgage application activity has softened industry-wide. We don't expect this to be a short-term blip. We're planning for an elevated rate environment to persist over the medium term, and we're adapting accordingly. Despite the macro environment in Q2, Better's loan volume grew 38% year-over-year to $1.67 billion, total net revenues increased 28% year-over-year and 15% quarter-over-quarter to $54.7 million. This quarter, HELOC represented 18% of our loan volume, up from 12% last quarter. That's a direct reflection of how we're responding to this rate backdrop. HELOCs enable homeowners to access liquidity without giving up a lower rate that they have already locked in.

Speaker 3

Even though HELOCs carry smaller average loan sizes than first liens, they generate higher average revenue per loan, so they have an outsized impact on revenue. Turning to NEO. In Q2, our NEO business grew 60% in loan volume year-over-year and continues to recruit top loan officer teams across the country. In Q2, our adjusted EBITDA loss was $14 million. This $14 million loss is a 39% improvement year-over-year and a 26% improvement quarter-over-quarter. The adjusted EBITDA benefits from a one-time $6.5 million trade reserve release related to loans originated prior to June 2022. Looking at product trends in Q2. Refinance loan volume grew 239% year-over-year to $549 million. Home equity volume grew 23% year-over-year to $294 million, purchase loan volumes grew 3% year-over-year to $824 million.

Speaker 3

By product mix, refinance made up 33% of Q2 loan volume, home equity made up 18% of Q2 loan volume, and purchase made up 49% of Q2 loan volume. By channel in Q2, 55% of loan volume came from the Tinman AI Platform and 45% from Direct-to-Consumer. Turning to third quarter guidance. We expect loan volumes of $1.375 billion-$1.525 billion, of which the midpoint represents 20% growth year-over-year. We expect total net revenues of $49 million-$52 million, of which the midpoint represents a 22% growth year-over-year. We also expect an adjusted EBITDA loss in the range of $18 million-$15 million, of which the midpoint represents a 28% improvement year-over-year. The range is wider than in prior quarters for two reasons.

Speaker 3

Refinance volume is more rate sensitive at current levels. Our revenue mix is actively shifting towards HELOCs. As our HELOC partnerships ramp and season, we expect that product to become a more predictable contributor to give us better visibility into our forecast. Building on Daniel's earlier statement on the September breakeven target, the cost reductions we have executed will continue to flow through the P&L over the remainder of the year. The timing of the HELOC partnership ramps and launches, and the pace of the refinance market will determine when we cross over. Rather than reanchor to a specific month, we will report our progress each quarter and let the results speak for themselves. On the balance sheet, we ended Q2 2026 with approximately $102 million in cash and cash equivalents and $10 million in restricted cash.

Speaker 3

We believe the balance sheet today is appropriately positioned to support our path towards profitability. In addition, our total warehouse capacity stands at approximately $850 million, a 48% increase from year-end 2025. That capacity reflects both the belief in the platform and the infrastructure required to support future partnership growth. Our warehouse lenders have continued to expand their commitments alongside us, which we see as a strong vote of confidence in the direction we're headed. We continue to pursue the sale of our U.K. bank subsidiary, Birmingham Bank, through a process led by FD Partners. We will provide an update when there is a material development. We'll continue to give you clear visibility into these numbers each quarter and let the results speak for the progress we are making. I'll turn it back to the operator for Q&A.

Operator

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Kartik Mehta with Northcoast Research. Your line is open, Kartik. Please go ahead.

Speaker 4

To start off, just looking at third quarter guidance. When looking at the third quarter guidance, it kind of assumes lower loan volume and revenue sequentially. Yet the compliance with GAAP performance suggests that you're realizing meaningful benefits from the cost initiatives. So I was wondering if you could discuss how much of that improvement is already visible versus how much you can realize over the next 12 months.

Speaker 3

Hey, Kartik, it's Lavine. Thanks for the question. Yeah. In our Q2, if you adjust for the TRID, our OpEx was around $75 million, and the midpoint of our Q3 guidance has OpEx about $67 million. Say about $8 million of savings from quarter-over-quarter. We started our cost cuts later in the quarter, we couldn't get the impact of majority of them in Q2. We see a meaningful impact in our cost cuts in Q3, which is why despite lower volumes and lower revenue in Q3, we should get that EBITDA.

Speaker 4

Daniel, you talked about, obviously, partnerships. Some of them are delayed. I'm wondering if you could talk about maybe your pipeline of new partnerships. Is it a delay just because it takes time to implement them? Is it a delay because maybe demand is different today than it was six months ago for those partnerships?

Speaker 2

Thanks for the question. The answer is that when you deal with large enterprises, you are subject to their rollout schedule, both in terms of the percentages of leads you would get, the actual launch dates, et cetera. It's not a lack of demand at all for Tinman. In fact, we've made some announcements about our HELOC product coming to market. I think it's our first partnership from the D2C. The pipeline is very robust. We've spoken to all the partners this week, and we feel that we're in a great position. In terms of guiding you for Q3, it becomes difficult. We decided we weren't going to include the impact of any launches in those numbers. Certainly as we end into the second, I guess, Q4 this year, that's when I think you'll really start to see some activity.

Speaker 2

The other thing I would say.

Speaker 4

Thanks. Excuse me. Go ahead. I apologize. Go ahead.

Speaker 2

No, just I think the other thing is, again, leaning into the HELOC side, because right now our enterprise partnerships are very skewed towards the refinancing. That obviously has a macro headwind. The ones in the second half of the year, we think are going to start to be more meaningful because they're the right kind of partner and it's the right kind of product, which is our HELOC.

Speaker 4

Perfect. Thank you. Good to hear the pipeline is still pretty strong.

Operator

Your next question comes from the line of Kyle Peterson with Needham. Your line is open, Kyle. Please go ahead.

Speaker 5

Great. Good afternoon. Thank you for taking the questions. Wanted to dig into the third quarter guide a little bit, but more on the top-line base. Just wanted to see if you guys could help us maybe bridge in a little more detail, in terms of how we get from the 2Q level to 3Q. I assume there's a good amount of mix that'll probably be changing there with less refi, more home equity. Any more color that you guys could give in terms of what to expect on the mix and the puts and takes to get to the third quarter revenue would be really helpful.

Speaker 3

Hey, Kyle. Thanks. Yeah, that's a great question. As we said on our first Q1 call, we expect the percentage of HELOC in our total volumes to increase, and we saw that in the second quarter. We went from 12% of volumes in the first quarter, HELOCs being 12% of volumes in the first quarter to being 18% of volumes in the second quarter. We expect HELOCs to be meaningfully higher in the third quarter. We don't want to give exact pinpoint guidance for a couple reasons. One is, we've factored in no HELOC partnerships in our 3Q guide. It's purely D2C. The second piece is, the macro environment affects the refi business, so that mix is uncertain as well.

Speaker 5

Okay. That is helpful. Then as a follow-up, I hear you on not including any of the HELOC contribution with partnerships. I did want to ask a little bit about what that could look like in the future, specifically with Credit Karma. I guess, how are you guys thinking about how long it would take a partnership like this to get up and running and when that could start to contribute to volumes? Is that in the fourth quarter of this year, or is that more of a next year event? Just any directional rough timing on the ramp time there would be great.

Speaker 2

The answer is multiple partnerships should start to kick in HELOC in the fourth quarter. Far this quarter, we have done no partner launches, and no HELOC launches specifically. Hopefully that gives you a sense of why the bridge on revenue. We are basically still have the refi environment in our largest enterprise segment, and we don't have anything really additional in terms of channel development in the HELOC product. Got it. Thank you.

Operator

Your next question comes from the line of Joseph Vasi with Canaccord Genuity. Your line is open, Joseph. Please go ahead.

Speaker 6

Hey, guys. Good afternoon. Welcome on board, Daniel. Maybe could we talk a little bit about ramping HELOC volume? It sounds like it's gonna continue to ramp here on a mixed-shift basis into Q3, but it doesn't sound like we're necessarily signing any new partners right now. Maybe, guys, just double-click on where HELOC volume growth is coming from in a more detailed way across your existing channels. Is it direct B2C or is there a channel benefit here? Thanks.

Speaker 2

I think just to correct that point, we have signed HELOC partnerships. They just haven't launched or ramped yet. That's why I'm pushing you towards the fourth quarter when you start to see some impact. The HELOC product itself, we have a very competitive offering vis-a-vis our competition. Tinman is a great solution for HELOC, as is our loan operation. Again, I think we're really excited about the HELOC partnership. We want to be thoughtful about Q3 guide just because we're not in control of those start dates. We know that they're coming, but they're not coming in this quarter.

Speaker 6

Okay, that's helpful. Thank you. Are there any channels that you think maybe Better is gonna de-emphasize moving forward relative to previously? Thanks very much.

Speaker 2

I think that echoes my comments on focus. There's the kind of partnership we want and the one that we really don't think makes a ton of sense for the business right now. When you're thinking about ripping out existing systems and training other people's loan officers on the use of Tinman, those are very long sales cycle. They're very expensive in terms of customer support. It's the partnerships where we are using our API-driven culture to plug in Tinman we can provide a white label solution, that includes the wholesale channel, which I think is gonna be starting towards the end of September. It includes the enterprise platform, the platforms that we have. There's a wide market that covers most of the TAM of the industry, particularly in HELOC.

Speaker 2

It's the really complicated enterprise integrations that we think so far have not yielded material results, the cost associated with them has been high.

Speaker 6

Great, thanks. Maybe just if I could sneak one more in. Can you just give us an update on your pricing strategy in the market? I know when Tinman launched, it was a little disruptive. An update on the outlook there would be helpful. Thank you very much.

Speaker 3

Yeah, absolutely. Our pricing methodology is more around contribution margin. We're going to keep our pricing methodology around the 20% to 25% incremental contribution margin across all channels and products.

Speaker 2

I think the way we want you all to start thinking about the company is less about loan volume because of the change in mix of HELOC versus first lien. We want you to think less about simply revenue growth, but look at contribution margin, which is less our marketing expense or the loan platform fees we have to pay. That's the proper metric rather than seeing if we're buying business in the marketing DTC channel.

Speaker 6

Great. Thank you very much.

Operator

As a reminder, if you would like to ask a question, please press star one to raise your hand. The next question comes from the line of Ramsey El-Assal with Cantor Fitzgerald. Your line is open, Ramzi. Please go ahead.

Speaker 7

Hi. Thank you very much for taking my question this evening. Daniel, congratulations on the new role. I guess my first question is why now on the CEO transition? Why did the board decide to act now? Then maybe as a two-parter here also, you were listed as interim CEO, but your prepared remarks sounded more permanent. I'm just wondering if the board's running a search for a permanent CEO or whether the interim title is, I don't know, itself interim if that makes sense.

Speaker 2

The board is committed to running a search for a full-time CEO. Part of my service on the board of directors of stepping into this role is giving them the most flexibility that they need. They've also given me the total authority to act against a strategic plan, which is why I probably sound less interim today. We have a strategic plan we're acting and we have a search firm. In terms of the decision of why now, I think the board concluded that we are really in a transitional phase between a founder mode-based company, which is creativity and many different projects, versus an enterprise stage of executing against very select ideas that have a demonstrated product market fit. That's the transition moment, and obviously Vishal has been an incredible founder for the company, and we are all very grateful.

Speaker 7

Fantastic. Let me squeeze one more quick one in. Given your background, is the board exploring any kind of strategic alternatives for the business? Is that on the table, or is that not something that's being contemplated?

Speaker 2

There's no formal strategic alternatives process at this time.

Speaker 7

Fantastic. Thank you very much.

Operator

We have reached the end of the Q&A session. I will now turn the call back to Daniel Lewis for closing remarks.

Speaker 2

Thank you all for joining us. I'm grateful to our team for all the hard work. We're focused on executing with discipline and delivering on the opportunity ahead. Look forward to speaking to you all again next quarter.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

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