• Full-Year Funded Loan Volume: $3.6 billion, a 19% increase year over year.
• Full-Year Revenue: $108 million, a 50% increase year over year.
• Adjusted EBITDA Loss: $121 million for the full year, reduced by 26% year over year.
• Q4 Funded Loan Volume: $936 million, a 77% increase year over year.
• Q4 Revenue: $25 million, compared to $18 million in Q4 of the previous year.
• Gain on Sale Margin: Improved from 1.95% in 2023 to 2.17% in 2024.
• Q4 Total Expenses: Approximately flat versus 2023, with a 24% decrease excluding one-time expenses.
• Loan Origination Expenses: Decreased by 28% in Q4 compared to Q3.
• Compensation-Related Expense: Decreased by 21% in Q4 compared to Q3.
• Marketing and Advertising Expenses: Decreased by 27% in Q4 compared to Q3.
• NEO Home Loans Funded Loan Volume: $95 million since January 2025.
• NEO Gain on Sale Margin: Approximately 365 basis points.
• Q4 GAAP Net Loss: Approximately $59 million.
• Q4 Funded Loan Volume Composition: 62% purchase, 18% Home Equity Loans, remainder refinance.

• Warning! GuruFocus has detected 3 Warning Signs with BETR.

Release Date: March 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Better Home & Finance Holding Co (NASDAQ:BETR) achieved a 19% year-over-year increase in funded loan volume and a 50% increase in revenue for the full year 2024.
• The company reduced its adjusted EBITDA losses by 26% year over year, demonstrating improved financial management.
• BETR's AI initiatives, including Tinman AI and Betsy, have significantly enhanced operational efficiency, reducing the cost to originate loans by over 35% compared to industry averages.
• The company reported a 416% year-over-year increase in HELOC and Home Equity Loan volume in Q4 2024, outpacing industry trends.
• BETR's partnership with NEO Home Loans is showing early success, with NEO serving approximately 220 families and achieving a gain on sale margin of 365 basis points, higher than the company's overall margin.

Negative Points

• Despite increased volumes, BETR reported a total GAAP net loss of approximately $59 million in Q4 2024.
• The company faced challenges with historically low housing affordability and high mortgage rates, impacting overall market demand.
• BETR incurred approximately $17 million in non-recurring restructuring expenses due to the wind down of its UK businesses.
• The wind down of the partnership with Ally Bank is expected to impact volume, as Ally accounted for 19% of Q4 2024 volume.
• BETR's Q4 2024 funded loan volume was down approximately 10% sequentially due to normal seasonal slowness in the purchase market.

Q & A Highlights

Q: How does the AI technology adjust for high costs and limited availability of property insurance? A: Vishal Garg, CEO, explained that their AI, Betsy, is not just a form-filling engine but integrates over 15 different data forks and API calls. It can deliver instant homeowners insurance quotes during the refinance or HELOC process, significantly reducing the need for human intervention and allowing for scalability without increasing staffing costs.

Q: How does Better Home & Finance plan to achieve profitability, and what risks are involved? A: Vishal Garg, CEO, stated that their path to profitability is built on efficiency rather than taking on more risk. They plan to reduce costs by shutting down non-core UK businesses, improving bank profitability, and leveraging AI to drive down operational costs. They aim to achieve break-even by exiting legacy costs and improving margins without increasing credit risk.

Q: What are the savings opportunities from Tinman's AI application? A: Vishal Garg, CEO, highlighted that AI, particularly Betsy, reduces sales costs by handling inbound calls and improving customer experience. AI underwriting saves $1,400 per loan, and overall, AI-driven loans can save $3,500 per loan. These savings are expected to enhance margins as they scale up.

Q: How are gain on sale margins trending, and what contributes to their improvement? A: Kevin Ryan, CFO, noted that gain on sale margins are trending higher, particularly with NEO loans, which have a higher margin than the company-wide average. Improvements are driven by AI and tech enhancements, better customer experience, and faster response times, which increase conversion rates.

Q: How is Betsy, the AI system, resonating with consumers, and what are the adoption rates? A: Vishal Garg, CEO, reported that about 18% of consumers opt to speak with a human loan officer, indicating high adoption. Younger consumers (20-35) and those 55 and up show the greatest uptake. Betsy improves customer experience by being available 24/7 and handling interactions efficiently.

Q: What is the outlook for the spring home purchase season? A: Vishal Garg, CEO, expressed optimism, noting an increase in pre-approvals per marketing spend as a positive indicator. They anticipate potential positive surprises if regulatory changes lead to lower rates, despite current affordability challenges.

Q: How quickly can Better Home & Finance close loans, and what advantages do they have? A: Vishal Garg, CEO, stated that they can close loans in New York in 32 days on average, compared to the industry average of 46 days. This speed is a significant advantage in the competitive housing market.

Q: What are the expansion opportunities within the retail channel like NEO? A: Vishal Garg, CEO, sees massive potential, with many loan officers expressing interest in joining. They aim to scale NEO's volume back to its original levels within a few months and then grow it significantly, leveraging their advanced technology platform.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.