Key Points
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Better Home & Finance launched a 90-day turnaround plan that includes board changes, an interim CEO search, cost reductions and a permanent CEO search expected to take three to four months.
The company is targeting breakeven by cutting quarterly operating expenses from about $65 million to $50 million, increasing revenue above $65 million, and improving mortgage-funnel conversion. Growth initiatives include expanding HELOCs through Credit Karma and other partners, as well as wholesale lending.
Better expects the planned sale of its U.K. bank to release roughly $65 million in cash, potentially leaving about $105 million available for operations after covenant requirements. The company says it may not need additional capital over the next 12 months if the transaction closes.
Better Home & Finance (NASDAQ:BETR) outlined a 90-day turnaround plan centered on board changes, an interim chief executive appointment, cost reductions, growth in home equity lending and the planned sale of its U.K. bank during its Better 2.0 shareholder conference call.
Founder and CEO Vishal Garg said 52% of voting shareholders supported the effort to return him and a new team to the board following a proxy consent process. Garg characterized the result as a mandate to put the company back on a path toward profitable growth and said management would provide updates on its progress.
Leadership and Board Changes
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Garg said the company has reconstituted its board and added Steve Sarracino of Activant, which he said has invested approximately $100 million in Better, and Bing Gordon, whom Garg described as a former Amazon product adviser and Electronic Arts co-founder. He added that Better expects to name additional directors.
The company has identified a candidate for interim CEO and is finalizing terms of that engagement, Garg said. Better has also begun seeking proposals from executive search firms for a permanent CEO, with Garg estimating that the search could take three to four months and potentially conclude in the first quarter of 2027.
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Garg said he expects to remain a public-facing representative of the company while a new CEO manages functions where he believes other leadership may be better suited. He acknowledged that communication with empathy is an area where he needs improvement, saying the company needs a leader who can both drive results and lead with empathy.
Cost, Revenue and Breakeven Targets
In response to a shareholder question, Garg said Better has two primary pathways toward breakeven: reducing quarterly operating expenses from about $65 million to roughly $50 million, or increasing quarterly revenue from the “50s” to more than $65 million. He said pursuing progress on both fronts could bring the company to breakeven if it achieves part of each goal.
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Garg said Better aims to improve conversion through its mortgage funnel, particularly lead-to-lock and lock-to-fund conversion. He said reaching industry-standard performance in each area could increase conversion by about 50%, potentially nearly doubling revenue while maintaining the current cost structure. The company has a specific path to $50 million of EBITDA, he said, though it did not provide a timetable for reaching that level.
Better will continue to disclose overall unit economics, Garg said, but does not intend to report economics for individual partnerships.
HELOCs, Partnerships and Wholesale Expansion
A core component of the strategy is expanding home equity line of credit, or HELOC, originations. Garg cited more than $21 trillion of U.S. home equity and said the product is particularly relevant in an environment of mortgage rates above 7%.
Better plans to launch HELOC offerings through Credit Karma, a partnership signed in late July before Garg’s departure in August. Garg said the company was also in late- or middle-stage discussions with five additional household-name partners, though some conversations were delayed during the leadership dispute.
Garg said Better sees a competitive advantage in offering both mortgages and HELOCs through one platform, enabling consumers and partners to move between products. He also said the company is moving “full speed ahead” in wholesale lending and has publicly disclosed more than 10 wholesale partners.
The company’s Coinbase partnership launched about a month and a half before the call, Garg said. Better plans to expand the range of assets Coinbase customers can pledge to purchase a home through token-backed mortgage offerings.
U.K. Bank Sale and Liquidity
Garg said Better has finalized terms to sell its U.K. bank to a buyer that has deposited €10 million in escrow. The company is seeking Prudential Regulation Authority approval for the transaction.
He said the sale could release roughly $65 million of cash to Better, subject to the bank’s loan book and operations. Together with existing cash, Garg said the company expects a combined cash balance of more than $140 million following the sale. He estimated that, after accounting for approximately $35 million in tangible net worth covenants on warehouse lines, Better would have about $105 million available to fund operations.
Garg said the company does not anticipate needing a capital infusion over the next 12 months if the bank sale closes in the expected three-to-four-month timeframe.
Technology and Workforce Focus
Garg said Better intends to optimize its workforce around work that artificial intelligence cannot perform, describing the company as “AI-native” and “AI-first.” He said the company’s Tinman platform combines a large language model engine with deterministic machine learning systems, and he cited a 6-basis-point critical-defect error rate across more than 10,000 mortgage-manufacturing parameters.
He also said Better has data from more than $110 billion of originations dating back to 2016, which he views as a differentiator. Garg said Better’s near-term focus will be improving operations, closing partner relationships and ensuring that customers are supported throughout the mortgage and HELOC process.
About Better Home & Finance (NASDAQ:BETR)
Better Home & Finance Holding Company is a technology-focused homeownership platform that provides digital tools and services for consumers navigating the home-buying and home-financing process. Its offerings are designed to simplify mortgage applications and other transactions through an online platform.
Through its Better Mortgage business, the company originates and facilitates residential mortgage loans. Its broader suite of services has included real estate brokerage, title and settlement services, and homeowners insurance, allowing customers to access several aspects of the homeownership process through a single platform.
Better was founded in 2014 and is associated with founder and Chief Executive Officer Vishal Garg.
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The article “Better Home & Finance Unveils 90-Day Turnaround Plan, Targets Breakeven With HELOC Push” was originally published by MarketBeat.
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