Better Home & Finance Holding Company
11/13/2025 | Press release | Distributed by Public on 11/13/2025 15:57
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of Better Home & Finance Holding Company's (together with its consolidated subsidiaries, the "Company," "we" "our" or "us") financial condition and results of operations should be read together with our audited consolidated financial statements as of December 31, 2024 and for the years ended December 31, 2024 and 2023, in each case, together with related notes thereto, included in our 2024 Annual Report on Form 10-K, and our condensed consolidated financial statements and related notes as of and for the quarterly period ended September 30, 2025, included elsewhere in this quarterly report on Form 10-Q.
Company Overview
We are building a next-generation platform that we believe can revolutionize the world's largest, oldest and most tangible asset class, the home. Our holistic solution and marketplace model, enabled by our proprietary technology, allows us to take one of our customers' largest and most complex financial journeys-the process of owning a home-and transform it into a more simple, transparent and ultimately affordable process. Our goal is to do our part in lowering the hurdles to homeownership by offering the lowest prices and the best experience to our customers.
We are a technology-driven organization. We are seeking to disrupt a business model by leveraging Tinman, our proprietary loan origination platform that uses AI and automation to deliver a frictionless, user-friendly experience to our customers, as well as Betsy, the first voice-based AI loan assistant built for the mortgage industry, to enhance the automation of the home finance process. 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.
Our offerings include mortgage financing, real estate services, title and homeowners' insurance. We offer a selection of loan products for home purchase and refinance, including cash-out refinance, debt consolidation and home equity lines of credit, across a range of maturities and interest rates as well as a suite of non-mortgage products, including real estate agent services offered by our network of third-party partner real estate agents and, through our insurance partners, title insurance and settlement services, and homeowners insurance. We serve customers in all 50 US states and the United Kingdom.
We are focused on improving our platform and plan to continue making investments to build our business and prepare for future growth. 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 our customer acquisitions channels which include our direct-to-consumer ("D2C") channel, our partner relationship ("B2B") channel, and our distributed retail channel ("Retail"), to 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. 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.
In our D2C channel, we serve customers from their first website visit to close entirely under the Better Home & Finance brand. We have historically relied on positive word of mouth, customer reviews, and trusted third-party recommendations to grow our business, together with performance marketing (pay-per-click) and other paid digital media.
In our B2B channel, we historically had an integrated relationship with Ally Bank, a Utah state-chartered bank ("Ally"), pursuant to which we offered our end-to-end platform and services alongside Ally's brand, and manufactured loans on Ally's behalf. Initially launched in 2019, our integrated relationship with Ally has ended due to a shift in strategic direction and corporate resourcing at Ally.
In order to grow our Retail channel, in the third quarter of 2024, we hired the executive team from NEO Home Loans, a group of loan officer teams with strong brand recognition within the U.S. mortgage market, to build out a distributed retail channel within Better. By bringing NEO Home Loans into the Better platform, we seek to diversify Better's distribution strategy, and leverage Tinman, our internally developed all-in loan operating system, to power local loan officers under the "NEO Powered by Better" brand. We believe there is significant opportunity to prove out Tinman's efficiency in the Retail channel by providing our technology to local loan officers to remove friction from their fulfillment process and expand their capacity to serve more customers, while improving economics through a business model with traditionally lower customer acquisition costs compared to the D2C channel. We expect to leverage Better's AI technology
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and digital lead funnel to empower NEO's loan officer teams, who have demonstrated track records in customer service excellence and strong reputations within the communities they serve.
During the three months ended September 30, 2025, we also executed multiple new strategic partnerships. The first is a partnership with one of the top five U.S. personal financial services platforms, which serves over 50 million customers. Under this arrangement, the partner will offer mortgage financing products to its customer base through Better's Tinman AI platform. The second is with one of the top five non-bank mortgage originators in the U.S., which will utilize Better's Tinman AI platform to originate HELOCs and HELOANs for its customer base and mortgage servicing rights (MSR) portfolio. Lastly, subsequent to the three months ended September 30, 2025, Better partnered with Finance of America, a leading provider of home equity-based retirement solutions ("FOA"), pursuant to which Better will offer HELOCs and HELOANs to FOA's customers, through Better's Tinman AI platform.
Our Business Model
We generate revenue through the production and sale of loans and other product offerings through our platform. 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) for the three and nine months ended September 30, 2025 and 2024 is as follows:
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
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(Amounts in thousands, except percentage amounts)
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Amounts
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Percentages
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Amounts
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Percentages
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| Gain on loans, net | $ | 36,421 | 83 | % | $ | 21,503 | 74 | % | |||||||||||||||
| Other revenue | 2,777 | 6 | % | 3,070 | 11 | % | |||||||||||||||||
| Net interest income | 4,669 | 11 | % | 4,421 | 15 | % | |||||||||||||||||
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Total net revenues
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$ | 43,867 | $ | 28,994 | |||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
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(Amounts in thousands, except percentage amounts)
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Amounts
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Percentages
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Amounts
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Percentages
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| Gain on loans, net | $ | 97,769 | 81 | % | $ | 61,384 | 74 | % | |||||||||||||||
| Other revenue | 10,107 | 8 | % | 8,768 | 10 | % | |||||||||||||||||
| Net interest income | 12,688 | 11 | % | 13,355 | 16 | % | |||||||||||||||||
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Total net revenues
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$ | 120,564 | $ | 83,507 | |||||||||||||||||||
Home Finance Mortgage Model-Gain on loans, net
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 three channels: our D2C channel, our B2B channel, and our Retail channel. Through our D2C and Retail channels, we generate gain on loans, net by selling loans and MSRs to our loan purchaser network, recognizing revenue per loan. We may also earn a fixed fee per loan originated by third-parties through our D2C and Retail channels. Through our B2B channel, we generate revenue from integrated relationships and advertising relationships. 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. 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. 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. As of September 30, 2025, this channel was primarily comprised of our integrated relationship with Ally, which we are currently winding down.
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Better Plus Model-Other revenue
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).
Through Better Real Estate services, we offer settlement services during the mortgage transaction, which include wire services, document preparation, and other mortgage settlement services. 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. 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.
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. We also offer title insurance primarily as an agent and work with third-party providers that fulfill and underwrite the title insurance policies.
International Lending Revenue-Other revenue
International lending revenue consists of revenue from our international lending activities, primarily in the U.K., which has expanded via acquisitions in prior years. International lending activities primarily include broker fees earned via our digital mortgage broker in the U.K. 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. At the end of the third quarter 2025, management has closed on the sale of its digital mortgage broker in the U.K.
Key Business Metrics
In addition to the measures presented in our condensed consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate plans and make strategic decisions. Our key business metrics enable us to monitor our ability to manage our business compared to the broader mortgage origination market, as well as monitor relative performance across key purchase and refinance verticals.
Key measures that we use in assessing our business include the following ($ in millions, except percentage data or as otherwise noted):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
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Key Business Metric
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2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
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Home Finance
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Funded Loan Volume
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$ | 1,210 | $ | 1,035 | $ | 3,284 | $ | 2,658 | ||||||||||||||||||
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Refinance Loan Volume
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$ | 183 | $ | 130 | $ | 478 | $ | 289 | ||||||||||||||||||
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Purchase Loan Volume
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$ | 774 | $ | 739 | $ | 2,155 | $ | 2,062 | ||||||||||||||||||
| HELOC Volume | $ | 253 | $ | 166 | $ | 651 | $ | 307 | ||||||||||||||||||
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D2C Loan Volume
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$ | 727 | $ | 776 | $ | 2,115 | $ | 1,805 | ||||||||||||||||||
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B2B Loan Volume
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$ | - | $ | 259 | $ | 95 | $ | 853 | ||||||||||||||||||
| Retail Loan Volume | $ | 483 | $ | - | $ | 1,074 | $ | - | ||||||||||||||||||
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Total Loans (number of loans, not millions)
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4,086 | 3,443 | 11,093 | 8,429 | ||||||||||||||||||||||
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Average Loan Amount ($ value, not millions)
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$ | 296,159 | $ | 300,589 | $ | 296,034 | $ | 315,350 | ||||||||||||||||||
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Gain on Sale Margin
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3.01 | % | 2.08 | % | 2.98 | % | 2.31 | % | ||||||||||||||||||
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Total Market Share
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0.2 | % | 0.2 | % | 0.2 | % | 0.2 | % | ||||||||||||||||||
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Better Plus
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Better Real Estate Transaction Volume
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$ | 64 | $ | 105 | $ | 228 | $ | 266 | ||||||||||||||||||
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Insurance Coverage Written
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$ | 1,018 | $ | 1,068 | $ | 3,015 | $ | 3,300 | ||||||||||||||||||
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Home Finance
Funded Loan Volumerepresents the aggregate dollar amount of all loans funded in a given period based on the principal amount of the loan at funding, including HELOC loans.
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.
Purchase Loan Volumerepresents the aggregate dollar amount of purchase loans funded in a given period based on the principal amount of the loan at purchase date.
HELOC Loan Volumerepresents the aggregate dollar amount of HELOC loans funded in a given period based on the principal amount of the loan at funding.
D2C Loan Volumerepresents 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 Retial and B2B partner relationships.
B2B Loan Volumerepresents 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.
Retail Loan Volumerepresents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that has been generated through one of our distributed retail channel.
Total Loansrepresents the total number of loans funded in a given period, including purchase loans, refinance loans and HELOC loans.
Average Loan Amountrepresents Funded Loan Volume divided by number of loans funded in a period.
Gain on Sale Marginrepresents gain on loans, net, as presented on our condensed consolidated statements of operations and comprehensive income (loss), divided by Funded Loan Volume.
Total Market Sharerepresents Funded Loan Volume in a period divided by total value of loans funded in the industry for the same period, as presented by the Federal National Mortgage Association.
Better Plus
Better Real Estate Transaction Volumerepresents the aggregate dollar amount of real estate volume transacted in a given period across both in-house agents and third-party network agents.
Insurance Coverage Writtenrepresents 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. 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
Our sources of revenue include gain on loans, net, other revenue, and net interest income.
Home Finance (Gain on Loans, Net)
Gain on loans, net, includes revenue generated from our mortgage production process. The components of Gain on loans, net, are as follows:
i.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. 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
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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. 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. 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.
Gain on sale of loans, net also includes the changes in fair value of IRLCs and forward sale commitments. 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.
ii.Broker revenue-Includes fees that the Company receives for originating loans on behalf of third-parties, including the integrated relationship partner. Starting late in 2024, our business with the integrated relationship partner, Ally, is winding down due a shift in strategic direction by Ally.
iii.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. In the event of a breach of its representations and warranties, we may be required to repurchase the loan with the identified defects. The provision for loan repurchase reserve, represents the charge for these potential losses.
Better Plus, International Lending Revenue, and Other (Other Revenue)
We generate other revenue through our Better Plus offerings, which includes Better Real Estate (real estate services), Better Cover (insurance), and international lending revenue.
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. 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. We recognize revenues from fees on settlement services upon the completion of the performance obligation, which was when the loan transaction closes.
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. We recognize revenues from agent fees on title policies upon the completion of the performance obligation, which is when the loan transaction closes. 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.
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.
For international lending revenue, we generate revenue primarily from broker fees earned via our digital mortgage broker in the U.K. During the fourth quarter of 2024, management enacted a plan to sell several entities in the U.K., which are being actively marketed. At the end of the third quarter 2025, management has closed on the sale of its digital mortgage broker in the U.K.
Net Interest Income
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
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U.K. banking operations. Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, through our U.K. banking operations, as well as interest expense on the Convertible Notes.
Components of Our Expenses
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.
Compensation and Benefits Expenses
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. Stock-based compensation includes expenses associated with restricted stock unit grants, performance stock unit grants, and stock option grants under our stock plans. We recognize compensation expense for the stock-based payments based on the fair value of the awards on the grant date. The expense is recorded on a straight-line basis over the requisite service period. Compensation and benefits excludes amounts capitalized for internally developed software.
General and Administrative Expenses
General and administrative expenses include rent and occupancy expenses, travel and entertainment expenses, insurance expenses, and external legal, tax and accounting services. General and administrative expenses are expensed as incurred.
Technology Expenses
Technology expenses consist of expenses related to vendors engaged in product management, design, development and testing of our websites and products. Technology and product development expenses are generally expensed as incurred.
Marketing and Advertising Expenses
Marketing and advertising expenses consist of customer acquisition expenses, brand costs, and paid marketing. For customer acquisition expenses, we primarily generate loan origination leads for which we incur "pay-per-click" expenses. Marketing expenses are generally expensed as incurred.
Loan Origination Expenses
Loan origination expenses consist primarily of origination expenses, appraisal fees, processing expenses, underwriting, closing fees, and servicing costs. These expenses are expensed as incurred.
Other Expenses/(Income)
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. 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. Other expenses are expensed as incurred.
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Results of Operations
The following table sets forth certain consolidated financial data for each of the periods indicated:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
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(Amounts in thousands, except per share amounts)
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2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
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Revenues:
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| Gain on loans, net | $ | 36,421 | $ | 21,503 | $ | 97,769 | $ | 61,384 | |||||||||||||||
| Other revenue | 2,777 | 3,070 | 10,107 | 8,768 | |||||||||||||||||||
| Net interest income | |||||||||||||||||||||||
| Interest income | 16,855 | 9,867 | 41,457 | 27,900 | |||||||||||||||||||
| Interest expense | (12,186) | (5,446) | (28,769) | (14,545) | |||||||||||||||||||
| Net interest income | 4,669 | 4,421 | 12,688 | 13,355 | |||||||||||||||||||
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Total net revenues
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43,867 | 28,994 | 120,564 | 83,507 | |||||||||||||||||||
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Expenses:
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| Compensation and benefits | 41,287 | 37,752 | 129,367 | 111,079 | |||||||||||||||||||
| General and administrative | 10,167 | 12,611 | 33,304 | 41,813 | |||||||||||||||||||
| Technology | 6,726 | 7,249 | 20,856 | 19,289 | |||||||||||||||||||
| Marketing and advertising | 10,490 | 12,101 | 30,317 | 25,186 | |||||||||||||||||||
| Loan origination expense | 3,728 | 3,774 | 10,154 | 7,142 | |||||||||||||||||||
| Depreciation and amortization | 3,398 | 8,259 | 10,908 | 25,323 | |||||||||||||||||||
| Other expenses/(income) | 7,051 | 1,332 | 11,226 | 270 | |||||||||||||||||||
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Total expenses
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82,847 | 83,078 | 246,132 | 230,102 | |||||||||||||||||||
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Loss before income tax expense
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(38,980) | (54,084) | (125,568) | (146,595) | |||||||||||||||||||
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Income tax expense/(benefit)
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145 | 126 | 384 | 472 | |||||||||||||||||||
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Net loss
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$ | (39,125) | $ | (54,210) | $ | (125,952) | $ | (147,067) | |||||||||||||||
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Earnings (loss) per share attributable to common stockholders (Basic)
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$ | (2.56) | $ | (3.58) | $ | (8.27) | $ | (9.74) | |||||||||||||||
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Earnings (loss) per share attributable to common stockholders (Diluted)
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$ | (2.56) | $ | (3.58) | $ | (8.27) | $ | (9.74) | |||||||||||||||
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Three and Nine Months Ended September 30, 2025 as Compared to Three and Nine Months Ended September 30, 2024
Revenues
The components of our revenues for the period were:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
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(Amounts in thousands)
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2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
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Revenues:
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| Gain on loans, net | 36,421 | 21,503 | 97,769 | 61,384 | |||||||||||||||||||
| Other revenue | 2,777 | 3,070 | 10,107 | 8,768 | |||||||||||||||||||
| Net interest income | |||||||||||||||||||||||
| Interest income | 16,855 | 9,867 | 41,457 | 27,900 | |||||||||||||||||||
| Mortgage interest expense | (12,186) | (5,446) | (28,769) | (14,545) | |||||||||||||||||||
| Net interest income | 4,669 | 4,421 | 12,688 | 13,355 | |||||||||||||||||||
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Total net revenues
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$ | 43,867 | $ | 28,994 | $ | 120,564 | $ | 83,507 | |||||||||||||||
Gain on loans, net
The components of our gain on loans, net for the period were:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
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(Amounts in thousands)
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2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Gain on sale of loans, net | $ | 36,249 | $ | 15,836 | $ | 91,542 | $ | 44,032 | |||||||||||||||
| Broker revenue | 1,608 | 2,441 | 5,114 | 7,184 | |||||||||||||||||||
| Loan repurchase reserve recovery | (1,436) | 3,226 | 1,113 | 10,168 | |||||||||||||||||||
| Total gain on loans, net | $ | 36,421 | $ | 21,503 | $ | 97,769 | $ | 61,384 | |||||||||||||||
Gain on sale of loans, net increased $20.4 million or 129% to $36.2 million for the three months ended September 30, 2025 compared to $15.8 million for the three months ended September 30, 2024. The increase in gain on sale of loans, net was largely driven by the increase of Funded Loan Volume, which was driven by increases in home equity products.
Gain on sale of loans, net increased $47.5 million or 108% to $91.5 million for the nine months ended September 30, 2025 compared to $44.0 million for the nine months ended September 30, 2024. The increase in gain on sale of loans, net was largely driven by the increase of Funded Loan Volume, which was driven by increases in home equity products.
Broker revenue decreased $0.8 million, or 34% to $1.6 million for the three months ended September 30, 2025, compared to $2.4 million for the three months ended September 30, 2024. The decrease in broker revenue was primarily driven by the reduction in B2B Loan Volume due to the conclusion of our integrated relationship partnership with Ally. This was offset by broker revenue earned for originating loans for third-parties in our Retail channel.
Broker revenue decreased $2.1 million, or 28.8% to $5.1 million for the nine months ended September 30, 2025, compared to $7.2 million for the nine months ended September 30, 2024. The decrease in broker revenue was primarily driven by the reduction in B2B Loan Volume due to the conclusion of our integrated relationship partnership with Ally. This was offset by broker revenue earned for originating loans for third-parties in our Retail channel.
Loan repurchase reserve recovery decreased $4.7 million or 145%, to a provision of $1.4 million for the three months ended September 30, 2025, compared to a recovery of $3.2 million for the three months ended September 30, 2024. The loan repurchase reserve has decreased as our estimate for potential loss exposure has declined as we no longer have exposure to the historical periods when we had a significantly higher funded loan volume. The reduction in potential loss exposure results in a reduction in the loan repurchase reserve liability which is recognized as a recovery within gain on loans, net.
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Loan repurchase reserve recovery decreased $9.1 million or 89.1%, to a recovery of $1.1 million for the nine months ended September 30, 2025, compared to a recovery of $10.2 million for the nine months ended September 30, 2024. The loan repurchase reserve has decreased as our estimate for potential loss exposure has declined as we no longer have exposure to the historical periods when we had a significantly higher funded loan volume. The reduction in potential loss exposure results in a reduction in the loan repurchase reserve liability which is recognized as a recovery within gain on loans, net.
Other Revenue
The components of other revenue for the period were:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| International lending revenue | $ | 2,267 | $ | 1,190 | $ | 5,241 | $ | 3,517 | |||||||||||||||
| Insurance services | 587 | 438 | 2,085 | 1,614 | |||||||||||||||||||
| Real estate services | 466 | 753 | 1,564 | 1,753 | |||||||||||||||||||
| Other revenue/(loss) | (543) | 689 | 1,217 | 1,884 | |||||||||||||||||||
| Total other revenue | $ | 2,777 | $ | 3,070 | $ | 10,107 | $ | 8,768 | |||||||||||||||
International lending revenue increased $1.1 million, or 91% to $2.3 million for the three months ended September 30, 2025 compared to $1.2 million for the three months ended September 30, 2024. The increase in international lending revenue was primarily driven by increased operations in U.K. brokerage businesses.
International lending revenue increased $1.7 million, or 49.0% to $5.2 million for the nine months ended September 30, 2025 compared to $3.5 million for the nine months ended September 30, 2024. The increase in international lending revenue was primarily driven by increased operations in U.K. brokerage businesses.
Insurance services increased $0.1 million, or 34.0% to $0.6 million for the three months ended September 30, 2025 compared to $0.4 million for the three months ended September 30, 2024. The increase in insurance services was primarily driven by an increase in insurance related revenue from the U.K.
Insurance services increased $0.5 million, or 29.2% to $2.1 million for the nine months ended September 30, 2025 compared to $1.6 million for the nine months ended September 30, 2024. The increase in insurance services was primarily driven by an increase in insurance related revenue from the U.K.
Real estate services decreased $0.3 million, or 38% to $0.5 million for the three months ended September 30, 2025 compared to $0.8 million the three months ended September 30, 2024 due to a decrease in real estate transaction volume driven by the conclusion of the integrated relationship partnership with Ally and its use as a source of referrals for real estate services.
Real estate services decreased $0.2 million, or 10.8% to $1.6 million for the nine months ended September 30, 2025 compared to $1.8 million for the nine months ended September 30, 2024 due to a decrease in real estate transaction volume driven by the conclusion of the integrated relationship partnership with Ally and its use as a source of referrals for real estate services.
Other revenue decreased by $1.2 million, or 178.8% to $(0.5) million for the three months ended September 30, 2025 compared to $0.7 million for the three months ended September 30, 2024. The decrease in other revenue was primarily driven by mortgage and non-mortgage loan servicing activities in the U.S. and U.K.
Other revenue decreased by $0.7 million, or 35.4% to $1.2 million for the nine months ended September 30, 2025 compared to $1.9 million for the nine months ended September 30, 2024. The decrease in other revenue was primarily driven by mortgage and non-mortgage loan servicing activities in the U.S. and U.K.
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Net Interest Income
The components of our net interest income for the period were:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Mortgage interest income | $ | 7,075 | $ | 5,400 | $ | 21,298 | $ | 12,832 | |||||||||||||||
| Interest income on loans held for investment | 6,560 | 705 | 12,333 | 1,008 | |||||||||||||||||||
| Interest income from investments | 3,220 | 3,762 | 7,826 | 14,060 | |||||||||||||||||||
| Warehouse interest expense | (5,627) | (3,178) | (14,142) | (7,575) | |||||||||||||||||||
| Interest expense on customer deposits | (6,559) | (637) | (12,916) | (1,007) | |||||||||||||||||||
| Other interest expense | - | (1,631) | (1,711) | (5,963) | |||||||||||||||||||
| Total net interest income/(loss) | $ | 4,669 | $ | 4,421 | $ | 12,688 | $ | 13,355 | |||||||||||||||
Mortgage interest income increased $1.7 million, or 31% to $7.1 million for the three months ended September 30, 2025 compared from $5.4 million of the three months ended September 30, 2024. The increase in mortgage interest income was primarily driven by the increase in origination volume and the mortgage 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.
Mortgage interest income increased $8.5 million, or 66.0% to $21.3 million for the nine months ended September 30, 2025 compared from $12.8 million of the nine months ended September 30, 2024. The increase in mortgage interest income was primarily driven by the increase in origination volume and the mortgage 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.
Interest income on loans held for investment increased $5.9 million, or 830.5% to $6.6 million for the three months ended September 30, 2025 compared to $0.7 million for the three months ended September 30, 2024. The increase in interest income on loans held for investment was driven by increased originations of loans held for investment in our U.K. banking operations. Loans held for investment was $623.4 million and $81.4 million as of September 30, 2025 and 2024.
Interest income on loans held for investment increased $11.3 million, or 1,124% to $12.3 million for the nine months ended September 30, 2025 compared to $1.0 million for the nine months ended September 30, 2024. The increase in interest income on loans held for investment was driven by increased originations of loans held for investment in our U.K. banking operations. Loans held for investment was $623.4 million and $81.4 million as of September 30, 2025 and 2024.
Interest income from investments decreased $0.5 million, or 14% to $3.2 million for the three months ended September 30, 2025 compared to $3.8 million for the three months ended September 30, 2024. The decrease in interest income from investments was primarily driven by decreased holdings of investments with maturities less than 90 days which was partially offset by increases in holdings of short-term investments with maturities of 91 days to a year.
Interest income from investments decreased $6.2 million, or 44.3% to $7.8 million for the nine months ended September 30, 2025 compared to $14.1 million for the nine months ended September 30, 2024. The decrease in interest income from investments was primarily driven by decreased holdings of investments with maturities less than 90 days which was partially offset by increases in holdings of short-term investments with maturities of 91 days to a year.
Warehouse interest expense increased $2.4 million, or 77% to $5.6 million for the three months ended September 30, 2025 compared to $3.2 million for the three months ended September 30, 2024. The increase in warehouse interest expense was primarily driven by increased borrowings on funding facilities used in the mortgage production process to meet the increased origination volume.
Warehouse interest expense increased $6.6 million, or 86.7% to $14.1 million for the nine months ended September 30, 2025 compared to $7.6 million for the nine months ended September 30, 2024. The increase in warehouse interest expense was primarily driven by increased borrowings on funding facilities used in the mortgage production process to meet the increased origination volume.
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Interest expense on customer deposits increased $5.9 million, or 930% to $6.6 million for the three months ended September 30, 2025 compared to $0.6 million for the three months ended September 30, 2024. The increase in interest expense on customer deposits was driven by increased customer deposits which in turn fund our loans held for investment in our U.K. banking operations. The balance of customer deposits was $694.8 million and $97.8 million as of September 30, 2025 and 2024.
Interest expense on customer deposits increased $11.9 million, or 1183% to $12.9 million for the nine months ended September 30, 2025 compared to $1.0 million for the nine months ended September 30, 2024. The increase in interest expense on customer deposits was driven by increased customer deposits which in turn fund our loans held for investment in our U.K. banking operations. The balance of customer deposits was $694.8 million and $97.8 million as of September 30, 2025 and 2024.
Other interest expense decreased $1.6 million, or 100% to none for the three months ended September 30, 2025 compared to $1.6 million for the three months ended September 30, 2024. Other interest expense is related to interest expense on our Convertible Notes which were extinguished as part of the Exchange per Note 10 in April 2025. As part of the TDR accounting, the interest on the Senior Notes has been recognized up front as part of the new carrying value.
Other interest expense decreased $4.3 million, or 71.3% to $1.7 million for the nine months ended September 30, 2025 compared to $6.0 million for the nine months ended September 30, 2024. Other interest expense is related to interest expense on our Convertible Notes which were extinguished as part of the Exchange per Note 10 in April 2025. As part of the TDR accounting, the interest on the Senior Notes has been recognized up front as part of the new carrying value.
Expenses
The components of our expenses for the period were:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
|
(Amounts in thousands)
|
2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Compensation and benefits | 41,287 | 37,752 | 129,367 | 111,079 | |||||||||||||||||||
| General and administrative | 10,167 | 12,611 | 33,304 | 41,813 | |||||||||||||||||||
| Technology | 6,726 | 7,249 | 20,856 | 19,289 | |||||||||||||||||||
| Marketing and advertising | 10,490 | 12,101 | 30,317 | 25,186 | |||||||||||||||||||
| Loan origination expense | 3,728 | 3,774 | 10,154 | 7,142 | |||||||||||||||||||
| Depreciation and amortization | 3,398 | 8,259 | 10,908 | 25,323 | |||||||||||||||||||
| Other expenses/(income) | 7,051 | 1,332 | 11,226 | 270 | |||||||||||||||||||
|
Total operating expenses
|
$ | 82,847 | $ | 83,078 | $ | 246,132 | $ | 230,102 | |||||||||||||||
Compensation and benefits expenses were $41.3 million for the three months ended September 30, 2025, an increase of $3.5 million or 9% compared with $37.8 million for the three months ended September 30, 2024. We increased our headcount between the two periods, and increased incentive compensation as a result of increased production volume, which lead to an increase in compensation and benefits. The increase in headcount was primarily in the second quarter of 2025 as we began to ramp up our Retail channel.
Compensation and benefits expenses were $129.4 million for the nine months ended September 30, 2025, an increase of $18.3 million or 16% as compared with $111.1 million for the nine months ended September 30, 2024. We increased our headcount between the two periods, and increased incentive compensation as a result of increased production volume, which lead to an increase in compensation and benefits. The increase in headcount was primarily in the second quarter of 2025 as we began to ramp up our Retail channel.
General and administrative expenses were $10.2 million for the three months ended September 30, 2025, a decrease of $2.4 million or 19% as compared with $12.6 million in the three months ended September 30, 2024. The decrease in general and administrative expenses was driven primarily by decreases in rent and occupancy expenses and reductions in insurance premiums.
General and administrative expenses were $33.3 million for the nine months ended September 30, 2025, a decrease of $8.5 million or 20.4% as compared with $41.8 million in the nine months ended September 30, 2024. The decrease in
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general and administrative expenses was driven primarily by decreases in rent and occupancy expenses and reductions in insurance premiums.
Technology expenses were $6.7 million for the three months ended September 30, 2025, a decrease of $0.5 million or 7% as compared with $7.2 million in the three months ended September 30, 2024. The decrease in technology expenses was driven primarily by the reduction of costs related to software vendors.
Technology expenses were $20.9 million for the nine months ended September 30, 2025, an increase of $1.6 million or 8.1% as compared with $19.3 million in the nine months ended September 30, 2024. The increase in technology expenses was driven primarily by an increase in costs associated with software vendors. This was driven by increased headcount as we ramped up our Retail channel in the first half of 2025, which required the purchase of additional software licenses.
Marketing and advertising expenses were $10.5 million for the three months ended September 30, 2025, a decrease of $1.6 million or 13% as compared with $12.1 million in the three months ended September 30, 2024. The decrease is due to the recent lower marketing expense required by the Retail channel and the increased conversion across all channels driven by further advancements in our internal AI technology.
Marketing and advertising expenses were $30.3 million for the nine months ended September 30, 2025, an increase of $5.1 million or 20.4% as compared with $25.2 million in the nine months ended September 30, 2024. The increase is due to higher investment to drive volume for our new Retail channel as well as spend attributed to a pilot program with our newly signed fintech partnership.
Loan origination expenses were $3.7 million for the three months ended September 30, 2025, a decrease of $0.1 million or 1%, as compared with $3.8 million in the three months ended September 30, 2024. The decrease in loan origination expenses driven by further optimization of our loan origination vendors.
Loan origination expenses were $10.2 million for the nine months ended September 30, 2025, and increase of $3.0 million or 42.2%, as compared with $7.1 million in the nine months ended September 30, 2024. The increase in loan origination expenses was driven by an increase in origination volume.
Other expenses/(income) were $7.1 million for the three months ended September 30, 2025, an increase of $5.7 million or 429%, as compared with $1.3 million in the three months ended September 30, 2024. The increase in other expenses was primarily driven by an increase on liability classified warrants and equity related liabilities as a result of the increased trading price of our common stock.
Other expenses/(income) were $11.2 million for the nine months ended September 30, 2025, an increase of $11.0 million or 4057.8%, as compared with $0.3 million in the nine months ended September 30, 2024. The increase in other expenses was primarily driven by an increase on liability classified warrants and equity related liabilities as a result of the increased trading price of our common stock.
Non-GAAP Financial Measures
We report Adjusted Net Loss and Adjusted EBITDA, which are financial measures not prepared in accordance with generally accepted accounting principles ("non-GAAP") that we use to supplement our financial results presented in accordance with GAAP. These non-GAAP financial measures should not be considered in isolation and are not intended to be a substitute for any GAAP financial measures. These non-GAAP measures provide supplemental information that we believe helps investors better understand our business, our business model, and how we analyze our performance.
Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning and are not prepared under any comprehensive set of accounting rules or principles. Accordingly, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
We include reconciliations of Adjusted Net Loss and Adjusted EBITDA to GAAP Net Income (Loss), their most closely comparable GAAP measure. We encourage investors and others to review our condensed consolidated financial statements and notes thereto in their entirety included elsewhere in this quarterly report on Form 10-Q, not to rely on any single financial measure, and to consider Adjusted Net Loss and Adjusted EBITDA only in conjunction with their respective most closely comparable GAAP financial measure.
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We believe these non-GAAP financial measures are useful to investors for supplemental period-to-period comparisons of our business and understanding and evaluating our operating results for the following reasons:
•We use Adjusted Net Loss to assess our overall performance, without regard to items that are considered to be unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations;
•Adjusted EBITDA is widely used by investors and securities analysts to measure a company's operating performance without regard to items such as stock-based compensation expense, depreciation and amortization expense, interest and amortization on non-funding debt, income tax expense, and costs that are unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations, all of which can vary substantially from company to company depending upon their financing and capital structures;
•We use Adjusted Net Loss and Adjusted EBITDA in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance; and
•Adjusted Net Loss and Adjusted EBITDA provide consistency and comparability with our past financial performance, facilitate period-to-period comparisons of our core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Further, although we use these non-GAAP measures to assess the financial performance of our business, these measures have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our financial results as reported under GAAP. Some of these limitations are, or may in the future be, as follows:
•Although depreciation and amortization expense is a non-cash charge, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
•Adjusted Net Loss and Adjusted EBITDA exclude stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;
•Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•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; or (ii) tax accruals or tax payments that represent a reduction in cash available to us; and
•The expenses and other items that we exclude in our calculations of Adjusted Net Loss and Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from similarly titled non-GAAP measures when they report their operating results, and we may, in the future, exclude other significant, unusual or non-recurring expenses or other items from these financial measures.
Because of these limitations, Adjusted Net Loss and Adjusted EBITDA should be considered along with other financial performance measures presented in accordance with GAAP, and not as an alternative or substitute for our financial results prepared and presented in accordance with GAAP.
Adjusted Net Loss and Adjusted EBITDA
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, and other non-core operational expenses.
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, 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.
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The following table presents a reconciliation of Net Income (Loss) to Adjusted Net Loss and Adjusted EBITDA for the periods indicated:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
|
(Amounts in thousands)
|
2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
|
Adjusted Net Loss
|
|||||||||||||||||||||||
|
Net (loss) income
|
$ | (39,125) | $ | (54,210) | $ | (125,952) | $ | (147,067) | |||||||||||||||
|
Stock-based compensation expense (1)
|
4,271 | 5,487 | 12,556 | 21,812 | |||||||||||||||||||
|
Change in fair value of warrants and equity related liabilities (2)
|
5,578 | (206) | 5,923 | (927) | |||||||||||||||||||
|
Restructuring, impairment, and other expenses (3)
|
817 | 43 | 2,593 | 948 | |||||||||||||||||||
|
Adjusted Net Loss
|
$ | (28,459) | $ | (48,886) | $ | (104,880) | $ | (125,234) | |||||||||||||||
|
Adjusted EBITDA
|
|||||||||||||||||||||||
|
Net (loss) income
|
$ | (39,125) | $ | (54,210) | (125,952) | $ | (147,067) | ||||||||||||||||
|
Income tax expense / (benefit)
|
145 | 126 | 384 | 472 | |||||||||||||||||||
|
Depreciation and amortization expense (4)
|
3,398 | 8,259 | 10,908 | 25,323 | |||||||||||||||||||
|
Stock-based compensation expense (1)
|
4,271 | 5,487 | 12,556 | 21,812 | |||||||||||||||||||
|
Interest and amortization on non-funding debt (5)
|
- | 1,631 | 1,711 | 5,962 | |||||||||||||||||||
|
Restructuring, impairment, and other expenses (3)
|
817 | 43 | 2,593 | 948 | |||||||||||||||||||
|
Change in fair value of warrants and equity related liabilities (2)
|
5,578 | (206) | 5,923 | (927) | |||||||||||||||||||
|
Adjusted EBITDA
|
$ | (24,915) | $ | (38,870) | $ | (91,877) | $ | (93,477) | |||||||||||||||
__________________
(1)Stock-based compensation represents the non-cash grant date fair value of stock-based instruments utilized to incentivize employees and consultants recognized over the applicable vesting period. This expense is a non-cash expense. 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).
(2)Change in fair value of 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. This charge is a non-cash charge.
(3)Restructuring, impairment, and other expenses are primarily comprised of employee one-time termination benefits, real estate restructuring losses, impairment of property and equipment, and goodwill.
(4)Depreciation and amortization represents the loss in value of fixed and intangible assets through depreciation and amortization, respectively. These expenses are non-cash expenses, and we believe that they do not correlate to the performance of our business during the periods presented.
(5)Interest and amortization on non-funding debt represents interest and amortization on the Convertible Note, which is included within net interest income in our Consolidated Statements of Operations and Comprehensive Loss.
Liquidity and Capital Resources
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. 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 September 30, 2025, we had three warehouse lines of credit in different amounts and with various maturities, with an aggregate available amount of $575.0 million.
As of September 30, 2025 and December 31, 2024, we had loans held for investment of $623.4 million and $111.5 million, respectively. The growth in loans held for investment has been primarily funded with customer deposits which are held at the U.K. banking entity. As of September 30, 2025 and December 31, 2024, we had customer deposits of $694.8 million and $134.1 million, respectively.
We have also raised capital via the closing of the Business Combination in August 2023, which resulted in gross proceeds of approximately $568 million. Of the total gross proceeds, $528.6 million was in the form of Convertible Notes issued by Better to SB Northstar LP. During the second quarter of 2025, we entered into the Note Exchange Agreement to exchange our existing Convertible Notes for $155.0 millionof Senior Notes and a cash payment of $110.0 million as further discussed below.
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We have also raised capital through an at-the-market equity offering program ("ATM Program") for sales of up to $75.0 million of our Class A common stock pursuant to our effective shelf registration statement on Form S-3 and the related prospectus supplement dated September 26, 2025. Further details discussed below.
We believe that funds provided by these sources will be adequate to meet our liquidity and capital resource needs for at least the next 12 months under current operating conditions.
Warehouse Lines of Credit
As of September 30, 2025 and December 31, 2024, we had the following outstanding warehouse lines of credit:
|
(Amounts in thousands)
|
Maturity
|
Facility Size
|
Amount
Outstanding
September 30, 2025
|
Amount
Outstanding
December 31, 2024
|
|||||||||||||||||||
|
Funding Facility 1 (1)
|
May 13, 2025 | - | - | 60,747 | |||||||||||||||||||
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Funding Facility 2 (2)
|
March 6, 2026 | 150,000 | 92,016 | 74,472 | |||||||||||||||||||
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Funding Facility 3 (3)
|
June 30, 2026 | 175,000 | 138,997 | 108,851 | |||||||||||||||||||
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Funding Facility 4 (4)
|
April 5, 2026 | 250,000 | 118,758 | - | |||||||||||||||||||
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Total warehouse lines of credit
|
$ | 575,000 | $ | 349,771 | $ | 244,070 | |||||||||||||||||
__________________
(1)Interest charged under the facility is at the 30-day term SOFR plus 2.125%. During the second quarter of 2025, Funding Facility 1 was terminated prior to maturity.
(2)Interest charged under the facility is at the 30-day term SOFR plus 2.10%- 2.50%. Cash collateral deposit of $3.8 million is maintained and included in restricted cash.
(3)Interest charged under the facility is at the 30-day term SOFR plus 1.75% - 3.75%. There is no cash collateral deposit maintained as of September 30, 2025.
(4)Interest charged under the facility is at the daily simple SOFR plus 1.75%- 2.50%. There is no cash collateral deposit maintained as of September 30, 2025.
Convertible Notes and Note Exchange Agreement
On April 12, 2025, we entered into a privately negotiated Note Exchange Agreement with the Investor, pursuant to which management and the Investor agreed to exchange all of the $532.5 milliontotal aggregate principal amount outstanding of our existing 1.00% Convertible Notes due 2028 held by the Investor for (i) $155.0 million in aggregate principal amount of the Senior Notes, and (ii) a cash payment of $110.0 million. We will not receive any cash proceeds in connection with the Exchange. The Exchange was subsequently consummated on April 28, 2025, upon which we received and cancelled all Existing Notes and the Investor forfeited any accrued and unpaid interest in respect of the Existing Notes to but not including the Closing Date.
Pursuant to the Note Exchange Agreement, we granted the Investor, conditioned on closing of the Exchange, a non-transferrable right to designate one non-voting board observer from June 1, 2025, for so long as the Investor and affiliates of the Investor continue to hold, in the aggregate, either (i) at least 25% of the initial aggregate principal amount of the New Notes or (ii) at least 12% of the sum of the outstanding shares of the Company's Class A Common Stock, Class B Common Stock and Class C Common Stock, calculated on a fully diluted basis.
New Notes Indenture
On the Closing Date, we entered into the New Notes Indenture with GLAS Trust Company LLC, as Trustee and notes collateral agent. The Senior Notes represent our senior secured obligations, and are secured by substantially all of the Company's and its material domestic subsidiaries' assets. The Senior Notes are (i) senior in right of payment to our existing and future senior, unsecured indebtedness to the extent of the value of the collateral; and (ii) senior in right of payment to ours existing and future indebtedness that is expressly subordinated to the New Notes.
Interest on the Senior Notes is payable, at our election, in cash or by payment-in-kind by issuing additional notes in an aggregate principal amount equal to the relevant amount of interest paid in kind. The Senior Notes will accrue interest at a rate of 6.00% per annum, payable semi-annually in arrears on June 30 and December 31 of each year, starting on June 30, 2025. The Senior Notes will mature on December 31, 2028.
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The Senior Notes will be redeemable, in whole and not in part, at our option at any time prior to December 31, 2028, at a cash redemption price equal to 106.00% of the principal amount of the Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with an amount not exceeding the net cash proceeds of one or more Equity Offerings (as defined in the New Notes Indenture); provided that at least 60% of the aggregate principal amount of the Senior Notes remains outstanding immediately after the redemption and the redemption occurs within 150 days of the date of the closing of each such Equity Offering. Additionally, prior to December 31, 2028, we may redeem all or part of the Senior Notes at a redemption price equal to the sum of 108% of the principal amount of the Senior Notes to be redeemed, plus the Make Whole Premium (as defined in the New Notes Indenture) at the redemption date, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If certain corporate events that constitute a Change of Control Triggering Event (as defined in the New Notes Indenture) occur, then noteholders may require us to repurchase all or any part of their Senior Notes at a cash repurchase price equal to 101% of the aggregate principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to the date of settlement. The definition of Change of Control Triggering Event includes certain business combination transactions involving the Company.
The carrying value of the Senior Notes of $200.4 million as of September 30, 2025 and is made up of the total future undiscounted cash flows which includes principal of $155.0 million and interest make-whole as well as a redemption premium of $45.4 million.
At-the-Market Offering Program
On September 26, 2025, the Company implemented the ATM Program for sales of up to $75.0 million of its Class A common stock pursuant to its effective shelf registration statement on Form S-3 (File No. 333-287335) and the related prospectus supplement dated September 26, 2025. The Company entered into separate sales agreements with Cantor Fitzgerald & Co. and BTIG, LLC (each an "Agent" and collectively, the "Agents"), under which it may offer and sell shares of its Class A common stock from time to time through the Agents, either as sales agents or as principals. Each Agent is entitled to a commission of 2.0% of the gross sales price of all shares sold through it as Agent.
During the three and nine months ended September 30, 2025, the Company sold 9,917 shares of Class A common stock under the ATM Program for total gross proceeds of $0.6 million. The Company incurred commissions and other offering expenses of an immaterial amount. As of September 30, 2025, approximately $74.4 millionremained available for issuance under the ATM Program. Subsequent to September 30, 2025 and through November 13, 2025, the Company sold 278,978 shares of Class A common stock under the ATM Program for total gross proceeds of $17.1 millionand net proceeds of approximately $16.8 million, after deducting aggregate commissions and offering expenses of approximately $0.3 million. As of November 13, 2025, approximately $57.3 millionremained available for issuance under the ATM Program.
The Company intends to use any net proceeds from the ATM Program for general corporate purposes, including working capital and to increase its warehouse line capacity to finance anticipated growth in loan production and funded loan volume. If fully utilized, the ATM Program is expected to significantly increase the Company's warehouse line capacity and support an increase in monthly originations.
Cash Flows
The following table summarizes our cash flows for the periods presented:
| Nine Months Ended September 30, | |||||||||||
|
(in thousands)
|
2025 | 2024 | |||||||||
|
Net cash (used in) provided by operating activities
|
$ | (109,305) | $ | (273,945) | |||||||
|
Net cash (used in) provided by investing activities
|
$ | (589,529) | $ | (111,825) | |||||||
|
Net cash provided by (used in) financing activities
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$ | 555,373 | $ | 93,108 | |||||||
Nine Months Ended September 30, 2025 as Compared to Nine Months Ended September 30, 2024
Operating Activities
Net cash used by operating activities was $109 million for the nine months ended September 30, 2025, a decrease of $165 million, or 60%, compared to net cash used by operating activities of $274 million for the nine months ended
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September 30, 2024. The decrease in net cash used by operating activities was primarily driven by loan originations in excess of proceeds from sales of loans for the nine months ended September 30, 2024 while loan originations remained relatively even with proceeds from sales of loans for the nine months ended September 30, 2025.
Investing Activities
Net cash used in investing activities was $590 million for the nine months ended September 30, 2025, an increase of $478 million, or 427%, compared to net cash used in investing activities of $112 million for the nine months ended September 30, 2024. The increase in cash used in investing activities primarily consists of purchases in excess of maturities of short-term investments, as well as originations of loans held for investment, both of which are through our U.K. banking entity which the Company has focused on growing during the nine months ended September 30, 2025. Loans held for investment are funded from our cash on hand as well as growth in customer deposits held by our U.K. banking entity, which is included within financing activities.
Financing Activities
Net cash provided by financing activities was $555.4 million for the nine months ended September 30, 2025, an increase of $462 million, or 496%, compared to net cash provided by financing activities of $93 million for the nine months ended September 30, 2024. The increase in cash provided by financing activities was primarily driven by an increase in customer deposits, namely through our U.K. banking entity and was offset by $110.0 million payment against our Convertible Notes as part of the Exchange.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in Item 303 of Regulation S-K that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies and Estimates
There have been no significant changes in our critical accounting policies and estimates during the period ended September 30, 2025, as compared to the critical accounting policies and estimates disclosed in the audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2024, which are included in our 2024 Annual Report on Form 10-K.
Better Home & Finance Holding Company published this content on November 13, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 13, 2025 at 21:57 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]