Better Home & Finance Holding Co. Q4 FY2024 earnings call

• Key achievements: Grew full year funded loan volume by 19% YOY, revenue by 50% YOY, and reduced adjusted EBITDA losses by 26% YOY. - AI initiatives: Betsy, an AI voice-based loan assistant, has seen significant growth in customer interactions, from ~5,000 in June 2024 to over 115,000 in February 2025. Tinman AI is used for automating underwriting processes, with the one-day mortgage product accounting for over 70% of mortgage volume and aim to grow AI underwriting review to over 75% of locks by end of 2025. - Distribution channel diversification: Launched NEO Powered by Better, with ~110 NEO loan officers onboarded across 53 branches since January 2025, serving ~220 families equating to $95 million in funded loan bonds. - Expense reductions: Excluding non-recurring restructuring expenses, total expenses decreased ~24% quarter-over-quarter in Q4 2024, with loan origination, compensation-related, and marketing expenses reduced.

For the full year 2024, Better Home & Finance Holding Company had funded loan volume of $3.6 billion, revenue of $108 million, and an adjusted EBITDA loss of $121 million. In the fourth quarter of 2024, funded loan volume was $936 million, a year-over-year increase of 77%. Revenue for Q4 was $25 million. The product categories included purchase, refinance, and second lien loans. Home equity products and refinance loans were significant growth drivers in the fourth quarter year-over-year. For example, year-over-year purchase loan volume increased 25%, refinance loan volume increased 611%, and HELOC and home equity loan volume increased 416%. Revenue contribution by segment wasn't explicitly broken down into percentages but the focus was on the growth across different loan types.

• For 2025, expect funded loan volume growth in low to mid-double digits YOY, driven by NEO Powered by Better but offset by loss of Ally business (~$900 million headwind). - First quarter 2025 funded loan volume expected to be down ~10%-15% compared to Q4 2024 due to seasonality and Ally wind down. - Expect to further decrease adjusted EBITDA losses in 2025 due to efficiency gains and corporate cost reductions. - Exiting non-core UK assets to start benefiting adjusted EBITDA losses in second half of 2025.

• Macroeconomic uncertainties: Persistently high mortgage rates and low housing affordability continue to strain mortgage demand. - Regulatory risks: While regulatory climate has become more friendly towards AI, still need to navigate regulatory landscape. - Market competition: Competing with established players in the mortgage industry with different technological capabilities and market reach.

Q: How does the underwriting and AI technology adjust for high cost and limited availability of property insurance?

A: There's an insurance engine built in that delivers instant homeowners insurance to consumers during refinance, HELOC, or cash out refi processes, with over 15 data forks and API calls processing multiple factors across 3,600 counties. Betsy can handle all functions that used to take many people to do, reducing the need for large sales, processing, and insurance agent staff.

Q: If the trend for profitability keeps moving in the right direction, how will it drive the amount of risk taken?

A: The company operates a pure marketplace business where loans are committed to be sold to others, so path to profitability isn't built on taking more marginal risk. It's built on efficiency, exiting legacy costs, improving margins from NEO channel, etc., without taking more credit risk.

Q: Walk through the saving opportunities from Tinman's application of AI?

A: Betsy reduces cost by handling inbound calls in nights and evenings, improving customer experience and reducing sales costs by ~$2,000 per funded loan. AI underwriting saves ~$1,400 per loan, with production cost already 35% cheaper than industry average and aiming for further savings with full AI driven loans.

Q: Update on gain on sale margins trending, quarter to date compared to 4Q and factors contributing?

A: Gain on sale margin is trending higher in Q1. NEO loans have higher gain on sale than company-wide in 2024. In D2C, Betsy and AI have gradually increased gain on sale from sub-2% to north of 2%, with rate drop and improved customer experience through faster response times contributing.

Q: How to contextualize contribution profit per loan or loan economics?

A: The business runs on contribution margin basis, which has been improving. They are maniacally focused on lowering costs in mortgage business to drive contribution profit, with savings from AI, exiting legacy costs, etc., contributing to better contribution margin.

Q: Feedback on how Betsy is resonating with consumers and loan funding speed?

A: ~18% of consumers ask to be transferred to a human, uptake greatest among 20-35 and 55+ age groups. In New York, able to close loans in 32 days, compared to industry average 46 days, ~40% better than competition.