Ladies and gentlemen, thank you for joining us and welcome to the Better Home & Finance Holding Company's Third Quarter 2025 Results Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press 9 to raise your hand and 6 to unmute. I will now hand the conference over to Tarek Afifi, Corporate Finance at Better. Tarek? Please go ahead.

Hello, everyone. And welcome to Better Home & Finance Holding Company's third quarter earnings conference call. My name is Tarek Afifi, on Better's Corporate Finance team. Joining me today is Vishal Garg, Founder and Chief Executive Officer of Better. In addition to this conference call, please direct your attention to our third 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 filing that could cause our actual results to differ materially from our historical. We assume no responsibility to update forward-looking statements other than as required by law. 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, and when filed in our quarterly report on Form 10-Q filed with the SEC. Amounts described as of and for the quarter ended 09/30/2025, represent a preliminary estimate as of the date of this earnings release and may be revised upon our quarterly report on Form 10-Q with the SEC. More information as of and for the end of the quarter ended 09/30/2025, will be provided upon filing our quarterly report on Form 10-Q with the SEC. I will now turn the call over to Vishal.

Thank you, Tarek, and welcome to our third quarter 2025 earnings call. This has been a pivotal quarter with significant developments for Better as the leading AI home finance company. We have rapidly evolved from a dominant direct-to-consumer business into a platform powering the entire home finance ecosystem, both for consumers directly and increasingly through our growing list of institutional partners. Partners include both local mortgage lenders and financial institutions, and we empower them with our Tinman AI platform to serve their customer needs better. In summary, over the last couple of months, we announced three new partnerships, which we see as deeply validating and believe will meaningfully expand our market reach across the home finance landscape and drive profitability as we track to breakeven adjusted EBITDA by Q3 2026. We are already pacing to fund $500 million in monthly volume as a result of the growth through these partnerships, and that momentum is accelerating rapidly. In the next six months, we are comfortable that this will double to at least a billion a month in funded loan volume. Our progress comes mostly from our soft launch during which we have marketed the power by Better solution to only a small fraction of our partner's customer bases and seen great success. This partnership represents the most significant opportunity in Better's history. Excitingly, thanks to our strong unit economics and best-in-class experience, powered by Betsy and Tinman, our pipeline of additional partners continues to expand rapidly. We expect to share further updates on these partnerships and additional ones in Q4. Our pipeline of Tinman AI platform clients keeps expanding as the industry is seeing what our platform could deliver. We are in late-stage conversations to land partners in some of the biggest, most strategic verticals in consumer finance. Examples include one…

Hello.

My name is Ryan Grant. How are you doing today?

Woah. Am I talking to an AI or is it you, Ryan? What happened here?

Hey. It's actually me. Ryan's AI mortgage adviser. Kind of like having Ryan's brain and Better Mortgage's tech all rolled into one. Ready to help you anytime. What can I do for you today? Woah. Woah. Woah.

Like, what did you do with Ryan's brain? Like,

Think of it like this. I get it. It sounds wild. Basically, I'm Ryan's expertise combined with AI tech. So I can help you anytime with mortgage questions, calculations, and advice just like he would. But instantly and around the clock. No worries. Ryan's still around. But I'm here to make things easier for you. What would you like to know or talk about?

Okay. I mean, that's interesting. Like, you tell me a little bit about yourself? Like, do you have a lot of experience doing this, or do they just get, like, some guy off the street?

I'm built on Ryan's experience. He's personally funded nearly $2 billion in mortgages and helped thousands of homeowners. So I bring all that know-how plus Better Mortgage's smart tech to guide you through your mortgage journey with confidence and clarity. Think of me as Ryan's brain. But always ready to help you anytime you need. What's your biggest question or goal with your mortgage right now?

I mean, I think rates are coming down, and I got this mortgage two years ago. And I think I can save some money. Right?

That makes sense. Refinancing to save money is a smart move if rates have dropped since you got your mortgage. To see how much you could save, I'd need to know your current interest rate, your remaining loan balance, and how many years you have left on your mortgage. Can you share those details?

Yeah. No. So I think I have $500,000 left on my mortgage. I got it two years ago, literally, like in September '23. And I think like, you know, I don't remember exactly what my rate was, but it was like, in the 7% something range. Maybe you can help me, like, figure that out. Like, yeah.

Got it. You have about $500,000 left and your loan started around September 2023 with a rate around 7%. I can help estimate your savings based on that. Do you happen to know your current monthly principal and interest payment? If not, no worries. I can estimate that too.

Yeah. I know. It's like on autopay, so I don't know exactly what it is. So, yeah, if you have an estimate, that would be really great.

Your current loan is about 7% with a $500,000 balance and twenty-eight years left. And your monthly payment is roughly $3,398. Oh, that's close. Got it. Let's start with the option that gives you the lowest monthly payment by paying points upfront. This option lowers your interest rate, so your monthly payment goes down. But you'll pay some cash at closing. Sound good?

Yeah. Yeah. Let's find out. Sure.

The lowest monthly payment option with points. Your new rate would be about 5.13%. Your monthly payment would drop to around $2,722, saving you about $676 each month when it comes with points costing about $12,907 upfront. Would you like to hear about the par rate option with lower closing costs too?

Yeah. Yeah. Why not? Like, you know, I'm not sure if I've got just $12 lying around.

The par rate option means no points upfront. So your closing costs are lower. Your rate would be about 5.99% with the monthly payment around $3,053, still a bit lower than your current payment, saving about $345 each month. It's a bit higher monthly, but you keep more cash at closing. Sound like something you want to explore more?

Yeah. No. Like, isn't there a way, like, I heard, like, you can just roll the closing cost into, like, the mortgage, like, at closing? Is that possible here?

Yes. You can often roll closing costs into your new loan balance, which means you don't pay them out of pocket at closing. That usually comes with a slightly higher interest rate, like the par rate option I just mentioned. So your monthly payment might be a bit higher, but you keep your cash upfront. Does that sound like a good fit for you?

Yeah. No. I think I'm gonna go with a lower monthly payment. Like, $700 a month of savings is like a lot more than $350 a month of savings. So I think that will be really good for my cash flow. So what do I need to do next? Like, does this work?

Great choice. Saving about $700 a month can really help your cash flow. The next step is to start your refinance application so we can lock in that lower rate and get the process going. Could you please spell your first and last name for me?

Yeah. Yeah. Wait. Wait. Wait. Can I talk to the real Ryan too? Like, or is it just gonna be me and you all the time?

I totally get wanting to chat with the real Ryan. He's a great guy. I'm here to help you anytime with quick answers and guidance. If you ever want to connect with Ryan directly, I can help make that happen once we get your application started and things are moving along. Sound good?

Sounds great. Alright. Listen. You know, I'll get the application going, and then why don't we, like, set out some time to talk to the real Ryan? It'll be interesting to see whether he knows as much as you do.

That sounds like a solid plan. To get started, could you please spell your first and last name for me? That way, I can set up your application, and we'll be on our way.

Okay. It's Vishal Garg. Why don't I do the rest of this online, and then we'll, you know, connect later? Alright? Talk soon. Bye.

Thanks, Vishal. 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 raise your hand now. If you have dialed into today's call, please press 9 to raise your hand and 6 to unmute. Your first question comes from the line of Owen Rickert with Northland. Your line is open. Please go ahead.

Hey, Vishal. Thank you for taking my questions here. I guess quickly, can you just dive a bit deeper into the three recent partnership announcements and how you expect each of these to ramp as we head into 2026?

Sure. So with respect to the large financial services platform, we expect that to ramp over time, over the next six months, specifically as we increase the penetration of their users in their app that see the offers from us and the number of users every day that they drop into Tinman to surface offers for. And those offers will be sent via stories in their app, notifications, text messages, things like that. And so we're just gonna increase those. And we've created a specific pod for this partner because it's such a large partner. And we need to staff into that pod. And so, while we expect the overall size of the partnership to manifest itself into, you know, multiple billions of dollars a month, it's going to take a bit of time for us to also ramp up and see what labor is gonna be required, what percentage of that partner's customers are comfortable talking to an AI, what percentage of that partner's customers need to talk to a person. So we're working all of that out. With respect to the other partnerships, the large mortgage originator, we're gonna start first with their direct-to-consumer team, then we're gonna start rolling it out to the team that does MSR and MSR recapture. And then from there, we're gonna start rolling it out to their loan officer teams all around the country to market HELOCs and HELOANS too. And so there's gonna be a ramp in that regard as well over the next six months or so. And then, with Finance of America, we are launching the HELOCs and HELOANS first to their customer base, then to their partner originators, and then across to their wholesale channel. And so, I think that is also gonna take, you know, another three to six months to fully ramp up. As well as the second, you know, the reverse second lien HELOC product, which we are rolling out in beta right now, which we're going to then ramp up across their entire network.

Got it. Thank you. And then secondly, you did hit on this pretty early on in the prepared remarks, but how would you characterize the future partnership pipeline right now? And what does that look like today? And maybe how has this pipeline evolved over the last few months?

I think as our partners are able to see how fast we're able to implement some of the earlier partners that we have now launched, the quality of the user experience, the ability to, you know, get approved for a mortgage programmatically, the ability to take something that traditionally has been very passive and sold passively by these partners and then have that be done in an active algorithmic way, the partner pipeline has really quite frankly exploded. And so we are seeing a lot of demand. The other thing just from a macro perspective, the largest incumbent solution has been forcing, has been going through an SDK change and has been forcing reintegrations with all of its partners, for its clients. And so it's been an interesting moment where a lot of people are very, very frustrated with the incumbent solutions that are out there and are looking for something new. And so I think, you know, it's sort of like, luck is when preparedness meets opportunity. And I think, you know, we're pretty thankful to be in the position that we're in now.

Great. Thanks, Vishal.

Your next question comes from the line of Brendan McCarthy with Sidoti. Your line is open. Please go ahead.

Great. Good morning, Vishal. Good morning, everybody. I really appreciate the demo there with Ryan. I thought that was great. I just wanted to start off circling back to the new partnerships, particularly the one with the top five US personal financial services platform. Can you give us detail on what the ultimate volume opportunity is like there? You know, 50 million customers is obviously a huge number. Just curious as to what you think the addressable market is in terms of volume.

Yeah. So, I mean, if you go and try GPT and type in what is the mortgage penetration rate for a financial institution in the United States with 50 million customers, it will tell you that, you know, it ranges from 10 basis points of that customer base to 15 basis points of that customer base. So let's use, like, you know, a low average 12 basis points. You multiply 12 basis points by 50 million, that gives you 60,000 originations a year. 60,000 originations times an average balance of, like, $400,000 gives you about $24 billion. So I don't know exactly what the number is. I'm not committing to that number, but that's sort of, you know, if we were able to just do it in an average passive manner at some branch, what we think we can achieve could be multiples of that if we're able to sort of algorithmically mine and surface offers directly to consumers in their mobile app.

Understood. That's very helpful. Thank you for that. And next question, just looking at the guidance, you know, really implying strong growth there, I think, from, you know, the 500 million monthly loan volume run rate to about a billion. It's just really a step up there. What's really underpinning that outlook? Is it, you know, just strictly the partnerships? Is it a growth in D2C? Is there any interest rate assumptions there? Just curious as to what's underpinning that.

No. We're assuming interest rates stay the same. And, yes, I mean, as you can see in D2C, we have been focused on making more money per loan in D2C rather than growing volume, though volume has grown pretty substantially, especially if you take out, you know, on a quarter-on-year basis, if you take out the Ally volume that we had last year, you know, organic growth has been over 50%. And, you know, when you layer that on, if there's a rate cut, I think, you know, D2C is going to fly. But other than that, like, we're just assuming that the rates stay the same. And so the numbers I've given you and I've indicated assume the interest rate environment doesn't change.

Great. Great. Thanks. That's all for me.

Your next question comes from the line of Kartik Mehta with Northcoast. Your line is open. Please go ahead.

The press release indicated that you anticipate about a billion dollars of loan volume in the next at the end of six months because of these partnerships. Does that assume that each of these partners will be fully ramped or get fully integrated? Or are you anticipating the ramp to take longer? So, really, the billion dollars could be a lot more once the partnerships are fully integrated.

I think it could be a lot more once they've fully integrated.

And then just, you know, the per funded contribution margins increased significantly. The one volatility is in the CAC. So I'm just curious, what's your anticipation for CAC as we move through 2025 and then 2026? I'm assuming they'll start trending lower as the partnerships become a bigger part of the loan volume. But I wanted to get your perspective on that.

Yeah. I mean, with the partners, there's no CAC. Right? There's, you know, no upfront CAC. The D2C CAC remains quite high. It, you know, purchased, you know, which remains a challenge in this market environment. You're spending money this quarter to book loans in six months, twelve months, eighteen months, when the consumer actually buys the house and books a loan. I think one thing that may be underappreciated about Better is over the past three years, we've given out over a million preapprovals to consumers, and those consumers have not been able to find a house or it's been too expensive for them to find a house. And so that CAC, you know, that you see there is elevated because for all the consumers that are not able to find a house or that they want to buy, you know, basically, we eat that CAC in that specific quarter, then when that consumer finds the house they want to buy, then when they come through, then, you know, it shows as lower CAC. So the mortgage industry CAC acquisition cost problems are even further compounded by the long gestation cycle of, you know, consumers on the Internet and when they get preapproved and when they actually find a house. So, you know, we do expect as rates, if rates come down, that, you know, the CAC will come down materially across the board for purchase or for refi. I mean, just to give you some context, when in the last rate cycle, when rates were coming down, our CAC on a refi was $1,000 a loan. And so there's a lot of positive convexity in the CAC as consumers, you know, as the rate environment changes and consumers' propensity to get preapproved and then actually fund increases.

Perfect. Thank you very much. I really appreciate it.

Your next question comes from the line of Bose George with KBW. Your line is open. Please go ahead.

Hey, good morning guys. This is actually Frankie on for Bose. Nice to see you. Start with, can you just walk through the ways in which AI efficiencies increase revenue per funded loan? In slide 16, you noted that this will be driven through enhanced sales and operational performance.

Yeah. So I think what you'll see is our revenue per loan is continuing to grow up. Right? And I think the reason for that is Betsy's able to supplant the loan officer whenever the loan officer is not able to, you know, either pick up the phone, answer a question, turn around a new preapproval based on, you know, data that the consumer has provided. You know, Sunday afternoon, 04:00, they want to put in an offer that they saw. You know, Betsy's there for them in a way that, you know, traditionally, your human loan officer isn't able to be. So that's enabled us to, one, you know, make our competitive pricing, and, you know, slightly less competitive and, you know, increase the gain on sale. Number two, as our volumes are going up, and, you know, it allows us to not have to staff up with many people. I think as you can see, like, on a year-on-year basis, volume and revenue went up substantially over 50%. And expenses actually, you know, stayed the same. And, therefore, the burn came down substantially by, like, about 35, 40%. And so that's sort of how Betsy's allowing us. It's allowing us to be more responsive, which means lower discounts, superior service, really build a service offering for consumers. And then on the flip side, you know, not have to hire as many people as we scale volume. And automate the processes, like processing loans, underwriting loans, closing loans, that traditionally have been done by people.

Great. Thank you. That's very helpful. And then can you just help us understand what types of incumbent solutions you're replacing in your partnership? Is it both the LOS system and POS system?

Yes. So we have integrated with a number of POS systems that are out there. Where, let's say, if our client wants to keep the POS that they're using today, that's fine with us. You know? We'll take all of the other stuff. We generally do replace the incumbent LOS. And in many cases, we replace the POS, the LOS, the pricing engine, the CRM system, the document generation engine, the notary, you know, and closing engine, and the warehouse, you know, the warehouse software. So when the client signs up with us, we might replace as many as eight to 10 different systems that the client has.

Awesome. Thank you. That's all for me.

Your next question comes from the line of Mikhail Goberman with Citizens JMP. Your line is open. Please go ahead.

Hi, Mikhail. You're on mute. I think you have a question.

I was. Sorry about that. Thank you. No problem. Good morning. Thanks for taking the question. If I could ask about expenses and I appreciate the comments prepared remarks about the expenses and how you're planning to deal with the partnerships with regard to that going forward. I believe you mentioned a target for the first quarter of next year. Is there any sort of a number or run rate that we can put on that?

No. I think we, you know, we're hoping that, you know, within the next six months, we get to a billion dollars a month origination run rate. I think, you know, we're hoping that we continue to have scale in our expenses. We're hoping that we continue to drive a lot of corporate cost reductions forward. We've been really busy this last quarter, so I think I personally wasn't able to pay as much attention to some of the, you know, legacy contracts and things like that that we need to kind of continue to still beat out, you know, three or five-year contracts that we signed back in 2020, 2021 that we're, like, working to sort of, you know, reset, with more AI-driven type solutions. I think there's still a lot of cost savings left. Which is why we continue to drive to, you know, achieving profitability. While, you know, growing scale at the same time, you know, by Q3 2026.

Great. Appreciate that. And if I can fit in one more, just your general thoughts on the stability and strength of the mortgage industry in general given where we are with interest rates and sort of wobbles, I guess, you could say, with the economy a little bit. Just your general thoughts on the borrower and the consumer and how the whole system is developing going forward. Thank you.

Yeah. No. I think, look. I really believe that we're headed into a recession. I believe that, you know, that's gonna result in a couple of things from a macro standpoint. I think there's, you know, you would think that heading into a recession, purchase mortgage would be disadvantaged. But there's millions of people who have wanted to buy a home over the past four, five years who missed out on the 2019 to 2021 rate environment. And they have been building up their savings, and they're looking and, you know, many of them who have owned equities in the past couple of years, they have been building up wealth to go and buy a home. So I think that you're gonna see purchase mortgage origination stay at sort of where they are. You might not have, like, the boom that you did in 2020 and 2021. If we have a real recession. And then on the flip side, you know, there's like 20 million people that can start to save money as rates go below 6%. If we do actually enter into a recession. And I think that that's pretty significant. And then lastly, in the current period, let's assume we just stay in this sort of muddled medium inflation, 6% plus interest rate environment, you know, home equity origination is still such a small number compared to what they were pre-global financial crisis, you know, or where they are, you know, relative to the total size of home equity that people have in their homes, which is now, I think, $22 trillion of capital home equity, according to the latest TransUnion report. And I think for us, you know, we have both the secular tailwinds of a very competitive business model in D2C that we are now, you…

That's great color. Thank you very much.

Your final question comes from the line of Doug Harter with UBS.

Hi, Doug. Thanks. Vishal, I was hoping you could talk about, as you're guided to getting back to breakeven and to profitability, what type of volumes do you need to accomplish that?

I think depending on the mix, you know, I think we get to a billion plus, and, you know, we have a good shot at it. Obviously, the margins in our partnership business are higher than that in our D2C business. But, you know, even D2C is getting to a place where the margins are pretty healthy on a contribution margin basis. But, yeah, you know, I think we get to a billion plus. And then, you know, depending on the mix, we get to beyond that. I think, per month, I think you have a very, very, very good business that's driving towards breakeven.

And then can you talk about is there different revenue that you're generating with partners for home equity origination versus a traditional first lien mortgage?

I think home equity originations, I mean, the, you know, the loan amounts are much smaller. But the gain on sale is higher. And, you know, between the gain on sale and the fees, you know, you're making, you know, on the mortgage side, you're making maybe $8,000 a loan. In the home equity side, you're making, like, $6,500 a loan. I think it's very important to remember in both of these cases, we're not retaining mortgage, the MSR, we're not taking credit risk, we're not taking prepayment risk. We're not taking any of those risks. In home equity, we have yet to scratch the surface on what scale looks like. There are other people in the home equity market selling their loans at 107 or booking a gain on sale at 107. We're at 103 and a half. So there's a long way to go in bridging that gap. But, you know, when those people are booking those loans at 107, they're taking principal prepayment risk. They're taking credit risk. They're, you know, booking residues, all that sort of stuff. If you like comparing apples on apples basis on a pure marketplace basis, I think we're getting a pretty good deal, but I think we probably still have another point or two that we can squeeze out on our home equity originations.

Great. Appreciate it, Vishal. Thank you.

There are no further questions at this time. This concludes today's call. Thank you for attending and you may now disconnect.

Thank you, everyone.