Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-40143 Better Home & Finance Holding Company (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

Financial Data and Key Metrics Changes - In Q2 2025, the company achieved a funded loan volume of approximately $1.2 billion, representing a 25% year-over-year growth, while revenue increased by 37% to $44.1 million [14][34]. - The adjusted EBITDA loss for the quarter was approximately $27 million, with expectations to reach adjusted EBITDA breakeven by Q3 2026 [34][36]. - Total expenses decreased by approximately 3% in Q2 compared to Q1 2025 [35]. Business Line Data and Key Metrics Changes - Funded loan volume by product was composed of 67% purchase loans, 20% second lien, and 13% refinance loans [34]. - The home equity and HELOC loans saw a significant increase of 166% year-over-year, while refinance loan volume increased by 109% [14]. - The direct-to-consumer (D2C) model generated 64% of the funded loan volume, while the Tinman AI platform contributed 36% [34]. Market Data and Key Metrics Changes - The company reported a lead-to-lock conversion rate increase of over 30%, from 3.3% to 4.4%, attributed to the implementation of Betsy AI [10][46]. - The Birmingham Bank in the UK grew its loan book by 90% sequentially in Q2 2025 [38]. Company Strategy and Development Direction - The company aims to achieve profitability by focusing on AI-driven technology, reducing corporate costs, and diversifying product and distribution channels [7][14]. - The strategic priorities include driving growth opportunities independent of broader economic conditions, reducing expenses, and improving operational efficiency [14][16]. - The company is expanding its Tinman AI platform to serve local mortgage bankers and financial institutions, creating a unique market position [7][19]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving adjusted EBITDA breakeven by Q3 2026, driven by volume growth and improved contribution margins [34][36]. - The company highlighted the increasing consumer adoption of AI and its potential to enhance operational efficiency and profitability [10][16]. - Management noted that the mortgage market presents significant opportunities, particularly in home equity lending, which is expected to grow substantially [60][64]. Other Important Information - The company has built a comprehensive AI platform that integrates various mortgage processes, enhancing customer experience and operational efficiency [10][12]. - The company has a strong pipeline of partners interested in utilizing the Tinman AI software, indicating robust demand for its technology [23][28]. Q&A Session Summary Question: Can you characterize the partners trying to enter the space using your technology? - The company is engaging with next-gen wealth management firms, traditional fintech lenders, and mega fintechs looking to offer mortgage products to their customer bases [41][44]. Question: How much volume is needed to see meaningful benefits from cost reductions? - The company indicated that it already sees benefits from reduced costs, with labor costs per fund significantly lower than industry averages [46]. Question: What has driven the lead-to-lock conversion rate increase with Betsy? - The expanded functionality of Betsy, which now assists throughout the entire loan process, has significantly improved efficiency and customer outcomes [51][52]. Question: Can you provide updates on the B2B side, specifically regarding the Tinman AI software? - The company has successfully onboarded a small to medium-sized bank onto the Tinman AI platform, achieving rapid implementation and loan processing [54]. Question: Can you elaborate on the home equity business growth? - The company reported a 260% year-over-year growth in home equity volume, positioning itself as a leading home equity lender in the U.S. [60][61].

Company Overview - Better Home & Finance Holding Company is developing a next-generation AI mortgage platform aimed at simplifying and accelerating the mortgage process[11] - Mortgages originated with Better technology cost 43% less than the industry average[17] - The company's platform delivers a best-in-class experience with a 64 Net Promoter Score and a 4.1 out of 5 Trustpilot Score[21] Market Opportunity - The cumulative homeownership market size is estimated at $19+ trillion[19] - Home mortgages represent approximately 69% of total household debt[19] - Buyers pay fees to up to 10 intermediaries, accounting for ~10% of home price[21] Technology and Platform - The platform is powered by Tinman® AI, which enables faster rate quotes (3 seconds), pre-approvals (3 minutes), and loan closes (3 weeks)[21, 13] - The company's AI agent, Betsy, has led to a 3x increase in loan officer productivity[57] - The company retains loans on its balance sheet for approximately 26 days on average[30, 32] Financial Performance - In Q2 2025, the total mortgage revenue was $7886 thousand per fund[58] - In Q2 2025, the contribution margin per fund was $1064[58] - Adjusted EBITDA for Q2 2025 was $(26605) thousand, compared to $(23259) thousand in Q2 2024[79]

Core Viewpoint - BetterLife Pharma Inc. has received an ISSUE NOTIFICATION from the US Patent and Trademark Office for its BETR-001 composition of matter patent, which provides strong intellectual property protection until at least 2042 [1][4]. Patent and Intellectual Property - The patent covers various claims related to crystalline forms of BETR-001, its formulations, and isomers [3]. - The composition of matter patent is considered the strongest level of intellectual property coverage for a compound [4]. Product Development - BETR-001 is a non-hallucinogenic neuroplastogen aimed at treating psychiatric and neurological disorders, including depression, anxiety, PTSD, traumatic brain injury, migraines, and neuropathic pain [4][8]. - The company has completed most IND-enabling studies and plans to file for IND and start human trials in H1 2026 [5]. Financial and Shareholder Information - BetterLife has issued a total of 6,473,712 common shares and the same number of share purchase warrants, related to convertible debentures and accrued interest totaling $647,371 [6]. - The share purchase warrants are exercisable at an exercise price of $0.10 per warrant and have varying expiration dates [6]. Company Overview - BetterLife Pharma is focused on developing and commercializing compounds for neuro-psychiatric and neurological disorders, specifically BETR-001 and BETR-002 [7]. - BETR-002 is based on honokiol and is also in preclinical studies, targeting anxiety-related disorders [9]. - The company is exploring strategic alternatives for further development of a drug candidate for viral infections [10].

Financial Performance - For the three months ended March 31, 2025, the company reported total net revenues of $32,553,000, a 46.4% increase from $22,251,000 in the same period of 2024[165] - Total net revenues for the three months ended March 31, 2025, were $32,553,000, an increase of 46% compared to $22,251,000 for the same period in 2024[196] - Gain on loans, net for the same period was $24,576,000, representing 75% of total net revenues, up from 70% in the prior year[165] - Gain on loans, net increased by $8,924,000 or 57% to $24,576,000 for the three months ended March 31, 2025, compared to $15,652,000 for the same period in 2024[196] - Mortgage interest income rose by $3,473,000 or 117% to $6,437,000 for the three months ended March 31, 2025, compared to $2,964,000 for the same period in 2024[204] - Other revenue increased by $1,213,000 or 43% to $4,030,000 for the three months ended March 31, 2025, compared to $2,817,000 for the same period in 2024[203] Loan and Investment Activity - Funded loan volume increased to $868,000,000 in Q1 2025, compared to $661,000,000 in Q1 2024, marking a 31.4% growth[172] - Direct-to-consumer (D2C) loan volume rose to $614,000,000, a significant increase from $360,000,000 in the previous year[172] - The average loan amount decreased to $291,909 from $332,111 year-over-year, indicating a shift in loan size[172] - Loans held for investment grew to $207.2 million as of March 31, 2025, up from $111.5 million as of December 31, 2024[229] - Net cash used in investing activities surged by $125 million, or 376%, to $159 million in Q1 2025, primarily due to increased loan originations[242] Expenses and Losses - Compensation and benefits expenses increased by $8,595,000 or 23% to $46,668,000 for the three months ended March 31, 2025, compared to $38,073,000 for the same period in 2024[210] - Marketing and advertising expenses increased by $4,133,000 or 91% to $8,687,000 for the three months ended March 31, 2025, compared to $4,554,000 for the same period in 2024[213] - Total expenses for the three months ended March 31, 2025, were $82,965,000, an increase of 13% compared to $73,600,000 for the same period in 2024[210] - Net loss for the three months ended March 31, 2025, was $50,557,000, compared to a net loss of $51,492,000 for the same period in 2024[196] - Adjusted Net Loss for Q1 2025 was $46.2 million, compared to $42.8 million in Q1 2024, reflecting an increase of 8%[223] - Adjusted EBITDA for Q1 2025 was $(40.4) million, compared to $(31.0) million in Q1 2024, indicating a decline of 30%[223] Strategic Initiatives - The company plans to continue investing in technology to enhance customer experience and reduce operational costs through automation[163] - The company aims to expand its market presence and diversify revenue streams through new product offerings and strategic partnerships[163] - The company is winding down its integrated relationship with Ally Bank, which has been a primary source of B2B loan volume[166] Cash Flow and Financing - Net cash used in operating activities increased by $14 million, or 34%, to $57 million in Q1 2025 from $43 million in Q1 2024[241] - Net cash provided by financing activities increased to $118.8 million for the three months ended March 31, 2025, a rise of $120 million or 10450% compared to $1 million for the same period in 2024[243] - The company raised approximately $568 million in gross proceeds from the Business Combination in August 2023, with $528.6 million in the form of a Convertible Note[230] - The company entered into a Note Exchange Agreement to exchange $532.5 million of existing Convertible Notes for $155 million in New Notes and a cash payment of $110 million[234] - The New Notes will accrue interest at a rate of 6.00% per annum, payable semi-annually, with the first payment due on June 30, 2025[238] Risk Factors and Accounting - Forward-looking statements indicate potential risks including the ability to expand customer base and market share, and to respond to economic conditions[246] - The company emphasizes the importance of maintaining profitability and the ability to raise additional financing in the future[246] - Risks discussed in the 2024 Annual Report may cause actual results to differ materially from forward-looking statements[247] - The company is classified as a smaller reporting company and is not required to provide additional market risk disclosures[248] - There have been no significant changes in critical accounting policies and estimates during the three months ended March 31, 2025, compared to the previous year[245]

Core Viewpoint - Better Home & Finance Holding Company (NASDAQ: BETR) has experienced a significant decline in share value, losing about one-third of its value over the past year, despite a recent recovery of approximately 50% from its lows [1] Company Performance - The company's shares have lost about 33% of their value in the past year [1] - Recently, shares have increased by around 50% from their recent lows [1] Investment Strategy - The company has over fifteen years of experience in making contrarian bets based on macro views and stock-specific turnaround stories to achieve outsized returns with a favorable risk/reward profile [1]

Financial Data and Key Metrics Changes - In Q1 2025, the company achieved a 31% year-over-year increase in funded loan volume to $868 million and a 46% increase in revenue to $33 million, driven by growth in both direct-to-consumer (DTC) and Tinman AI platform channels [7][21][22] - The adjusted EBITDA loss was $40.4 million, with a total GAAP net loss of approximately $50.6 million [21][22] - Funded loan volume was 71% generated through DTC and 29% through the Tinman AI platform [21] Business Line Data and Key Metrics Changes - Funded loan volume growth was driven by home equity products and refinance loans, with HELOC and home equity loan volume increasing by 207%, refinance loan volume by 64%, and purchase loan volume by 9% [9][21] - The company reported that the DTC business has seen increasing contribution margins as operating costs decrease due to AI implementation [11] Market Data and Key Metrics Changes - The total addressable market (TAM) for the mortgage industry is estimated at $2.1 trillion for 2025, with $1.4 trillion for purchases and $700 billion for refinancing [5][6] - The company aims to capture even a 1% market share, which would result in $14 billion of volume, approximately three times its current volume [6] Company Strategy and Development Direction - The company is focused on three strategic priorities: driving growth through AI, improving operational efficiency, and diversifying distribution channels [7][10] - The Tinman AI platform is being positioned as a disruptive technology in the mortgage industry, aiming to replace traditional systems and improve efficiency [12][18] - The company is also expanding its B2B partnerships, particularly with banks and fintechs, to license its software and enhance operational capabilities [56][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the mortgage industry but emphasized the opportunities created by these dynamics, particularly through the use of AI technology [5][20] - The company expects funded loan volume to increase in Q2 2025, driven by efficiencies in the Tinman AI platform, with a projected growth of over 250% in Neo originations compared to Q1 [25][26] - The outlook for 2025 includes expectations for improved adjusted EBITDA losses due to efficiency gains and corporate cost reductions [26][27] Other Important Information - The company successfully retired approximately $530 million of convertible notes, creating about $200 million of positive pretax equity value [8][23] - The company is undergoing efforts to exit non-core UK assets while focusing on growing Birmingham Bank, expecting to double UK bank originations in 2025 [27] Q&A Session Summary Question: What is the expected timeline for loan officers to feel the impact of the Neo platform? - Management indicated that loan officers start seeing the impact within 30 days as the platform automates many of their tasks, allowing them to regain time and increase productivity [29][30] Question: How many more loan officers does the company plan to onboard in 2025? - The company aims to triple or quadruple the Neo channel, with plans to double it in the upcoming quarter [36] Question: How have unit economics trended year over year? - Unit economics have improved, with March showing a significant reduction in losses, indicating that the mortgage company was nearly breakeven [40][41] Question: What are the long-term leverage levels that make sense for the business? - The company operates a capital-light model and is comfortable with its current leverage, having restructured its debt to improve its balance sheet [49][52] Question: What opportunities exist for B2B partnerships? - The company is focusing on software-only partnerships with banks and fintechs, allowing them to utilize the Tinman platform without extensive integration costs [56][58]

Financial Data and Key Metrics Changes - In Q1 2025, funded loan volume increased by 31% year-over-year to $868 million, while revenue grew by 46% to $33 million, driven by funding more loans through both DTC and Tinman AI platform channels [6][19][20] - The adjusted EBITDA loss was $40.4 million, and the total GAAP net loss was approximately $50.6 million [19] - Funded loan volume by channel was 71% from direct-to-consumer (DTC) and 29% from Tinman AI platform [19] Business Line Data and Key Metrics Changes - Funded loan volume growth was driven by home equity products and refinance loans, with HELOC and home equity loan volume increasing by 207%, refinance loan volume by 64%, and purchase loan volume by 9% [8] - The DTC business continues to improve contribution margin as operating costs decrease due to AI implementation [10] Market Data and Key Metrics Changes - The mortgage industry is projected to have a total origination volume of $2.1 trillion for 2025, with approximately $1.4 trillion for purchases and $700 billion for refinancing [5] - The company aims to capture even a 1% market share, which would result in $14 billion of volume, approximately three times the current level [5] Company Strategy and Development Direction - The company is focused on three strategic priorities: driving growth through AI, improving operational efficiency, and diversifying distribution channels [6][9] - The Tinman AI platform is being expanded to serve local mortgage brokers and banks, aiming to disrupt traditional retail mortgage origination [11][14] - The company is also working on exiting non-core UK assets while focusing on growing Birmingham Bank [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in the mortgage industry but sees significant opportunities for growth through technology and AI [5][6] - The company expects funded loan volume to increase in Q2 2025, driven by efficiencies in the Tinman AI platform, with a projected $450 million in Neo originations, representing over 250% growth compared to Q1 [23] - The outlook for 2025 includes expectations for year-over-year growth in funded loan volume, despite macro pressures and the loss of the Ally business [23] Other Important Information - The company successfully retired approximately $530 million of convertible notes, creating about $200 million of positive pretax equity value [7][21] - The company is focused on building a leading AI platform in the mortgage industry to enhance customer experience and drive down costs [17][22] Q&A Session Summary Question: What is the expected timeline for loan officers to feel the impact of the Neo platform? - Management believes loan officers will start seeing the impact within 30 days as the platform automates many of their tasks, allowing them to regain time and increase productivity [26][27] Question: How many more loan officers does the company plan to onboard in 2025? - The company aims to triple or quadruple the Neo channel, with plans to double it in the coming quarter [31][32] Question: How have unit economics trended year-over-year? - Unit economics have improved, with March showing a significant reduction in losses and approaching breakeven for the mortgage company [36][38] Question: What is the long-term leverage level that makes sense for the business? - The company operates a capital-light model and is comfortable with its current leverage, having reduced debt and improved its balance sheet [45][48] Question: What opportunities exist for B2B partnerships? - The company sees potential in software-only partnerships with banks and fintechs looking to enter the mortgage business, with a strong pipeline of interest [50][54]

Financial Data and Key Metrics Changes - In 2024, the company achieved a 19% year-over-year increase in funded loan volume, totaling $3.6 billion, and a 50% increase in revenue, reaching $108 million [10][11] - The adjusted EBITDA loss was reduced by 26% year-over-year, amounting to $121 million [10] - For Q4 2024, funded loan volume was $936 million, a 77% year-over-year increase, while revenue was $25 million, up from $18 million in Q4 2023 [12][49] Business Line Data and Key Metrics Changes - Funded loan volume growth in Q4 was driven by home equity products and refinance loans, with purchase loan volume increasing by 25% and refinance loan volume surging by 611% year-over-year [14] - Home equity loan volume increased by 416% in Q4 2024 compared to the previous year [14] - The company reported that 81% of funded loan volume in Q4 was generated through the direct-to-consumer (D2C) channel, with 62% being purchase loans [50] Market Data and Key Metrics Changes - The overall mortgage market saw improvements in Q4 2024, but 30-year fixed mortgage rates remained high, impacting mortgage demand [16] - The company outperformed the market, with a reported 619% increase in HELOC originations compared to a 10% industry-wide increase [14] Company Strategy and Development Direction - The company aims to leverage AI and technology to enhance the home ownership experience, focusing on growth, efficiency improvements, and diversification of distribution channels [9][10] - The partnership with NEO Home Loans is expected to enhance local loan officer capabilities and improve conversion rates [33][45] - The company is committed to reducing expenses and improving operational efficiency to achieve profitability in the medium term [16][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in 2025, despite macroeconomic headwinds and the wind down of the Ally business [51][53] - The company anticipates a 10% to 15% decrease in funded loan volume in Q1 2025 due to seasonal slowness and the exit from non-core businesses [51] - Management highlighted the importance of AI in driving down operational costs and improving customer experience [18][30] Other Important Information - The company has implemented significant cost-saving measures, including reducing loan origination expenses by 28% and marketing expenses by 27% in Q4 [17] - The AI-driven assistant, Betsy, has significantly increased customer interactions, growing from 5,000 in June 2024 to over 115,000 by February 2025 [19][20] Q&A Session Summary Question: How does the underwriting and AI technology adjust for high property insurance costs? - Management explained that their technology integrates multiple data sources to provide instant homeowners insurance quotes, significantly reducing the need for manual processing [58] Question: How does profitability impact risk-taking? - Management clarified that their marketplace model does not involve holding loans on the balance sheet, thus minimizing risk while focusing on efficiency and cost reduction [62][68] Question: Can you walk through the savings opportunities from Tinman's AI application? - Management detailed that AI has reduced costs associated with loan officer tasks and improved customer service efficiency, leading to significant savings per funded loan [78] Question: How are gain on sale margins trending in Q1? - Management reported that gain on sale margins are trending higher, particularly with the NEO partnership, which is expected to enhance overall profitability [85][88] Question: Can you contextualize contribution profit per loan? - Management indicated that contribution margins have been improving, and they are focused on reducing costs in the mortgage business to drive profitability [98][100]

Revenue and Business Operations - The company derives almost all of its revenue from its mortgage loan production business, referred to as Home Finance, and related services [182]. - Approximately 30% of the company's Funded Loan Volume for the fiscal year ended December 31, 2024, was secured by properties concentrated in California (12%), Texas (9%), and Florida (9%) [187]. - The company has invested significant resources in developing new products and refining existing offerings, focusing on long-term growth areas despite reductions in near-term spending [182]. - The company is expanding its Better Plus business lines, including partnerships with third-party real estate agents and insurance providers [182]. - The company has been expanding internationally, including operations in the United Kingdom [182]. Risks and Compliance - The company faces risks associated with non-conforming loans, which involve a high degree of business and financial risk, potentially leading to substantial losses [184]. - The company is subject to significant legal and reputational risks related to the privacy and security of customer information, with approximately 10,000 data points captured per customer during the loan transaction process [194]. - The company may experience increased claims and reputational damage due to risks associated with new product offerings and potential defects in technology [182]. - The company is required to comply with various cybersecurity regulations, including the NYDFS Cybersecurity Regulation, which mandates the establishment of a cybersecurity program [196]. - The company acknowledges that failure to accurately predict demand for new products could adversely affect its financial condition and results of operations [183]. - The company faces significant risks related to network security breaches, which could lead to increased costs, litigation, and reputational damage [197]. - Inappropriate access to customer information could result in financial liabilities and regulatory actions, potentially impacting the company's financial condition [198]. - The company operates in a heavily regulated industry, requiring compliance with a wide array of U.S. federal, state, and local laws, which may be inconsistent [234]. - The company is subject to various telecommunications, data protection, and consumer protection laws, with ongoing compliance and monitoring required as these laws evolve [237]. - Regulatory actions for noncompliance could result in fines, loss of licenses, and damage to the company's reputation, affecting its ability to operate [240]. Financial Condition and Performance - The company has incurred debt to finance operations and acquisitions, which may limit its ability to raise additional funds for working capital and other business activities [224]. - The company is dependent on warehouse lines of credit for funding loans, and any termination of these facilities could materially impact its liquidity [227]. - A decline in the performance of loans underlying warehouse lines could affect the company's ability to renew these lines [229]. - The company is exposed to interest rate risk due to variable rates on borrowings, which could increase debt service obligations and decrease net income [233]. - The company has experienced net losses in recent years, leading to lower advance rates under warehouse facilities [227]. - The company reported a net loss of $206,290 thousand for 2024, a decrease in loss of 61.6% from $536,420 thousand in 2023 [487]. - Total liabilities increased to $971,227 thousand in 2024, up 24% from $782,954 thousand in 2023 [486]. - Customer deposits surged to $134,130 thousand in 2024, compared to $11,839 thousand in 2023, marking an increase of 1,133% [486]. Technology and Innovation - The company relies on proprietary technology, including its loan operating system, Tinman, to deliver services and evaluate loan applicants, making technological adaptation critical for growth [199]. - The loan production process is increasingly dependent on technology, and failure to meet advertised processing times could adversely affect the company's reputation and financial performance [200]. - The integration of AI technology is ongoing, and the company must address ethical and legal challenges to maintain competitive advantage and financial performance [207]. - The use of third-party software and services poses risks, including potential errors or failures that could materially affect the company's operations and financial results [209]. Stock and Market Performance - The market price of Class A Common Stock has shown significant weakness, influenced by the company's ability to integrate operations and execute its business plan [281]. - Sales of substantial amounts of Class A Common Stock could adversely affect its market price and impair capital-raising efforts [283]. - CEO Vishal Garg controls approximately 20% of the voting power and could increase to about 34.9% as Class B shares convert to Class A shares [284]. - The company does not expect to pay any cash dividends for the foreseeable future, with future determinations at the discretion of the Board [291]. - The existence of multiple classes of common stock may adversely affect the value and liquidity of Class A Common Stock, potentially leading to a less active trading market [289]. Regulatory Environment - The company must maintain appropriate state licenses to produce or service loans, with risks of inadvertently conducting unlicensed activities [250]. - The evolving regulatory environment may lead to increased scrutiny and enforcement actions, impacting the company's business strategies and growth plans [245]. - Noncompliance with applicable laws could lead to civil and criminal liability, including class action lawsuits and diminished ability to sell loans [246]. - The CFPB has the authority to impose civil money penalties ranging from approximately $6,800 per day for ordinary violations to approximately $1,360,000 per day for knowing violations [262]. - The revised definition of "qualified mortgage" by the CFPB has created additional compliance burdens for lenders [258]. Growth and Future Outlook - The company anticipates that interest rates will remain its primary market risk for the foreseeable future [464]. - The company expects its exposure to foreign currency exchange risk to increase as it focuses growth on specific entities in the United Kingdom [478]. - The management team has limited experience in overseeing a public company, which could hinder effective management during the transition [292]. - The market opportunity estimates and growth forecasts presented are subject to significant uncertainty and may prove to be inaccurate [303].