Part I Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025, outlining key financial figures, accounting policies, and significant debt restructuring events Unaudited Condensed Consolidated Balance Sheets As of March 31, 2025, total assets reached $1.005 billion, total liabilities $1.107 billion, and stockholders' deficit widened to $102.1 million, driven by growth in loans and deposits | Balance Sheet Item | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :--- | :--- | :--- | | Total Assets | 1,004,992 | 913,057 | | Cash and cash equivalents | 110,565 | 211,101 | | Mortgage loans held for sale | 413,031 | 399,241 | | Loans held for investment, net | 207,185 | 111,477 | | Total Liabilities | 1,107,137 | 971,227 | | Warehouse lines of credit | 235,956 | 244,070 | | Convertible Note | 521,449 | 519,749 | | Customer deposits | 261,063 | 134,130 | | Total Stockholders' (Deficit)/Equity | (102,145) | (58,170) | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss For Q1 2025, net loss was $50.6 million, total net revenues increased 46% to $32.6 million, and total expenses grew 13% to $83.0 million, primarily due to higher compensation | Income Statement Item | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total net revenues | 32,553 | 22,251 | +46.3% | | Gain on loans, net | 24,576 | 15,652 | +57.0% | | Total Expenses | 82,965 | 73,600 | +12.7% | | Compensation and benefits | 46,668 | 38,073 | +22.6% | | Net Loss | (50,557) | (51,492) | -1.8% | | Loss per share (Basic & Diluted) | ($3.33) | ($3.41) | -2.3% | Unaudited Condensed Consolidated Statements of Cash Flow In Q1 2025, net cash used in operating activities was $57.2 million, investing activities used $158.8 million, and financing activities provided $118.8 million, resulting in a $100.0 million net decrease in cash | Cash Flow Activity | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (57,187) | (42,806) | | Net cash used in investing activities | (158,843) | (33,386) | | Net cash provided by/(used in) financing activities | 118,821 | (1,148) | | Net Decrease in Cash | (100,044) | (77,463) | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail accounting policies, revenue sources, debt facilities, fair value measurements, U.K. assets held for sale, and a significant subsequent debt restructuring event - The company offers comprehensive homeownership solutions in the U.S. and U.K., utilizing its proprietary Tinman technology platform25 - In August 2024, the company completed a 1-for-50 reverse stock split to meet Nasdaq's minimum bid price requirement, with all historical share data retroactively adjusted2930 - In Q4 2024, management initiated a plan to sell several U.K. entities, now classified as assets and liabilities held for sale90 - Subsequent to quarter-end, on April 12, 2025, the company exchanged $532.5 million in convertible notes for $155.0 million in new senior secured notes and a $110.0 million cash payment152 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 performance, noting a 31% increase in funded loan volume and 46% revenue growth, alongside rising expenses and a significant post-quarter debt restructuring Company Overview and Business Model The company simplifies homeownership via its Tinman platform and Betsy AI, offering mortgage financing, real estate, and insurance services, with revenue primarily from 'Gain on loans, net' - The company is a technology-driven organization disrupting homeownership using its proprietary Tinman platform and voice-based AI loan assistant, Betsy161 - The business model comprises 'Home Finance' (75% of Q1 2025 net revenues) and 'Better Plus' (12% of Q1 2025 net revenues), generating income primarily from 'Gain on loans, net' and 'Other revenue' respectively164165 Key Business Metrics In Q1 2025, Funded Loan Volume increased 31% to $868 million, with Gain on Sale Margin improving to 2.83%, reflecting enhanced profitability | Key Business Metric | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Funded Loan Volume | $868 M | $661 M | +31.3% | | Purchase Loan Volume | $578 M | $529 M | +9.3% | | HELOC Volume | $157 M | $51 M | +207.8% | | Total Loans (count) | 2,975 | 1,991 | +49.4% | | Gain on Sale Margin | 2.83% | 2.37% | +46 bps | Results of Operations Q1 2025 total net revenues rose 46% to $32.6 million, driven by higher gain on loan sales, while total operating expenses increased 13% to $83.0 million due to higher compensation and marketing spend - Gain on sale of loans, net, increased by $11.5 million (117%) year-over-year, primarily due to higher Funded Loan Volume198 - Compensation and benefits expenses rose by $8.6 million (23%) year-over-year, driven by increased headcount and higher incentive compensation210 - Marketing and advertising expenses increased by $4.1 million (91%) year-over-year, reflecting a strategic focus on driving loan volume growth213 - General and administrative expenses decreased by $2.4 million (17%) year-over-year, mainly due to reduced rent and occupancy costs from a smaller real estate footprint211 Non-GAAP Financial Measures The company reports Adjusted Net Loss of $46.2 million and Adjusted EBITDA of negative $40.4 million for Q1 2025, reflecting higher operating expenses compared to the prior year | Non-GAAP Measure ($ thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss | (50,557) | (51,492) | | Adjusted Net Loss | (46,182) | (42,834) | | Adjusted EBITDA | (40,357) | (30,953) | Liquidity and Capital Resources The company's liquidity relies on warehouse lines of credit and customer deposits, with a significant April 2025 debt restructuring exchanging $532.5 million in convertible notes for new secured notes and cash - As of March 31, 2025, the company maintained three warehouse lines of credit totaling $425.0 million in capacity, with $236.0 million outstanding228232 - U.K. banking operations saw customer deposits grow to $261.1 million as of March 31, 2025, funding loans held for investment229 - In April 2025, the company exchanged $532.5 million of convertible notes for $155.0 million in new 6.00% Senior Secured Notes and a $110.0 million cash payment234 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing disclosures on quantitative and qualitative market risk - As a smaller reporting company, Better Home & Finance is exempt from the disclosure requirements of this item248 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of March 31, 2025, due to un-remediated material weaknesses, with ongoing efforts to address control environment and oversight issues - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to ongoing material weaknesses249 - Identified material weaknesses include issues with the 'tone at the top,' an ineffective control environment due to limited experienced accounting personnel, and inadequate review of complex third-party valuations252255 - Remediation efforts include creating a Chief Accounting Officer role, establishing a management ethics and compliance committee, and enhancing reporting lines with an independent Chairman253256 Part II Item 1. Legal Proceedings The company is involved in ordinary course legal proceedings, with details on commitments, contingencies, and a subsequent settlement provided in Notes 12 and 20 of the financial statements - The company is subject to various legal proceedings in the ordinary course of business, with specific details in Note 12 and Note 20 of the financial statements259 Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes have occurred to the risk factors disclosed in the company's 2024 Annual Report on Form 10-K261 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds during the reporting period - No unregistered sales of equity securities or use of proceeds occurred during the period262 Item 5. Other Information No director or executive officer entered into, modified, or terminated any Rule 10b5-1 trading plans during Q1 2025 - No director or executive officer adopted, modified, or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement during the quarter265 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL data files - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer, along with Inline XBRL financial data267
AURORA ACQUISIT(AURC) - 2025 Q1 - Quarterly Report