Better Home and Finance is navigating some turbulent waters right now under new interim leadership. According to HousingWire, the company brought in Daniel Lewis as interim CEO to steer what the board is calling a transition from a startup mentality to a more focused enterprise operation. Lewis, who comes from an activist investor background, has been working with the management team for about three months and is tasked with tightening execution and operational efficiency across the business.
The company's near-term outlook is pretty challenging. Better is guiding toward a bigger adjusted EBITDA loss in the third quarter compared to what they posted in the second quarter, and they're also expecting loan origination volume to decline from the previous quarter. The challenging mortgage rate environment and softer application activity across the industry are weighing on the business, and management isn't banking on rates falling soon to fix the problem. They've already missed their earlier goal of reaching adjusted EBITDA break-even by September, so there's real work ahead.
Rather than chasing refinance demand, Better's strategy is shifting toward what they believe is more stable ground. The company is focusing on three main areas: building out an enterprise partner model, developing their Tinman platform for independent brokers, and investing heavily in HELOC products. Lewis emphasized that they already have strong products and don't need a different market environment, they need better distribution and smarter customer acquisition. He's also consolidating some of their mortgage operations to create efficiencies.
Interestingly, there's been speculation among investors and analysts about whether Lewis's involvement could signal a potential sale or other strategic alternatives for Better. Lewis has been clear that there's no formal process like that underway right now. He's also taking a pretty austere approach to his own compensation, accepting only the minimum legally required salary and tying the rest to performance through equity. The board is doing the same thing, taking their pay in equity rather than cash.
Better ended the second quarter with around $102 million in cash, which management believes gives them the runway they need to reach profitability. They're also working on selling their U.K. banking operation to help strengthen their position. What I am seeing locally in the Bay Area is that these kinds of pivots are happening across the lending landscape as the environment stays challenging, and borrowers are becoming more selective about who they work with and what products make sense for their situations.
