Better signals tough Q3 amid enterprise pivot

Better Home & Finance Holding Co. anticipates a tough third quarter as it rolls out a new strategic plan under the interim leadership of Daniel Lewis.

“The board concluded that we are in a transitional phase between a founder-mode company — which is about creativity and many different projects — and an enterprise stage of executing against a very select set of ideas that have demonstrated product-market fit,” Lewis said during an earnings call with analysts on Thursday.

Lewis, who has a background as an activist investor, was questioned about the possibility that his nomination could be tied to a sale of the company. Since the announcement of his position, analysts and investors have been questioning whether Better could raise capital, go private or engage in mergers and acquisitions.

“There’s no formal strategic alternatives process at this time,” he said.

Lewis’s hedge fund, Orange Capital, shut down in 2016 after 10 years in operation and a portfolio worth more than $1 billion. From 2018 to 2023, he served as CEO of Ascend Fundraising Solutions, a Toronto-based software company. He gained the top job at Better after building a 5.8% stake in the company. 

Lewis, who is replacing founder Vishal Garg, said he has been working alongside the management team for the past three months, following an invitation from Garg. He said the board is looking for a permanent replacement for the position.

Q2 roundup, Q3 guidance

The New York-based digital lender, which posted an adjusted EBITDA loss of $14 million in the second quarter, expects that loss to rise to between $15 million and $18 million in the third quarter. Loan volume is expected to come in between $1.375 billion and $1.525 billion, down from $1.67 billion in Q2.

“Our third-quarter guidance reflects the muted refinancing environment and the uncertain timing of several partnership launches,” Lewis said. “Regarding our previously guided goal of reaching adjusted EBITDA break-even by September, we now expect to fall short.”

As Lewis told HousingWire, Better will not commit to a month to deliver profits, since the goal is to “establish credibility through execution.”

Loveen Advani, the company’s chief financial officer, said the mortgage rate backdrop became more difficult as the second quarter progressed, and mortgage application activity has softened industrywide. Better does not expect that to be a short-term blip and is planning for an elevated rate environment to persist over the medium term.

“The cost reductions we have executed will continue to flow through the P&L over the remainder of the year. But the timing of the HELOC partnership ramps and launches, and the pace of the refinance market, will determine when we cross over (into profitability),” Advani said.

The company ended Q2 2026 with approximately $102 million in cash and cash equivalents, and $10 million in restricted cash. The company said it believes the balance sheet is appropriately positioned to support the path towards profitability, while it continues to pursue the sale of U.K.-based Birmingham Bank.

Immediate priorities

Lewis said his initial mandate was to “help strengthen execution and improve operational efficiency, delivering the company’s strategic priorities.” According to him, the expansion from direct-to-consumer to an enterprise model is not a simple evolution.

“We will not depend on a refinancing cycle or wait for interest rates to fall. We already have a compelling HELOC product. What we need is thoughtful distribution and continued improvement in customer acquisition costs, not additional demand or a different macro environment. We are building operating leverage in businesses where demand already exists,” Lewis said.

Among Better’s priorities, he pointed to a focus on enterprise partners whose businesses naturally align with Tinman and API-driven operating models. The company also seeks to serve independent mortgage brokers with Tinman, a platform it will keep developing; to invest aggressively in HELOCs, which is driven by direct-to-consumer efforts even as Better expects to expand into enterprise as well; and to use D2C and NEO Home Loans as a “feedback loop” on the loan officer experience.

“Our NEO and better mortgage operations are being combined, creating efficiencies while improving execution,” Lewis said.

Lewis said he will receive the minimum salary permitted by law and no cash bonus. His compensation will consist of performance-based equity. The board also elected to receive their compensation in equity rather than cash.