Prepared remarks
Hello, and welcome to the Better Home & Finance Holding Company First Quarter 2025 Results Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the conference over to Tarek Afifi, Corporate Finance. You may begin.
Welcome to Better Home & Finance Holding Company's first quarter earnings conference call. My name is Tarek Afifi, Corporate Finance at Better. Joining me on today's call are Vishal Garg, Founder & Chief Executive Officer of Better; and Kevin Ryan, Chief Financial Officer of Better. In addition to this conference call, please direct your attention to our first 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 filings that could cause our actual results to differ materially from our historical results. 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 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, both of which are available on the Investor Relations section of Better's website, and when filed in our Quarterly Report on Form 10-Q filed with the SEC.
Thank you, and welcome to our first quarter 2025 earnings call. We appreciate everyone joining us today and for your continued support as we advance our mission to make homeownership better, faster, and easier for our customers by building a technology platform that revolutionizes the homeownership experience. I want to set the tone for today's discussion by reiterating that, while the mortgage industry and housing markets are facing challenges, this dynamic creates tremendous greenfield opportunity for us, because we are truly the first scaled-up AI platform built to empower consumers and now also empowering local mortgage brokers and banks with the technology to serve their customers. The mortgage industry is massive, estimated by the MDA to be $2.1 trillion in total origination volume for the full year of 2025, of which approximately $1.4 trillion is purchased and approximately $700 billion is refinancing.
So even just a 1% share of this massive total addressable market would result in $14 billion of volume for Better, approximately three times from where we are today. We continue to drive progress towards our mission in which every customer can seamlessly buy, sell, refinance, insure, and improve their home digitally, online, instantly, and towards executing on our key objectives, which are: One, to lean into growth and AI to drive increased volume and revenue. Two, ongoing efficiency improvements driven by continuous advancements in our technology and the implementation of AI through our entire operating model; and Three, diversification of our distribution channels and corporate cost reductions. In the first quarter of 2025, on a year-over-year basis, we grew funded loan volume by 31% to $868 million and revenue by 46% to $33 million, driven by funding more loans both through our direct-to-consumer and Tinman AI platform channels.
Last month, we were very pleased to announce the retirement of Better's outstanding convertible debt and right-size the liability structure. This transaction is expected to create approximately $200 million of positive pre-tax equity value and create a path to long-term value creation for our equity shareholders. Removing this debt overhang is a monumental achievement and a key milestone to our capital structure, and Kevin will talk to this in more detail. In the meantime, we remain focused on driving towards profitability in the mid-term by continuing to lean into Tinman's technology and AI, with the Betsy AI Loan Assistant executing 127,000 consumer interactions in March, our AI underwriting growing from over 40% of lock loans to 75% in the near future, and increasing loan officer productivity in terms of loans per month to over three times the mortgage industry average. As we look forward to the second half of 2025 and beyond, our strategic priorities remain focused on what lies in our control.
Our first priority is to continue to thoughtfully propel growth. In the first quarter, year-over-year funded loan volume growth was driven by increases across all three of our main product categories, with Home Equity products and Refinance Loans being the largest growth drivers. Specifically, HELOC and home equity loan volume increased 207%, refinance loan volume increased 64%, and purchase loan volume increased 9%. This growth is attributable to the strategic investments we've made in technology, product innovation, and distribution expansion, including the launch of Betsy, a voice-based AI loan officer, deployment of our Tinman AI platform strategy with the addition of NEO powered by Better, and efficient expansion of direct-to-consumer. These strategic initiatives have positioned us to capitalize on market opportunities, enhance operational efficiency, and drive sustainable growth. Our second priority is to continue to reduce expenses and improve operational efficiency with the goal of reaching profitability in the medium term.
While we expect loan origination expenses will increase as we lean into growth, as we further implement Betsy into the sales, processing, and underwriting workflows, we expect continued operating leverage with revenue growth outpacing expense growth. Using our Tinman AI platform, we have been able to automate time and labor-intensive components of the mortgage process and reduce our cost to originate by over 40% of the industry average. We believe our continued investments in AI with our product and engineering roadmaps well on track will significantly drive down costs further, resulting in improved operating efficiency and superior customer experience. Lastly, our third priority is to continue diversifying our product and platform distribution channels. We now have three ways of serving the customer using our technology: direct-to-consumer, Tinman AI as a platform, and Tinman AI as software.
Our D2C business serves the consumer directly on better.com. Better was founded on revolutionizing the consumer experience for the home finance process, and as such, our D2C business has always been at the forefront of pushing the envelope on what technology can do in the mortgage industry at its core. Within the D2C channel, contribution margin or per-loan profitability is increasing, as the operating cost to fund is decreasing due to the implementation of AI in both the sales and operations workflows. Next, we serve the consumer through our Tinman AI platform, powering loan officers across the United States locally, for which we are seeing rapid early growth. For context, over $1.2 trillion of mortgage volume in 2024 was originated by retail loan officers on antiquated technology and high operating costs. We are quickly disrupting traditional retail mortgage origination by onboarding loan officers and branches onto our Tinman AI platform, empowering them to do more loans than they've ever done before, removing friction from their fulfillment process, and expanding their capacity to help more customers.
These loan officers keep the pricing they've been able to get historically based on the service level that they provide locally and within their communities and networks, all while compressing a staggering 80% of their back-office costs using our platform. As we've discussed on recent earnings calls, NEO Powered by Better, our first and now proven traditional retail mortgage originator leveraging the Tinman AI platform, is deeply benefiting from our AI technology and digital lead funnel, supercharging their loan officer teams who have demonstrated track records and customer service excellence within the communities they serve. Further, Betsy, the first AI voice-based loan assistant for the US mortgage industry, is being individually branded for each loan officer at NEO and rolled out through their entire sales force. We are making great early progress with NEO Powered by Better, well ahead of our internal expectations and have high aspirations for the road ahead.
Since beginning production in January 2025, we have onboarded approximately 115 NEO loan officers across 53 branches. Currently, NEO loan officers are doing three loans a month, and we have the goal of tripling their capacity to 10 loans a month, thereby also increasing their earnings and helping them serve even more families than they currently do. In January, we funded $2 million of loans for four families. In February, we funded $42 million for 104 families, and in March, we funded $119 million for 258 families, and this is during the slow season in mortgage origination. This is the first successful launch of taking an entire mortgage company off of their traditional mortgage industry software stack with Encompass and other outdated systems, and within 90 days getting them to exceed the loan volume they previously had, while dramatically increasing their efficiency. As we have proven this out with NEO, with the entire mortgage industry watching, we have been inundated with other mortgage teams and companies wanting to move their business to the Tinman AI platform.
We see massive opportunity in the road ahead to replicate the success of NEO powered by Better with other traditional mortgage originators. Lastly, we are serving the customer by powering banks that seek to license our Tinman AI software to become more efficient and customer-centric. We have built a highly fine-tuned platform for our own business and customers, and now there is demand from others in the industry to license our software. This quarter, we are excited to sign an agreement with a bank partner to power their entire mortgage platform from a software perspective, from click to close, with their sales and operations people, across the full range of products that they offer, including non-QM and other niche products, entirely on Tinman. As you all know, banks have traditionally had to offer mortgages, but the cost to originate these loans to their customer base has been well over $10,000 per funded loan, making bank origination of mortgages largely unprofitable.
To be clear, banks want to originate mortgages, but they know they need to invest in technology to make it a profitable business in any environment. That is a huge opportunity for Better and Tinman. Notably, this will be the first implementation of Tinman as a direct competitor to the point-of-sale system, plus CRM system, plus pricing engine, plus document engine, plus loan origination software, plus underwriting calculation engine setup that the vast majority of the mortgage industry has. With seven to eight systems, all by different vendors with different pricing and middleware integrations, mostly not communicating with each other, with stale data where only one person can log in at a traditional way, we look forward to sharing more information about disrupting this entire software stack in the coming quarters ahead, as we believe a very large addressable market exists within the mortgage ecosystem for a holistic one-stop software solution powered by the industry's leading AI engine, Tinman.
To put the opportunity into context, over 5 million mortgages were built on the Encompass platform in 2024. To the extent that we can achieve even 1% penetration of the Encompass customer base, we believe, based on our current pricing, that could drive an incremental 50,000 new loans and $75 million of revenue to Better per year. And unlike other traditional mortgage software, our SaaS platform does not charge on a per-seat or per-application basis; rather, we uniquely charge on a per-funded loan basis, where the revenue event for the mortgage company is directly tied to the technology cost, which is a fundamentally disruptive model to the traditional software players in the industry and enables the full adoption of AI, because unlike those other players, we are paid on a per-successful transaction basis, not by filling seats or filling the application funnel. To sum it all up, while our D2C business has always been at the forefront of pushing the envelope of what technology can do in the mortgage industry at its core, we have started making great advancements in diversifying our product and platform distribution channels, notably through the Tinman AI platform, both empowering local loan officers and mortgage brokers and empowering banks with our software.
Looking ahead to the second half of 2025 and beyond, the opportunity ahead of us has never been more exciting. We remain focused on enhancing our go-to-market with growth being our North Star alongside continued expense management and channel diversification. We will continue to invest in building the leading AI platform in the mortgage industry, Tinman, to improve the customer experience and further drive down labor costs, making our platform more efficient and scalable, ultimately driving the business to profitability. Furthermore, we are substantially broadening the use of Tinman through diversification on both Tinman AI as a platform for other mortgage originators and Tinman AI as a software service to solve for the mortgage industry's broken tech stack. With that, let me now turn it over to Kevin Ryan, our Chief Financial Officer, who will discuss the quarterly performance and our financial strategy.
Thank you, Vishal. As we've discussed on prior calls, even through a continued challenging market environment and now heightened macro volatility, we continue to make great progress towards our goals of increased volume and revenue balanced with ongoing expense management and improved efficiency. In the first quarter of 2025, on a year-over-year basis, we grew funded loan volume by 31% to $868 million and revenue by 46% to $33 million, driven by funding more loans through our D2C channel and Tinman AI platform. We had an adjusted EBITDA loss of $40.4 million and a total GAAP net loss of approximately $50.6 million. By channel, first quarter funded loan volume was 71% generated through direct-to-consumer and 29% generated through Tinman AI platform, along with B2B home equity, and 15% refinance. On a sequential quarter-over-quarter basis versus Q4 2024, Q1 funded loan volume was down approximately 7%.
As Q1 is always seasonally the slowest quarter in the D2C business, and this compares quite favorably to our prior guidance of down 10% to 15%. We are pleased that despite the sequential quarter-over-quarter decline in volume, revenue was up approximately 30%. Revenue grew in the quarter despite the expected decline in volume due to volume from NEO coming on board with higher gain on sale margins, our continued push towards increased pricing, and a tailwind from the loan loss reserves. Turning to expenses during the quarter. When excluding one-time costs related to clean-up items from the SPAC transaction, total expenses decreased approximately 11% in Q1 compared with Q4 of 2024, and we reduced the adjusted EBITDA loss on a month-over-month basis during the quarter. Loan origination expenses were down in Q1 on a sequential basis versus Q4 2024. While these loan volume-related expenses will increase as we further lean into growth, operating leverage will rise as revenue growth outpaces expense growth.
Turning to our balance sheet and capital structure. Last month, we announced the retirement of approximately $530 million of convertible notes, creating approximately $200 million of positive pre-tax equity value to continue expanding our AI mortgage platform. We are very pleased to reduce the debt overhang and improve our balance sheet positioning and strategic optionality. With the completion of the debt restructuring, our priorities squarely remain growth and profitability. We continue building out our Tinman AI platform and Tinman software channels, lean into productivity-driven savings through AI deployment across the mortgage business, and drive costs down further in our corporate functions. We are excited about using AI to drive the business towards growth and profitability, similar to the advances we experienced in 2016 to 2021 when we grew originations by over 100 times. Turning now to our outlook.
We remain focused on managing towards profitability in the mid-term, and we expect to drive growth through efficiency from Tinman AI, distribution channel diversification, and optimized marketing, while balancing these growth expenses with further corporate cost reductions. For the second quarter of 2025, we expect funded loan volume to be up compared to the first quarter of 2025, driven by efficiencies in our Tinman AI platform. We are particularly excited that the Tinman AI platform loan volume is pacing well ahead of our internal plan in March and April, despite the heightened macro volatility, and we expect over $450 million of NEO originations in Q2, which is growth of over 250% versus Q1. Additionally, for the second quarter, we expect core expenses, including compensation and benefits, to be down relative to the first quarter. For the full year of 2025, we expect funded loan volume growth to increase year-over-year, driven by tailwinds from the growth initiatives, including NEO Powered by Better, offset by continued macro pressure and the loss of the Ally business, which presents a roughly $1 billion headwind.
We expect growth to come particularly in the second and third quarter of the year, at which point, we expect NEO Powered by Better to be more fully ramped and to benefit from improved seasonal tailwinds. We also expect further improvements to our adjusted EBITDA losses in 2025 compared to 2024 due to a combination of efficiency gains and continued corporate cost reductions. Lastly, we continue to undergo efforts to exit our non-core UK assets while focused on growing Birmingham Bank. We expect to more than double UK bank originations again in 2025 as we deploy AI with the goal of building the leading AI-driven specialist mortgage bank in the United Kingdom. We expect the exiting of three smaller non-core UK businesses to start being a benefit to our adjusted EBITDA losses in the second half of 2025 as a result of their disposition. With that, I'll now turn it back to the operator for Q&A.
Questions and answers
Thank you. Your first question comes from Kartik Mehta with Northcoast Research. Your line is open.
Good morning, Vishal and Kevin. Vishal, you talked about the NEO platform and obviously how much success you're having with it. As you've looked at the early stages, I know you talked about 90 days, but what do you think is a fair number of time before the loan officer really feels the impact of that model, and how do you expect that to trend over the next 12 months?
I think they start to see the impact within 30 days, and that starts with taking out a huge chunk of the sales-related tasks that the loan officer has to do other than speaking to the consumer. So, they immediately start getting back hours of their day that they were spending either putting data into the system, getting data out of the system, or following up with processors and underwriters on where loan files are at, where customer files are at—that all is done automatically by the system. So they immediately start getting time back. Then from there, they start getting productivity back because the customers that they've locked are not having to chase them up for the documents; the engine is doing it directly. If there's some problem with the documents, the engine handles it, and then they encounter the AI underwriter, where if a loan file needs to get restructured, I'm really excited about the AI underwriter because it captures the logic across all 35 of our investor guidelines, right?
We're talking almost like 40,000 pages of guidelines that are updated three times a day. It's capturing all of that, and it basically gives the loan officer the means to address the customer's question: 'Hey, how do I get a lower rate?' 'How can I qualify for a bigger mortgage?' 'What do I need to do to get this loan approved if this new issue arose?' All of that—it's done instantly. Something that would have taken a human underwriter three to ten hours to resolve is handled in three to five seconds. So people are seeing it immediately, and that's why we're seeing the traffic come in from other loan officers. We already have, on top of the NEO funding of $2.5 billion, other loan officers who are funding loans today and excited and interested in the platform. Now, while not all of that $50 billion will come to fruition—people have cycles, and they will take their time figuring it out—we have created a mechanism by which if you're a successful retail mortgage loan officer, you can have full transparency, and you have to share a much smaller percentage of your profits with our platform, while experiencing significant productivity increases. So what we're promising the retail loan officer is that we will help them make three times more money and cut their costs in half, and that's a pretty compelling value proposition.
Yes. Thank you for that. Just as a follow-up, how many more loan officers in 2025 would you like to onboard? I don't know if there's a capacity or if there's a way that you wanted to scale that in terms of adding to the platform?
Yes. To be honest, in 2021, we had 5,000 loan officers. Here we are onboarding 150 of them on the retail channel, right? So the other thing that the platform provides is effectively infinite capacity to any loan officer team, and so I think we'd like to grow. I think we'd like to triple or quadruple the NEO channel. We're already going to see that this coming quarter, as Kevin mentioned in terms of production. So I think there's a lot of capacity ahead.
Question comes from Brendan McCarthy with Sidoti. Your line is open.
Great, good morning, everyone. Thanks for taking my questions here. Just wanted to start off looking at the unit economics. Just curious as to how unit economics at the loan level trended year-over-year, and I guess really aiming to get an idea of how do you quantify the AI functionality, and really you mentioned operating leverage is kind of positioned to improve looking forward. Are you able to quantify maybe how much you expect that to improve looking ahead?
Yes. Kevin, do you want that question, and I can fill in?
Yes. Let me start. So I think, Brendan, there's a couple of things here. So the unit economics have improved. If I just take Q1, February was better than January, and March was materially better than February, and when you look at our actual aggregate losses, March came in about $7 million, so materially lower, and the mortgage company essentially was breakeven in March. So, the unit economics are a direct result of the AI improvements are coming fast and furious. Now, there's always a market cyclicality to it, as it relates to purchase season; purchase season kind of deferred a little bit here given some of the macro. So, it's not going to be linear, but to date, it has been pretty linear, but I wouldn't assume that's going to be true month-over-month. Where are you going to see the savings? I'll guide you through the income statement. The majority of the savings you're going to see through continued technology improvements are going to be in the compensation and benefits line.
That number is going to go up as we onboard the loan officers that Vishal just talked about. Comp will go up, but it is going to go up slower than revenue, and it continues to improve and continues to get better—that's always been one of our challenges. The other place you'll see it is in loan origination expense. We will see that come down. So, think of that as non-comp expenses on a per-loan basis. We're safely below $1,000 a loan and going even lower on that line item, and that is a direct result of being able to deprecate vendors, renegotiate vendors, drive better deals, and use our technology to really lower the expense, the non-comp expense cost of manufacturing a loan. Those are the principal areas.
Great, Kevin. I appreciate your insight.
Yes, I think the North Star is getting the total cost of production of a loan down to $1,500 a loan: $500 of sales labor, $500 of ops labor, and $500 of credit bureau, income verification, and all of those other external vendor costs—and we're driving hard towards that. If we are able to do that, we're going to be six times cheaper than the industry's cost to manufacture. Retail mortgage originators today spend, outside of sales expenses, about $7,500 a loan to get a loan fully funded through the books. So we believe that there's certainly a lot more gains coming out of the AI. We're starting to actually see it in the numbers with, as Kevin mentioned, the mortgage company becoming profitable this quarter, which it hasn't been in many quarters, and we're going to now be able to continue to grow. The important thing is that mortgage is a scale business, and so, what we did this quarter with the addition of two additional methods of addressing the market—one being on a software basis and the second on a platform basis—is going to drive substantially more volume through the entire funnel. That's going to enable us to get better pricing across our vendor contracts, get better execution on hiring and deploying labor, and really get the benefits of scale that Plus the AI can bring.
That makes sense. I really appreciate the insight looking ahead. And then wanted to talk on the balance sheet. First of all, congratulations on the convertible retirement. I think that's a big piece of the story. But just curious as to maybe longer-term, what kind of leverage level makes sense for the business, and how do you think about the balance sheet at this point versus where you would like to be?
Sure. So, I'll start; Vishal may want to supplement. I'll make a few comments as you think about our balance sheet and leverage. To date, we have always sold servicing released, so we run a very capital-light business model. We're on a $1 billion balance sheet, but half of that will be loans held for sale and those loans are recycling quite quickly, particularly post the SoftBank transaction, because I think as we talked about in the 8-K when we did the deal, we didn't use much cash at all to actually do that deal, but we did sell unencumbered loans held for sale that we chose not to pledge to warehouse lines in order to fund that transaction. So from a leverage perspective, we don't think about it as debt-to-equity per se like where a lot of other companies may because they run a big servicing asset on the balance sheet that they presumably leverage through a financing facility against the mortgage servicing rights.
But what I will say is that the $155 million of new debt we've put on does not mature until the end of 2028. It's fully picked. Until we're profitable, we've informed our partner, our lender, that we will be picking the interest, and so that will accrue, but we will not cash pay it. We feel quite comfortable with $155 million of debt due at the end of 2028. The combination of market improvement and all the self-help we're doing and the work we're doing around technology should make refinancing that three years from now well within our purview. So we feel quite comfortable with our current leverage.
Great. Thanks for the insight there, Kevin. One more question from me. This is constantly a point of growth here is the B2B partnerships. What other opportunities are you seeing for B2B partnerships? And maybe you could talk about the pipeline there?
You want to start that one, Vishal?
Yes, we've discussed the bank partnerships we've established. Moving forward, I see two main types of B2B partnerships. The first is a software-only partnership. We've observed with Ally's leadership that many banks are currently downsizing their mortgage operations and are reluctant to outsource their front and back office completely. Instead, these banks can utilize our software to adjust their services as needed, allowing them to handle some processing or underwriting only when required, thus gaining efficiencies for their loan officers and processors. We believe this is a more effective go-to-market strategy, and we anticipate rapid scaling. Numerous fintechs and banks are ready to engage as we finalize our setup with this one bank. To put this into perspective, typically, for a bank to implement the traditional mortgage industry stack, it usually costs between $1 million and $5 million and takes about nine months.
In contrast, we had this particular bank operating on conforming loans within three days. They then requested to expand to their full product lineup, including wholesale, which we accomplished in 60 days. This involved no implementation costs and no third-party vendor fees, operating only on a per-funded loan basis. For this bank, based on their transition from last year's volume, we expect to generate over $4 million in revenue. Adding wholesale capabilities could potentially raise that to between $10 million and $12 million in revenue over the next 18 months, and these are small to medium-sized banks, so our pipeline looks promising. The second segment of our B2B pipeline involves fintechs seeking to enter the mortgage space, including wealth management fintechs, lending platforms, and personal loan platforms. We're seeing significant interest from these platforms as they explore diversifying into home equity and eventually mortgages, gearing up to convert their customers into mortgage borrowers.
We anticipate sharing positive updates and securing substantial agreements with several major fintech platforms in the next nine months, which should cover both types of B2B partnerships we expect to see moving forward.
The next question comes from Reina Kumar with Oppenheimer. Your line is open.
Hi, good morning. This is Jake Kooyman on for Reina. Thank you for taking our question and congrats on onboarding your first bank partner as part of the Tinman AI as a software opportunity. I was just hoping you could expand on how this relationship works in terms of the economics and operational workflow, and what does the go-to-market look like to capture additional bank partners?
Sure. So, the way it works is that we take all of their existing software and it disappears; they get one platform. We load up the pricing they want and give them self-service pricing control. We load up the underwriting criteria they want and can attach it to the pricing. So, it's the only eligibility-plus-pricing platform in the industry. They can add additional underwriting criteria and charge up or down for it, all in one flow, and it automatically triggers what needs to be taxed out, both to the consumer and the processor and underwriter. It is very easy to learn once they get the hang of it, and we basically deploy account managers and product managers to help them through that process. On the other side, we've created a retail origination module for their bank branches, a wholesale origination module for them, and a direct-to-consumer module for their website. They deploy that and take in the applications mimicking the same workflow that they have today, but with an AI assistant handling everything.
So, they can now operate 24/7 for their customers, and their loan officers can become three times more productive, starting to reach the productivity that Better's loan officers have traditionally experienced. Then their underwriters can essentially become exception managers, with our team providing the necessary training. We have a SWAT team that gets deployed and then, they are up and running. The economics are about $1,500 per funded loan in software and platform fees, and they don't have to deal with eight different vendors or multiple systems integrators. This is a very compelling offer for them—not just on a cost basis but also because we can increase the throughput of their people by two to three times, substantially reducing their cost to originate loans, meaning we bring them more in line with Better's costs.
Your next question comes from Eric Hagen with BTIG. Your line is open.
Hi, thanks. Good morning, guys. Back on the balance sheet maybe, how does the restructuring give you better negotiating terms with lenders and other counterparties? You guys talked about the bank partnerships. How does the restructuring itself play a part in your ability to source and maintain those relationships? And again, does the restructuring make you more competitive with other entities looking at similar partnerships?
Yes, sure. So, Eric, good morning, it's Kevin. I'll start and then Vishal may want to supplement. It's certainly helpful. I think, as we disclosed, we're going to create about $200 million of equity creation as part of the deal. A lot of people looked at us and said you have a relatively high debt load. Certainly for a company that's kind of at the low point of the cycle, hopefully, cycle improves here and all the AI improvements will drive us through the cycle irrespective of how the cycle does. I think we have definitely fixed the balance sheet by taking equity up and debt down as a result of this deal. When people do their high-level diligence on us as a partner, they really want to ensure they are working with a strong counterparty, and now I think we've improved our pitch to them due to the balance sheet transaction, but we performed it because it was the right thing to do for shareholders and it provided an ROI on the cash used to do the deal.
Great color there. Appreciate that. I mean, we hear constantly about the range of borrower profiles and the need for loan officers to effectively tailor a loan to the borrower's profile. How do you guys work with the software to address these different profiles? How do you benchmark that flexibility, or is it really more effective to see Better as being the cheapest and most efficient platform for the borrowers whose profile is down the fairway?
That's a really great question. For the first seven years of our life, Better was great for straight down the fairway customers, and we crushed it in terms of cost and efficiency for conforming, jumbo, high FICO, medium TI, AD LTV type loans, and that fueled our growth. Really onboarding the retail loan officers, we've had to build out the functionality for every loan type in Tinman in the past 120 days. So now we can have three or more borrowers, which has become an important factor because the Bank of Mom and Dad is significant in retail. We had to build that into our system. Now we can qualify infinite borrowers—up to 12 on our own file—while building all the custody products and all construction loan products into the system. Now the system excels at all those loan products. For this bank, we had to onboard bank non-QM and bank statement; we’re now equipped to handle that, and more importantly, the AI underwriting is automatically matching the consumer to the full product set, exposing everything available. The loan officer doesn't have to remember any of this stuff; it all happens instantly. We believe one of the significant aspects of Tinman is not just being super cost efficient but also capturing the full range of products available. This is also contributing to significantly improving D2C unit economics, as we can now serve previously turned away customers.
Yes. Eric, the addition Vishal mentioned is a major storyteller for us over the last three to six months. Through Tinman AI and onboarding NEO, it has been a game changer concerning rolling out new products.
The next question comes from Bose George with KBW. Your line is open.
Hi, guys. Good morning. Actually, that was very interesting on your comments about the way Tinman could disintermediate some of the LOS systems. Are the companies that you're speaking to, like the bank you noted, generally on a system like Encompass and then they're looking at you as a lower-cost, higher-efficiency alternative? Or is it more de novo? Can you characterize the people you're talking to?
The companies we are speaking to are currently using systems like Encompass, and the bank we've onboarded was on Encompass, as was NEO. The efficiency gain for moving from those systems plus the vendors and ecosystem surrounding them to our platform is dramatic. These companies have large sales forces and long contract cycles, so what has favorably positioned us is that this is happening as everyone reevaluates their technology to see if it can work with AI agents and LLMs. Most existing technologies in mortgage land cannot, which is attributed to the presence of seven or eight systems. OpenAI will inform you that the maximum number of function calls the LLM can do simultaneously is two to three. How are you going to do that across eight systems without experiencing latency? Nobody wants that. So, you can't deploy an AI agent with any of these outdated systems. I think we have a unique generational lead here, and I have been pleasantly surprised by the industry response, particularly from large mortgage companies reaching out to us, saying, 'Wow, this works. If you can get it to function for them, you'll make it work for us. Come out and see us, and we want to scale into this.'
Okay, great. That's interesting. Thanks. Have companies you're speaking to expressed concerns about essentially buying technology from a competitor? To the extent this thing grows meaningfully, are there alternatives you can contemplate, like possibly separating this out, or is that too early to think about?
I think it's too early to think about that. The companies that we are talking to are not in retail. They do not view better.com as a competitor. I have been transparent with them that Better.com B2C might become 25% or even 10% of our business over time. Yes, there are concerns, but when you're facing a potential extinction event, you're less worried about buying a tool that helps you surpass that event from someone who may or could be a competitor.
This concludes the question-and-answer session. I'll turn the call to Vishal Garg for closing remarks.
Thank you all for continuing to support us as we build America's leading AI mortgage platform and, in doing so, help consumers get better rates and experience, which lets them have better homes and better lives. While the past five years have been challenging for us, given the state of the market, we're now playing offense hard again. We're looking forward to executing our continued efficient growth and sharing more positive news with you in the quarters ahead. Thank you.
This concludes today's conference call. Thank you for joining. You may now disconnect.