Tinman AI And HELOC Expansion Will Transform Long Term Earnings Power

Catalysts

About Better Home & Finance Holding

Better Home & Finance Holding provides mortgage, refinance and home equity products through a technology focused lending platform and partnership model.

What are the underlying business or industry changes driving this perspective?

• Rapid scaling of the Tinman AI platform, which went from contributing 0% of funded loan volume in 2024 to approximately half of funded volume in Q1 2026, supports higher operating leverage and is set up to influence future revenue growth and earnings efficiency as more volume flows through the system.
• Partnership driven distribution with Credit Karma, NEO, a top five non bank originator and other fintech and bank partners channels large pre approval volumes at effectively zero upfront customer acquisition cost, which can support future revenue while helping protect net margins when marketing spend is constrained.
• Mix shift toward higher margin HELOC products, where gain on sale economics are described at six to seven points compared with roughly 2.5 to 3.5 points on traditional mortgages, has the potential to support revenue per dollar of funded volume and improve overall net margins even if total balances per loan are lower.
• Expansion of warehouse capacity by 48% to US$850 million and a strengthened liquidity position through a US$69 million equity raise and at least US$25 million of annualized cost reductions provides operational room to support higher funded volumes and can help future adjusted EBITDA and earnings as fixed costs are spread over more revenue.
• New products such as the Better Home Equity card and the token backed mortgage with Coinbase are designed to deepen long term customer relationships, extend engagement beyond a one time mortgage event and increase cross sell opportunities, which can support recurring revenue streams and help smooth earnings over time.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Better Home & Finance Holding compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Better Home & Finance Holding's revenue will grow by 42.6% annually over the next 3 years.
• The bullish analysts are not forecasting that Better Home & Finance Holding will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Better Home & Finance Holding's profit margin will increase from -93.5% to the average US Diversified Financial industry of 14.8% in 3 years.
• If Better Home & Finance Holding's profit margin were to converge on the industry average, you could expect earnings to reach $77.4 million (and earnings per share of $3.35) by about July 2029, up from -$169.2 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 16.7x on those 2029 earnings, up from -2.4x today. This future PE is greater than the current PE for the US Diversified Financial industry at 15.2x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.1%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Persistent or further increases in mortgage rates linked to geopolitical tension could keep refinance customers “stuck in the middle of the funnel,” which compresses lock rates and leaves a growing pool of pre-approved borrowers unconverted, directly pressuring funded volume and revenue even if top of funnel interest remains high.
• The long-term shift in mix toward HELOCs, which typically carry smaller average balances than traditional mortgages, could cap total dollar volume and make revenue growth more dependent on higher margins and fees, so any compression in HELOC gain on sale economics would quickly feed through to revenue per loan and net margins.
• The business remains loss making on an adjusted EBITDA basis, and management has indicated that if rates move materially higher or the Middle East conflict is more prolonged than expected, they would need to cut costs more deeply. This could constrain growth investments and partner support and in turn weigh on revenue growth and delay a move to positive earnings.
• Partnership driven distribution concentrates growth in a few large ecosystems such as Credit Karma and major mortgage originators, so any slowdown in partner engagement, changes to partner priorities or underperformance in partner funnels could reduce funded volumes and contribution margin, affecting both revenue and the path to improved net margins.
• The shift to heavy reliance on Tinman AI, Betsy and other automation, along with plans to absorb more partner operations, increases operational and execution risk. Any technology issues, integration challenges or partner resistance to new systems could limit expected efficiency gains and keep operating expenses elevated relative to revenue, hindering improvement in earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Better Home & Finance Holding is $42.0, which represents up to two standard deviations above the consensus price target of $36.33. This valuation is based on what can be assumed as the expectations of Better Home & Finance Holding's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $42.0, and the most bearish reporting a price target of just $32.0.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $524.5 million, earnings will come to $77.4 million, and it would be trading on a PE ratio of 16.7x, assuming you use a discount rate of 10.1%.
• Given the current share price of $21.81, the analyst price target of $42.0 is 48.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.