• Key Insight: Uncover how founder Vishal Garg is restructuring Better Home & Finance after ousting the interim CEO.
• What's at Stake: Determining whether Better can survive ongoing losses as its stock struggles near historic lows.
• Forward Look: On the horizon: Hiring a search firm to find a permanent CEO.  Overview bullets generated by AI with editorial review.

Investor analysts are bullish on Vishal Garg as the Better Home & Finance founder explained why profits have been elusive at the digital lender. Needham and BTIG reiterated buy ratings on Better after Garg laid out his 90-day return plan in a call with shareholders Tuesday evening. The company has posted consistent losses since going public in 2023, but has shown green shoots in origination volume and is vying to be a significant multichannel competitor. 

The founder secured a majority of shareholder support to back his return last week, and ousted interim CEO Daniel Lewis Monday. The Garg consortium also reshaped the board of directors, adding a Silicon Valley venture capitalist and top Amazon lieutenant, among others.

Garg largely reiterated plans he shared weeks ago during the proxy war, but bolstered his outlook Tuesday with a new announcement regarding the company's bank in the United Kingdom. A buyer has escrowed £10 million for the transaction, which is pending regulatory approval.

"The increased visibility around the sale of the UK bank gives us greater confidence in the liquidity outlook for BETR and provides a longer runway to achieving cash flow break even (and eventually positive cash flow)," wrote analysts at BTIG in a report Tuesday evening. 

Better's stock has dwindled since Garg was ousted August 3, from a high of $27.30 per share to a low of $10.08 last week amid the power struggle. The company's stock climbed slightly on news of Garg's return but settled back down to $10.24 per share midday Wednesday. 

Back to basics

Garg is eying $50 million of EBITDA, and wants to shave around $15 million in operating expenses while generating $15 million more in revenue. That push includes shoring up Better's artificial intelligence-fueled originating machine. The lender will have to improve its conversion rate from lead-to-lock, and lock-to-fund, through "superior management" of its workforce and efforts. 

"If we were to get them to industry standards of what it is from a lock-to-fund perspective, we would improve lock-to-fund by 50%," he said. "And if we got it to industry standards on a lead-to-lock perspective … we increase it by another 50%. And that would almost double our revenue while keeping our cost structure the same."

The UK bank sale meanwhile should release around $65 million of cash to Better. 

The founder hasn't shied away from calling out competitors, suggesting Better could be a third option in the wholesale space behind giants Rocket Mortgage and United Wholesale Mortgage. Garg also remains bullish on Better's home equity line of credit business with Credit Karma. 

New leadership

Better will hire a search firm to tap a permanent CEO, with a background in credit, AI and fintech, according to Garg. The founder doesn't have an official title, but said he expects to continue to be the face of the company.

The leader, notorious for firing hundreds of workers via a Zoom call in 2021, has expressed contrition in the past for his behavior, and acknowledged to shareholders his struggle in communicating with empathy. 

"I can't be a real leader of the company," he said, denying that he would seek the CEO title again. "We're going to get a real leader of the company that can drive results and take the things that I'm really, really good at and then drive them with empathy."