Better Home & Finance Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 8, 2024

There are 8 speakers on the call.

Operator

you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Better Home and Finance Holding Company's 2nd Quarter 2024 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. I would now like to turn the conference over to Hannah Kosla, Vice President, Corporate Finance and Investor Relations. You may begin.

Speaker 1

Welcome to Better Home and Finance Holding Company's Q2 2024 Earnings Conference Call. My name is Hana Khosla, and I am the Vice President of Corporate Finance and Investor Relations at Better. Joining me on today's call are Vishal Garg, Founder and Chief Executive Officer at Better and Kevin Ryan, Chief Financial Officer at Better. In addition to this conference call, please direct your attention to our Q2 earnings release, which is available on our Investor Relations website. Also available on our website is an investor presentation.

Speaker 1

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 not be considered replacements for and should be read together with our GAAP results.

Speaker 1

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. Amounts described as of and for the quarter ended June 30, 2024, represent a preliminary estimate as of the date of this earnings release and may be revised upon our quarterly report on Form 10 Q with the SEC. More information as of and for the quarter ended June 30, 2024 will be provided upon filing our quarterly report on Form 10 Q with the SEC. I will now turn the call over to Vishal.

Speaker 2

Thank you, Hana, and welcome to our Q2 2024 earnings call. We appreciate everyone joining us today and for your continued support as we drive towards our mission to make homeownership better, faster and cheaper for our customers by building a technology platform that revolutionizes the experience of becoming and being a homeowner. We continue to make great progress towards our vision in which every customer can seamlessly buy, sell, refinance, insure and improve their home digitally online instantly. I'd like to start by highlighting some of our key achievements during the quarter. We continue to lean into growth to drive increased volume balanced with ongoing efficiency improvements and disciplined cost management to target reaching profitability in the medium term.

Speaker 2

In short, even in a market that remains challenged with historically low housing affordability and persistently high mortgage rates, we continue to deliver on the roadmap we set out at the start of the year, which included top line growth and continued expense management. Compared with the Q1 of 2024, funded loan volume increased by 45% and revenue rose by approximately 41% in the Q2. We continue executing on strategies to increase conversion through additional products and services as well as improved sales efficiency to drive higher pull through on the approximately 60,000 monthly customers who begin their mortgage applications with us. We also continue to increase revenue per loan while still being a low cost provider and continue to optimize the revenue generated on prudently invested cash and investments. Specifically, we have increased the volume of self funded loans we choose to hold on our balance sheet that generate income between loan funding and sales to secondary investors.

Speaker 2

Volume growth was primarily driven by growth in purchase loans as well as home equity products, including HELOCs and closed end second lien loans. These products remain attractive to our customers in an environment with persistently higher rates and higher cost of living because they enable borrowers to tap into the equity they have in their homes, which totals over $30,000,000,000,000 in the United States today. Our 2nd quarter growth was combined with continued expense discipline with a focus on maximizing operating efficiency, resulting in quarterly total expenses remaining approximately flat quarter over quarter, even with the top line growth we showed. As discussed on our Q1's earnings call, I'd like to remind everyone of our strategic priorities for 2024. Our first priority is thoughtfully leading into growth against which we showed continued progress this quarter.

Speaker 2

Since we announced our intention to begin leaning back into growth in the Q4 of last year, we have increased our funded loan volume by 83% and revenue by approximately 78%. We continue to embrace the opportunity to grow our loan officer footprint, add additional marketing channels and new products and services to ensure we are well positioned as consumer demand returns to capture increased market share across our 3 main mortgage products purchase, refinance and home equity products. Looking at growth for each product compared sequentially with the Q1 of 2024, purchase loan volume increased by 50%. HELOC volume including home equity lines of credit and closed end second lien loans increased 76% and refinance loan volume decreased 5% with high rates continuing to negatively impact rate term refinances customers with existing low mortgage rates opting for home equity products instead of cash out refinances. In purchase, we continue to see strong early results from the benefit of having experienced loan officers nurturing homebuyers through their journey.

Speaker 2

In our home equity products, we see strong momentum given home values continue to appreciate while rates have remained high and customers are looking to manage their monthly cash flow by tapping into the equity sitting in their homes without resetting the rates on their 1st lien mortgages. With a one day HELOC, they can go online 20 fourseven and within a few hours have certainty on how much money they can save each month. In the Q2, we saw continued improvements to our gain on sale margin, which increased to 2.43% in the Q2 of 2024 compared to 2.37 percent for the Q1 of 2024. Drivers of this margin improvement include increased pricing, while still remaining the low cost provider and a focus on driving customer retention through improved service as well as continued efforts to optimize for the best execution across our network of loan purchasers including the GSEs. In the Q2, we also saw certain non recurring benefits to gain on sale revenue that totaled approximately $9,000,000 including a one time positive mark to market impact on our lock pipeline and a recovery from a release of our loan repurchase reserve.

Speaker 2

Our second priority is improving operational efficiency and further variabilizing loan production expenses, which we also demonstrated in the Q2. Over the past two and a half years, we have been intensely focused on significantly reducing expenses and maximizing operating efficiency during the highly challenging macro environment. While we lean into certain growth expenses such as marketing and compensation for larger loan production teams to produce higher volumes, These were offset by lower vendor and corporate compensation expenses compared with the Q1 of 2024. Our marketing and advertising expenses increased 87% from $4,600,000 in Q1 twenty twenty four to $8,500,000 in Q2 twenty twenty four, and we expect these to further increase in order to support volume growth. Additionally, our loan officer productivity remained above industry average and continue to benefit from the previously discussed shift to a sales compensation structure with lower salaries and higher commissions.

Speaker 2

We are also testing a variety of applications of AI within Tin Man, both for internal efficiency and consumer facing benefits. We are seeing early indications from these AI program investments geared towards sales and underwriting productivity, specifically around customer routing, data capture and initial underwriting review of loan files. We believe these AI investments and our continued investments in core automation such as our automated initial review system or AIR where for certain loan files Tin Man is capable of completing the entire initial underwriting fully autonomously will help us drive customer conversion and operational efficiency at scale. When Tin Man autonomously handles certain tasks and interactions, it frees our team up for more complex or nuanced customer interactions. In the Q2, we also saw certain one time non recurring expense benefits, including reductions in certain reserves and a state tax refund.

Speaker 2

Aggregate one time benefits amounted to approximately $1,000,000 of contra expenses in the 2nd quarter. To recap, in the Q2 of 2024, our revenue increased by approximately 41% quarter over quarter, while total expenses were approximately flat, demonstrating substantial operating leverage in the business. Finishing with our 3rd priority of growing our B2B mortgage as a service distribution channel, we continue to see demand for our technology and origination capabilities from new partners with strong brands who are looking to offer mortgages to their customers in a cost efficient way. We also continue to nurture our existing pipeline and are currently working on multiple B2B pilot programs. One example being an early stage partnership with a large national roofing and basement contractor.

Speaker 2

While early in the pilot, we are excited about programs like this because they can empower homeowners to protect and invest in their homes and finance these projects through their existing home equity with our one day HELOC products. We believe our partnership pipeline demonstrates strong product market fit for our B2B offerings and demand for our technology from firms with existing brands and relationships with customers. We are however in a position at the mid year mark to see that the most material prospective partnerships from a funded loan volume perspective have multi year enterprise sales and integration cycle. As a result, we expect most of our growth in 2024 year being driven by the DTC channel. Looking beyond 2024, the medium term opportunity for better remains very exciting.

Speaker 2

We are focused on 1st enhancing our go to markets with growth being our North Star and second, continuing to invest in automation and AI through the cycle. In terms of go to market, our experienced commission based loan officers are working to drive improved customer conversion in a cost efficient manner, specifically converting website visitors to funded customers, particularly on the purchase side. We are seeing that industry veteran loan officers who come on our platform are able to drive higher fundings per month while maintaining the same level of service and engagement with their customers because of the end to end proprietary technology we have built. We expect to manage costs through a highly variable sales compensation model and continued automation that drives down non customer facing costs as well as reductions to corporate overhead costs. Further, we are testing the addition of more traditional brand advertising to our D2C acquisition channels.

Speaker 2

This quarter, we became an official partner of the Premier Lacrosse League to expand the breadth of customers we are reaching and awareness of the better brand. We continue to invest in Tin Man, our proprietary technology platform to improve the customer experience and further drive down labor costs, making our platform more efficient and scalable and enabling us to provide our customers with lower rates, higher approvals and certainty earlier in the mortgage process. Tin Man powers are highly differentiated competitive advantage and drives our better, faster and cheaper customer experience. In summary, we continue to have a large and attractive market opportunity. We are excited to continue our growth direction in the second half of twenty twenty four and excited about the market dynamics we are seeing thus far in Q3.

Speaker 2

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. Kevin?

Speaker 3

Thank you, Vishal. As Hana mentioned at the start of the call, we have not yet completed our Q2 10 Q and the numbers discussed in this call represent a preliminary estimate and may be revised upon the filing of the 10 Q with the SEC. As Vishal discussed, we are excited to report that better is growing while continuing to be laser focused on maximizing operating efficiency. While we expect an improvement in the mortgage market in the medium to long term, this will likely take time. To that end, we continue to thoughtfully lean into certain growth expenses, including marketing spend and production headcount to drive increased volume as well as increased origination capacity in advance of expected near term demand, which will be balanced by continued cost discipline to target reaching profitability in the medium term.

Speaker 3

I'll turn now to the financial results of the Q2. During the Q2 of 2024, we generated funded loan volume of approximately $962,000,000 This compares to our prior guidance for the quarter of above 800,000,000 dollars Revenue of approximately $31,000,000 and an adjusted EBITDA loss of approximately 25,000,000 dollars which represents an improvement of approximately $6,000,000 in our adjusted EBITDA loss compared to the Q1 of 2024. Total GAAP net loss for the 2nd quarter was approximately $42,000,000 an improvement of approximately $9,000,000 compared to the Q1. Total expenses of $73,000,000 in Q2 2024 was approximately flat compared to $74,000,000 in the 1st quarter. Our 2nd quarter funded loan volume was 70% generated through our direct to consumer channel and 30% generated through our B2B channel.

Speaker 3

It was 83% purchase, 8% refinance and the remainder of dollar volume was home equity, including home equity lines of credit and closed end second lien loans. Now to touch briefly on our balance sheet and capital positioning. We ended the Q2 of 2024 with approximately $507,000,000 of cash, restricted cash, short term investments in self funded loans. Self funded loans is defined by our loans held for sale less a warehouse lines of credit. We believe that adding self funded loans is relevant when looking at our liquidity as we are making a conscious decision to hold these high quality cash flow generating assets on an interim basis between funding and sale to secondary investors, similar to other short term investments.

Speaker 3

We are well capitalized for growth as our cash position provides us with liquidity to continue executing against our vision and corporate objectives. We retain strong relationships with our financing counterparties to manage mortgage working capital even in this lower volume environment. As of June 30, 2024, we had 3 warehouse facilities for total capacity of $425,000,000 Additionally, we are effectuating a reverse stock split that betters common stock at a ratio of 1 post split share for every 50 pre split shares. The reverse split was approved by Better's stockholders at our annual meeting on June 4, 2024 and the 1 for 50 reverse stock split ratio was approved by the company's Board of Directors on August 1, 2024.

Operator

The

Speaker 3

minimum bid price requirement for continued listing on the NASDAQ Capital Market. We expect the reverse stock split to be completed shortly within the time required to regain NASDAQ compliance. Turning now to our second half of twenty twenty four outlook, we continue to expect funded loan volume to increase in 2024 as compared with 2023 as we prudently increase customer acquisition spend in the highest returning channels and increase origination capacity through hiring and loan production roles. For the Q3 of 2024, we expect to generate a funded loan volume of at least $1,000,000,000 which represents continued quarter over quarter funded loan growth for the Q3 in a row. We continue to have a keen focus on cost management, including the continued reduction of corporate overhead expenses, vendor costs and other costs due to further automation and critical review of our existing contracts.

Speaker 3

As a result of increased growth expenses offset by continued expense reductions, we expect total expenses to be approximately flat in 2024 as compared with 2023. Lastly, we expect customer conversion to improve with continued investment in Tin Man, increasingly variable sales compensation plans, improved sales technology and purchase product offerings. With that, I'll now turn it back to the operator for Q and A.

Operator

Thank you. The floor is now open for questions. Your first question comes from the line of Rayna Kumar with Oppenheimer. Please go ahead.

Speaker 4

Good morning. Thanks for taking my questions. In regards to the AI initiatives, could you give some more specifics around the AI investment that you're making and the types of operational efficiency that they could drive? And maybe talk a little bit about the metrics that AI could impact and how does your strategy compare to that of peers?

Speaker 2

Sure. That's a great question. I think there's 3 main areas in our operations that the AI initiatives are going to impact. The first is in terms of sales and customer support. So there, our operating costs for sales and customer support are amongst the lowest in the industry in terms of sales expense for fund.

Speaker 2

However, that's still a pretty significant portion of our total cost of making a loan. Approximately 25% of the cost of to 30% of making a loan goes to sales and sales support. We've been testing voice agents that are autonomous, that are now actively in the field that are gathering customer information, transcribing that customer information, writing it into our database and automatically generating pre approvals for our customers based on the missing data that has been collected. That is a task that was previously done by humans and required a significant labor force for us to go and do that. It's also enabled us to touch our customers much faster than we would on a usual basis.

Speaker 2

So rather than having a response time measured in minutes or hours, we are now able to respond back to customer queries in seconds and milliseconds. And that level of speed is just something that is unmatched with what you can do in a traditional mortgage call center setting. Another area where we are seeing dramatic improvement in processing and processing turn times, we've already always had the one day mortgage since 2023, but we've gotten even faster with that with using generative AI in document classification and data extraction from document classification. So traditional methods of OCR for document data extraction really require the computer to already know and have a template of the document that's being OCR'd. With generative AI, we are now able to have the machine automatically determine what document is being uploaded.

Speaker 2

Use an example of a previous document like that document. Let's say if it's a homeowners association statement or a tax return or a home purchase contract and automatically extract the data that is required. So that it dramatically lowers the amount of processor time And we're using that to not only just do the basic documents of the mortgage process, but all the hundreds of trailing documents in the mortgage process and take the data extraction process and bring that down dramatically, both in terms of speed and in terms of efficiency. The last is on the underwriting side. We have now introduced our automated initial underwriting where traditionally that is a process that would take weeks and a traditional underwriter to do.

Speaker 2

And we are seeing dramatic progress in expanding the percentage of our customers who are effectively getting a commitment letter from us almost instantly post locking alone. And we expect that metric to continue to go up. Of course, that is going to result in labor cost savings. We think that these investments in total will enable us to lower our total cost of manufacturing alone by over 50% over the coming years. And we think that we have been leaning into technology and AI since the founding of this company.

Speaker 2

So in 2014, we set out to build a autonomous rules engine that would match consumer data and property data to investor preferences and criteria. And we use machine learning to do that. With the advances in generative AI, we believe that there's a second chapter in Better's history that is being written today, which will enable us to drive the cost of loan production and the speed at which we're able to process in a way that none of our competitors will be able to match.

Speaker 4

Got it. Appreciate all that detail. And one more question from me. The B2B pilot program you spoke about sounds like an interesting opportunity for other lenders like personal lenders to expand their product offerings into HELOC. What do you see as the addressable opportunity here, should this materialize?

Speaker 2

So that's another great question. There are over $2,000,000,000,000 of personal installment loans, solar loans, student loans and buy now pay later loans that all are out there because the HELOC went away post the credit crisis. And so we saw growth in all these other categories because the instant availability of credit from your home went away after the credit crisis. And so the last decade has seen about $2,000,000,000,000 of origination that would have for other loan types that would traditionally have been covered by the HELOC product. And we see great partnership opportunities with lenders who have been in these other markets who now with the advent of a one day HELOC product and an instant underwrite on the HELOC product for the consumer are going to seek to have their consumers be able to access that product.

Speaker 2

Now the likelihood of them building it themselves is pretty remote considering the complexities of mortgages and HELOCs. So we see a really great opportunity to partner with these existing lenders and many of the FinTech lenders that have come up over the past 2nd to actually be able to meet their consumers with the HELOC product and be able to deliver that for them in partnership with these lenders.

Speaker 4

Great. Thank you.

Operator

Your next question comes from the line of Ryan Tomasello with KBW. Please go ahead.

Speaker 5

Good morning, everyone. Thanks for taking the questions. As the mortgage market maybe starts to see some tailwinds here, I was hoping you could walk us through some back of the envelope math for what level of origination volume you think the company needs to see in order to reach breakeven over the intermediate term? Thanks.

Speaker 3

Hey, Ryan, it's Kevin. Good morning. So we look at this all the time. I think there's obviously 3 components to this. So we put up first just on expenses.

Speaker 3

We put up 40 points of operating leverage in the Q2, right. We're very proud of the fact that we can hold expenses flat while getting revenue 40%. I think that operating leverage was flattered in part as I think, Vishal mentioned in his prepared remarks by some one timers. But I think the business from here has very little fixed expense growth. We need to put on to like literally 10x the volume of the company.

Speaker 3

I mean, there's public company costs. We obviously invest heavily intact just given the way this company was built. And so those expenses are already embedded. So from a volume perspective, it's also a function of gain on sale. So it's really revenue, right, versus volume that ultimately matters to cover an expense basis run $150,000,000 through 2 quarters.

Speaker 3

That's fully loaded, including stock based comp and everything else, including non cash expenses. And so what we're doing is we're guiding to over $1,000,000,000 of volume in Q3. We took gain on sale up in Q2 versus Q1. We're working to do that again now in Q3. We're running pricing experiments and things like that.

Speaker 3

We're still at a very low cost of the customer. To lower the number at which we need to breakeven, to something just north of $10,000,000,000 we'd like to get to, but we're still working that through. And so what we're going to try to do in September is do investor meeting where we actually lay out that math and create specificity, but it will be a combination of volume and gain on sale margin we ultimately land at in our business.

Speaker 5

Okay. Thanks.

Speaker 3

Appreciate it. We don't think expenses grow much from here. We doubled marketing expense. We're hiring LOs. So I don't think we're going to put up 40 points of operating leverage every quarter.

Speaker 3

We're going to have to add some what I'll call variable expenses. But our fixed expenses are and we're still knocking them down. We're going to continue. We got compensation down. We're going to take out some chunky corporate costs this quarter around leases and vendors.

Speaker 3

And so we're working through it every day.

Speaker 5

Got it. Thanks, Kevin. And then separate but related topic, I was hoping you could provide your updated thoughts on how the upcoming broker commission practice changes about a week might impact the industry and how you see that playing out for the mortgage market in particular, just given the unique relationship that the mortgage market does have with residential brokers, particularly on the buy side that serve as a meaningful source of referral business for loan officers? Thanks.

Speaker 3

Sure. So I make two comments. I think we still see the broker having a very important role in this and we've worked hard to improve our relationships with real estate agents brokers over the last year, right? I think part of the history of the company growing up is a digitally native business that wasn't not out in the field. We didn't really have those relationships.

Speaker 3

And as the market turned from refi to purchase, it's taken us a little while to catch up and adopt those relationships. That's point 1. But point 2 and this is counterbalances that industry transforms, we're perfectly placed to transform with the industry, meaning anything that takes cost and friction out of the process is ultimately good in our minds for the process. That's the reason Vishal founded this company. And so if you lower that friction and transaction costs across the board, there will be more transactions we think over time.

Speaker 3

And I think particularly given what we're doing in AI, the digital experience, the low cost to the customer that should act as a on a relative basis, a tailwind for better versus others. And so we're going to continue to partner with real estate agents. We need to do more purchase loans. We've been saying that for a year and a half, 2 years now. We understand that.

Speaker 3

But we do actually support anything that makes the market better for the consumer.

Speaker 2

Yes. I think fundamentally as soon as consumers and I know there are changes coming through this week and the week after where from going forward consumers are going to have to sign these representation agreements where they're going to in many cases say they're on the hook for the fee even if the seller doesn't pay the realtor a fee. I think that's the course consumers to potentially shop around realtors. And then if they're going to shop around for realtors, they're going to go online. And when they go online, they come to us.

Speaker 2

Now the fact is the bulk of consumers still don't shop around and they don't go online. The 80% plus of the consumers do not shop around or go online according to the CFPB. So we're pretty psyched about the potential for there to be significant disruption in the consumers willingness to go online to both shop for a Realtor as they shop for homes and then as they shop for a Realtor to shop for a mortgage.

Speaker 5

Appreciate the comments. Thanks guys.

Speaker 3

Thanks Ryan.

Operator

Your next question comes from the line of Joseph Vafi with Canaccord Genuity. Please go ahead.

Speaker 6

Hey, everyone. Good morning and thanks for the opportunity to ask some questions. Just wondering here in the rate environment that we're in and what we're looking at potentially moving forward, how much rate cut do you think we need to see before potentially refi volumes start to kick back up materially? And then I'll have a follow-up.

Speaker 2

I'll let Kevin handle the how much the rate cuts need to be. But I know that with 50 basis points of rate cuts, there's about $6,000,000 purchase mortgages that have been originated since 2022. And on average, a 50 basis points of rate cuts is going to save each of these homeowners at least $100 a month, which is pretty significant. And their propensity to refinance is going to be higher because of the rates they have been they have financed that versus what traditional prepaid speeds were when people were getting 3% or 4% mortgages. So 6,000,000 consumers, let's assume 2 $150,000 average balance is probably more nowadays.

Speaker 2

You're talking about $1,500,000,000,000 of potential refinance volume. And back when we were doing refinances, we had between 1% to 2% market share in 2020 2021 of refinances in the market. So we see a pretty significant boost for our ability to capture and grow into that with our one day mortgage, one day refi product offerings that enable consumer to go online effectively lock their refinance and lock in their savings within 15 minutes and then be able to have a commitment letter for that within the same day.

Speaker 3

And I think I would add to that. So the mindset of the consumer for the last couple of years is rates are going up, rates are going up, rates are going up. Now you're finally having this shift where we're almost certainly going to get a cut in September, right? We'll have to see. There's still some data that the federal need to see, but I think people are very convinced that we're going to get the first move in September.

Speaker 3

And so from that perspective, we're finally for this industry going to have a tailwind going forward. We don't know what's going to happen to the curve. The curve is flat and it should ultimately steepen over time. And so it's really hard to track direct mortgage rates with the Fed funds rate. But as from a sentiment matter, it does start to show to the consumer that rates are coming down.

Speaker 3

It's okay to kind of dip back into this market. You still have supply challenges, you still have affordability challenges. So it's going to take a bit to work through this. But as Vishal said, we've been bumping at 7% or even slightly above 7% really for the first 6 months of the year at this point. You got down lower end of last week, Monday.

Speaker 3

Now you're kind of running just below 7% generally. The market pricing is pretty dynamic. That $50 savings is $200 plus for our average customer. And I think that's meaningful enough to just start a little mini refi move even really at current rates and we expect rates to march down into the lower sixes by the end of the year. Great.

Speaker 3

Thanks for that.

Speaker 2

And I think

Speaker 3

like 2020, 2021 obviously, but we people that did deals in 2022 and 2023 are going to be refi eligible in the near term here.

Speaker 6

Sure. That's great color. And then just as a follow-up on that same point, is there a kind of revenue margin differential between your refi business and your original purchase business? Thanks a lot.

Speaker 3

Yes. I mean historically when refi correlates with higher volume and historically, we've put up a slightly higher margins. Because remember, if rates come down, it's also going to open up the purchase market. Affordability has been a big issue. So margins are very driven by just aggregate volume in the industry because it's a supply demand dynamic across the sector.

Speaker 2

That also being said, margins are likely to be healthy because of the number of loan officers that have left the industry.

Speaker 3

Correct.

Speaker 2

So you've seen since the peak in 2021, an attrition rate of about 45% depending on who you'd ask of the number of loan officers that are licensed and are out there and doing transactions.

Speaker 3

And the other thing I'll add, so there's it's funny when you're in the mortgage business, there's the revenue margin, but then there's like you think about running a company, just your operating margin. When we do refinances and clearly, we did $58,000,000,000 of volume back in 2021, dollars 50,000,000,000 approximately, which was refi. Our cost to actually execute that loan is much lower. Our purchase process takes some hand holding, some time, etcetera. It's more LO time.

Speaker 3

Refi can be very quick twitch. And so our cost to manufacture is lower. So our corporate margin or our contribution margin on that refi loan for us is certainly higher than it has been on purchase and will be even as an equal gain on sale or revenue margin.

Speaker 6

Thanks for all that color.

Operator

Your next question comes from the line of Jeff Cantwell with Seaport Research Partners. Please go ahead.

Speaker 7

Hey, thank you. I wanted to ask you, with volumes starting to rise and assuming that trend continues, can you talk a little bit about your loan officer capacity, originations and flow investments will be the typical operational bottleneck? Thanks.

Speaker 2

Yes. I mean, our productivity for loan officers has continued to be best in class for industry. And as we're bringing these experienced loan officers on, we're seeing guys and gals that were doing 2 to 4 loans a month come on our platform and do north of 10 loans a month. So the bottlenecks really are in terms of recruiting where we're seeing continued incumbents shedding workforces and in training in terms of being able to then train these experienced loan officers to work on the system, on the Tin Man system. So there's some gravitational forces that preclude us from growing massively.

Speaker 2

But those are bottlenecks primarily on training the experienced loan officers to come on board the platform. We've had some amazing luck on recruiting in terms of being able to hire them. There's some bottlenecks in onboarding. And then once they're on the system, their productivity is world class. Their productivity is industry beating.

Speaker 2

So we see some really great productivity and margin expansion as we get more of these experienced loan officers onto the platform and we scale up.

Speaker 7

Okay, great. Thanks guys. Appreciate it.

Operator

There are no further questions at this time. I will now turn the conference back over to Vishal Garg for closing remarks.

Speaker 2

Thank you everyone for joining. We really value your support and we had a great quarter in terms of growth and expense management. And we look forward to delivering more of the same for our shareholders in the coming quarters ahead. Thank you.

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Better Home & Finance Q2 2024
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