According to an amended S-4 filed by its special purpose acquisition company Aurora Acquisition Corp. with the Securities and Exchange Commission (SEC) on Monday, the earnings deterioration resulted from increasing interest rates, higher costs to support purchase loans, and investments to expand its product offerings. 

However, Better.com also mentioned the impacts of a continued reorganization of its sales and operations teams, including the “effects of negative media coverage following, and severance costs associated with, a series of workforce reductions beginning in December 2021.” 

So far, Better.com has announced layoffs involving more than 4,000 employees since December.

Vishal Garg, the hot-tempered chief executive officer, gained infamy when he laid off 900 employees in a Zoom meeting in December. In early March, the company cut 3000 additional jobs, part of them in India. Last week, the company instituted the third layoff. 

As of March 21, 2022, the company had approximately 5,800 team members, including 3,300 in the United States, 2,300 in India, and 200 in the United Kingdom.  

According to data published by the Mortgage Bankers Association, 96% of nonbank mortgage lenders were profitable in 2021.

Despite the heavy financial losses in 2021, Better.com originated more loans and increased its revenues than the prior year, in which it made a $172 million profit. The company’s funded loan volume reached $58 billion in 2021, up 139% compared to 2020. Revenues were $1.2 billion, a 41% year-over-year increase.

But total expenses rose at a faster pace during the same period, to $1.5 billion from $623 million, a 136% increase year-over-year. Gain-on-sale margin declined from 3.71% on December 31, 2020, to 2.05% for December 31, 2021. 

According to Better.com, the recent workforce reductions resulted in lower interest rate lock volume in December 2021 and early 2022. Such dynamics will, in part, lead to lower funded loan volume in 2022, according to the S-4 statement.

Amid the deterioration of its earnings, Better.com said it may require additional capital resources to grow its business.

In December, Aurora Acquisition Corp. said it will keep the proposed merger with the digital lender. “Aurora remains confident in Better and the proposed transaction,” the company said in a document filed with the SEC. 

The special purpose acquisition company, sponsored by Novator Capital, announced in May 2021 plans to make Better.com, a SoftBank Group-backed digital lender, public in a deal that would value the company at nearly $8 billion. But the figure has been judged with skepticism by Wall Street analysts and the mortgage industry.