Better.com is reckoning with significant losses financially and internally following its headline-grabbing layoffs via Zoom in December, the company revealed this week.
Its most recent U.S. Securities and Exchange Commission filing cited “negative media coverage” over two dozen times in describing the fallout of CEO Vishal Garg’s termination of 900 employees in a single meeting. Since then, several key lieutenants have departed. Better is pursuing a slate of new executives and working on its company culture, according to the filing.
The lender and servicer also reported a preliminary net loss between $167 million to $182 million for Q4 2021, which it credited to fluctuating interest rates impacting volume and the severance costs and bad press related to the firing. The loss amounts to a 17% to 22% decline in revenue compared to Q3 2021. Refinance loans made up 82% of Better’s funded loan volume in Q321 and the company felt the financial crunch as refis waned in favor of more labor-intensive purchase loans, it said.
The admissions came in a filing related to Better’s anticipated merger with Aurora Acquisition Corp., the special purpose acquisition company that confirmed its commitment to the deal following the layoffs. Aurora was formed by London-based private equity firm Novator Capital.
Better.com CEO Vishal Garg.
Sarah Pierce, Better’s head of sales and operations and one of its highest-compensated executives, resigned earlier this month, the company confirmed. She left due to conflicts that arose following the layoffs shortly after Garg returned from a five-week leave of absence, according to a TechCrunch report.
Other departures include two directors who resigned in January; two longtime executives who left in the past few weeks, according to an Inman report; and public relations and marketing leaders who resigned after December’s layoffs.
Following a law firm’s independent review of company culture, Better is looking for a new chairman of the board of directors, as well as a president and a chief human resources officer. After the 9% reduction of Better’s workforce at the end of 2021, it employs 9,300 workers with 5,200 in the U.S. and 4,100 in India.
The negative press surrounding the firing is still hurting Better’s relationship with business partners, lenders and investors, as well as recruiting and retaining staff, it said. At least one unnamed commercial partner decided to drop its pursuit of a pilot program with Better following the negative publicity, the company revealed.