0001628280-26-033684
SEC filingQ1 2026 results showed revenue declining 71.7% to $1.1M while net losses widened 39.1% to $70.3M, driven by higher operating cash burn amid increased loan origination expenses from rising origination volumes and U.K. deposit-related interest dynamics.
Revenue fell 71.7% year-over-year to $1.1 million in Q1 FY2026 from $4.0 million, primarily due to shifts in the company's mortgage origination and related activities amid a challenging high-rate environment. This topline contraction underscores the sensitivity of gain-on-sale margins and fee income to market conditions, even as origination volumes increased per management discussion.
Net losses expanded 39.1% to $70.3 million from $50.6 million, with diluted EPS declining 28.8% to -$4.29 from -$3.33. The widening stemmed from elevated operating expenses, including higher loan origination costs directly tied to increased origination volume. Management notes that such expenses rise in tandem with production activity, reflecting the variable nature of scaling loan pipelines. Additionally, U.K. operations contributed through increased interest income from investments funded by growing customer deposits, offset by corresponding rises in interest expense on those deposits, illustrating the leverage dynamics in the held-for-investment loan portfolio.
Discontinued operations, particularly the Birmingham Bank disposal process, are expected to remain volatile, influenced by operating performance, interest rate shifts, and pre-sale carrying value adjustments. This introduces ongoing uncertainty to bottom-line results. Meanwhile, management commentary highlights technology expense increases from software vendor costs and evolving accounting standards for internal-use software, which begin capitalization upon project commitment and probable completion. These factors collectively explain the quarter's financial profile, positioning the company to navigate origination growth while managing U.K.-related funding costs and liquidity needs.