Blend Labs (BLND) Q1 2025 Earnings Call May 08, 2025 04:30 PM ET Speaker0 Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Blend Labs Incorporated First Quarter twenty twenty five Earnings 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. Thank you. I will now turn the call over to Amir Jafari, Head of Finance and ...

Blend Labs, Inc. Q1 2025 Earnings Supplemental Slides May 8, 2025 Forward-Looking Statements and Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or Blend's future financial or operating performance. In some cas ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number 001-40599 BLEND LABS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organ ...

Third Consecutive Quarter of YoY Growth Fueled by Renewed Customer Momentum May 8, 2025 SAN FRANCISCO -- Blend Labs, Inc. (NYSE: BLND), a leading origination platform for digital banking solutions, today announced its first quarter 2025 financial results. "We're delivering strong results across the business—closing nearly three times as many deals as this time last year, deepening relationships with top-tier institutions, and driving strong adoption of our Rapid Home Lending solutions. This progress signals ...

Financial Performance and Risks - As of December 31, 2024, the company had an accumulated deficit of $1,385.0 million, indicating a history of net losses and uncertainty in achieving future profitability [109]. - Increased market interest rates have adversely affected consumer borrowing and mortgage origination activity, leading to reduced engagement with the company's platform [106]. - Economic uncertainties, including rising interest rates and geopolitical tensions, have negatively affected lending activity and business investments, posing risks to revenue growth [107]. - The company experienced lower than anticipated title transaction volume since the Title365 acquisition, which may continue to impact future revenue [110]. - The company faces challenges in retaining existing customers and acquiring new ones, which could adversely affect revenue growth rates [114]. - There is a risk of customers terminating agreements without penalties, impacting transaction volumes and revenue [114]. - The company has faced challenges in adapting to technological changes and competition from larger, established firms, which could hinder growth prospects [102]. - The fluctuating results of operations have caused volatility in the market price of the company's Class A common stock, reflecting ongoing business risks [102]. - The company has experienced fluctuating growth rates due to macroeconomic factors, making future performance difficult to predict [120]. - Historical revenue growth rates may not be indicative of future performance due to various external factors [123]. Customer Concentration and Dependency - The top five customers in the Blend Platform segment accounted for 33.0% of the segment revenue in 2024, highlighting significant revenue concentration risks [110]. - The company's top five customers in the Title segment represented 73.2% of the segment revenue in 2024, with Mr. Cooper alone accounting for 46.8% [110]. - The company relies on a small number of key customers for a significant portion of its revenue, which increases vulnerability to changes in those customers' financial health [110]. - Revenue is significantly dependent on large and mid-sized financial services firms, and failure to innovate could lead to customer attrition [126]. Technology and Operational Challenges - The company must adapt to rapidly changing technology and evolving industry standards to remain competitive [125]. - The company is incorporating AI technology into its platform, which is anticipated to drive future growth, but faces challenges in customer adoption and implementation [156]. - System failures and service interruptions have previously resulted in revenue losses, and future incidents could significantly impact business operations [154]. - The company must continue to improve its operational and financial infrastructure to manage growth effectively and maintain investor confidence [152]. - High-quality customer support is essential for customer retention, and challenges in scaling support services could harm the company's reputation [163]. Regulatory and Compliance Risks - The company is subject to increased legal, accounting, and financial compliance costs due to the requirements of the Sarbanes-Oxley Act and other regulations, which may strain resources [182]. - The company may face significant compliance costs and operational challenges due to the General Data Protection Regulation (GDPR), which imposes fines up to €20 million or 4% of annual global revenue for breaches [213]. - The regulatory landscape has intensified since the 2008 financial crisis, leading to stricter enforcement of consumer protection laws [205]. - Changes in the regulatory environment, particularly regarding consumer financial services, could adversely affect the volume of mortgage originations in the U.S. [203]. - The company may face increased regulatory scrutiny and compliance costs due to evolving privacy laws and regulations across multiple states, including California, Virginia, and Colorado [210]. Capital and Financing Needs - The company may require additional capital to support growth, which might not be available on acceptable terms, impacting financial stability [102]. - The company anticipates that existing cash, cash equivalents, and marketable securities will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months, but may require additional financing [180]. - The ability to obtain financing will depend on development efforts, business plans, operating performance, and capital market conditions, with potential adverse effects on business growth if financing is not secured [181]. Competition and Market Position - Competition is intense, with competitors having greater financial resources and established relationships, potentially leading to pricing pressures [118]. - The company faces challenges in identifying suitable acquisition targets due to competition and high valuations, which may hinder future growth opportunities [135]. - The title segment revenue is significantly sourced from residential real estate transactions in Texas, California, and Florida, making the company vulnerable to regulatory changes in these states [243]. - Competition in the title insurance industry is intense, with larger agencies having substantially greater capital, which could adversely affect the company's market position [245]. Intellectual Property and Brand Risks - The company has registered trademarks and domain names, but faces risks from competitors adopting similar names, potentially harming brand identity [258]. - As of December 31, 2024, the company had one issued patent in the United States, with ongoing risks related to intellectual property litigation [259]. Shareholder and Governance Issues - The multi-class stock structure concentrates voting power with the CEO, limiting shareholder influence on corporate matters [265]. - The potential conversion of Class B shares to Class A shares under certain conditions could impact voting power dynamics in the future [268]. - The company’s multi-class common stock structure allows Mr. Ghamsari to significantly influence shareholder decisions despite not holding a majority of shares [280]. - The exclusive forum provisions in the bylaws may limit shareholders' ability to choose the judicial forum for disputes, which could discourage lawsuits [278]. Future Growth and Strategic Initiatives - The company has made strategic acquisitions, including Title365 in 2021 and a partnership with Covered Insurance Solutions in 2024, which require unique integration approaches due to various factors [134]. - Future success depends on the effective integration of acquisitions and partnerships, with risks including failure to realize anticipated benefits from the Title365 acquisition [137]. - Significant investments are being made in technology, customer service, risk management, sales, and marketing to support future growth [151]. - The company is focused on expanding its platform and enhancing user experience, which may conflict with short-term financial results [170].

Financial Data and Key Metrics Changes - Total company revenues in Q4 2024 were $41.4 million, representing a 15% year-over-year growth [51] - Non-GAAP operating profitability was $5.2 million in Q4, improving by $18.3 million from the same period last year, with an operating margin of 13% [59][60] - Free cash flow for the quarter was negative $7.2 million, an improvement from negative $20.8 million in the same quarter last year [60] Business Line Data and Key Metrics Changes - Consumer Banking revenue grew 48% year-over-year in Q4 2024, totaling $9.5 million, and 42% for the full year, surpassing the 35% target [55][10] - Mortgage suite revenue was $18.2 million, representing a 6% year-over-year growth [51] - Professional services revenue was $2.5 million, slightly up from $2.3 million in the same period last year [55] Market Data and Key Metrics Changes - The remaining performance obligations (RPO) landed at $123 million, a 30% increase compared to the same period last year [62] - The pipeline is now 50% larger than the previous year, indicating strong future growth potential [12][37] Company Strategy and Development Direction - The company is focusing on becoming a software-driven business, simplifying operations, and expanding its partner ecosystem to enhance efficiency and innovation [14][96] - A dedicated business unit for Independent Mortgage Banks (IMBs) was launched to provide tailored technology solutions [102] - The company plans to incorporate AI into its platform to streamline processes and reduce operational costs [118][120] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging macroeconomic environment, with expectations of positive free cash flow in Q1 2025 [44][76] - The company anticipates moderate origination growth for the year, with a cautious approach to annual planning due to market conditions [78] - Management highlighted the importance of maintaining profitability while investing in innovation and expanding the sales and marketing organization [80][81] Other Important Information - The company has signed a strategic partnership with Truework for income verification, which is expected to enhance operational efficiency [48][96] - The mortgage suite's economic value for funded loans declined sequentially to $96, attributed to the transition to a partnership model [64][70] Q&A Session Summary Question: What is the outlook for the mortgage market in 2025? - Management noted that forecasts for mortgage originations have decreased, but they believe the market will perform below these projections, indicating a cautious outlook for Q1 2025 [74][76] Question: How does the company plan to manage expenses in the current environment? - The company plans to tightly manage expenses while continuing to invest in innovation and sales, aiming for a positive free cash flow margin [76][80]

Blend Labs, Inc. (NYSE:BLND) Q4 2024 Earnings Conference Call February 27, 2025 4:30 PM ET Company Participants Winnie Ling - Head-Legal & People Nima Ghamsari - Co-Founder & Head-Blend Amir Jafari - Head-Finance & Administration Conference Call Participants Dylan Becker - William Blair Seth Gilbert - UBS Aaron Kimson - JMP Joseph Vafi - Canaccord Genuity David Unger - Wells Fargo Ryan Tomasello - KBW Winnie Ling Good afternoon and welcome to Blend's Fourth Quarter and Full Year 2024 Earnings Conference Cal ...

Group 1 - Blend Labs (BLND) reported break-even quarterly earnings per share, compared to a loss of $0.07 per share a year ago, representing an earnings surprise of -100% [1] - The company posted revenues of $41.41 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.49%, and compared to year-ago revenues of $36.1 million [2] - Over the last four quarters, Blend Labs has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Group 2 - The stock has lost about 13.5% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates being breakeven on $41.9 million in revenues for the coming quarter and $0.03 on $190 million in revenues for the current fiscal year [4][7] - The Zacks Industry Rank indicates that the Internet - Software sector is currently in the top 33% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

Forward-Looking Statements and Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or Blend's future financial or operating performance. In some cases, you can identify forward looking statements because they conta ...

Financial Performance - Blend achieved total revenue of $41.4 million in Q4 2024, representing a 15% year-over-year increase[5] - The Consumer Banking Suite generated $9.5 million in revenue in Q4 2024, a 48% increase year-over-year, contributing 31% to total revenue[5] - For the full year 2024, total revenue reached $162.0 million, with Blend Platform segment revenue at $115.8 million[11] - Total revenue for Q4 2024 was $41,408 million, a 14.4% increase from $36,104 million in Q4 2023[44] - Gross profit for the year ended December 31, 2024, was $90,544 million, up from $81,135 million in 2023, reflecting a 11.5% increase[44] - Total revenue for Q4 2024 reached $41.408 million, a 15% increase from $36.104 million in Q4 2023[49] - For the year ended December 31, 2024, total revenue was $162.019 million, a 3% increase from $156.846 million in 2023[49] Profitability Metrics - Non-GAAP income from operations was $5.2 million in Q4 2024, resulting in a non-GAAP operating margin of 13%[10] - Blend's GAAP gross profit margin improved to 60% in Q4 2024, up from 55% in Q4 2023[10] - GAAP diluted net loss per share attributable to common stockholders improved to $0.03 in Q4 2024 from $0.13 in Q4 2023[10] - Net loss attributable to Blend Labs, Inc. common stockholders for Q4 2024 was $6,506 million, compared to a loss of $31,812 million in Q4 2023, representing a 79.6% improvement[44] - The company reported a comprehensive loss attributable to Blend Labs, Inc. of $988 million for Q4 2024, compared to a loss of $29,442 million in Q4 2023[44] - Non-GAAP net income for the three months ended December 31, 2024, was $6,355,000, compared to a net loss of $17,647,000 in the same period of 2023, indicating a substantial turnaround[53] Cash Flow and Liquidity - Cash used in operating activities decreased to $4.6 million in Q4 2024 from $20.7 million in Q4 2023[7] - As of December 31, 2024, Blend had cash and cash equivalents totaling $105.8 million, with no outstanding debt[17] - Cash, cash equivalents, and restricted cash at the end of Q4 2024 stood at $49,537 million, an increase from $38,253 million at the end of Q4 2023[46] - Net cash used in operating activities for the year ended December 31, 2024, was $13,044 million, a significant decrease from $127,621 million in 2023[46] - The company reported a free cash flow of $(7,167,000) for the three months ended December 31, 2024, compared to $(20,773,000) in the same period of 2023, showing an improvement in cash flow management[55] Expense Management - Operating expenses decreased significantly to $26,516 million in Q4 2024 from $41,593 million in Q4 2023, a reduction of 36.3%[44] - Research and development expenses for Q4 2024 were $8,861 million, down from $14,417 million in Q4 2023, a decrease of 38.0%[44] - Non-GAAP operating expenses for the year ended December 31, 2024, were $103,148,000, compared to $159,875,000 in 2023, a decrease of about 35%[53] - Stock-based compensation for the year ended December 31, 2024, totaled $28,077,000, down from $46,021,000 in 2023, reflecting a reduction of approximately 39%[57] Segment Performance - The Blend Platform's total software revenue was $27.637 million in Q4 2024, representing a 17% year-over-year growth[49] - The Mortgage Suite generated $18.179 million in Q4 2024, a 6% increase compared to $17.203 million in Q4 2023[49] - Consumer Banking Suite revenue surged by 48% year-over-year, reaching $9.458 million in Q4 2024[49] - The Mortgage Suite for the year ended December 31, 2024, generated $73.257 million, a 6% decrease from $77.574 million in 2023[49] - Consumer Banking Suite revenue for the year increased by 42%, totaling $33.657 million in 2024[49] - Professional services revenue for Q4 2024 was $2.485 million, a 10% increase from $2.258 million in Q4 2023[49] Balance Sheet Highlights - Total current assets decreased from $169,836,000 in December 31, 2023 to $135,170,000 in December 31, 2024, a decline of approximately 20.4%[42] - Cash and cash equivalents increased from $30,962,000 in December 31, 2023 to $42,243,000 in December 31, 2024, an increase of approximately 36.5%[42] - Total liabilities decreased from $179,118,000 in December 31, 2023 to $40,330,000 in December 31, 2024, a decline of approximately 77.5%[42] - The accumulated deficit increased from $(1,341,630,000) in December 31, 2023 to $(1,384,975,000) in December 31, 2024, reflecting a worsening of approximately 3.2%[42] Future Outlook - Blend expects Q1 2025 revenue for the Blend Platform segment to be between $25.0 million and $27.0 million[12] - The company anticipates a compound annual growth rate (CAGR) for Consumer Banking Suite revenue to increase from 35% to 40% from 2023 to 2026[13] - The company plans to continue focusing on cost efficiency and operational restructuring to improve financial performance moving forward[58] Non-GAAP Measures - The company emphasizes that non-GAAP financial measures should not be considered in isolation from GAAP financial information[38] - The non-GAAP diluted net income (loss) per share metric has been updated for better comparability, moving away from the previously used non-GAAP basic net loss per share[33] - The company reported a non-GAAP operating margin, which is a key metric for assessing operational performance[34]