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]

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]

Company Performance - Blend Labs (BLND) shares have increased by 52.7% over the past month, reaching a new 52-week high of $5.11, and have gained 98.8% since the start of the year [1] - The company has consistently exceeded earnings expectations, reporting an EPS of $0 against a consensus estimate of -$0.02 in its last earnings report [2] Financial Projections - For the current fiscal year, Blend Labs is projected to have an EPS of -$0.07 on revenues of $161.4 million, reflecting an 82.5% change in EPS and a 2.9% change in revenues [3] - In the next fiscal year, the expected EPS is $0.03 on revenues of $190 million, indicating a year-over-year change of 142.86% in EPS and 17.72% in revenues [3] Valuation Metrics - Blend Labs has a Value Score of F, while its Growth and Momentum Scores are A and B, respectively, resulting in a VGM Score of B [6] - The company currently holds a Zacks Rank of 2 (Buy), supported by rising earnings estimates, suggesting potential for further growth [7] Industry Comparison - The Internet - Software industry is performing well, ranking in the top 16% of all industries, which provides favorable conditions for both Blend Labs and its peers [10] - Five9, Inc. (FIVN), a competitor, has a Zacks Rank of 1 (Strong Buy) and has also shown strong earnings performance, indicating a competitive landscape [8][9]

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the strategy of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps investors identify effective momentum metrics amidst ongoing debates about performance indicators [2] Group 2: Blend Labs (BLND) Performance - Blend Labs currently holds a Momentum Style Score of A and a Zacks Rank of 2 (Buy), indicating strong potential for outperformance [3][4] - Over the past week, BLND shares increased by 30.85%, significantly outperforming the Zacks Internet - Software industry, which rose by 5.16% [6] - In a longer timeframe, BLND shares have gained 25.86% over the past quarter and 250.4% over the last year, compared to the S&P 500's increases of 9.45% and 33.9%, respectively [7] Group 3: Trading Volume and Earnings Outlook - The average 20-day trading volume for BLND is 2,261,540 shares, indicating a bullish sign with rising stock prices [8] - Recent earnings estimate revisions show one upward revision for the full year, improving the consensus estimate from -$0.11 to -$0.07 over the past 60 days [10]

Financial Data and Key Metrics Changes - The company achieved its first positive non-GAAP operating income quarter as a public company, marking a significant milestone in profitability [7] - Total company revenues for Q3 were $45.2 million, representing an 11% year-over-year growth, exceeding guidance [26] - Platform revenue reached $33.1 million, growing 16% year-over-year, while mortgage suite revenue was $21.5 million, reflecting a 6% year-over-year growth [26][28] - Consumer Banking revenue grew 54% year-over-year to $9.5 million, significantly surpassing the previously shared growth target of 35% [26][28] - Non-GAAP gross profit was $26.3 million, with gross margins for the Blend Platform segment at 75% [27] Business Line Data and Key Metrics Changes - The Consumer Banking business outperformed expectations, achieving over 50% growth compared to the same quarter last year [9] - Mortgage suite revenue showed a 17% sequential growth, aligning with expectations of higher industry originations [26] - Professional services revenue slightly decreased to $2 million from $2.1 million year-over-year [26] Market Data and Key Metrics Changes - The mortgage industry is experiencing a positive sentiment shift despite high mortgage rates, with increased willingness to invest in businesses [8] - Blend achieved a 21.7% share of HMDA originations in 2023, a 120 basis point increase from 2022, although a slight decline is expected in 2024 due to industry churn [31][32] Company Strategy and Development Direction - The company is transitioning to a simpler software-focused model, emphasizing operational leverage and partnerships to enhance customer value [11][12] - A strategic partnership with Covered Insurance Solutions aims to enhance the insurance marketplace while reducing operational costs [33][34] - The company plans to continue expanding its platform and partnerships to drive growth and profitability [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the mortgage industry's recovery and the potential for increased adoption of technology solutions among customers [17][18] - The outlook for Q4 2024 includes expected platform revenue between $29 million and $31 million, reflecting cautious optimism amid high mortgage rates [39] - Non-GAAP net operating income is projected to be between zero and $3 million for Q4, maintaining profitability from Q3 [40] Other Important Information - The company ended the quarter with approximately $124 million in cash, cash equivalents, and marketable securities, providing a strong balance sheet for strategic initiatives [29] - Remaining performance obligations (RPO) reached a record $107.4 million, marking an 82% year-over-year growth [38] Q&A Session Summary Question: Can you provide more details about the deal with a top 10 bank in consumer banking? - The bank is expanding its relationship with Blend, having previously used Blend for mortgage services and is now adopting consumer banking solutions [43] Question: How is the sentiment shift among customers impacting adoption of new offerings? - The shift is driven by customers finally achieving profitability, allowing them to invest in new solutions like Blend Close [48] Question: What is the current strategy for the title business? - The title business remains critical, with ongoing innovations to enhance the mortgage process [66] Question: How will the sale of the insurance business impact revenue and guidance? - The sale will lead to a decline in revenue but is expected to increase profit per transaction, aligning with the company's strategy for higher operating leverage [75]

Financial Performance - Blend Labs (BLND) reported break-even quarterly earnings per share, surpassing the Zacks Consensus Estimate of a loss of $0.02, compared to a loss of $0.09 per share a year ago, representing an earnings surprise of 100% [1] - The company posted revenues of $45.18 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 9.40%, and up from $40.59 million year-over-year [2] - Over the last four quarters, Blend Labs has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - Blend Labs shares have increased approximately 49% since the beginning of the year, outperforming the S&P 500's gain of 21.2% [3] - The sustainability of the stock's immediate price movement will depend on management's commentary during the earnings call [3] Earnings Outlook - The current consensus EPS estimate for the coming quarter is -$0.01 on revenues of $40.8 million, and -$0.11 on revenues of $157.5 million for the current fiscal year [7] - The estimate revisions trend for Blend Labs is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Software industry, to which Blend Labs belongs, is currently in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue for the three months ended September 30, 2024, was $45,184 thousand, an increase of $4,593 thousand or 11% compared to $40,591 thousand for the same period in 2023 [210]. - Gross profit increased by $3,933 thousand or 18% to $25,996 thousand for the three months ended September 30, 2024, compared to $22,063 thousand for the same period in 2023 [211]. - Gross margin improved to 58% for the three months ended September 30, 2024, up from 54% for the same period in 2023 [212]. - Total revenue remained flat at $120.6 million for the nine months ended September 30, 2024, compared to $120.7 million for the same period in 2023 [224]. - Gross profit increased by $4.4 million, or 7%, for the nine months ended September 30, 2024, compared to the same period in 2023 [226]. Cost Management - The company executed a workforce reduction plan in September 2024, eliminating approximately 50 positions, or 9% of its workforce, incurring charges of about $1.7 million [184]. - Research and development expenses decreased by $8,699 thousand or 46% to $10,127 thousand for the three months ended September 30, 2024, compared to $18,826 thousand for the same period in 2023 [214]. - Sales and marketing expenses decreased by $4,611 thousand or 32% to $9,883 thousand for the three months ended September 30, 2024, compared to $14,494 thousand for the same period in 2023 [216]. - Total operating expenses decreased by $18,946 thousand or 33% to $39,315 thousand for the three months ended September 30, 2024, compared to $58,261 thousand for the same period in 2023 [214]. - Total operating expenses decreased by $82.1 million, or 42%, for the nine months ended September 30, 2024, compared to the same period in 2023 [228]. Revenue Streams - The Blend Platform revenue increased by $4,462 thousand or 16% to $33,104 thousand for the three months ended September 30, 2024, compared to $28,642 thousand for the same period in 2023 [210]. - Mortgage Suite revenue increased by $1,240 thousand or 6% to $21,546 thousand for the three months ended September 30, 2024, compared to $20,306 thousand for the same period in 2023 [210]. - Consumer Banking Suite revenue increased by $3,321 thousand or 54% to $9,520 thousand for the three months ended September 30, 2024, compared to $6,199 thousand for the same period in 2023 [210]. Strategic Initiatives - Blend Labs, Inc. reported a strategic partnership agreement on September 30, 2024, which included a cash sale of its insurance business for $10.1 million and a warrant for 177,516 Class B Units [183]. - Blend Labs, Inc. continues to focus on customer acquisition, maximizing partnerships, and product expansion, including potential market expansion outside the United States [180]. - The company has built a market-leading cloud-based software platform designed to support the end-to-end consumer journey for banking products, driving revenue growth opportunities [176]. Financial Position - As of September 30, 2024, the company had cash, cash equivalents, and marketable securities totaling $116.8 million [237]. - The accumulated deficit reached $1,384.1 million as of September 30, 2024, indicating significant operational losses [238]. - The company believes current cash and marketable securities will be sufficient to fund operations for at least the next 12 months, but future capital requirements depend on growth and investments [244]. Other Financial Metrics - Net loss for the three months ended September 30, 2024, was $(2,627) thousand, compared to a net loss of $(41,820) thousand for the same period in 2023 [205]. - Interest expense decreased by $8.2 million, or 100%, for the three months ended September 30, 2024, primarily due to the prepayment of the outstanding Term Loan [220]. - Other income increased by $8.1 million, or 307%, for the three months ended September 30, 2024, primarily due to a $9.2 million gain on the sale of the insurance business [221]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $8.5 million, a significant decrease from $106.9 million in the same period of 2023 [247]. - Net cash provided by investing activities was $47.3 million for the nine months ended September 30, 2024, primarily from sales and maturities of marketable securities [248]. - Net cash used in financing activities was $14.7 million for the nine months ended September 30, 2024, mainly due to long-term debt repayment and issuance costs [250].