Financial Performance - Blend Labs achieved $1 million in non-GAAP net operating income, marking the third consecutive quarter of profitability[6] - Revenue reached $26.8 million, exceeding the midpoint of guidance[6] - The company delivered $15.5 million of free cash flow, resulting in a 58% free cash flow margin[6] Revenue Breakdown - Consumer Banking Suite revenue increased to $9.6 million in Q1 2025[9] - Mortgage Suite revenue decreased to $14.6 million in Q1 2025[10] - Total Software Platform revenue increased by 12% year-over-year, reaching $24.26 million in Q1 2025[34] Efficiency and Cost Management - Non-GAAP operating expenses significantly reduced year over year, with FY 2025E projected between $85 million and $90 million[22, 25] - General & Administrative expenses decreased to $6.7 million in Q1 2025[23] - Research & Development expenses decreased to $5.6 million in Q1 2025[23] Mortgage Suite Economics - Mortgage Suite economic value per funded loan increased to $93 in Q1 2025[13] - Near-term economic value per funded loan is expected to generate contribution margin of 90%+[17]

PART I. Financial Information [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, show a year-over-year revenue increase to **$26.8 million** and a reduced net loss of **$9.4 million**, reflecting the classification of the Title segment as discontinued operations and the impact of a new Series A preferred stock issuance Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$188,266** | **$178,085** | | Cash and cash equivalents | $56,244 | $38,011 | | Marketable securities | $48,574 | $56,233 | | Assets held for sale from discontinued operations | $14,357 | $15,675 | | **Total Liabilities** | **$59,287** | **$40,403** | | Deferred revenue | $33,266 | $19,240 | | Liabilities held for sale from discontinued operations | $7,696 | $6,210 | | **Series A redeemable convertible preferred stock** | **$145,865** | **$141,663** | | **Total stockholders' equity** | **($16,886)** | **($56,356)** | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total Revenue** | **$26,770** | **$23,840** | | Gross Profit | $18,958 | $16,042 | | Loss from operations | ($7,693) | ($21,221) | | Loss from continuing operations | ($6,609) | ($20,709) | | Net loss from discontinued operations | ($2,803) | $46 | | **Net Loss** | **($9,412)** | **($20,663)** | | Net loss per share (basic and diluted) | ($0.05) | ($0.09) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $20,390 | ($3,868) | | Net cash provided by investing activities | $3,228 | $60,621 | | Net cash used in financing activities | ($5,176) | ($3,187) | | **Net increase in cash, cash equivalents, and restricted cash** | **$18,442** | **$53,562** | - In the first quarter of 2025, the company classified its Title segment as **discontinued operations** and its assets and liabilities as held for sale, a **strategic shift** to transform into a **platform-first company**[33](index=33&type=chunk)[49](index=49&type=chunk)[152](index=152&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, financial instruments, and equity structure, highlighting the decision to exit the Title business, the issuance of **$150 million** in Series A Preferred Stock, and a **$25 million** share repurchase program - The company initiated a process to exit the title business in Q1 2025, classifying the **Title segment as discontinued operations**, as part of a strategic shift to become a **platform-first company**[156](index=156&type=chunk) - On April 29, 2024, the company issued 150,000 shares of Series A Preferred Stock to Haveli for **$150.0 million**, with net proceeds of **$139.9 million** used to repay outstanding debt, and the stock is classified as **mezzanine equity**[101](index=101&type=chunk)[103](index=103&type=chunk) - In August 2024, the board authorized a share repurchase program of up to **$25.0 million**, and during Q1 2025, the company repurchased **922,996 shares** for **$3.1 million**, leaving **$21.9 million** available[111](index=111&type=chunk)[112](index=112&type=chunk) - As of March 31, 2025, the company had **$158.1 million** in remaining performance obligations (RPO), with approximately half expected to be recognized as revenue over the next 12 months[62](index=62&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q1 2025 performance, noting a **12% revenue increase** to **$26.8 million**, a **28% reduction in operating expenses**, and a narrowed loss from operations, supported by a strategic exit from the Title business and **$104.8 million** in liquidity Revenue and Gross Profit Comparison (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$26,770** | **$23,840** | **$2,930** | **12%** | | Mortgage Suite | $14,638 | $15,078 | ($440) | (3%) | | Consumer Banking Suite | $9,622 | $6,658 | $2,964 | 45% | | Professional Services | $2,510 | $2,104 | $406 | 19% | | **Gross Profit** | **$18,958** | **$16,042** | **$2,916** | **18%** | | **Gross Margin** | **71%** | **67%** | - | - | Operating Expenses Comparison (in thousands) | Expense Category | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $7,520 | $14,183 | ($6,663) | (47%) | | Sales and marketing | $7,188 | $9,755 | ($2,567) | (26%) | | General and administrative | $11,224 | $12,353 | ($1,129) | (9%) | | **Total operating expenses** | **$26,651** | **$37,263** | **($10,612)** | **(28%)** | - The company made a **strategic decision** in Q1 2025 to exit its title operations to simplify the business and transform into a platform-first company, with the Title segment results now presented as **discontinued operations**[173](index=173&type=chunk) - As of March 31, 2025, principal sources of liquidity, including cash, cash equivalents, and marketable securities, totaled **$104.8 million**, which management believes is sufficient to fund operations for at least the next 12 months[210](index=210&type=chunk)[215](index=215&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on its **$104.8 million** cash and marketable securities portfolio, though the impact is not material due to short-term investments, and inflation risk could increase operating costs if not offset by price adjustments - The company holds **$56.2 million** in cash and cash equivalents and **$48.6 million** in marketable securities, which are subject to **interest rate risk**, but due to their short-term nature, the company does **not anticipate material risk** from interest rate changes[230](index=230&type=chunk) - **Inflationary factors**, such as increased overhead costs, could **adversely affect operating results** if the company cannot increase the selling prices of its products to match rising costs[231](index=231&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025, with **no material changes** to internal control over financial reporting during the quarter, acknowledging inherent system limitations - Management, including the principal executive officer and principal financial officer, concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[233](index=233&type=chunk) - **No changes** in internal control over financial reporting were identified during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[234](index=234&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any litigation expected to have a **material adverse effect** on its business, though future legal proceedings in the normal course of business are possible - The company is **not presently party to any litigation** that it believes would likely have a **material adverse effect** on its business, financial condition, results of operations, or cash flows[238](index=238&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including dependency on the financial services and mortgage industries, a history of **net losses**, customer concentration, cybersecurity threats, regulatory complexities, and concentrated voting power due to its multi-class stock structure - The business is substantially **dependent on the financial services industry** and is subject to **risks impacting the mortgage market**, such as interest rate fluctuations and economic downturns[242](index=242&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) - The company has a **history of net losses** (**$1.39 billion accumulated deficit** as of March 31, 2025) and may not achieve or maintain profitability in the future[242](index=242&type=chunk)[250](index=250&type=chunk) - A large percentage of **revenue is concentrated** with a small number of key customers; in 2024, the **top five Blend Platform customers accounted for 33.0% of segment revenue**[242](index=242&type=chunk)[251](index=251&type=chunk) - The **multi-class stock structure concentrates voting power** with Co-Founder Nima Ghamsari, who held approximately **35% of the total voting power** as of March 31, 2025, severely limiting other stockholders' influence[243](index=243&type=chunk)[412](index=412&type=chunk)[413](index=413&type=chunk) [Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=90&type=section&id=Item%202.%20Recent%20Sales%20of%20Unregistered%20Securities) The company repurchased **922,996 shares** for **$3.1 million** in March 2025 under a **$25.0 million** program, with **$21.9 million** remaining available for future repurchases as of March 31, 2025 Share Repurchase Activity - Q1 2025 | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | Approximate Dollar Value Remaining (millions) | | :--- | :--- | :--- | :--- | | January 2025 | — | — | $25.0 | | February 2025 | — | — | $25.0 | | March 2025 | 923 | $3.33 | $21.9 | | **Total** | **923** | **-** | **$21.9** | [Item 3. Defaults Upon Senior Securities](index=90&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities [Item 4. Mine Safety Disclosures](index=90&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations [Item 5. Other Information](index=90&type=section&id=Item%205.%20Other%20Information) Several company officers and a director adopted or terminated Rule 10b5-1 trading arrangements during Q1 2025, including plans for **168,929**, **167,000**, **500,000**, and **40,000 shares** by specific individuals - Oxana Tkach (Head of Accounting and FP&A) terminated a Rule 10b5-1 plan on Jan 25, 2025, and adopted a new one on March 12, 2025, for the potential sale of up to **168,929 shares**[442](index=442&type=chunk)[443](index=443&type=chunk) - Winnie Ling (Head of Legal and People) adopted a Rule 10b5-1 plan on March 14, 2025, for the sale of up to **167,000 shares**[444](index=444&type=chunk) - Brian Kneafsey (Head of Revenue) adopted a Rule 10b5-1 plan on March 14, 2025, for the sale of up to **500,000 shares**[445](index=445&type=chunk) - Eric Woersching (Director) adopted a Rule 10b5-1 plan on March 4, 2025, for the sale of up to **40,000 shares**[446](index=446&type=chunk) [Item 6. Exhibits](index=91&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including **certifications from principal officers** and **Inline XBRL documents** for data tagging - The report includes **certifications** from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[448](index=448&type=chunk) - **Inline XBRL data files** are included as exhibits, which format the financial data in the report for automated extraction and analysis[448](index=448&type=chunk)

Financial Performance - Blend's platform revenue for Q1 2025 was $26.8 million, an increase of $2.9 million or 12% year-over-year[4] - Total revenue for the three months ended March 31, 2025, was $26.77 million, representing a 12% increase from $23.84 million in the same period of 2024[49] - Gross profit for the same period was $18,958,000, up from $16,042,000, indicating a growth of 11.9%[38] - Gross profit for the software platform was $18.40 million with a gross margin of 76% for Q1 2025, compared to $16.56 million and 76% gross margin in Q1 2024[45] - GAAP gross profit margin improved to 71% in Q1 2025, up from 67% in Q1 2024[9] - Non-GAAP net income from continuing operations for Q1 2025 was $2.04 million, a significant improvement from a loss of $15.22 million in Q1 2024[49] - The company reported a GAAP net loss from continuing operations of $6.61 million for Q1 2025, down from a loss of $20.71 million in Q1 2024[49] - Non-GAAP diluted net loss per share attributable to common stockholders for continuing operations was $(0.04), an improvement from $(0.08) in the previous year[38] - Loss from operations improved to $(7,693,000) compared to $(21,221,000) in the prior year, reflecting a 63.7% reduction in losses[38] - Loss from continuing operations decreased to $6,609 thousand from $20,709 thousand year-over-year[40] Cash Flow and Liquidity - Cash provided by operating activities was $20.1 million in Q1 2025, compared to cash used of $3.0 million in Q1 2024, marking a significant improvement[9] - Free cash flow reached $15.5 million in Q1 2025, compared to a negative $5.0 million in Q1 2024, indicating the first positive free cash flow in the company's history[9] - The company achieved a free cash flow margin of 58% in Q1 2025, a significant increase from a negative 21% in Q1 2024[49] - Cash and cash equivalents increased to $56,244,000 as of March 31, 2025, compared to $38,011,000 at the end of 2024, a growth of 48%[36] - Total cash, cash equivalents, and restricted cash at the end of the period was $61,267 thousand, down from $82,602 thousand a year earlier[40] - The company reported a net cash provided by investing activities of $3,228 thousand, a decrease from $60,621 thousand in the previous year[40] - The company reported a net increase in cash, cash equivalents, and restricted cash of $18,442 thousand, compared to an increase of $53,562 thousand in the prior year[40] Operational Efficiency - Total operating expenses decreased to $26,651,000 from $37,263,000, a reduction of 28.6% year-over-year[38] - GAAP operating expenses decreased to $26.65 million in Q1 2025 from $37.26 million in Q1 2024, reflecting cost efficiency measures[47] - Stock-based compensation for the period was $6,048 thousand, down from $8,045 thousand in the prior year[40] - Stock-based compensation expenses decreased to $6.05 million in Q1 2025 from $8.05 million in Q1 2024, reflecting a reduction in equity-based awards[51] Future Outlook - The company expects Q2 2025 platform revenue to be between $30.5 million and $32.5 million, reflecting anticipated growth in U.S. mortgage originations[7] - For the full year 2025, Blend projects non-GAAP operating expenses to be between $85.0 million and $90.0 million[8] Market Position - The company closed nearly three times as many deals in Q1 2025 compared to the same period last year, including a significant partnership with a top 25 credit union[5] - Record first quarter signings resulted in total remaining performance obligations of $158.1 million, representing a 70% increase year-over-year[4] - The company serves 10 of the top 20 mortgage servicers in the U.S., highlighting its growing market presence[5] - Economic Value per Funded Loan is used to measure success in broadening client relationships and selling additional products through the software platform[24] Debt Management - The company repaid all outstanding debt in April 2024, eliminating any debt service obligations[30]

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]

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 [59] - Free cash flow for the quarter was negative $7.2 million, an improvement of $13.6 million compared to 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, totaling $9.5 million, and 42% for the full year, surpassing the 35% target [55][90] - 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) reached $123 million, a 30% increase year-over-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 [8][94] - A strategic partnership with Truework for income verification aims to enhance operational efficiency and revenue sharing [48][96] - The launch of a dedicated business unit for Independent Mortgage Banks (IMBs) reflects a commitment to cater to smaller institutions [102][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth despite macroeconomic challenges, with expectations of positive free cash flow in Q1 2025 [12][44] - The company anticipates moderate origination growth for the year, with a cautious approach to annual planning [78] - The integration of AI into core banking processes is expected to enhance efficiency and reduce operational costs [118][120] Other Important Information - The company aims to achieve a positive Rule of 40 for its platform segment, combining revenue growth and operating margin [45][81] - The economic value for funded loans is expected to start at a new baseline of $94 in Q1 2025, reflecting strategic changes [69] Q&A Session Summary Question: What is the outlook for the mortgage market in 2025? - Management noted that forecasts for mortgage originations have decreased by 20% for Q1 2025, but they believe the market will perform below these projections [73][74] Question: How does the company plan to manage expenses in the current environment? - The company is focused on tightly managing expenses while investing in sales and marketing to capitalize on growth opportunities [76][80] Question: What are the expectations for the consumer banking suite moving forward? - The projected compounded annual growth rate for the consumer banking suite has been increased to 40% from the previous target of 35% [79]

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]