Blend Labs(BLND) - 2025 Q2 - Quarterly Results

Executive Summary & Recent Highlights Blend achieved its fourth consecutive quarter of revenue growth and non-GAAP operating profit, doubling sales momentum and reaching a record $190.4 million RPO, while strategically selling Title365 - Sales momentum accelerated significantly, with 23 new or expanded deals in Q2, more than double the number from Q1. This includes three new independent mortgage banks[2][6] - Achieved a record Remaining Performance Obligations (RPO) of $190.4 million, bolstered by a $50 million renewal and expansion announced in May[6] - Announced the sale of Title365 to Covius as part of the 'Simplify Blend' strategy, aiming to shift title services to a higher-margin partnership model[6] - The company reported its fourth consecutive quarter of both year-over-year revenue growth and non-GAAP operating profit[6] Second Quarter 2025 Financial Highlights Blend's Q2 2025 total revenue grew 10% to $31.5 million, driven by a 43% increase in Consumer Banking Suite revenue, while significantly improving profitability to a $4.7 million non-GAAP operating income and maintaining strong liquidity Revenue Q2 2025 total revenue increased 10% to $31.5 million, driven by a 43% surge in Consumer Banking Suite revenue, offsetting a slight Mortgage Suite decline Q2 2025 Revenue Breakdown ($ in millions) | Revenue Category | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $31.5 | $28.7 | +10% | | Software Platform | $29.4 | $26.5 | +11% | | ↳ Consumer Banking Suite | $11.4 | $8.0 | +43% | | ↳ Mortgage Suite | $18.0 | $18.5 | -3% | | Professional Services | $2.1 | $2.2 | -4% | Gross Margin & Profitability Q2 2025 profitability significantly improved, with GAAP loss from operations narrowing to $4.6 million and non-GAAP income reaching $4.7 million, alongside expanded gross margins Q2 2025 Profitability Metrics ($ in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | GAAP Gross Margin | 74% | 71% | | Non-GAAP Gross Margin | 76% | 71% | | GAAP Loss from Operations | $(4.6)M | $(13.1)M | | Non-GAAP Income (Loss) from Operations | $4.7M | $(5.5)M | | GAAP Diluted Net Loss per Share | $(0.03) | $(0.09) | | Non-GAAP Diluted Net Income (Loss) per Share | $0.00 | $(0.03) | Liquidity, Cash, & Capital Resources As of June 30, 2025, Blend maintained strong liquidity with $93.3 million in cash and no debt, despite using $5.3 million in operating cash flow Q2 2025 Liquidity and Cash Flow ($ in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Cash, Cash Equivalents, & Marketable Securities | $93.3 | - | | Outstanding Debt | $0 | - | | Cash Used in Operating Activities | $(5.3) | $(3.3) | | Free Cash Flow | $(9.0) | $(5.1) | Third Quarter 2025 Outlook Blend projects Q3 2025 total revenue between $31.5 million and $33.5 million, with non-GAAP net operating income of $3.0 million to $4.5 million, assuming marginally higher mortgage originations Q3 2025 Guidance ($ in millions) | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $31.5 – $33.5 | | Non-GAAP Net Operating Income | $3.0 – $4.5 | - The guidance assumes a marginal increase in U.S. aggregate industry mortgage originations in Q3 2025, with an expected market size between 1,160,000 and 1,260,000 units[8] Financial Statements This section presents Blend's unaudited condensed consolidated financial statements, including the Balance Sheet, Statement of Operations, and Statement of Cash Flows, detailing financial position and performance Condensed Consolidated Balance Sheets As of June 30, 2025, Blend reported total assets of $183.1 million and total liabilities of $55.4 million, with a notable rise in liabilities driven by deferred revenue Balance Sheet Highlights (In thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $36,499 | $38,011 | | Total current assets | $126,830 | $135,243 | | Total assets | $183,072 | $178,085 | | Deferred revenue | $32,746 | $19,240 | | Total current liabilities | $52,743 | $39,022 | | Total liabilities | $55,396 | $40,403 | | Total stockholders' equity | $(22,565) | $(56,356) | Condensed Consolidated Statements of Operations Q2 2025 total revenue reached $31.5 million, with loss from operations significantly reduced to $4.6 million and net loss attributable to common stockholders narrowing to $11.0 million Q2 Statement of Operations Highlights (In thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenue | $31,523 | $28,696 | | Gross profit | $23,305 | $20,341 | | Total operating expenses | $27,929 | $33,410 | | Loss from operations | $(4,624) | $(13,069) | | Net loss | $(6,645) | $(19,421) | | Net loss attributable to common stockholders | $(11,021) | $(23,595) | Condensed Consolidated Statements of Cash Flows Q2 2025 saw net cash used in operating activities of $6.4 million, investing activities of $10.8 million, and financing activities of $3.7 million, resulting in a $20.9 million net cash decrease Q2 Cash Flow Highlights (In thousands) | Activity | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,368) | $(6,666) | | Net cash used in investing activities | $(10,831) | $(25,084) | | Net cash used in financing activities | $(3,651) | $(7,320) | | Net decrease in cash | $(20,850) | $(39,071) | Supplementary Financial Information This section details revenue disaggregation, highlighting 43% YoY growth in Consumer Banking Suite, and provides comprehensive reconciliations of GAAP to non-GAAP measures, including adjustments for stock-based compensation Revenue Disaggregation Q2 2025 revenue disaggregation shows the Consumer Banking Suite as the primary growth driver with 43% YoY increase, while the Mortgage Suite experienced a slight decline Q2 Revenue Disaggregation (In thousands) | Revenue Source | Q2 2025 | % of Total | Q2 2024 | % of Total | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Mortgage Suite | $17,961 | 57% | $18,454 | 64% | (3)% | | Consumer Banking Suite | $11,430 | 36% | $8,021 | 28% | 43% | | Total software platform | $29,391 | 93% | $26,475 | 92% | 11% | | Professional services | $2,132 | 7% | $2,221 | 8% | (4)% | | Total revenue | $31,523 | 100% | $28,696 | 100% | 10% | Reconciliation of GAAP to non-GAAP Measures Blend provides detailed reconciliations from GAAP to non-GAAP measures, with Q2 2025 adjustments including $7.6 million for stock-based compensation to clarify operational performance - To reconcile GAAP loss from operations of $(4.6)M to non-GAAP income from operations of $4.7M for Q2 2025, the company made several adjustments, the largest being the exclusion of $7.6M in stock-based compensation[48] - Non-GAAP gross profit for Q2 2025 was $24.0 million (76% margin), compared to GAAP gross profit of $23.3 million (74% margin), with adjustments primarily for stock-based compensation and amortization[46] About Non-GAAP Financial Measures and Other Performance Metrics Blend uses non-GAAP measures to provide insights into operational performance, adjusting for non-core items like stock-based compensation, and defines 'Economic Value per Funded Loan' as a key performance metric - Management uses non-GAAP measures internally to analyze financial results and believes they are useful for investors in evaluating ongoing operational performance and trends[16] - Key adjustments to derive non-GAAP figures include excluding: - Stock-based compensation (a non-cash expense) - Workforce reduction and restructuring costs - Transaction-related costs - Amortization of capitalized internal-use software - Litigation contingencies[17][18][22] - The company defines 'Economic Value per Funded Loan' as a key metric to measure success in selling additional products through its software platform, breaking it down into core software, add-on products, and partnerships[29]