Blend Labs(US:BLND)2022-08-16 01:38Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $65.5 million, reflecting a 5% year-over-year growth in Blend Platform revenue despite a 37% decline in mortgage market volume [7][26] - Non-GAAP gross profit for Q2 was approximately $25.8 million, up from $19.9 million in the prior year [28] - Non-GAAP loss from operations was $39.5 million compared to $26.3 million in the prior year, with a significant noncash impairment charge of approximately $392 million recognized for Title365 [30][31] Business Line Data and Key Metrics Changes - Blend Platform segment revenue was $33.6 million, up about 5% year-on-year [26] - Consumer Banking and Marketplace segment revenue grew by 53% year-over-year to $8.5 million, with total consumer banking transactions increasing by approximately 138,000 to about 215,000 in Q2 [27][19] - Title365 segment revenue was $31.9 million, with a noted decline in legacy title business [26] Market Data and Key Metrics Changes - The mortgage industry volumes have significantly decreased, impacting overall market conditions, but Blend's performance has outpaced these declines [20][66] - The company reported a gross revenue retention rate of 99% and a market-adjusted net revenue retention rate of 164%, up from 159% in the previous quarter [16] Company Strategy and Development Direction - The company is realigning its cost structure to achieve positive free cash flow and reduce non-GAAP net operating loss by 50% by the end of 2023 [11][42] - Key initiatives include workforce reductions, offshoring operations to India, and prioritizing products that deliver high ROI [12][13][14] - The company aims to strengthen its position as a category creator in the digital banking space, focusing on innovation through software solutions [22][23] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about executing their strategy despite challenging market conditions, emphasizing the importance of cost management and revenue diversification [22][44] - The company is preparing for a prolonged market reset, operating under the assumption that mortgage industry unit volumes will remain low through 2025 [11][36] - Management highlighted that they are not seeing significant changes in the competitive landscape and continue to focus on gaining market share [80][82] Other Important Information - The company has $450 million in cash, cash equivalents, and marketable securities, providing ample liquidity for ongoing operations [31] - The guidance for 2022 has been adjusted, with a decrease in Blend Platform revenue outlook by $5 million and an increase in Title365 revenue guidance by the same amount [42][43] Q&A Session Summary Question: Update on Blend Title transition - The transition to Blend Title is progressing well, with outperformance noted in Title365 due to countercyclical offsets [46] Question: Demand environment for new logos - Demand remains strong for mortgage solutions, with a focus on efficiency during market margin compression [48][49] Question: Consolidated top line revenue growth target - Specific revenue guidance was not provided, but growth metrics are moving in the right direction [51][52] Question: Multiyear conditions for the mortgage industry - The company is taking a prudent approach to future mortgage volumes, focusing on market share growth [54][56] Question: Mortgage transactions in Q2 - Mortgage banking transactions were reported at 348,000 for Q2, down from 376,000 in Q1 [59][61] Question: Sales environment in the downturn - The company is viewed as an essential solution, with customers continuing to invest in their offerings [83][84]