Blend Labs(US:BLND)2025-11-06 22:30Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $32.9 million, down 1% year over year, but ahead of the midpoint of guidance [20] - Non-GAAP operating income was $4.6 million, representing a non-GAAP operating margin of 14%, exceeding the high end of guidance [22] - Non-GAAP gross margin improved to 78%, up from 76% in the previous quarter [22] - Free cash flow for the quarter was negative $5 million, with a year-to-date total of positive $1.5 million [22] Business Line Data and Key Metrics Changes - Mortgage Suite revenue decreased by 18% year over year, attributed to strategic transitions and churn [20] - Consumer Banking Suite revenue increased by 11% quarter over quarter, driven by go-live deployments and increased usage [21] - Economic value per funded loan (EVPFL) for Q3 was $86, with expectations for Q4 to be approximately $83-$84 [23] Market Data and Key Metrics Changes - Blend's HMDA market share decreased to 18.6% in 2024 from 21.7% in 2023, primarily due to churn notices [24] - Anticipated market share headwinds in 2026 of approximately 100 basis points, mainly due to lower volume from Mr. Cooper [25] Company Strategy and Development Direction - The company is focusing on three key areas for 2026: increasing take rate in the Mortgage Suite, expanding the Consumer Banking Suite, and building new growth horizons through AI and Rapid products [13][16] - The Consumer Banking Suite now represents 39% of total revenue, up from 29% a year ago, indicating a strategic shift towards higher-margin products [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business's resilience and the potential for growth as the macro environment shows signs of improvement [17] - The company is positioned to benefit from a recovery in the mortgage market, with a disciplined cost structure providing operating leverage [17] Other Important Information - The company signed 14 new deals and expansions in Q3, maintaining the quality of customer relationships [7] - The company repurchased 1.6 million shares worth over $5 million in Q3, with a total of $9.2 million year-to-date [23] Q&A Session Summary Question: Impact of Rocket Cooper deal on conversations with financial institutions - Management noted that the acquisition has prompted mortgage servicers to rethink their strategies, with increased interest in upgrading technology [32] Question: Revenue impact from Mr. Cooper in 2026 - Management indicated that while there will be a revenue headwind, a significant portion of revenue is protected under contract until mid-2028 [39] Question: Market share growth expectations - Management confirmed a strong mortgage pipeline and emphasized the potential for growth in both mortgage and consumer banking segments [41] Question: Renewal risk and pricing discussions - Management clarified that the renewal discussions were initiated long ago and do not foresee renewal risks in the current pipeline [46] Question: Economic value per funded loan long-term outlook - Management expressed optimism about long-term growth in EVPFL, particularly with the introduction of new products [62]