Blend Labs(US:BLND)2023-08-10 01:21Financial Data and Key Metrics Changes - Total company revenues in Q2 were $42.8 million, exceeding the top end of guidance by 4% [28] - Non-GAAP operating loss improved to $17.9 million from $39.5 million year-over-year, surpassing the $20 million target for Q4 2023 [33] - Non-GAAP gross profit was $23.8 million, down only 8% from last year against a 35% decline in total revenue [57] Business Line Data and Key Metrics Changes - Mortgage Banking suite revenue declined by 17% year-over-year to $22.3 million, while the origination environment declined by 37% [17] - Consumer Banking suite revenue totaled $5.8 million in Q2, an increase of 27% compared to the prior year [29] - Professional services revenue increased by 10% to $2.2 million due to fees associated with Consumer Banking deployments [29] Market Data and Key Metrics Changes - The mortgage origination market remains challenging, with mortgage rates at 23-year highs impacting volumes [22] - Despite the tough market, customers leveraging the company's technology are outperforming the broader mortgage origination market [11] Company Strategy and Development Direction - The company is focusing on deepening wallet share with mortgage customers and expanding the Blend Builder platform to drive growth [8] - A shift from building to deploying is underway, leveraging the efficiency of the Blend Builder to deliver more innovation per dollar spent [24] - The Title business is on track to return to positive non-GAAP operating profit contribution within the next several quarters [15] Management's Comments on Operating Environment and Future Outlook - Management is confident in achieving profitability despite the challenging market conditions and plans to help customers grow market share [22] - The company expects to see sequential improvement in operating loss through the balance of the year, with a goal of reaching non-GAAP profitability earlier in 2024 than originally planned [63] - Management emphasized the importance of operational excellence and cost reductions, which have already resulted in nearly $100 million in annualized savings [21] Other Important Information - The company has deployed 18 Consumer Banking products in 2023, contributing to revenue growth [23] - Remaining performance obligations topped $53.2 million at the end of Q2, indicating a strong future revenue stream [34] Q&A Session Summary Question: Can you expand on gross margins and vendor optimizations? - Management explained that gross margin improvements are due to structural shifts enabled by the Blend Builder platform, which allows for lower costs and higher margins [39][66] Question: What is the trajectory of gross margins for the rest of the year? - Management indicated that they expect to maintain strong gross margins, with a target of 80% for the software business by next year [39] Question: How is the attach rate with new products like Blend Income? - Management noted that there is strong adoption of add-on solutions, which is driving revenue per transaction higher [68][80] Question: How is the company planning to innovate in a high-interest rate environment? - Management expressed confidence that innovation will accelerate, with plans to announce new products at the upcoming Investor Day [72]