Consolidated revenue of $71.5 million includes
solid Blend Platform growth in declining U.S. mortgage market
Blend maintains 2022 revenue outlook
Blend Labs, Inc. (NYSE:BLND), a leader in cloud banking
software, today announced its first quarter 2022 financial
results.
“Blend’s first quarter reflects our growing mortgage banking
market share in a challenging originations environment as well as
strong growth in Consumer Banking & Marketplace revenue,” said
Nima Ghamsari, Head of Blend. “We are excited to see more customers
adopting our newer software solutions such as Blend Close and Blend
Income Verification. This is an important indicator of Blend’s
future growth as U.S. financial institutions increase the pace of
digital transformation in their banking operations.
“While our first quarter results were better than expected, in
part due to higher than expected mortgage refinance activity in
March, we are at the same time mindful of the current economic and
interest rate environment. We are now anticipating a more
pronounced decline of approximately 41% in 2022 mortgage
origination volumes against 2021, compared to a 35% decline
predicted at the end of March. Balancing these factors, we are
maintaining our full year revenue outlook, which reflects our
current expectations that Blend Mortgage Banking will continue to
grow market share and outperform the decline in industry
origination volumes, while Consumer Banking & Marketplace
revenue is expected to double year-over-year.
“Against this backdrop, we are also engaged in a comprehensive
analysis of our cost structure, with a focus on prudent capital
allocation without sacrificing investment in critical new products
that further grow our platform.”
Financial Highlights
- Consolidated revenue of $71.5 million
- 1Q22 Blend Platform segment revenue of $32.8 million, up $0.9
million, or 3% year-over-year
- Within Blend Platform, 1Q22 Consumer Banking and Marketplace
revenue of $7.2 million, up 55% from $4.6 million in the prior-year
period, led by increasing adoption of Blend Close and Blend Income
Verification
- 1Q22 Mortgage Banking revenue of $24.5 million, down by
approximately $2.0 million, or 7% year-over-year, against an
estimated 44% decline in U.S. mortgage origination volumes in the
same period
- Title365 segment revenue of $38.7 million
First Quarter Customer and Product
Achievements
- Expanded our total customer base by 8 new accounts, for a total
of 351 customers
- Increased adoption of our Consumer Banking offerings, with
approximately one-third of our total customer base on one or more
of these products
- Grew total consumer banking transactions by more than 100,000
transactions year-on-year to approximately 155,000 in Q1 2022
- Approximately two-thirds of our total customer base now use two
or more of our software products
First Quarter Financial
Summary
First quarter revenue was $71.5 million, up $39.6 million, or
124%, year-over-year, driven by an increase of $38.7 million due to
the inclusion of revenue from Title365 and an increase in Blend
Platform revenue of $0.9 million, or 3%. First quarter Blend
Platform revenue reflected the lower volume of mortgage banking
transactions with our customers compared with the prior-year
quarter, partially offset by an increased estimated share of funded
loan transactions.
Consumer Banking and Marketplace revenue increased $2.5 million,
or 55%, primarily due to an increase in the volume of transactions
related to our integrated software solutions outside of mortgage,
including ancillary products and marketplace offerings.
Professional Services revenue increased by $0.3 million or 42%,
primarily due to an increase in professional services associated
with the deployment of our platform. Mortgage Banking revenue
decreased by approximately $2.0 million, or 7%, primarily due to an
industry wide decrease in mortgage loan origination volumes.
First quarter cost of revenue was $42.7 million, up $31.8
million, or 293% year-over-year, driven by an increase of $28.5
million due to the inclusion of costs associated with the
operations of Title365, and an increase in Blend Platform cost of
revenue of $3.3 million, or 31%.
First quarter GAAP gross profit was $28.9 million, up $7.9
million, or 37% year-over-year. Current-period gross profit
includes $18.6 million attributable to Blend Platform and $10.3
million to Title365.
First quarter non-GAAP gross profit was $29.4 million, up $8.3
million, or 39% year-over-year. Current-period non-GAAP gross
profit includes $19.0 million attributable to Blend Platform and
$10.4 million to Title365.
GAAP loss from operations was $69.7 million for the first
quarter of 2022, compared to $27.2 million in the first quarter of
2021.
Non-GAAP loss from operations was $39.5 million for the first
quarter of 2022, compared to $18.8 million in the first quarter of
2021.
Liquidity and Capital
Resources
At March 31, 2022, the Company had cash, cash equivalents, and
marketable securities of $499.4 million, with total debt
outstanding of $225.0 million on the Company’s five-year term loan.
Blend’s $25.0 million revolving line of credit remains undrawn.
Full Year 2022 Revenue
Guidance
Blend today reaffirmed its 2022 revenue guidance as follows:
$ in millions
Blend Platform
Title365
Blend Labs, Inc.
(Consolidated)
Full Year 2022 Revenue Guidance
$140-150
$90-100
$230-250
Blend 2022 revenue guidance reflects the following:
- Our updated expectations that U.S. mortgage market origination
volumes will decline by approximately 41% from their 2021
level
- 2022 Blend Platform segment revenue growth includes:
- High-single to low-double digit decline in full year Mortgage
Banking revenue from full year 2021 levels, as market share growth
mitigates industry volume declines.
- Over 100% growth in Consumer Banking and Marketplace revenue,
including the expected transition of revenue from the Title365
segment to the Blend Platform segment, as customers transition to
the Blend Title solution (a component of Consumer Banking and
Marketplace revenue). This transition is anticipated to commence in
mid-2022.
Webcast Information
On Thursday, May 12, 2022 at 5:00 pm ET, Blend will host a live
discussion of its first quarter 2022 financial results. A link to
the live discussion will be made available on the Company's
investor relations website at https://investor.blend.com. A replay
will also be made available following the discussion at the same
website.
Forward-Looking
Statements
This press release 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. These statements may relate to, but are not limited to,
quotations of management, outlook for 2022 and the “Full Year 2022
GAAP Revenue Guidance” sections above, expectations of future
results of operations or financial performance of Blend Labs, Inc.
(“Blend,” the “Company,” “we,” “us,” or similar terms), market size
and growth opportunities, macroeconomic and industry conditions,
capital expenditures, plans for future operations, competitive
position, technological capabilities, strategic relationships,
Blend’s opportunity to increase market share and penetration in its
existing customers, projections for a sharp decrease in mortgage
loan origination volumes, Blend’s ability to create long-term value
for our customers, Blend’s expectations for revenue growth, and
Blend’s expectations of migration of the Title365 legacy business
to Blend’s software-enabled platform, as well as assumptions
relating to the foregoing. Forward-looking statements are
inherently subject to risks and uncertainties, some of which cannot
be predicted or quantified. In some cases, you can identify
forward-looking statements by terminology such as “may,” “will,”
“should,” “expect,” “plan,” “anticipate,” “could,” “would,”
“intend,” “target,” “project,” “contemplate,” “believe,”
“estimate,” “predict,” “potential” or “continue” or the negative of
these terms or other comparable terminology that concern Blend’s
expectations, strategy, plans or intentions. You should not put
undue reliance on any forward-looking statements. Forward-looking
statements should not be read as a guarantee of future performance
or results and will not necessarily be accurate indications of the
times at, or by which such performance or results will be achieved,
if at all.
Forward-looking statements are based on information available at
the time those statements are made and/or management’s good faith
beliefs and assumptions as of that time with respect to future
events and are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those
expressed in or suggested by the forward-looking statements. These
risks and uncertainties include the possibility that: we fail to
retain our existing customers or to acquire new customers in a
cost-effective manner; our customers fail to maintain their
utilization of our products and services; our relationships with
any of our key customers were to be terminated or the level of
business with them significantly reduced over time; we are unable
to compete in highly competitive markets; we are unable to manage
our growth; we are unable to make accurate predictions about our
future performance due to our limited operating history in an
evolving industry; we are unable to successfully integrate or
realize the benefits of our acquisition of Title365; or changes in
market interest rates adversely affect our business. Further
information on these risks and other factors that could affect our
financial results are set forth in our filings with the Securities
and Exchange Commission, including in our Annual Report on Form
10-K for the year ended December 31, 2021, and our Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2022 that
will be filed following this press release. In light of these risks
and uncertainties, the forward-looking events and circumstances
discussed in this press release may not occur and actual results
could differ materially from those anticipated or implied in the
forward-looking statements. These factors could cause actual
results, performance, or achievement to differ materially and
adversely from those anticipated or implied in the forward-looking
statements. Moreover, we operate in a very competitive and rapidly
changing environment. New risks and uncertainties emerge from time
to time, and it is not possible for us to predict all risks and
uncertainties that could have an impact on the forward-looking
statements contained in this press release. Except as required by
law, Blend does not undertake any obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future developments, or otherwise.
About Non-GAAP Financial Measures and
Other Key Metrics
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”), this press
release and the accompanying tables contain, and the conference
call will contain, non-GAAP financial measures, including non-GAAP
gross profit, non-GAAP operating expenses, non-GAAP loss from
operations, and non-GAAP net loss. These non-GAAP financial
measures adjust the related GAAP financial measures to exclude
non-cash stock-based compensation and warrant amortization expense,
amortization of acquired intangible assets, non-recurring
acquisition-related costs, and non-recurring income tax expenses or
benefits related to acquisitions. Our management uses these
non-GAAP financial measures internally in analyzing our financial
results and believes they are useful to investors, as a supplement
to the corresponding GAAP financial measures, in evaluating our
ongoing operational performance and trends, in allowing for greater
transparency with respect to measures used by our management in
their financial and operational decision making, and in comparing
our results of operations with other companies in the same
industry, many of which present similar non-GAAP financial measures
to help investors understand the operational performance of their
businesses. However, it is important to note that the particular
items we exclude from, or include in, our non-GAAP financial
measures may differ from the items excluded from, or included in,
similar non-GAAP financial measures used by other companies in the
same industry. In addition, other companies may utilize metrics
that are not similar to ours.
The non-GAAP financial information is presented for supplemental
informational purposes only and is not intended to be considered in
isolation or as a substitute for, or superior to, financial
information prepared and presented in accordance with GAAP. There
are material limitations associated with the use of non-GAAP
financial measures since they exclude significant expenses and
income that are required by GAAP to be recorded in our financial
statements. Please see the reconciliation tables at the end of this
release for the reconciliation of GAAP and non-GAAP results.
Management encourages investors and others to review Blend’s
financial information in its entirety and not rely on a single
financial measure.
We adjust the following items from our non-GAAP financial
measures:
Stock-based compensation and amortization of warrant. We exclude
stock-based compensation and amortization of warrant, which are
non-cash expenses, from our non-GAAP financial measures because we
believe that excluding these items provides meaningful supplemental
information regarding operational performance. In particular,
companies calculate stock-based compensation expense using a
variety of valuation methodologies and subjective assumptions, and
expense related to stock-based awards can vary significantly based
on the timing, size and nature of awards granted.
Amortization of acquired intangible assets. We exclude
amortization of acquired intangible assets, which is a non-cash
expense, from our non-GAAP financial measures. We exclude these
amortization expenses because we do not believe these expenses have
a direct correlation to the operation of our business.
Acquisition-related costs. We exclude costs related to
acquisitions from our non-GAAP financial measures as we do not
consider these costs to be related to organic continuing operations
of the acquired business or relevant to assessing the long-term
performance of the acquired assets. These adjustments allow for
more accurate comparisons of the financial results to historical
operations and forward looking guidance. These costs include
financial advisory, legal, accounting and other transactional costs
incurred in connection with acquisition activities, and
non-recurring transition and integration costs.
Income taxes. We exclude non-cash non-recurring tax benefits
from our non-GAAP financial measures. These tax benefits consist of
the changes in the valuation allowance resulting from acquisitions
and from changes in U.S. tax law requiring capitalization and
amortization of research and development costs for tax
purposes.
About Blend
Blend is the infrastructure powering the future of banking.
Financial providers — from large banks, fintechs, and credit unions
to community and independent mortgage banks — use Blend’s platform
to transform banking experiences for their customers. Blend powers
billions of dollars in financial transactions every day. To learn
more, visit www.blend.com.
Blend Labs, Inc.
Condensed Consolidated Balance
Sheets
(In thousands, except per share
amounts)
(Unaudited)
March 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
167,666
$
213,082
Marketable securities
331,714
334,147
Trade and other receivables, net of
allowance for credit losses of $1,669 and $1,371, respectively
33,621
34,076
Prepaid expenses and other current
assets
27,825
31,713
Total current assets
560,826
613,018
Property and equipment, net
5,895
6,155
Operating lease right-of-use assets
14,245
14,713
Intangible assets, net
168,935
173,008
Goodwill
287,228
287,228
Deferred contract costs
3,326
4,178
Restricted cash, non-current
5,358
5,358
Other non-current assets
8,617
8,828
Total assets
$
1,054,430
$
1,112,486
Liabilities, Redeemable Noncontrolling
Interest and Stockholders’ Equity
Current liabilities:
Accounts payable
$
2,116
$
6,160
Deferred revenue
14,172
8,068
Accrued compensation
13,489
18,140
Other current liabilities
24,264
27,662
Total current liabilities
54,041
60,030
Operating lease liabilities,
non-current
13,684
14,607
Other non-current liabilities
8,127
13,415
Debt, non-current, net
214,527
213,843
Total liabilities
290,379
301,895
Commitments and contingencies
Redeemable noncontrolling interest
37,077
35,949
Stockholders’ equity:
Preferred stock, $0.00001 par value:
200,000 shares authorized and no shares issued and outstanding as
of March 31, 2022 and December 31, 2021
—
—
Class A, Class B and Class C Common Stock,
$0.00001 par value: 3,000,000 (Class A 1,800,000, Class B 600,000,
Class C 600,000) shares authorized; 232,400 (Class A 219,767, Class
B 12,633, Class C 0) and 230,324 (Class A 217,691, Class B 12,633,
Class C 0) shares issued and outstanding as of March 31, 2022 and
December 31, 2021, respectively
2
2
Additional paid-in capital
1,244,466
1,218,213
Accumulated other comprehensive loss
(2,625
)
(808
)
Accumulated deficit
(514,869
)
(442,765
)
Total stockholders’ equity
726,974
774,642
Total liabilities, redeemable
noncontrolling interest and stockholders’ equity
$
1,054,430
$
1,112,486
Blend Labs, Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended March
31,
2022
2021
Revenue
$
71,524
$
31,875
Cost of revenue
42,655
10,860
Gross profit
28,869
21,015
Operating expenses:
Research and development
35,106
17,074
Sales and marketing
22,341
15,865
General and administrative
37,102
15,283
Amortization of acquired intangible
assets
4,068
—
Total operating expenses
98,617
48,222
Loss from operations
(69,748
)
(27,207
)
Interest expense
(5,558
)
—
Other income (expense), net
91
150
Loss before income taxes
(75,215
)
(27,057
)
Income tax benefit (expense)
2,797
(10
)
Net loss
(72,418
)
(27,067
)
Less: Net loss attributable to
noncontrolling interest
314
—
Net loss attributable to Blend Labs,
Inc.
(72,104
)
(27,067
)
Less: Accretion of redeemable
noncontrolling interest to redemption value
(1,442
)
—
Net loss attributable to Blend Labs, Inc.
common stockholders
$
(73,546
)
$
(27,067
)
Net loss per share attributable to Blend
Labs, Inc. common stockholders:
Basic and diluted
$
(0.32
)
$
(0.60
)
Weighted average shares used in
calculating net loss per share:
Basic and diluted
230,329
45,090
Comprehensive loss:
Net loss
$
(72,418
)
$
(27,067
)
Unrealized (loss) gain on marketable
securities
(1,845
)
15
Foreign currency translation gain
28
—
Comprehensive loss
(74,235
)
(27,052
)
Less: Comprehensive loss attributable to
noncontrolling interest
314
—
Comprehensive loss attributable to Blend
Labs, Inc.
$
(73,921
)
$
(27,052
)
Blend Labs, Inc.
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March
31,
2022
2021
Operating activities
Net loss
$
(72,418
)
$
(27,067
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
24,312
4,016
Depreciation and amortization
4,601
823
Amortization of deferred contract
costs
1,244
1,319
Amortization of debt discount and issuance
costs
709
—
Amortization of operating lease
right-of-use assets
785
593
Release of valuation allowance and change
in deferred taxes
(2,864
)
—
Other
1,049
481
Changes in operating assets and
liabilities:
Trade and other receivables
409
133
Prepaid expenses and other assets, current
and non-current
2,830
(3,728
)
Deferred contract costs, non-current
852
858
Accounts payable
(4,314
)
509
Deferred revenue
6,104
777
Accrued compensation
(4,651
)
(1,804
)
Operating lease liabilities
(958
)
(665
)
Other liabilities, current and
non-current
(3,532
)
3,361
Net cash used in operating activities
(45,842
)
(20,394
)
Investing activities
Purchases of marketable securities
(30,450
)
(25,400
)
Maturities of marketable securities
30,035
34,850
Purchases of property and equipment
(268
)
(302
)
Purchase of other investment
—
(3,000
)
Net cash (used in) provided by investing
activities
(683
)
6,148
Financing activities
Proceeds from exercises of stock options,
including early exercises, net of repurchases
1,202
5,750
Proceeds from issuance of Convertible
Preferred Stock, net of issuance costs
—
309,701
Payment of initial public offering
costs
(121
)
(158
)
Proceeds from exercises of Convertible
Preferred Stock warrants
—
10,172
Net cash provided by financing
activities
1,081
325,465
Effect of exchange rates on cash, cash
equivalents, and restricted cash
28
—
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(45,416
)
311,219
Cash, cash equivalents, and restricted
cash at beginning of period
218,440
46,288
Cash, cash equivalents, and restricted
cash at end of period
$
173,024
$
357,507
Reconciliation of cash, cash equivalents,
and restricted cash within the consolidated balance sheets:
Cash and cash equivalents
$
167,666
$
352,311
Restricted cash
5,358
5,196
Total cash, cash equivalents, and
restricted cash
$
173,024
$
357,507
Supplemental disclosure of cash flow
information:
Cash paid for income taxes
$
11
$
25
Cash paid for interest
$
4,944
$
—
Supplemental disclosure of non-cash
investing and financing activities:
Vesting of early exercised stock
options
$
1,913
$
157
Right-of-use assets obtained in exchange
for lease obligations
$
317
$
—
Accretion of redeemable noncontrolling
interest to redemption value
$
1,442
$
—
Blend Labs, Inc.
Revenue Disaggregation
(In thousands)
(Unaudited)
Three Months Ended March
31,
2022
2021
Blend Platform revenue:
YoY change
Mortgage Banking
$
24,484
75
%
$
26,435
83
%
(7
)%
Consumer Banking and Marketplace
7,187
22
%
4,648
15
%
55
%
Professional Services
1,122
3
%
792
2
%
42
%
Total Blend Platform revenue
32,793
100
%
31,875
100
%
3
%
Title365 revenue
38,731
—
Total revenue
$
71,524
$
31,875
124
%
Blend Labs, Inc.
Reconciliation of GAAP to
non-GAAP Measures
(In thousands)
(Unaudited)
Three Months Ended March 31,
2022
Three Months Ended March 31,
2021
Gross Profit Reconciliation
GAAP Gross Profit
Non-GAAP
adjustments(1)
Non-GAAP gross profit
GAAP Gross Profit
Non-GAAP
adjustments(1)
Non-GAAP gross profit
Blend Platform
$
18,591
$
371
$
18,962
$
21,015
$
58
$
21,073
Title365
10,278
122
10,400
—
—
—
Total
$
28,869
$
493
$
29,362
$
21,015
$
58
$
21,073
Blend Labs, Inc.
Reconciliation of GAAP to
non-GAAP Measures
(In thousands)
(Unaudited)
Three Months Ended March
31,
2022
2021
GAAP operating expenses
$
98,617
$
48,222
Non-GAAP adjustments:
Stock-based compensation(1) and
amortization of warrant
23,843
4,131
Amortization of acquired intangible
assets
4,068
—
Acquisition-related expenses(2)
1,812
4,207
Non-GAAP operating expenses
$
68,894
$
39,884
GAAP loss from operations
$
(69,748
)
$
(27,207
)
Non-GAAP adjustments:
Stock-based compensation(1) and
amortization of warrant
24,336
4,189
Amortization of acquired intangible
assets
4,068
—
Acquisition-related expenses(2)
1,812
4,207
Non-GAAP loss from operations
$
(39,532
)
$
(18,811
)
GAAP net loss
$
(72,418
)
$
(27,067
)
Non-GAAP adjustments:
Stock-based compensation(1) and
amortization of warrant
24,336
4,189
Amortization of acquired intangible
assets
4,068
—
Acquisition-related expenses(2)
1,812
4,207
Income tax benefit(3)
(2,864
)
—
Non-GAAP net loss
$
(45,066
)
$
(18,671
)
(1) Stock-based compensation by
function:
Cost of revenue
$
493
$
58
Research and development
9,866
1,386
Sales and marketing
2,523
1,373
General and administrative
11,430
1,199
Total
$
24,312
$
4,016
(2) Amortization of acquired intangible
assets represents non-cash amortization of customer relationships
acquired in connection with the Title365 acquisition
(3) Acquisition-related expenses include
non-recurring due diligence, transaction and integration costs
recorded within general and administrative expenses
(4) Income tax benefit represents the
non-recurring release of historical valuation allowance resulting
from changes in U.S. tax law requiring capitalization and
amortization of research and development costs for tax purposes
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220512005311/en/
Investor Relations ir@blend.com
Media Erin Bergamo-Tacy ebergamo-tacy@blend.com
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