Meets Revenue Guidance and Outperforms
Operating Loss Target in Second Quarter 2024
Blend Labs, Inc. (NYSE:BLND), the leading platform for digital
banking solutions, today announced its second quarter 2024
financial results.
“The second quarter marked another strong quarter for Blend, as
we signed several important deals with new customers across
mortgage and consumer banking,” said Nima Ghamsari, Head of Blend.
“Despite continued pressures on the mortgage industry, we’re
excited about the new investments we made in the Blend Platform and
the success we achieved in expanding our relationships with key
customers through their increased adoption of our add-on products.
In Consumer Banking, we achieved $8 million of revenue in the
quarter for the first time ever, with positive momentum thanks to
the successful deployment and ramp of our solutions.
“As always, we’re focused on maintaining our position as a
leader in digital banking innovation and on continuing to build new
features that help our customers be successful. Over the coming
months, we expect to go live with several product developments with
our customers, including the latest phase of our instant home
equity and next generation refinance experiences. We expect the
second half of 2024 to be pivotal for Blend, and as the mortgage
market recovers, we expect we will be in an even stronger position
given the actions we have taken to form a built to last company.
We’re also thrilled to announce our first ever share buyback
program of up to $25 million, which reflects our Board’s confidence
in our business and path ahead.”
Recent Highlights
- Welcoming New Mortgage Customers: Blend welcomed several
new mortgage customers, including Horizon Bank, an $8 billion
financial institution based in the Midwest, as well as First
National Bank of Fort Smith, who partnered with Blend to streamline
their mortgage lending and home equity businesses.
- Outpacing Expectations For Our Consumer Banking Suite:
The second quarter marks the first time our Consumer Banking Suite
generated $8 million of revenue in a quarter, representing 37% of
year-over-year growth. The Consumer Banking Suite is picking up
momentum from successful implementations with large customers like
Navy Federal Credit Union as well as new customer additions, such
as Andrews Federal Credit Union, a multi-billion dollar credit
union based in Maryland, who recently chose Blend to power the
deposit account opening experience for their members.
- Delivering Increased Value Across Our Full Product Suite As
Economic Value Per Funded Loan Reaches A New High: Blend’s
economic value per funded loan, which we use to measure the
economic value derived from each transaction in our mortgage suite,
reached a new high of $97 for the second quarter. This increase can
be attributed to a combination of better renewal pricing and
increased adoption and utilization of our attach products.
- Deploying Next-Generation Product Enhancements: Blend
continues to invest and enhance its leading digital banking
platform. The Company is in the process of implementing new AI
features into the account opening experience for one of its largest
customers, which we expect will significantly boost the customer’s
efficiency once rolled out. We have also been developing our
instant home equity product and are preparing to launch it with a
key customer during the third quarter.
- Improving Net Operating Loss: Blend GAAP net operating
loss once again decreased significantly in the quarter compared to
the same period last year. The Company significantly decreased
operating expenses over the past year, and is continuing to
progress toward achieving non-GAAP operating profitability.
- Share Repurchase Program: Blend today announced that its
Board of Directors authorized a share repurchase program providing
for the repurchase of up to $25 million of its Class A common
stock. The program underscores the Board’s strong confidence in
Blend’s differentiated digital banking platform and market
opportunities that are not yet fully reflected in the Company’s
current market valuation.
Second Quarter 2024 Financial
Highlights
Revenue
- Total company revenue in 2Q24 was $40.5 million, composed of
Blend Platform segment revenue of $28.7 million and Title segment
revenue of $11.8 million.
- Within the Blend Platform segment, Mortgage Suite revenue
decreased by 17% year-over-year to $18.5 million.
- Consumer Banking Suite revenue totaled $8.0 million in 2Q24, an
increase of 37% as compared to the prior-year period.
- Professional services revenue totaled $2.2 million in 2Q24,
consistent with the same period last year.
Gross Margin & Profitability
- Blend GAAP and non-GAAP gross profit margin were approximately
54%, down slightly compared to 55% on both a GAAP and non-GAAP
basis in 2Q23.
- GAAP Blend Platform segment gross profit was $20.3 million in
2Q24, down from $22.1 million in 2Q23. Non-GAAP Blend Platform
segment gross profit was $20.5 million in 2Q24, down from $22.4
million in 2Q23.
- GAAP and non-GAAP Software platform gross margins were 79% in
2Q24, down slightly compared to 80% on a GAAP basis and 81% on a
non-GAAP basis in 2Q23.
- GAAP loss from operations was $13.3 million, compared to $36.7
million in 2Q23. Non-GAAP loss from operations was $5.6 million,
compared to $17.9 million in 2Q23.
- GAAP net loss per share attributable to common stockholders was
$0.09 compared to $0.18 in 2Q23. Non-GAAP consolidated net loss per
share was $0.02 compared to $0.09 in 2Q23.
Liquidity, Cash, & Capital Resources
- As of June 30, 2024, Blend has cash, cash equivalents, and
marketable securities, including restricted cash, totaling $119.9
million, with no outstanding debt after the Company’s term loan was
repaid in full in April upon receiving a $150 million investment
from Haveli Investments.
- Blend cash used in operating activities was $6.7 million in
2Q24, compared to $34.4 million in 2Q23. Free cash flow was $(8.5)
million in 2Q24, compared to $(34.6) million in 2Q23. Unlevered
free cash flow was $(6.9) million in 2Q24, compared to $(27.4)
million in 2Q23.
Third Quarter 2024
Outlook
Blend is providing guidance for the third quarter of 2024 as
follows:
$ in millions
Q3 2024 Guidance
Blend Platform Segment Revenue
$28.0 – $31.0
Title Segment Revenue
$11.5 – $12.5
Blend Labs, Inc. Consolidated Revenue
$39.5 – $43.5
Non-GAAP Net Operating Loss
$(7.0) – $(4.0)
Blend’s 3Q24 guidance reflects our internal estimate of U.S.
aggregate industry mortgage originations in 3Q24.
Note that economic conditions, including those affecting the
levels of real estate and mortgage activity, as well as the
financial condition of some of our financial customers, remain
highly uncertain.
We have not provided the forward-looking GAAP equivalent to our
non-GAAP Net Operating Loss outlook or a GAAP reconciliation as a
result of the uncertainty regarding, and the potential variability
of, stock-based compensation, which is affected by our hiring and
retention needs and future prices of our stock, and non-recurring,
infrequent or unusual items.
Webcast Information
On Thursday, August 8, 2024 at 4:30 pm ET, Blend will host a
live discussion of its second quarter 2024 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; the “Third Quarter 2024 Outlook” section
above; Blend’s expectations regarding its financial condition and
operating performance, including growth opportunities, investments
and plans for future operations and competitive position; Blend’s
partnerships and expectations related to such partnerships on
Blend’s products and business; Blend’s products, pipeline, and
technologies; Blend’s customers and customer relationships,
including the businesses of such customers and their position in
the market; Blend’s cost reduction efforts and ability to achieve
profitability in the future; projections for mortgage loan
origination volumes, including projections provided by third
parties; other macroeconomic and industry conditions; and Blend’s
expectations for changes in revenue, 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 risks that: changes in economic
conditions, such as mortgage interest rates, credit availability,
real estate prices, inflation or consumer confidence, adversely
affect our industry, markets and business, 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 and
evolving markets; we are unable to successfully integrate or
realize the benefits of our acquisition of Title365; our
restructuring actions do not result in the desired outcomes or
adversely affect our business, impairment charges on certain assets
have an adverse effect on our financial condition and results of
operations; risks related to the investment from Haveli, including
the governance rights of Haveli and potential dilution as a result
of the investment; changes to our expectations regarding our share
repurchase program; or we are unable to generate sufficient cash
flows or otherwise maintain sufficient liquidity to fund our
operations and satisfy our liabilities. 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, 2023, our Quarterly Report on Form
10-Q for the quarter ended March 31, 2024, and our Quarterly Report
on Form 10-Q for the quarter ended June 30, 2024 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 Performance Metrics
In addition to financial measures prepared in accordance with
GAAP, this press release and the accompanying tables contain, and
the conference call will contain, non-GAAP financial measures,
including non-GAAP gross profit and non-GAAP gross profit margin,
non-GAAP software platform gross profit and gross margin, non-GAAP
Blend Platform segment gross profit and gross margin, non-GAAP
operating expenses, non-GAAP loss from operations, non-GAAP net
operating loss, and non-GAAP consolidated net loss per share. 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.
We adjust the following items from our non-GAAP financial
measures as detailed in the reconciliations below:
Stock-based compensation. We exclude stock-based compensation,
which is a non-cash expense, from our non-GAAP financial measures
because we believe that excluding this cost 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.
Loss on transfer of subsidiary. We exclude loss on transfer of
our subsidiary in India to a third party, which is primarily
comprised of impairment charges related to certain assets
transferred as part of the agreement, costs incurred to settle
certain liabilities arising from the agreement, and one-time legal
costs incurred to facilitate the transaction. These costs are
non-recurring in nature and we do not believe they have a direct
correlation to the operation of our business.
Compensation realignment costs. We exclude the compensation
realignment costs incurred in connection with the change in our
compensation strategy from our non-GAAP financial measures. These
costs relate to amortization of one-time two-installment cash bonus
payment made to certain employees in lieu of previously committed
equity-based awards, driven by an organizational initiative to
standardize our equity compensation program. We believe that
excluding these charges for purposes of calculating the non-GAAP
financial measures provides more meaningful period to period
comparisons.
Restructuring costs. We exclude restructuring costs as these
costs primarily include employee severance, executive transition
costs and other costs directly associated with resource
realignments incurred in connection with changing strategies or
business conditions. These costs can vary significantly in amount
and frequency based on the nature of the actions as well as the
changing needs of our business and we believe that excluding them
provides easier comparability of pre- and post-restructuring
operating results.
Transaction-related costs. We exclude costs related to mergers
and 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.
Gains related to carrying value adjustments of non-marketable
equity securities. We exclude gains related to the carrying value
adjustments of non-marketable equity securities because we do not
believe these non-cash gains have a direct correlation to the
operation of our business.
Foreign currency gains and losses. We exclude unrealized gains
and losses resulting from remeasurement of assets and liabilities
from foreign currency into the functional currency as we do not
believe these gains and losses to be indicative of our business
performance and excluding these gains and losses provides
information consistent with how we evaluate our operating
results.
Net income or loss allocated to noncontrolling interest and
accretion of redeemable noncontrolling interest to redemption
value. We exclude net income or loss allocated to noncontrolling
interest and accretion of redeemable noncontrolling interest to its
redemption value from our non-GAAP net loss per share calculation
as we measure our non-GAAP net loss per share on a consolidated
basis.
Accretion of Series A redeemable preferred stock to its
redemption value. We exclude the accretion of Series A redeemable
convertible preferred stock to its redemption value from our
non-GAAP net loss per share calculation as we measure our non-GAAP
net loss per share on a consolidated basis.
Litigation contingencies. We exclude costs related to litigation
contingencies, which represent reserves for legal settlements.
These costs are non-recurring in nature and we do not believe they
have a direct correlation to the operation of our business.
Loss on extinguishment of debt. We exclude the write offs of
unamortized debt issuance costs and debt discounts related to the
extinguishment of our term loan and termination of the credit
agreement from our non-GAAP financial measures. These costs are
non-recurring in nature and we do not believe they have a direct
correlation to the operation of our business.
In addition, our non-GAAP financial measures include measures
related to our liquidity, such as free cash flow, unlevered free
cash flow and free cash flow margin. Free cash flow is defined as
net cash flow from operating activities less cash spent on
additions to property, equipment, internal-use software and
intangible assets. Unlevered free cash flow is defined as free cash
flow before cash paid for interest on our outstanding debt. Free
cash flow margin is defined as free cash flow divided by total
revenue. We believe information regarding free cash flow, free cash
flow margin and unlevered free cash flow provide useful information
to investors as a basis for comparing our performance with other
companies in our industry and as a measurement of the cash
generation that is available to invest in our business and meet our
financing needs. However, given our debt service obligations and
other contractual obligations, unlevered free cash flow does not
represent residual cash flow available for discretionary
expenditures. In April 2024, we repaid in full all amounts
outstanding and payable under our debt obligations and therefore
eliminated any debt service obligations.
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.
Economic Value per Funded Loan in our Mortgage Suite represents
the contractual rates for mortgage and mortgage-related products
multiplied by the number of loans funded or transactions completed,
as applicable, by a customer in the specified period, divided by
the total number of loans funded by all Mortgage Suite customers in
that same period. Additionally, the value derived from partnerships
and verification of income products that is associated with the
mortgage application stage is aligned with the timing of funding
the related loan (typically a 3 month delay from the time of
application). We use Economic Value per Funded Loan to measure our
success at broadening the client relationships from the underlying
mortgage transactions and selling additional products through our
software platform.
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)
June 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
45,450
$
30,962
Marketable securities and other
investments
67,153
105,960
Trade and other receivables, net of
allowance for credit losses of $91 and $149, respectively
19,602
18,345
Prepaid expenses and other current
assets
10,315
14,569
Total current assets
142,520
169,836
Property and equipment, net
7,617
3,945
Operating lease right-of-use assets
7,516
8,565
Intangible assets, net
2,099
2,108
Deferred contract costs
2,020
2,453
Restricted cash, non-current
7,294
7,291
Other non-current assets
16,344
11,867
Total assets
$
185,410
$
206,065
Liabilities, redeemable equity and
stockholders’ equity
Current liabilities:
Accounts payable
$
1,084
$
2,170
Deferred revenue
20,832
8,984
Accrued compensation
3,225
5,562
Other current liabilities
16,383
14,858
Total current liabilities
41,524
31,574
Operating lease liabilities,
non-current
5,172
6,982
Other non-current liabilities
1,571
2,228
Debt, non-current, net
—
138,334
Total liabilities
48,267
179,118
Commitments and contingencies
Redeemable noncontrolling interest
49,169
46,190
Series A redeemable convertible preferred
stock, par value $0.00001 per share: 200,000 shares authorized, 150
and 0 shares issued and outstanding as of June 30, 2024 and
December 31, 2023, respectively
133,445
—
Stockholders’ equity:
Class A, Class B and Class C Common Stock,
par value $0.00001 per share: 3,000,000 (Class A 1,800,000, Class B
600,000, Class C 600,000) shares authorized; 254,207 (Class A
248,985, Class B 5,222, Class C 0) and 249,910 (Class A 240,262,
Class B 9,648, Class C 0) shares issued and outstanding as of June
30, 2024 and December 31, 2023, respectively
2
2
Additional paid-in capital
1,335,928
1,321,944
Accumulated other comprehensive loss
304
441
Accumulated deficit
(1,381,705
)
(1,341,630
)
Total stockholders’ equity
(45,471
)
(19,243
)
Total liabilities, redeemable equity
and stockholders’ equity
$
185,410
$
206,065
Blend Labs, Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Revenue
Software platform
$
26,475
$
28,115
$
48,211
$
51,085
Professional services
2,221
2,216
4,325
3,950
Title
11,784
12,484
22,891
25,116
Total revenue
40,480
42,815
75,427
80,151
Cost of revenue
Software platform
5,674
5,486
10,849
11,289
Professional services
2,681
2,705
5,304
5,511
Title
10,447
11,131
19,455
24,005
Total cost of revenue
18,802
19,322
35,608
40,805
Gross profit
21,678
23,493
39,819
39,346
Operating expenses:
Research and development
12,916
22,091
27,099
48,348
Sales and marketing
9,370
16,128
19,585
33,696
General and administrative
12,524
19,646
26,459
40,327
Restructuring
207
2,349
1,190
15,132
Total operating expenses
35,017
60,214
74,333
137,503
Loss from operations
(13,339
)
(36,721
)
(34,514
)
(98,157
)
Interest expense
(1,648
)
(7,947
)
(6,747
)
(15,516
)
Other income (expense), net
(4,411
)
3,232
1,242
6,114
Loss before income taxes
(19,398
)
(41,436
)
(40,019
)
(107,559
)
Income tax expense
(23
)
(53
)
(65
)
(124
)
Net loss
(19,421
)
(41,489
)
(40,084
)
(107,683
)
Less: Net loss attributable to
noncontrolling interest
14
258
9
1,035
Net loss attributable to Blend Labs,
Inc.
(19,407
)
(41,231
)
(40,075
)
(106,648
)
Less: Accretion of redeemable
noncontrolling interest to redemption value
(1,527
)
(1,592
)
(2,988
)
(3,648
)
Less: Accretion of Series A redeemable
convertible preferred stock to redemption value
(2,661
)
—
(2,661
)
—
Net loss attributable to Blend Labs, Inc.
common stockholders
$
(23,595
)
$
(42,823
)
$
(45,724
)
$
(110,296
)
Net loss per share attributable to Blend
Labs, Inc. common stockholders:
Basic and diluted
$
(0.09
)
$
(0.18
)
$
(0.18
)
$
(0.45
)
Weighted average shares used in
calculating net loss per share:
Basic and diluted
253,069
244,262
252,000
242,861
Comprehensive loss:
Net loss
$
(19,421
)
$
(41,489
)
$
(40,084
)
$
(107,683
)
Unrealized (loss) gain on marketable
securities
(42
)
(773
)
(146
)
48
Foreign currency translation (loss)
gain
—
(11
)
9
(29
)
Comprehensive loss
(19,463
)
(42,273
)
(40,221
)
(107,664
)
Less: Comprehensive loss attributable to
noncontrolling interest
14
258
9
1,035
Comprehensive loss attributable to Blend
Labs, Inc.
$
(19,449
)
$
(42,015
)
$
(40,212
)
$
(106,629
)
Blend Labs, Inc.
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Operating activities
Net loss
$
(19,421
)
$
(41,489
)
$
(40,084
)
$
(107,683
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
7,271
14,364
15,342
30,756
Depreciation and amortization
558
626
1,122
1,256
Amortization of deferred contract
costs
253
761
519
1,745
Amortization of debt discount and issuance
costs
170
759
690
1,489
Amortization of operating lease
right-of-use assets
842
809
1,703
1,615
Gain on investment in equity
securities
—
—
(4,417
)
—
Loss on extinguishment of debt
5,476
—
5,476
—
Other
(92
)
(2,025
)
(326
)
(3,372
)
Changes in operating assets and
liabilities:
Trade and other receivables
(1,409
)
(1,580
)
(1,227
)
1,320
Prepaid expenses and other assets, current
and non-current
2,486
1,058
3,453
(3,911
)
Deferred contract costs, non-current
177
(993
)
433
(776
)
Accounts payable
(1,217
)
1,217
(1,489
)
1,889
Deferred revenue
(708
)
(1,076
)
11,848
3,275
Accrued compensation
(1,961
)
(6,294
)
(2,337
)
(5,318
)
Operating lease liabilities
(1,096
)
(914
)
(2,146
)
(1,917
)
Other liabilities, current and
non-current
2,005
387
906
(1,411
)
Net cash used in operating activities
(6,666
)
(34,390
)
$
(10,534
)
$
(81,043
)
Investing activities
Purchases of marketable securities
(28,217
)
(8,751
)
(76,529
)
(194,957
)
Sale of available-for-sale securities
—
—
100,297
—
Maturities of marketable securities
5,000
40,139
15,600
197,709
Additions to property, equipment,
internal-use software development costs and intangible assets
(1,867
)
(170
)
(3,831
)
(474
)
Net cash provided by investing
activities
(25,084
)
31,218
35,537
2,278
Financing activities
Proceeds from exercises of stock options,
including early exercises, net of repurchases
95
1
714
22
Taxes paid related to net share settlement
of equity awards
(3,213
)
(1,092
)
(7,019
)
(3,532
)
Repayment of long-term debt
(144,500
)
—
(144,500
)
—
Net proceeds from the issuance of the
Series A redeemable convertible preferred stock and the Warrant
149,375
—
149,375
—
Payment for issuance costs related to the
Series A redeemable convertible preferred stock and the Warrant
(9,077
)
—
(9,077
)
—
Net cash used in financing activities
(7,320
)
(1,091
)
(10,507
)
(3,510
)
Effect of exchange rates on cash, cash
equivalents, and restricted cash
(1
)
5
(5
)
13
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(39,071
)
(4,258
)
14,491
(82,262
)
Cash, cash equivalents, and restricted
cash at beginning of period
91,815
51,553
38,253
129,557
Cash, cash equivalents, and restricted
cash at end of period
$
52,744
$
47,295
$
52,744
$
47,295
Reconciliation of cash, cash
equivalents, and restricted cash within the condensed consolidated
balance sheets:
Cash and cash equivalents
$
45,450
$
34,980
$
45,450
$
34,980
Restricted cash
7,294
12,315
7,294
12,315
Total cash, cash equivalents, and
restricted cash
$
52,744
$
47,295
$
52,744
$
47,295
Supplemental disclosure of cash flow
information:
Cash paid for income taxes
$
67
$
(53
)
$
76
$
48
Cash paid for interest
$
1,621
$
7,189
$
6,150
$
14,100
Supplemental disclosure of non-cash
investing and financing activities:
Vesting of early exercised stock
options
$
172
$
256
$
356
$
1,014
Operating lease liabilities arising from
obtaining new or modified right-of-use assets
$
—
$
—
$
654
$
327
Stock-based compensation included in
capitalized internal-use software development costs
$
494
$
—
$
1,130
$
—
Accretion of redeemable noncontrolling
interest to redemption value
$
1,527
$
1,592
$
2,988
$
3,648
Accretion of Series A redeemable
convertible preferred stock to redemption value
$
2,661
$
—
$
2,661
$
—
Issuance costs accrued in connection with
the Series A redeemable convertible preferred stock and the
Warrant
$
403
$
—
$
403
$
—
Blend Labs, Inc.
Revenue Disaggregation
(In thousands)
(Unaudited)
Three Months Ended June
30,
2024
2023
Blend Platform:
YoY change
Mortgage Suite
$
18,454
64
%
$
22,271
73
%
(17
)%
Consumer Banking Suite
8,021
28
%
5,844
20
%
37
%
Total software platform
26,475
92
%
28,115
93
%
(6
)%
Professional services
2,221
8
%
2,216
7
%
—
%
Total Blend Platform
28,696
100
%
30,331
100
%
(5
)%
Title
11,784
12,484
(6
)%
Total revenue
$
40,480
$
42,815
(5
)%
Six Months Ended June
30,
2024
2023
Blend Platform:
YoY change
Mortgage Suite
$
33,532
64
%
$
40,066
73
%
(16
)%
Consumer Banking Suite
14,679
28
%
11,019
20
%
33
%
Total software platform
48,211
92
%
51,085
93
%
(6
)%
Professional services
4,325
8
%
3,950
7
%
9
%
Total Blend Platform
52,536
100
%
55,035
100
%
(5
)%
Title
22,891
25,116
(9
)%
Total revenue
$
75,427
$
80,151
(6
)%
Blend Labs, Inc.
Reconciliation of GAAP to
non-GAAP Measures
(In thousands)
(Unaudited)
Three Months Ended June 30,
2024
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross
Profit
Gross Margin
Gross
Profit
Gross Margin
Blend Platform
Software platform
$
20,801
79
%
$
3
$
20,804
79
%
Professional services
(460
)
(21
)%
119
(341
)
(15
)%
Total Blend Platform
20,341
71
%
122
20,463
71
%
Title
1,337
11
%
—
1,337
11
%
Total
$
21,678
54
%
$
122
$
21,800
54
%
Three Months Ended June 30,
2023
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross
Profit
Gross Margin
Gross
Profit
Gross Margin
Blend Platform
Software platform
$
22,629
80
%
$
9
$
22,638
81
%
Professional services
(489
)
(22
)%
253
(236
)
(11
)%
Total Blend Platform
22,140
73
%
262
22,402
74
%
Title
1,353
11
%
2
1,355
11
%
Total
$
23,493
55
%
$
264
$
23,757
55
%
Six Months Ended June 30,
2024
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross
Profit
Gross Margin
Gross
Profit
Gross Margin
Blend Platform
Software platform
$
37,362
77
%
$
7
$
37,369
78
%
Professional services
(979
)
(23
)%
254
(725
)
(17
)%
Total Blend Platform
36,383
69
%
261
36,644
70
%
Title
3,436
15
%
15
3,451
15
%
Total
$
39,819
53
%
$
276
$
40,095
53
%
Six Months Ended June 30,
2023
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross
Profit
Gross Margin
Gross
Profit
Gross Margin
Blend Platform
Software platform
$
39,796
78
%
$
22
$
39,818
78
%
Professional services
(1,561
)
(40
)%
593
(968
)
(25
)%
Total Blend Platform
38,235
69
%
615
38,850
71
%
Title
1,111
4
%
137
1,248
5
%
Total
$
39,346
49
%
$
752
$
40,098
50
%
Blend Labs, Inc.
Reconciliation of GAAP to
non-GAAP Measures
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
GAAP operating expenses
$
35,017
$
60,214
$
74,333
$
137,503
Non-GAAP adjustments:
Stock-based compensation(1)
7,148
14,100
15,065
30,004
Compensation realignment costs(3)
254
1,778
1,155
2,874
Restructuring(4)
207
2,349
1,190
15,132
Litigation contingencies(10)
—
(245
)
—
(245
)
Transaction-related costs(5)
—
596
—
1,034
Non-GAAP operating expenses
$
27,408
$
41,636
$
56,923
$
88,704
GAAP loss from operations
$
(13,339
)
$
(36,721
)
$
(34,514
)
$
(98,157
)
Non-GAAP adjustments:
Stock-based compensation(1)
7,271
14,364
15,342
30,756
Compensation realignment costs(3)
254
1,778
1,155
2,874
Restructuring(4)
207
2,349
1,190
15,132
Litigation contingencies(10)
—
(245
)
—
(245
)
Transaction-related costs(5)
—
596
—
1,034
Non-GAAP loss from operations
$
(5,607
)
$
(17,879
)
$
(16,827
)
$
(48,606
)
GAAP net loss
$
(19,421
)
$
(41,489
)
$
(40,084
)
$
(107,683
)
Non-GAAP adjustments:
Stock-based compensation(1)
7,271
14,364
15,342
30,756
Loss on extinguishment of debt(12)
5,531
—
5,531
—
Compensation realignment costs(3)
254
1,778
1,155
2,874
Restructuring(4)
207
2,349
1,190
15,132
Litigation contingencies(10)
—
(245
)
—
(245
)
Transaction-related costs(5)
—
596
—
1,034
Gain on investment in equity
securities(6)
—
—
(4,417
)
—
Foreign currency gains and losses(7)
(3
)
(23
)
(10
)
(157
)
Loss on transfer of subsidiary(2)
601
—
601
—
Non-GAAP net loss
$
(5,560
)
$
(22,670
)
$
(20,692
)
$
(58,289
)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
GAAP basic net loss per share
$
(0.09
)
$
(0.18
)
$
(0.18
)
$
(0.45
)
Non-GAAP adjustments:
Net loss attributable to noncontrolling
interest(8)
—
—
—
—
Accretion of redeemable noncontrolling
interest to redemption value(8)
0.01
0.01
0.01
0.01
Accretion of Series A redeemable
convertible preferred stock to redemption value(9)
0.01
—
0.01
—
Stock-based compensation(1)
0.03
0.06
0.06
0.13
Loss on extinguishment of debt(12)
0.02
—
0.02
—
Compensation realignment costs(3)
—
0.01
0.01
0.01
Restructuring(4)
—
0.01
0.01
0.06
Litigation contingencies (10)
—
—
—
—
Transaction-related costs(5)
—
—
—
—
Gain on investment in equity
securities(6)
—
—
(0.02
)
—
Foreign currency gains and losses(7)
—
—
—
—
Loss on transfer of subsidiary(2)
—
—
—
—
Non-GAAP basic net loss per
share
$
(0.02
)
$
(0.09
)
$
(0.08
)
$
(0.24
)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net cash used in operating
activities
$
(6,666
)
$
(34,390
)
$
(10,534
)
$
(81,043
)
Additions to property, equipment,
internal-use software and intangible assets
(1,867
)
(170
)
(3,831
)
(474
)
Free cash flow
(8,533
)
(34,560
)
(14,365
)
(81,517
)
Cash paid for interest
1,621
7,189
6,150
14,100
Unlevered free cash flow
$
(6,912
)
$
(27,371
)
$
(8,215
)
$
(67,417
)
Revenue
$
40,480
$
42,815
$
75,427
$
80,151
Free cash flow margin
(21
)%
(81
)%
(19
)%
(102
)%
Notes:
1) Stock-based compensation represents the
non-cash grant date fair value of stock-based instruments utilized
to incentivize our employees, for which the expense is recognized
over the applicable vesting or performance period.
Three Months Ended June
30,
Six Months Ended June
30,
Stock-based compensation by function:
2024
2023
2024
2023
Cost of revenue
$
123
$
264
$
277
$
752
Research and development *
2,567
4,829
5,919
12,960
Sales and marketing
875
1,931
1,853
4,714
General and administrative
3,706
7,340
7,293
12,330
Total
$
7,271
$
14,364
$
15,342
$
30,756
* Net of $0.5 million and $1.1 million of
additions to capitalized internal-use software for the three and
six months ended June 30, 2024 and none for the three and six
months ended June 30, 2023
(2) Loss on transfer of subsidiary
represents a loss recognized in connection with the transfer of our
subsidiary in India to a third-party and includes impairment
charges related to certain assets transferred as part of the
agreement, costs incurred to settle certain liabilities arising
from the agreement, and one-time legal costs incurred to facilitate
the transaction.
(3) Compensation realignment costs relate
to amortization of one-time cash bonus payment (paid in two
installments in March and May 2023) to certain employees in lieu of
previously committed equity-based awards, driven by an
organizational initiative to standardize our equity compensation
program.
(4) The restructuring charges relate to
our workforce reduction plans executed as part of our broader
efforts to improve cost efficiency and better align our operating
structure with our business activities.
(5) Transaction-related costs include
non-recurring due diligence, consulting, and integration costs
recorded within general and administrative expense.
(6) Gain on investment in equity
securities represents an adjustment to the carrying value of the
non-marketable security without a readily determinable fair value
to reflect observable price changes.
(7) Foreign currency gains and losses
include transaction gains and losses incurred in connection with
our operations in India.
(8) Net loss attributable to
noncontrolling interest and accretion of redeemable noncontrolling
interest to redemption value relate to the 9.9% non-controlling
interest in our Title365 subsidiary.
(9) Accretion of Series A redeemable
convertible preferred stock to its redemption value relates to the
redemption rights outlined in the Haveli investment agreement.
(10) Litigation contingencies represent
reserves for legal settlements that are unusual or infrequent costs
associated with our operating activities.
(11) Loss on extinguishment of debt
represents a write off of unamortized debt issuance costs and debt
discounts related to the extinguishment of our term loan.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808227415/en/
Investor Relations Bryan Michaleski ir@blend.com
Media press@blend.com
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