Welcomes New Customers and Accomplishes
Important Financial Milestones for the Business
Blend Labs, Inc. (NYSE:BLND), a leading origination platform for
digital banking solutions, today announced its third quarter 2024
financial results.
“The third quarter resulted in several big wins for Blend,
including the signing of multi-year deals with new customers in
both mortgage and consumer banking as well as the significant
milestone of achieving non-GAAP operating profitability ahead of
our fourth quarter target,” said Nima Ghamsari, Head of Blend.
“This achievement reflects the dedication, focus and hard work of
our entire team. Reaching this milestone now positions us to enter
the next phase of our growth strategy. Our focus will be on
generating profitable growth and ensuring our platform continues to
deliver even more value for our customers over time.
“We’re observing renewed optimism in the mortgage industry. Our
pipeline has been strong throughout the year, and bringing on
Pentagon Federal Credit Union as a new customer highlights the
momentum we’re seeing in our mortgage business because of this
enthusiasm. The positive outlook for mortgage mixed with our
accelerating consumer banking business, which generated more than
50% year-over-year revenue growth in the third quarter, and the
achievement of our non-GAAP operating profitability goal makes now
an exciting time to be building at Blend.”
Recent Highlights
- Achieving Non-GAAP Operating Profitability: Blend
improved GAAP loss from operations to $13.3 million in the third
quarter compared to $36.2 million in the same period last year. We
reached non-GAAP operating profitability this quarter, as Blend
Platform Segment revenue exceeded the high end of prior guidance by
7% and both GAAP and non-GAAP operating expenses decreased
significantly in the quarter compared to the same period last
year.
- Growing Platform Customer Base: Welcomed several new
customers to the platform in the third quarter, including signing a
multi-year mortgage and home equity deal with Pentagon Federal
Credit Union, the nation’s second-largest federal credit union by
asset size with nearly 3 million members. Another new customer is a
top 300 financial institution by customer accounts who chose Blend
to power its full consumer banking suite, from deposits and credit
cards to auto and personal loans.
- Accelerating Consumer Banking Suite Growth: Blend
generated a record high $9.5 million of revenue in our Consumer
Banking Suite, representing 54% year-over-year growth and well
ahead of our 35% 3-year revenue growth target that we shared at our
2023 Investor Day. A large contributor to this growth was continued
innovation and enhancements to our product suite, including a
completely revamped deposit account experience which is driving
higher conversion rates and significantly reducing the time
required to deploy with new customers.
- Deepening Relationships With Our Customer Base As Economic
Value Per Funded Loan Reaches A New High: Blend’s economic
value per funded loan reached another new high of $99 for the third
quarter. Adoption of our attach products continues to increase as
more customers recognize the value derived over time by using
solutions like Blend Close to cut closing times and deliver a
better consumer experience.
- Establishing A Strategic Partnership To Expand Our Insurance
Business: Entered into a transaction for the sale of our
insurance business and strategic partnership with Covered Insurance
Solutions, a premier provider of embedded insurance solutions, to
shift our insurance service model from an exclusively in-house
operation to one in which we leverage a partner specialized in
providing a comprehensive insurance marketplace to further enhance
and simplify the mortgage application process.
Third Quarter 2024 Financial
Highlights
Revenue
- Total company revenue in 3Q24 was $45.2 million, composed of
Blend Platform segment revenue of $33.1 million and Title segment
revenue of $12.1 million.
- Within the Blend Platform segment, Mortgage Suite revenue
increased by 6% year-over-year to $21.5 million.
- Consumer Banking Suite revenue totaled $9.5 million in 3Q24, an
increase of 54% as compared to the prior-year period.
- Professional services revenue totaled $2.0 million in 3Q24,
down slightly compared to the same period last year.
Gross Margin & Profitability
- Blend GAAP and non-GAAP gross profit margin were approximately
58%, up compared to 54% on a GAAP basis and 55% on a non-GAAP basis
in 3Q23.
- GAAP Blend Platform segment gross profit was $24.5 million in
3Q24, up from $20.0 million in 3Q23. Non-GAAP Blend Platform
segment gross profit was $24.8 million in 3Q24, up from $20.2
million in 3Q23.
- GAAP and non-GAAP Software platform gross margins were 80% in
3Q24, up compared to 79% on a GAAP and non-GAAP basis in 3Q23.
- GAAP loss from operations was $13.3 million, compared to $36.2
million in 3Q23. Non-GAAP income from operations was $0.04 million,
compared to non-GAAP loss from operations of $15.9 million in
3Q23.
- GAAP net loss per share attributable to common stockholders was
$0.03 compared to $0.18 in 3Q23. Non-GAAP net income per share was
$0.00 compared to non-GAAP net loss per share of $0.09 in
3Q23.
Liquidity, Cash, & Capital Resources
- As of September 30, 2024, Blend has cash, cash equivalents, and
marketable securities, including restricted cash, totaling $124.1
million, with no outstanding debt.
- Blend cash provided by operating activities was $2.1 million in
3Q24, compared to cash used in operating activities of $25.9
million in 3Q23. Free cash flow was $(1.4) million in 3Q24,
compared to $(25.9) million in 3Q23.
Fourth Quarter 2024
Outlook
Blend is providing guidance for the fourth quarter of 2024 as
follows:
$ in millions
Q4 2024 Guidance
Blend Platform Segment Revenue
$29.0 – $31.0
Title Segment Revenue
$10.5 – $11.5
Total Revenue
$39.5 – $42.5
Non-GAAP Net Operating Income
$0.0 – $3.0
Blend's 4Q24 guidance reflects our expectation that U.S.
aggregate industry mortgage originations will be lower in 4Q24
relative to 3Q24 based on application volume observed to date
through our customer base and our analysis of the latest relevant
macroeconomic data. Additionally, it incorporates the impact of our
strategic partnership with Covered Insurance Solutions, which is
expected to have a negative impact on revenue and positive impact
on operating income going forward.
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 Income 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 Wednesday, November 6, 2024 at 4:30 pm ET, Blend will host a
live discussion of its third 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 “Fourth 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
or maintain 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; 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 subsequent Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2024 and June 30, 2024, and our Quarterly
Report on Form 10-Q for the quarter ended September 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 income (loss) from operations,
non-GAAP net operating income (loss), and non-GAAP net income
(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.
Workforce reduction costs. We exclude restructuring costs
related to workforce reductions 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.
Abandoned and terminated facilities costs. In the third quarter
of 2024, we abandoned our headquarters in San Francisco, California
and early terminated our office lease in Omaha. We exclude costs
related to abandoned and terminated leases as these costs related
to a one-time strategic business decision, are non-recurring or
short-term in nature and are not reflective of our ongoing
operations. Thus we believe that excluding these charges for
purposes of calculating the non-GAAP financial measures provides
more meaningful period to period comparisons.
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.
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.
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.
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.
Gain on sale of insurance business. We exclude the gain on sale
of our insurance business to a third party, which is comprised of
the excess consideration received for the net assets transferred as
part of the sale agreement. This gain is non-recurring in nature
and we do not believe it has a direct correlation to the operation
of our business.
Amortization of capitalized internal-use software. We exclude
the amortization of capitalized internal-use software because we do
not believe this non-cash expense has a direct correlation to the
operation of our business.
Gain on investment in 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.
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.
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 income per share and
non-GAAP net loss per share calculations as we measure our non-GAAP
net income per share and non-GAAP net loss per share on a
consolidated basis.
Accretion of Series A redeemable convertible 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 income per share and non-GAAP net loss per share
calculations as we measure our non-GAAP net income per share and
non-GAAP net loss per share on a consolidated basis.
In addition, our non-GAAP financial measures include the
following measures related to our liquidity: 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.
We have not separately adjusted for certain tax-related impacts
of our non-GAAP financial measures, as they are not material to our
overall non-GAAP results for the periods presented.
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)
September 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
55,041
$
30,962
Marketable securities and other
investments
61,744
105,960
Trade and other receivables, net of
allowance for credit losses of $38 and $149, respectively
15,894
18,345
Prepaid expenses and other current
assets
13,722
14,569
Total current assets
146,401
169,836
Property and equipment, net
9,723
3,945
Operating lease right-of-use assets
1,715
8,565
Intangible assets, net
2,085
2,108
Deferred contract costs
2,063
2,453
Restricted cash, non-current
7,294
7,291
Other non-current assets
16,848
11,867
Total assets
$
186,129
$
206,065
Liabilities, redeemable equity and
stockholders’ equity
Current liabilities:
Accounts payable
$
1,863
$
2,170
Deferred revenue
19,857
8,984
Accrued compensation
6,046
5,562
Other current liabilities
17,478
14,858
Total current liabilities
45,244
31,574
Operating lease liabilities,
non-current
955
6,982
Other non-current liabilities
1,292
2,228
Debt, non-current, net
—
138,334
Total liabilities
47,491
179,118
Commitments and contingencies
Redeemable noncontrolling interest
50,747
46,190
Series A redeemable convertible preferred
stock, par value $0.00001 per share: 200,000 shares authorized as
of September 30, 2024 and December 31, 2023, 150 and 0 shares
issued and outstanding as of September 30, 2024 and December 31,
2023, respectively
137,493
—
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 as of September 30,
2024 and December 31, 2023; 255,881 (Class A 252,134, Class B
3,747, Class C 0) and 249,910 (Class A 240,262, Class B 9,648,
Class C 0) shares issued and outstanding as of September 30, 2024
and December 31, 2023, respectively
2
2
Additional paid-in capital
1,333,781
1,321,944
Accumulated other comprehensive loss
765
441
Accumulated deficit
(1,384,150
)
(1,341,630
)
Total stockholders’ equity
(49,602
)
(19,243
)
Total liabilities, redeemable equity
and stockholders’ equity
$
186,129
$
206,065
Blend Labs, Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Revenue
Software platform
$
31,066
$
26,505
$
79,277
$
77,590
Professional services
2,038
2,137
6,363
6,087
Title
12,080
11,949
34,971
37,065
Total revenue
45,184
40,591
120,611
120,742
Cost of revenue
Software platform
6,294
5,675
17,143
16,964
Professional services
2,310
2,937
7,614
8,448
Title
10,584
9,916
30,039
33,921
Total cost of revenue
19,188
18,528
54,796
59,333
Gross profit
25,996
22,063
65,815
61,409
Operating expenses:
Research and development
10,127
18,826
37,226
67,174
Sales and marketing
9,883
14,494
29,468
48,190
General and administrative
13,140
15,819
39,599
56,146
Restructuring
6,165
9,122
7,355
24,254
Total operating expenses
39,315
58,261
113,648
195,764
Loss from operations
(13,319
)
(36,198
)
(47,833
)
(134,355
)
Interest expense
—
(8,210
)
(6,747
)
(23,726
)
Other income (expense), net
10,710
2,632
11,952
8,746
Loss before income taxes
(2,609
)
(41,776
)
(42,628
)
(149,335
)
Income tax expense
(18
)
(44
)
(83
)
(168
)
Net loss
(2,627
)
(41,820
)
(42,711
)
(149,503
)
Less: Net loss attributable to
noncontrolling interest
182
60
191
1,095
Net loss attributable to Blend Labs,
Inc.
(2,445
)
(41,760
)
(42,520
)
(148,408
)
Less: Accretion of redeemable
noncontrolling interest to redemption value
(1,760
)
(1,452
)
(4,748
)
(5,100
)
Less: Accretion of Series A redeemable
convertible preferred stock to redemption value
(4,048
)
—
(6,709
)
—
Net loss attributable to Blend Labs, Inc.
common stockholders
$
(8,253
)
$
(43,212
)
$
(53,977
)
$
(153,508
)
Net loss per share attributable to Blend
Labs, Inc. common stockholders:
Basic and diluted
$
(0.03
)
$
(0.18
)
$
(0.21
)
$
(0.63
)
Weighted average shares used in
calculating net loss per share:
Basic and diluted
254,910
246,410
252,977
244,057
Comprehensive loss:
Net loss
$
(2,627
)
$
(41,820
)
$
(42,711
)
$
(149,503
)
Unrealized gain on marketable
securities
448
181
302
229
Foreign currency translation gain
13
106
22
77
Comprehensive loss
(2,166
)
(41,533
)
(42,387
)
(149,197
)
Less: Comprehensive loss attributable to
noncontrolling interest
182
60
191
1,095
Comprehensive loss attributable to Blend
Labs, Inc.
$
(1,984
)
$
(41,473
)
$
(42,196
)
$
(148,102
)
Blend Labs, Inc.
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Operating activities
Net loss
$
(2,627
)
$
(41,820
)
$
(42,711
)
$
(149,503
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
6,671
9,042
22,013
39,798
Depreciation and amortization
681
600
1,803
1,856
Amortization of deferred contract
costs
260
682
779
2,427
Amortization of debt discount and issuance
costs
—
790
690
2,279
Amortization of operating lease
right-of-use assets
631
835
2,334
2,450
Accelerated amortization of right-of-use
asset in connection with lease abandonment
2,992
—
2,992
—
Gain on investment in equity
securities
—
—
(4,417
)
—
Loss on extinguishment of debt
—
—
5,476
—
Gain on sale of insurance business
(9,213
)
—
(9,213
)
—
Other
(359
)
(1,285
)
(685
)
(4,657
)
Changes in operating assets and
liabilities:
Trade and other receivables
3,621
1,709
2,394
3,029
Prepaid expenses and other assets, current
and non-current
(3,656
)
2,415
(203
)
(1,496
)
Deferred contract costs, non-current
(43
)
234
390
(542
)
Accounts payable
868
(1,028
)
(621
)
861
Deferred revenue
(975
)
(1,914
)
10,873
1,361
Accrued compensation
2,783
5,126
446
(192
)
Operating lease liabilities
(1,046
)
(1,027
)
(3,192
)
(2,944
)
Other liabilities, current and
non-current
1,488
(246
)
2,394
(1,657
)
Net cash provided by (used in) operating
activities
2,076
(25,887
)
(8,458
)
(106,930
)
Investing activities
Purchases of marketable securities
(19,893
)
(8,324
)
(96,422
)
(203,281
)
Sale of available-for-sale securities
30
—
100,327
—
Maturities of marketable securities
26,250
80,146
41,850
277,855
Additions to property, equipment and
internal-use software development costs
(3,432
)
(31
)
(7,263
)
(505
)
Other
(283
)
—
(283
)
—
Proceeds from sale of insurance
business
9,075
—
9,075
—
Net cash provided by investing
activities
11,747
71,791
47,284
74,069
Financing activities
Proceeds from exercises of stock options,
including early exercises, net of repurchases
155
(2
)
869
20
Taxes paid related to net share settlement
of equity awards
(3,984
)
(1,325
)
(11,003
)
(4,857
)
Repayment of long-term debt
—
—
(144,500
)
—
Net proceeds from the issuance of the
Series A redeemable convertible preferred stock and the Warrant
—
—
149,375
—
Payment for issuance costs related to the
Series A redeemable convertible preferred stock and the Warrant
(403
)
—
(9,480
)
—
Net cash used in financing activities
(4,232
)
(1,327
)
(14,739
)
(4,837
)
Effect of exchange rates on cash, cash
equivalents, and restricted cash
—
(23
)
(5
)
(10
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
9,591
44,554
24,082
(37,708
)
Cash, cash equivalents, and restricted
cash at beginning of period
52,744
47,295
38,253
129,557
Cash, cash equivalents, and restricted
cash at end of period
$
62,335
$
91,849
$
62,335
$
91,849
Reconciliation of cash, cash
equivalents, and restricted cash within the condensed consolidated
balance sheets:
Cash and cash equivalents
$
55,041
$
84,555
$
55,041
$
84,555
Restricted cash
7,294
7,294
7,294
7,294
Total cash, cash equivalents, and
restricted cash
$
62,335
$
91,849
$
62,335
$
91,849
Supplemental disclosure of cash flow
information:
Cash paid for income taxes
$
—
$
—
$
76
$
48
Cash paid for interest
$
—
$
7,364
$
6,150
$
21,464
Supplemental disclosure of non-cash
investing and financing activities:
Vesting of early exercised stock
options
$
7
$
230
$
363
$
1,244
Operating lease liabilities arising from
obtaining new or modified right-of-use assets
$
497
$
—
$
1,151
$
327
Stock-based compensation included in
capitalized internal-use software development costs
$
811
$
—
$
1,941
$
—
Accretion of redeemable noncontrolling
interest to redemption value
$
1,760
$
1,452
$
4,748
$
5,100
Accretion of Series A redeemable
convertible preferred stock to redemption value
$
4,048
$
—
$
6,709
$
—
Warrant received in connection with
strategic partnership and sale of insurance business
$
222
$
—
$
222
$
—
Accrual of transaction costs incurred in
connection with sale of insurance business
$
314
$
—
$
314
$
—
Capitalized internal-use software
development costs included in accrued compensation
$
419
$
—
$
419
$
—
Blend Labs, Inc.
Revenue Disaggregation
(In thousands)
(Unaudited)
Three Months Ended September
30,
2024
2023
Blend Platform:
YoY change
Mortgage Suite
$
21,546
65
%
$
20,306
71
%
6
%
Consumer Banking Suite
9,520
29
%
6,199
22
%
54
%
Total software platform
31,066
94
%
26,505
93
%
17
%
Professional services
2,038
6
%
2,137
7
%
(5
)%
Total Blend Platform
33,104
100
%
28,642
100
%
16
%
Title
12,080
11,949
1
%
Total revenue
$
45,184
$
40,591
11
%
Nine Months Ended September
30,
2024
2023
Blend Platform:
YoY change
Mortgage Suite
$
55,078
64
%
$
60,371
72
%
(9
)%
Consumer Banking Suite
24,199
28
%
17,219
21
%
41
%
Total software platform
79,277
92
%
77,590
93
%
2
%
Professional services
6,363
8
%
6,087
7
%
5
%
Total Blend Platform
85,640
100
%
83,677
100
%
2
%
Title
34,971
37,065
(6
)%
Total revenue
$
120,611
$
120,742
—
%
Blend Labs, Inc.
Reconciliation of GAAP to
non-GAAP Measures
(In thousands)
(Unaudited)
Three Months Ended September
30, 2024
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross Profit
Gross Margin
Gross Profit
Gross Margin
Blend Platform
Software platform
$
24,772
80
%
$
222
$
24,994
80
%
Professional services
(272
)
(13
)%
101
(171
)
(8
)%
Total Blend Platform
24,500
74
%
323
24,823
75
%
Title
1,496
12
%
1
1,497
12
%
Total
$
25,996
58
%
$
324
$
26,320
58
%
Three Months Ended September
30, 2023
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross Profit
Gross Margin
Gross Profit
Gross Margin
Blend Platform
Software platform
$
20,830
79
%
$
8
$
20,838
79
%
Professional services
(800
)
(37
)%
210
(590
)
(28
)%
Total Blend Platform
20,030
70
%
218
20,248
71
%
Title
2,033
17
%
9
2,042
17
%
Total
$
22,063
54
%
$
227
$
22,290
55
%
Nine Months Ended September
30, 2024
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross Profit
Gross Margin
Gross Profit
Gross Margin
Blend Platform
Software platform
$
62,134
78
%
$
252
$
62,386
79
%
Professional services
(1,251
)
(20
)%
355
(896
)
(14
)%
Total Blend Platform
60,883
71
%
607
61,490
72
%
Title
4,932
14
%
16
4,948
14
%
Total
$
65,815
55
%
$
623
$
66,438
55
%
Nine Months Ended September
30, 2023
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross Profit
Gross Margin
Gross Profit
Gross Margin
Blend Platform
Software platform
$
60,626
78
%
$
30
$
60,656
78
%
Professional services
(2,361
)
(39
)%
803
(1,558
)
26
%
Total Blend Platform
58,265
70
%
833
59,098
71
%
Title
3,144
8
%
146
3,290
9
%
Total
$
61,409
51
%
$
979
$
62,388
52
%
Blend Labs, Inc.
Reconciliation of GAAP to
non-GAAP Measures
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
GAAP operating expenses
$
39,315
$
58,261
$
113,648
$
195,764
Non-GAAP adjustments:
Stock-based compensation(1)
6,566
8,815
21,631
38,819
Workforce reduction costs(2)
1,681
9,122
2,871
24,254
Abandoned and terminated facilities
costs(3)
4,484
—
4,484
—
Compensation realignment costs(4)
—
1,289
1,155
4,163
Litigation contingencies(5)
303
—
303
(245
)
Transaction-related costs(6)
—
857
—
1,891
Non-GAAP operating expenses
$
26,281
$
38,178
$
83,204
$
126,882
GAAP loss from operations
$
(13,319
)
$
(36,198
)
$
(47,833
)
$
(134,355
)
Non-GAAP adjustments:
Stock-based compensation(1)
6,671
9,042
22,013
39,798
Workforce reduction costs(2)
1,681
9,122
2,871
24,254
Abandoned and terminated facilities
costs(3)
4,484
—
4,484
—
Amortization of capitalized internal-use
software(9)
219
—
242
—
Compensation realignment costs(4)
—
1,289
1,155
4,163
Litigation contingencies(5)
303
—
303
(245
)
Transaction-related costs(6)
—
857
—
1,891
Non-GAAP income (loss) from
operations
$
39
$
(15,888
)
$
(16,765
)
$
(64,494
)
GAAP net loss
$
(2,627
)
$
(41,820
)
$
(42,711
)
$
(149,503
)
Non-GAAP adjustments:
Stock-based compensation(1)
6,671
9,042
22,013
39,798
Loss on extinguishment of debt(7)
—
—
5,531
—
Workforce reduction costs(2)
1,681
9,122
2,871
24,254
Abandoned and terminated facilities
costs(3)
4,484
—
4,484
—
Gain on sale of insurance business(8)
(9,239
)
—
(9,239
)
—
Amortization of capitalized internal-use
software(9)
219
—
242
—
Compensation realignment costs(4)
—
1,289
1,155
4,163
Litigation contingencies(5)
303
—
303
(245
)
Transaction-related costs(6)
—
857
—
1,891
Gain on investment in equity
securities(10)
—
—
(4,417
)
—
Foreign currency gains and losses(11)
30
74
20
(83
)
Loss on transfer of subsidiary(12)
—
—
601
—
Non-GAAP net income (loss)
$
1,522
$
(21,436
)
$
(19,147
)
$
(79,725
)
Blend Labs, Inc.
Reconciliation of GAAP to
non-GAAP Measures
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
GAAP net loss per share
$
(0.03
)
$
(0.18
)
$
(0.21
)
$
(0.63
)
Non-GAAP adjustments:
Stock-based compensation(1)
0.02
0.03
0.09
0.16
Workforce reduction costs(2)
0.01
0.04
0.01
0.09
Abandoned and terminated facilities
costs(3)
0.02
—
0.02
—
Compensation realignment costs(4)
—
0.01
—
0.02
Litigation contingencies (5)
—
—
—
—
Transaction-related costs(6)
—
—
—
0.01
Loss on extinguishment of debt(7)
—
—
0.02
—
Gain on sale of insurance business(8)
(0.04
)
—
(0.04
)
—
Amortization of capitalized internal-use
software(9)
—
—
—
—
Gain on investment in equity
securities(10)
—
—
(0.02
)
—
Foreign currency gains and losses(11)
—
—
—
—
Loss on transfer of subsidiary(12)
—
—
—
—
Net loss attributable to noncontrolling
interest(13)
—
—
—
—
Accretion of redeemable noncontrolling
interest to redemption value(13)
0.01
0.01
0.02
0.02
Accretion of Series A redeemable
convertible preferred stock to redemption value(14)
0.01
—
0.03
—
Non-GAAP net income (loss) per
share
$
0.00
$
(0.09
)
$
(0.08
)
$
(0.33
)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net cash provided by (used in)
operating activities
$
2,076
$
(25,887
)
$
(8,458
)
$
(106,930
)
Additions to property, equipment and
internal-use software development costs
(3,432
)
(31
)
(7,263
)
(505
)
Free cash flow
(1,356
)
(25,918
)
(15,721
)
(107,435
)
Cash paid for interest
—
7,364
6,150
21,464
Unlevered free cash flow
$
(1,356
)
$
(18,554
)
$
(9,571
)
$
(85,971
)
Revenue
$
45,184
$
40,591
$
120,611
$
120,742
Free cash flow margin
(3
)%
(64
)%
(13
)%
(89
)%
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 September
30,
Nine Months Ended September
30,
Stock-based compensation by function:
2024
2023
2024
2023
Cost of revenue
$
105
$
227
$
382
$
979
Research and development *
2,169
4,090
8,088
17,050
Sales and marketing
862
1,577
2,715
6,291
General and administrative
3,535
3,148
10,828
15,478
Total
$
6,671
$
9,042
$
22,013
$
39,798
* Net of $0.8 million and $1.9 million of
additions to capitalized internal-use software for the three and
nine months ended September 30, 2024 and none for the three and
nine months ended September 30, 2023
(2) Workforce reduction costs represent
expenses incurred in connection with the workforce restructuring
actions executed as part of our broader efforts to improve cost
efficiency.
(3) Abandoned and terminated facilities
costs represent charges related to the early termination of a
leased facility and abandonment of another leased facility as part
of our broader efforts to better align our operating structure with
our business activities.
(4) 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.
(5) Litigation contingencies represent
reserves for legal settlements that are unusual or infrequent costs
associated with our operating activities.
(6) Transaction-related costs include
non-recurring due diligence, consulting, and integration costs
recorded within general and administrative expense.
(7) 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.
(8) Gain on sale of insurance business
represents the gain recognized in connection with the sale of
certain assets of our insurance agency, partially offset by
transaction costs.
(9) Amortization of capitalized
internal-use software represents the non-cash amortization expense
related to our developed technology that is amortized over the
estimated useful life.
(10) 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.
(11) Foreign currency gains and losses
include transaction gains and losses incurred in connection with
our operations in India.
(12) 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.
(13) 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.
(14) Accretion of Series A redeemable
convertible preferred stock to its redemption value relates to the
redemption rights outlined in the Haveli investment agreement.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106044764/en/
Investor Relations Bryan Michaleski ir@blend.com
Media press@blend.com
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