Blend Announces First Quarter 2025 Financial Results

Third Consecutive Quarter of YoY Growth Fueled by Renewed Customer Momentum 

• Continued execution on the strategic shift to a software-first model
• Entered into an exclusive process with a leading title and mortgage services provider for potential sale of title insurance business
• Platform revenue of $26.8 million exceeded consensus estimates and the midpoint of guidance
• Record first quarter signings with total remaining performance obligations of $158.1 million or +70% year-over-year
• Cash provided by operating activities of $20.1 million with record free cash flow of $15.5 million

Blend Labs, Inc. (NYSE:BLND), a leading origination platform for digital banking solutions, today announced its first quarter 2025 financial results.

"We're delivering strong results across the business—closing nearly three times as many deals as this time last year, deepening relationships with top-tier institutions, and driving strong adoption of our Rapid Home Lending solutions. This progress signals a market that's re-energizing and investing in what's next. With a pipeline nearly double what it was a year ago—and demand coming from across the industry, from leading banks and mortgage servicers to Independent Mortgage Banks and credit unions—it's clear the need for effortless, personalized banking and lending is only growing."

— Nima Ghamsari, Co-founder & CEO, Blend

Recent Highlights

• Customer Growth: Blend closed almost three times more deals in Q1 than the same period last year, notably including a top 25 credit union by asset size to spearhead a multi-year transformation across their full product suite—encompassing deposits, credit cards, personal loans, and home lending.
• Rapid Home Lending Adoption: The strong market demand for our Rapid Refinance and Rapid Home Equity solutions is evident in their accelerated adoption by customers, resulting in an average of 1.9x increase in economic value per funded loan for signed deals.
• Leading Servicers Partner with Blend: Following a new signing and an expansion this quarter, Blend now serves 10 of the top 20 mortgage servicers in the country.
• Strengthening Cash Flows; First Quarter of Positive Free Cash Flow: Blend generated $20.1 million in cash provided by operating activities and $15.5 million in free cash flow, marking the first time in the company's history to report positive free cash flow and solidifying our financial strength as we reinvest capital in our products and people.
• Initiated a Process for Selling Title365: Blend entered into an exclusive process with a leading title and mortgage services provider for the potential sale of our title insurance business in line with our commitment to fully embrace a software-first model. Blend now operates in a single reportable segment, and the results of our previously reported Title segment are presented as discontinued operations herein.

First Quarter 2025 Financial Highlights

Revenue

• Blend Platform revenue in 1Q25 was $26.8 million, up by $2.9 million, or 12%, from the same period last year. Blend Platform revenue in 1Q25 was composed of Software platform revenue of $24.3 million and Professional services revenue of $2.5 million.
• Software platform revenue increased 12% from the same period last year, driven by:
  • A 45% increase in Consumer Banking Suite revenue, to $9.6 million.
  • A 3% decrease in Mortgage Suite revenue, to $14.6 million.

Gross Margin & Profitability

• GAAP gross profit margin was 71% in 1Q25 and non-GAAP gross profit margin was 73%, both up compared to 67% on a GAAP basis and 68% on a non-GAAP basis in 1Q24.
• GAAP Software platform gross profit was $18.4 million in 1Q25, up from $16.6 million in 1Q24. Non-GAAP Software platform gross profit was $18.8 million in 1Q25, up from $16.6 million in 1Q24.
• GAAP Professional services gross margin was 22% in 1Q25 and non-GAAP Professional services gross margin was 29% in 1Q25, compared to (25)% on a GAAP basis and (18)% on a non-GAAP basis in 1Q24.
• GAAP loss from operations was $7.7 million representing a (29)% operating margin, compared to GAAP loss from operations of $21.2 million in 1Q24. Non-GAAP income from operations was $1.0 million, representing a non-GAAP operating margin of 4%, compared to non-GAAP loss from operations of $11.3 million in 1Q24.
• GAAP diluted net loss per share attributable to common stockholders was $0.04 compared to $0.08 in 1Q24. Non-GAAP diluted net loss per share attributable to common stockholders was $0.01 compared to $0.06 in 1Q24.

Liquidity, Cash, & Capital Resources

• As of March 31, 2025, Blend has cash, cash equivalents, and marketable securities, including restricted cash, totaling $109.8 million, with no outstanding debt.
• Cash provided by operating activities was $20.1 million in 1Q25, compared to cash used in operating activities of $3.0 million in 1Q24. Free cash flow was $15.5 million in 1Q25, compared to $(5.0) million in 1Q24.

Second Quarter 2025 Outlook

Blend is providing guidance for the second quarter of 2025 as follows:

Blend's 2Q25 guidance reflects our expectation that U.S. aggregate industry mortgage originations will be higher in 2Q25 relative to 1Q25 based on application volume observed to date through our customer base and our analysis of the latest relevant macroeconomic data, including our view of the mortgage market size. We view the mortgage market size based on the Home Mortgage Disclosure Act ("HMDA") data as previously disclosed in our 3Q24 earnings materials, and for 2Q25 we expect that market size to be between 1,150,000 and 1,250,000 units. Additionally, it incorporates the expected impact from the transition of our add-on products to a partnership model and the expansion of our platform strategy.

Full Year 2025 Outlook

Blend is providing guidance for the full year of 2025 as follows:

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 and Non-GAAP Operating Expenses 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, May 8, 2025 at 4:30 pm ET, Blend will host a live discussion of its first quarter 2025 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 "First Quarter and Full Year 2025 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: ongoing uncertainty or deterioration in economic conditions, such as mortgage interest rates, credit availability, real estate prices, tariffs and regulatory changes, 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; our strategic initiatives, including our decision to exit our Title business, could adversely affect our financial condition; 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and our recently filed Annual Report on Form 10-K for the year ended December 31, 2024. 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 margin,  non-GAAP operating expenses, non-GAAP income (loss) from operations, non-GAAP operating margin, non-GAAP net  income (loss) from continuing operations, and non-GAAP diluted net income (loss) per share from continuing operations attributable to common stockholders. 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 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 and related professional services costs. We exclude costs related to litigation contingencies, which represent reserves for legal settlements, as well as the related professional service fees incurred related to these matters. 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 strategic transactions from our non-GAAP financial measures as we do not consider these costs to be related to organic continuing operations of our business or relevant to assessing the long-term performance of the impact of such transactions. These adjustments allow for more accurate comparisons of the financial results to historical operations and forward looking guidance. These non-recurring costs include financial advisory, legal, and other transactional costs incurred in connection with investing or divesting activities.

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.

Impairment of capitalized internal-use software. We exclude the impairment of capitalized internal-use software because we do not believe this non-cash expense has a direct correlation to the operation of our business and is non-recurring in nature.

Economic Value per Funded Loan. In our Mortgage Suite, Economic Value per Funded Loan 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 (economic value), divided by the total number of loans funded by all Mortgage Suite customers in that same period. Economic value per funded loan is segregated into three categories: 1) core software, 2) add-on products and 3) partnerships. Core software consists of economic value generated through Mortgage and Blend Close. Add-on products transitioning to partnership models consists of economic value generated through Blend Income Verification and Blend Insurance Agency, prior to their transition to partnership models. Partnerships consists of economic value generated from partners through our integrated marketplace. The value derived from products associated with the mortgage application stage is aligned with the timing of funding the related loan (typically a 1-3 month delay from the time of application). Additionally, the value that is associated with fixed platform fees is recognized as revenue ratably over the contractual period, which naturally creates peaks and troughs that align with quarters of low and high mortgage loans funded. 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.

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.

Changes in non-GAAP EPS metric. We have historically reported non-GAAP basic (consolidated) net loss per share as our earnings per share metric, as we believed the metric was most appropriate in light of our ongoing net losses. As our business has evolved and we maintained non-GAAP net income during the three months ended March 31, 2025, we no longer view non-GAAP basic (consolidated) net loss per share as useful or appropriate to understanding our earnings per share metric. Therefore, we no longer use, and we will not disclose, basic (consolidated) net loss per share. Instead, we will disclose non-GAAP diluted net income (loss) per share attributable to common stockholders. The historical periods presented herein have been recast to the updated metric for purposes of comparability.

Our non-GAAP financial measures also include non-GAAP operating margin, which is defined as non-GAAP income (loss) from operations divided by total revenue. We believe that the presentation of non-GAAP operating margin provides useful information to investors as it is one of the metrics we use to assess our operating and financial performance, and also may be a useful metric for investors to compare our operating and financial results with other companies in our industry.

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 and free cash flow margin provides 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. We present unlevered free cash flow primarily for historical comparisons. 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.

About Blend

Blend Labs, Inc., (NYSE:BLND) is a leading origination platform for digital banking solutions. 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. Better banking starts on Blend. To learn more, visit blend.com.

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