Blend Labs, Inc.

Good afternoon and welcome to Blend's first quarter 2022 earnings conference call. My name is Crystal Sumner, head of legal compliance and risk for the company. With me today are Nima Gamsari, co-founder and head of Blend, Temiopolis president, and Mark Greenberg, head of finance. After Nima and Mark deliver their prepared remarks, the team will take questions. You can find the supplemental slides on our investor relations webpage at investor.blend.com. During the call, we will refer to certain non-GAAP measures which are reconciled to GAAP results in today's earnings release and in the appendix to our supplemental slides. Non-GAAP measures are not intended to be a substitute for GAAP results. Also, certain statements made during today's conference call regarding Blinn and its operations may be considered forward-looking statements under federal securities law. The company cautions you that forward-looking statements involve substantial risk and uncertainty, and a number of factors, many of which are beyond the company's control, could cause actual results, events, or circumstances to differ materially from those described in these statements. Please see the risk factors we've identified in our most recent 10-K, 10-Q, and other SEC filings. We are not undertaking any commitment to update these statements if conditions change, except as required by law. I'll now turn the call over to Neema.

Thank you, Crystal, and hello, everyone. We appreciate you spending time with us today. Blend delivered a solid first quarter in a tough market with revenue ahead of expectations. In many ways, this quarter validates our view of both 2022 and Blend's long-term potential. For this call, I'd like to cover four topics. First, a summary of our Q1 highlights and our general operating environment. Second, an update on current market conditions and how this impacts our business. Third, how we're executing against our long-term growth thesis. And lastly, an update on how we're thinking about near-term management of the business and capital allocation. After that, Mark will review the quarter in more detail, and then we'll take questions. Tim is also with us for Q&A. Starting with Q1 highlights, we are encouraged by our top-line performance, which reinforces our confidence in our 2022 outlook. Revenue of $71.5 million was ahead of the range we gave you at the end of March, and Mark will take you through that in more detail. But the takeaway is that we did better than we expected in both mortgage and in consumer banking. In fact, we delivered 3% growth in blend platform segment revenues as compared to Q1 2021, despite Q1 mortgage market volumes being down an estimated 44% year over year. Additionally, declines in Title 365 were less than anticipated. This was largely due to the timing of interest rate impacts. Refinancing activity has begun to meaningfully decline in Q2. In addition to benefiting from growth in mortgage market share, we continue to cross-sell and increase our wallet share of our existing customer base. At the end of the quarter, about two-thirds of our existing customers subscribe to two or more software products. Consumer banking and marketplace revenue, therefore, was up 55% year over year, and we are seeing continued adoption of this suite of products. At the end of Q1, 22% of our blend platform revenue came from consumer banking and marketplace, and approximately one-third of our total customer base now use one or more of these products. So we've exceeded our expectations for the first quarter and we're continuing to build momentum in the business. Nonetheless, we are mindful that the broader economic environment is going to continue to be challenging. Here's what we've observed since we last spoke to you six weeks ago. Mortgage rates rose quickly in the last two months, as you all know. And for these and other macro reasons, we are now projecting a 41% year-over-year drop in mortgage resignation volumes in 2022 versus the 35% outlook in place at the time of our call in March. Given persistently strong housing demand, these declines are disproportionately hitting the refinance market, a decrease that started in earnest in April. While this is a difficult time in our industry, Blend is well positioned to help our customers navigate this reset. It's in moments like this that customers are compelled to focus on efficiency and technology, both to preserve margin and be better positioned to take advantage of the eventual upturn. I'll touch on this more later. At Blend, we're increasingly diversifying our revenue base, with consumer banking and marketplace now starting to grow more quickly. And with that as the industry backdrop, let's shift to how Blend is operating in this environment and why we think we're in a good position to continue executing on our growth thesis despite the current market volatility. There are two important indicators, one internal and one external, that we watch closely to monitor our progress. An important pillar in the Blend growth thesis is our ability to acquire and retain customers. In Q1, we reported gross revenue retention of 98%, roughly in line with our 99% in Q4, and market adjusted net revenue retention of 159%, up from 147% in Q4. Our unique differentiation is our focus on delivering a full platform solution that accelerates the digital transformation process for our customers. This platform solution, coupled with our business model, positions Blend to build relationships rooted in a shared journey of growth with our customers. Externally, a key leading indicator is our customers' increased investment in digital transformation automation. Investing during downturns positions companies to gain market share and come out stronger on the other side. For banks and lenders, getting stronger is about investing in improving the customer experience and driving efficiency. Technology is the most effective, scalable way to do that at a lower cost with a clear ROI. Our platform is designed to achieve that goal, allowing customers to significantly improve their profitability and be more competitive. This is especially vital in a downturn when margins tighten. Shifting to how we're executing our long-term growth thesis, we feel very good about the key indicators for long-term growth at Blend. We are focused on the following three growth areas. First, helping our customers be more efficient through fully integrated software. Second, delivering the best possible experience for our consumer banking product lines. And third, being the platform that powers the end-to-end value chain in home ownership. Let me talk about these three in more detail. Starting with efficiency, on the heels of the market reset, we've heard from our customers about the need to standardize their process and become more operationally efficient. Margins are very tight. Based on surveys that we've commissioned, customers that run their loans through the Blend platform realize an average return of investment of 6.5 times the dollars they spend, saving almost 12 hours per loan. This means that increased usage of Blend software drives additional benefits and is a big reason we're seeing our platform segment remain strong despite the steep decline in mortgage volumes. On top of that, our investment in products like BlendFastTrack, which will clear loan conditions automatically using technology before a human touches it, will help drive our customers' cost of production down. This creates more value for our customers and thus more revenue for Blend. Many customers have told us that they intend to accelerate investment in automation. When I talk to mortgage executives, the number one topic I hear on a daily basis is driving efficiency in their operations. That enables them to stay competitive, grow market share, and ultimately offer lower cost products to their customers. Now, shifting to consumer banking. Thank you. Outside of Home Equity and BlendBuilder, we are partnering with Wells Fargo, empowering their next-generation rental payments reward credit card application through a company called Built. By delivering a seamless digital experience and streamlined application process for their customers, we processed a significant amount of applications within the first 48 hours, showing the flexibility and scalability of our consumer banking solutions while helping our customers become more efficient through the use of technology. Lastly, we're continuing to invest in being the end-to-end platform that brings together all the components of the homeownership lifecycle. This is a win for everyone. Consumers get a single platform that seamlessly ties together components such as income verification, approval, home insurance, title, and closing. And lenders get more efficiency as the system automatically orchestrates these events and manages the data flows. This helps keep their costs down, which is very important in this time. When we add a value like this to our customers and consumers, this drives them to be more successful. And given our success-based pricing model, it also drives more revenue to blend. Providing the end-to-end journey is not just important for the reasons I mentioned. It's also what will be required for lenders to remain competitive now and in the future. Leveraging our software solution gives lenders the ability to have a superior offering while keeping costs down and driving an exceptional experience. This is the promise of technology. To summarize, with an industry-leading platform, a growing roster of customers well-positioned for the next upturn, and increasing revenue diversity as we bring more customers live on consumer banking and marketplace offerings, we are in an excellent position to drive digital transformation at a time when institutions need it the most. Lastly, I want to talk about our capital management strategy. As we discussed in our last call, we are moving to adjust our cost structure to meet market realities, without jeopardizing our primary goal of continued investment in the Blend platform. As a first step in this effort, we reduced our headcount by approximately 10% in April. The reductions were primarily within Title 365, where our needs are significantly lower given current market and certain G&A functions. We expect to begin seeing the cost benefits of this action in the second half of the year, We believe that decisions like this will allow us to emerge from the current environment stronger and even better positioned to achieve our vision. Building on the workforce reduction, we are doing a comprehensive review to align our cash consumption and market realities near-term, while charting a clear course towards stronger product and operating margins that will lead to Blend having long-term profitability. Our plan will include looking at ways to improve our cost structure, such as improving our product margins, increasing speed of deployments, and better managing our spend internally. We also continue to monitor title volume and adjust our cost structure as market conditions warrant without jeopardizing our customers' or consumers' experiences. With all that being said, we are taking a long-term view as our role as a preferred technology partner for financial institutions. We are continuing investments in our platform, helping our customers be more efficient, delivering the best possible experience for consumer banking, and powering the end-to-end value chain in homeownership. we are executing a disciplined approach to our capital allocation strategy while investing in key growth areas that I highlighted earlier. To that end, we plan to provide an update on our plan next quarter. As our plans are finalized and implemented, I'm confident you'll see a company well-positioned to deliver on its mission, to bring simplicity and transparency to financial services, and to do so in a way that creates substantial value for shareholders. I know we have a lot of work to do, but we are energized to attack it. While market conditions are challenging, we believe the current period could be accelerant for industry transformation. Just as COVID drove faster digital adoption in consumer and enterprise markets, a significant mortgage reset may also drive accelerated investment in digitization as operational efficiency becomes a driver for long-term success. Wrapping up, I want to thank our customers for their engagement with Blend through these tough times for them, and our investors for supporting us as we position the company for long-term growth and value creation. And I especially want to thank everyone at Blend and the team here for their hard work, resilience, and dedication to the mission. I'm grateful for all your efforts and excited for the journey ahead. Thanks, and now I'll turn it over to Mark.

Thanks, Nima. Hopefully everyone on the call has had a chance to review our release. I will go through our release in the following three categories. First, I'll provide color on our Q1 performance, including how we are performing in the early part of the current mortgage cycle. Second, I'll cover our recent and planned cost management activities as part of our broader capital management strategy. And last, as our release notes, and Nima has touched on earlier, we reiterated our 2022 revenue outlook today. I'll comment on that as well and how we see trends unfolding for the rest of the year, and then we'll get to your questions. Let's start with the highlights from Q1. Blend reported consolidated revenue of $71.5 million above our guidance range of $63 to $66 million provided on our Q4 earnings call. The higher than expected result can be attributed primarily to better than expected blend platform performance, both in mortgage and consumer banking marketplace, and lower than expected year-on-year decline in Title 365 revenue for the period. Blend platform segment revenue was approximately $32.8 million, up about 3% year-on-year against our expectations of a modest decline. And Title 365 segment revenue was approximately $38.7 million, down almost 13% from the fourth quarter of 2021 against an anticipated 20% decline. It's important to note that at the time of the Q4 earnings call, we had solid funded loan data for the first two months of Q1. Given both significant predicted declines in mortgage lending by Fannie and the MBA and expectations of Fed interest rate actions, we were anticipating a pronounced decline in refinance activity beginning in March. However, that refinancing cliff was pushed out several weeks into Q2, and as such, we saw a sustained volume of refi closings that benefited our Q1 results more than we had initially expected. In addition, our customers' purchase mortgage volumes were slightly ahead of our forecast, reflecting the underlying quality of our customer base and the strength and resilience of our market share. To put some further context around mortgage banking performance, our Q1 revenues were down 16% from Q4, compared to an estimated 29% decrease in industry mortgage volumes. Year on year, our Q1 mortgage banking revenue was down 7% against a 44% market decline in origination volume. This demonstrates that we are continuing to make progress in our goals to increase our market share, including both new customers and wider adoption with existing customers. As illustrated in our supplemental slides, we estimate our customer share of U.S. mortgage industry volumes increased to just under 25% in the second half of 2021, up from 23.5% in the first half of 2021, and from 16.7% in the second half of 2020. This includes a higher utilized market share north of 15% in the second half of last year, with nearly another 10% of committed but not yet utilized capacity. So we're continuing to make good headway and taking share with substantial TAM still available to us. Q1 included an important new deployment in March and also included ramping of volumes and other select customers. Shifting to consumer banking and marketplace, we achieved revenue of $7.2 million in Q1, up significantly from $4.6 million in the prior year period. We highlight that total consumer banking transactions grew by more than 100,000 transactions year on year to approximately 155,000 in Q1. We saw a significant increase in deposit account, personal loan, and home equity transactions in Q1 2022 relative to Q1 2021. It's also worth noting that home equity revenue increased modestly over the prior year, and this continues to be an area of opportunity given the current lending environment. Rounding out the revenue discussion, Blend recognized a little over $1 million in professional services revenue, up from approximately $800,000 in the prior year first quarter. As a reminder, professional services revenues are tied to product deployments. These revenues are lower margin and generally non-recurring. Moving to gross profit, Q1 non-GAAP gross profit was approximately $29 million, up from $21 million in the prior year period. Current period non-GAAP gross profit includes a little under $19 million attributable to Blend Platform and a bit north of $10 million to Title 365. These figures are net of cost of revenue of approximately $43 million, about two-thirds of which relates to the addition of costs associated with Title 365, which we did not own in the prior year period. Blend platform segment cost of revenue increased $3.3 million with early investments in Blend Title and increases in delivery, hosting, and connectivity expenses. Non-GAAP operating expenses for the first quarter of 2022 were slightly under $69 million compared with slightly under $40 million in the prior year, reflecting higher personnel costs and sales commissions associated with our expanding teams focused on development, marketing, and sales of new and existing products, as well as the addition of costs from Title 365. Keep in mind that our OPEX structure compared with prior year now also includes expenses associated with operating as a public company. In April, as Nima highlighted, we announced a workforce reduction of approximately 200 positions or 10% of our then current workforce. The eliminated positions represent annualized compensation expenses of approximately $35.4 million. The reductions were predominantly in Title 365, where our needs are reduced both due to anticipated lower refi volumes near term and our migration of legacy Title 365 customers to blend title. we also eliminated other operating expense positions with a focus on certain corporate G&A functions. This savings will incrementally reduce our cash needs beginning in Q2. However, before considering additional cost reduction measures that we plan to implement, our quarterly OpEx run rate is expected to trend in line with Q1 levels. This run rate includes a ramp in headcount related fixed expenses incurred in late Q3 and Q4 2021, prior to our reduction in 2022 revenue guidance. We've made our first meaningful step towards aligning our operating structure with a rapidly evolving market environment. We look forward to updating you on our comprehensive review process that Nima highlighted when it is complete. Now turning to our balance sheet. Our cash, cash equivalents, and marketable securities at March 31, 2022 were just under $500 million, with total debt outstanding of $225 million on our five-year term loan. Our $25 million revolving line of credit remains undrawn. I'll wrap up now with our outlook. Our full year 2022 revenue guidance provided in our Q4 earnings call is unchanged. That guidance reflects expectations of between $230 and $250 million in consolidated revenue in 2022, with between $140 and $150 million in the blend platform segment, and between $90 and $100 million in the Title 365 segment. Note that the mortgage markets are volatile and uncertain, and if industry forecasts move materially lower, we may need to appropriately adjust our guidance at that time. The blend platform segment guidance reflects expected mortgage banking revenue decline in the high single to low double digits with a more pronounced 41% industry volume decline that we share with you today. Meanwhile, as a reminder, our anticipated 2022 consumer banking and marketplace revenue reflects triple-digit growth from full-year 2021 levels, which includes the transition of revenue from the Title 365 segment as customers transition to the Blend platform and the Blend Title solution, as well as contributions from other consumer banking and marketplace products. Wrapping up, 2022 is off to a solid start in a very challenging environment. A growing market share in mortgage banking is leading to significant performance against pronounced industry declines while we're seeing solid consumer banking and marketplace revenue growth as more customers adopt our platform and our new products. We've begun taking meaningful actions to prudently manage our expenses as we navigate the current downturn while not sacrificing the investments that will enable us to drive and create value from the digital transformation of the financial services industry. Thank you again for joining. Crystal, we're now ready for questions.

Thanks, Mark and Nima, for your remarks. We'll now turn to Q&A. Our first question comes from Ryan Tomasello from KBW. Ryan, you may unmute yourself and ask your question.

Hi, everyone. Can you hear me?

We can.

Great. Thanks for taking the question. Nice to see the progress on the cost structure realignment. Justin Ewertt, I was wondering if you know, based on the progress you've seen to date, if you're able to provide an outlook for earnings for the year, perhaps in terms of non gap operating income. Justin Ewertt, As well as cash burn and then beyond that you know it would also be helpful, whether on this call or an upcoming call if you could provide. Justin Ewertt, More defined guardrails on how you view the margin trajectory of the business over the intermediate term and long term, you know the margins you expect to be able to support thanks.

Thanks Ryan this point we're just reaffirming the revenue guidance and we're anticipating spend in line at this point with what you saw in Q1 and then we'll look to update you later in the year, as the plan comes together.

Thanks our next question comes from maddie strange maddie please feel free to unmute yourself and ask your question.

hey guys sorry, can you hear me now we got you Thank you awesome I just quickly thanks for taking my question, I was wondering how you guys are thinking about the pace of share games, as we model up the rest of the year, and then the long term trajectory of sharing potential thanks.

Many doing market share yep yep.

Yeah, so the majority of the market share gains come from rolling out within a within a year so between now and the end of the year will come from existing customer rollouts. I'm happy to announce that in the last 60 days we had a few, a couple large customers in particular rollout large one large bank and one large non bank and obviously smaller ones. And so we'll see share gain grow. We're not going to share an exact number, but we do project share gain to grow as those rollouts come to fruition in terms of volume on the platform. Despite the market coming down, I mean, our share is sort of independent of the market volatility right now.

Next question comes from Joseph Meares from Tourist. Please feel free to unmute yourself.

Great. Thanks for taking the question. Last quarter, you noted that the current market environment is leading to thin margins at lenders and thus slowing down adoption of new products. Just wondering if there's been any change, positive or negative, in this trend over the last six weeks since you last reported.

Thank you. Thanks for the question. What we're finding is that for certain product areas and certain areas of our product that drive efficiency, we're seeing a lot of I'm seeing a lot of interest around those specific areas. Blend income is particularly interesting because it's a cheaper way for them to verify income and they're paying that cost right now. And then also for other product lines, I've mentioned home equity a couple of times, but there's a lot of urgency around that product because homeowners have a huge amount of equity in their home and they want to be able to tap it at the lowest possible cost to them, which in a lot of cases will be a home equity line or loan. And so now we're seeing specific areas get a lot of focus from our customers because there's an absolute need to save money to be able to stay competitive in this environment or offer different products to be able to get more revenue.

Thanks. Our next question comes from Matt Stottler from William Blair.

Hey, thank you for taking the question. Maybe just one on the title piece. I think a very helpful color around kind of the Q1, Q2 dynamics. and the press release you mentioned um i guess beginning the effort in earnest to move uh title 365 customers over the core platform uh any color you can provide in terms of uh the plan there the strategy to execute on that the ability to do that and any uh you know visibility into how you'll be able to carry out those migrations into the second half of the year uh this is tim thanks for the question uh we uh we expect that uh

the largest customer of Title 365, that's Mr. Cooper, we expect that they will go live on our Blend Title platform before the end of the second quarter, so before the end of June. And we are working with other customers to make progress on that in the second half of the year. But the single biggest driver of that transition is Mr. Cooper and

we're pleased with the progress that we've been able to make on that uh this quarter thanks our next question comes from arvin ramani from piper sandler hi thanks for taking my question i just wanted to clarify a quick data point uh you know i think you you indicated on this one is called kind of a 41 reduction in overall mortgage volumes and does it compare to the 35% you all had talked about on the last earnings call.

Yeah, that's right. Yeah. So previously we had thought that volumes would be down in 2022, 35%. in terms of number of units compared to 2021. So another way to say that is 65% of the number of units in 2022 compared to 2021. And now that number looks more like 59% or a 41% decline. So pretty significant decline in our overall volume forecast for the market. And we primarily use Fannie Mae and MBA for that, but we're still reaffirming our guidance because we still feel good about those numbers.

We'll take another question from Ryan Tomasello from KBW.

Hey, everyone. Thanks for taking the follow-up. I guess just circling back on the embedded title solution, can you talk about how that product will be priced in terms of refi versus purchase? It's my understanding that initially you'll be focusing, you see more refi as the low-hanging fruit there. And I guess the types of attach rates you think are achievable for that product over the next few years and maybe helping to guide some of our modeling into 2023 and beyond. Thanks.

Sure. So you're right. I think we look at refi as the more immediately available opportunity for us versus purchase in the title space, although obviously refi volume is coming down this year. And in terms of pricing, We expect that we will keep the pricing consistent with what it has been at Title 365 in the past. And, you know, in terms of attached rates, I think it's too early for us to be able to give you any clear estimates around that. But we feel good about the amount of volume that we'll be able to capture clearly with the biggest customer, Mr. Cooper.

and um and you know we'll see where that takes us let me just let me just add one quick additional point there another area another product line that needs at least a title property report is home equity and so it fits nicely into our instant home equity focus around helping our customers offer that product digitally as well so it's another area that we're looking at

Next question comes from David Unger from Wells Fargo.

You may unmute. Hi, can you hear me okay? Sorry.

Yeah, we got you.

Sorry about that. Mark, so I know given the challenges in the industry and cheap valuations broadly, it's a very tough question, but $500 million on the balance sheet in terms of cash, Just thinking about the upswing in the future, philosophically, how should we think about M&A so far? Thank you.

When you say upswing, do you mean how we're thinking about our stock price?

In the mortgage market.

Sorry, I missed that.

Hopefully, an eventual recovery in the mortgage market.

Yeah, no, this is, in some ways, I mean, this downswing, I think the fact that we're growing through the downswing or our declines are not as great as what the market is, I think goes to our customer selection, and we're really happy with that. It also goes to the additional products we've been able to add on, things like income and clothes already and what's planning and homeowner insurance and elsewhere. But... I mean, we're focused on driving value. We're focused on doubling down on the investments that we're making that are working for our lenders. And the stock market will hopefully take care of itself. We're not the only public company, I think, in this situation. And we have a very sort of mission-oriented employee base. And we're working on just being focused and being connected to our customers.

Next question comes from Joe Vafi from Conaccord.

Hey guys, thanks for taking the question. I was just wondering in the current environment, what you see, you know, right now in terms of bank behavior, it sounds like they're kind of still Moving forward with new technology initiatives, just kind of the most updated real-time, I guess, update on how banks are thinking about rolling out new technology here. Thanks.

And banks are, I guess, I like that you called out banks specifically because banks slash credit unions behave somewhat differently than independent mortgage companies in this regard. But banks in particular are investing heavily in technology right now. I mentioned home equity a couple times just because we've spent so much time thinking about it at Blend, so it's very top of mind for me personally. And of course, top of mind for our customers, but it's not just that. Personal lending is getting a lot of focus from customers. New membership or deposit account opening for credit unions and banks is another area that we hear a lot about. And so there's quite a bit of energy behind these areas because, yes, while the mortgage market is down, these companies offer a wide array of products. And especially in times like this, when consumers need access to capital, when there's high inflation and there's more need for individuals to have access to more capital, that's what the banks and credit unions are there for. And so we feel good as the preferred provider. And it goes back to our underlying thesis of make your customers successful and they'll want to do more with you. And we see that in our market adjusted net revenue retention number as well.

Thanks. We'll take a second question from Maddie from KeyBank.

Hey guys, thanks for the follow up. So you mentioned that two thirds of total customers are using two or more software products. Could you maybe give us a little more information on your more heavily adopted customers, how many products they're using today and how applicable that might be to the rest of the install base? Thanks.

One thing that we've seen historically is that some of the largest institutions buy one or two products at a time, and then some of the smaller ones, the credit unions and banks, will often buy a whole suite of products at once. So they'll buy mortgage, auto, personal loans, deposit accounts, home equity altogether, and maybe even some of the add-ons like clothes and income. And so it sort of depends on the... on the size of customer. That being said, we did just announce the credit card product being live with Wells Fargo. And so we're even seeing traction at the top of the market with some of these more broader consumer banking offerings as well. And so I guess it's a long way of saying top of the market behaves a little differently in the bottom of the market and often we shared a number in past quarters that we didn't share this quarter around how much we're buying two or more products in the first sale which that number has been higher than it was a few years ago and we didn't have multiple products of course and so both all those things are positive trends and we're we're excited and helps reinforce our long-term thesis around growing with our customer base take another question from matt stotler from william blair

Thank you for taking the follow-up. So maybe just one on, or, you know, a couple of things on consumer banking. So obviously, you know, looking at the, what we saw in Q1 and what seems to be the updated expectation for 2022, maybe a little bit of an uptick in expectations for consumer banking. I know a lot of that was probably from what you guys had talked about last quarter about, you know, maybe some delays and rolling out some of those, you know, products at your customers. Would just love some more, some more color on, what you're seeing in terms of those rollouts, new additions in terms of customer banking products, and if you're seeing standalone customer banking wins or if it's still largely an upsell on mortgage. Thank you.

sure yeah so we're we i didn't understand the very first part of the question but to answer the second part and maybe you can reiterate this the first part after answer the second part um we typically just because we have such a broad mortgage customer base and we've been successful with them that and that that's why they trust us with the next product line and i you know i gave the example about wells fargo but there's of course others as well um it typically ends up being attached to an existing mortgage customer, because that's the first product line I went out to market with. And I shouldn't say an attached, because it was a separate sale to an existing mortgage customer. And that's a trend that we're pretty happy with. I mean, making our customers successful and having them do more with us is, I think it's a good thing. It's a good sign. And so, and what was, I didn't understand the first part of the question. So could you reiterate that?

Sure. Yeah. The first part of the question just being, it seems like the consumer banking segment has performed better than expected in Q1. And it seems like the expectation for the full year is that it is also improving relative to the last time we got an outlook from you guys. So is that largely just the customers from last year that are rolling out and then actually catching up? I know some of those have been delayed. Is there anything new that's being learned in there from this year or just how to think about kind of the driving factors behind that kind of uptick in expectations for that part of the business?

That part of the business is primarily our home equity, our personal loans product, our deposit account product, and then income and close. I would say the majority of the uptick is from personal loans. And that's a function of a few of our customers who do those lending products are doing more volume than we had and maybe more dollars per unit than we had previously anticipated.

Let's take a follow-up question from Joe Vafi from Conaccord.

Hey, guys. I know this year is a balancing act between managing cost and keeping the roadmap and everything going. And I know we're going to get more of an update on the numbers later in the year, but could you give us a little more color on, you know, what may be dialing back in the current environment in terms of your investment spend across, I don't know what, maybe customer service, new product initiative, sales, et cetera. Thanks.

Big part of that, Joe, is right-sizing based on volumes. So if title volumes are down, then the production of title costs obviously has to come down alongside it. And then just generally right-sizing for where we are in the cycle and the size of the company. So we're just being extra prudent and we're looking across the entire company, both revenue and cost, but really focused on making sure that our costs are in line with with what the volumes are based on refis.

Our last question comes from a retail investor. Emily S asks, what is Blend's most important goal and focus for this year? Nima, do you want to take this one?

Chris O' Sure yeah and I would say I like questions like this, because it makes you pick one thing, obviously we do multiple things with our customers and so it's always. Chris O' I like questions like this, because it helps us focus on on one thing and what's most important to us. Chris O' And as as reflecting on this question, a lot of what is going to make us successful in the long run, especially to go back and look at our history is our existing customers continuing to do more with us. And so, especially in the mortgage part of the market, like I said, margins are really tight. And I made a couple of comments about it in the prepared remarks. Margins are tight for our lenders. Making sure that we can drive efficiency for them and make sure that they're winners does really three things for us. One, it makes sure that they not just stay flat in market share, but they grow market share, which leads to more growth for us. Our market share doesn't have to just come from signing new customers. As we make customers more successful or they consolidate other mortgage companies, that's a win for us as well. And we're seeing some consolidation in the industry as well. Two, that will be the foundation if they're a bank or credit union for them to do more products with us. Like we've seen this story play out time and time again where, and you see in our net revenue retention, our market adjusted net revenue retention, that number is so good because our customers want to do more with us because we make them successful. And then the third thing is they last with us for decades. These are the kinds of things that we believe they'll last with us for decades if we do this. And so I've really reaffirmed to our team the importance of making sure our existing customers are successful. That's unique for us as being a vertical software company and something that we have to never lose sight of. Most of those happen to be mortgage, but that also means for the ones who are signed up for consumer banking, we need to make sure they're just as successful. And so that's something that we're paying close attention to. We're spending a lot of time and energy on as a leadership team, making sure we're very close to our customers, more so now than when times were booming and they had less time to spend time with us. It was not as important, and now it's extra important. That's what we're focused on.

As that was our last question, the conference has now concluded. Thank you all for your participation. You may now disconnect your lines.