Blend Labs, Inc.

been placed in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. If you would like to join the queue to ask a question, simply press the star followed by the number 1 on your telephone keypad. It is now my pleasure to turn the call over to Meg Nunnally. You may begin.

Good afternoon, and welcome to BLEND's financial results conference call for the third quarter of 2025. I'm Meg Nunnally, Blend's Head of Capital Relations. Joining me today is Neema Gamsari, our co-founder and head of Blend, and Jason Rehm, our Head of Finance and Administration. Before we start today's call, I'd like to note that we also refer to certain non-GAAP measures, which are reconciled to GAAP measures 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. Unless otherwise stated, all financial results we'll discuss today, including our profitability, refer to non-GAAP. Also, certain statements made during today's conference call regarding Bland and its operations, in particular, its guidance for the fourth quarter of 2025, commentary regarding 2026, and expectations about our markets, our strategic investments, product development plans, and operational targets may be considered forward-looking statements under federal securities law. The company cautions you that forward-looking statements involve substantial risks and uncertainties, and a number of factors, many of which are beyond the company's control, can cause actual results, events, or circumstances to differ materially from those described in these statements. Please see the risk factors we have 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. All comparisons made in the course of this call are against continuing operations for the same period in the prior year unless otherwise stated. Lastly, we will be providing a copy of our prepared remarks on our website by the conclusion of today's call, and an audio replay will also be available soon after the call. I'll now turn the call over to Nima.

Thank you, Meg, and welcome, everyone. Our third quarter results demonstrate our team's strong execution and the increasing resilience of our business model. We delivered total revenue just above the midpoint of guidance and, more importantly, non-GAAP operating income that exceeded the high end of our guidance. This marks our fifth consecutive quarter of non-GAAP operating profitability, a trend we expect to continue into the fourth quarter. For all of this, I want to personally thank the entire Blend team. This five-quarter streak of profitability is not an accident. It's a direct result of their focus, their discipline, and their deep commitment to our customer success. Their execution is what gives us the stability to invest in our future from a position of strength. This profitability is a result of deliberate work to right-size the business over the past few years and build a foundation for sustainable long-term growth. While our overall top line was steady, it reflects a tale of two dynamics. We saw continued strength and growth in our consumer banking suite, which was offset by some headwinds to revenue in our mortgage business, but this was not a surprise to us. it reflects the intentional strategic transitions that we are navigating. Specifically, moving from lower margin services businesses to higher margin partnerships and managing the final roll off of legacy customers that we've discussed in prior quarters. We expected and are managing these headwinds and they are clearing the way for a healthier, more profitable future. I want to spend our time today on three topics. First, the quality of our new customer wins and the strength of our future pipeline. Second, the incredible energy and pull through we're seeing from our customers around our rapid suite and AI. And finally, our key strategic priorities as we drive towards 2026. To start out, in the third quarter, we signed 14 new deals and expansions in line with the prior year. But the quality of these deals is what's most important. Our largest deal was a seven-figure expansion with a top 20 US bank for solar home equity lending. This is a prime example of our platform strategy at work, using our core technology to rapidly deploy and configure complex, high-value solutions with our largest clients. This is precisely what we mean by our platform. Our customers can launch new, high-margin products in weeks, not years, leveraging the technology they already have. We also had another major renewal and expansion with a consumer banking customer across six product lines. This same customer is now evaluating our mortgage solution, which is a fundamental shift. Our flagship mortgage product used to be the only door into Blend. Today, we have a multi-product platform that allows our customers to land and expand. This is the flywheel we have been building for years, and it is now actively turning. Our consumer banking products create deep daily engagement with customers, which in turn builds trust and provides a natural data-driven pathway to a mortgage. And our mortgage platform creates a high value data rich event that our customers can use to offer those consumers deposits, cards, and home equity loans over time. Each side of our business now feeds the other. And this platform momentum is why the small handful of churn notices we saw this quarter are not a strategic concern. The four small customers who left were outside the core market and represented about $200,000 in aggregate annual revenue. We are successfully trading low value, non-core churn, for high value strategic platform expansion. The only noteworthy turn on the horizon is the expected roll off for Mr. Cooper, which Jason will detail further. So in all, the real story for me is not the legacy share that we're shedding, but the future share that we're building. Our pipeline activity is strong, building sequentially from Q2, and it's up approximately 60% year over year. This pipeline is our future and it's robust. We are actively pursuing multiple seven-figure consumer banking deals, sizable top 10 banks and mortgage, and several cross-sell opportunities for our rapid and closed products. This is the high-quality platform-based business that we are building. And this energy was on full display at our Blend Customer Forum in September. This was our largest forum yet with 120 executives, and the tone was completely different from last year. Last year, AI felt like a science project. This year, we're at an inflection point. The question from customers is no longer, what is AI? How can it help me? But how fast can you get it into our hands? The reason for this urgency is clear. The cost to originate a mortgage loan is still stubbornly high, nearly $11,000, and roughly 90% of that is human labor. The industry is realizing that bolting on more point solutions only adds complexity and costs. What we demonstrated at Forum is the only real path forward, blend intelligent origination. This isn't another tool. It's an entirely new operating model for lending. By embedding agentic AI directly into our core blend workflow, we can autonomously orchestrate and execute end-to-end processes. And because it's embedded natively into our platform, it's not just another tool for employees to learn or another chatbot for people to talk to. It's a system that works with the rest of the blend platform and learns for them. This is a fundamental architectural advantage that Point Solutions simply cannot replicate. Our customers see this as the definitive answer on the path to the industry's $11,000 problem. They are excited and we are too, because this is the future and we are building it with them. We also saw tremendous buzz around our Rapid Home Equity product, which is a very important product for consumers in this day and age. And this was the first forum where early adopters could share their results with peers. The value of this product is its seamless data connectivity and personalized offers in real time, which drive higher conversion by radically reducing the time to an approval. The momentum here is palpable. This momentum and the energy from our customers at Forum is what gives me such great optimism about Blend where I stand today. It is a great way for us to lean into 2026 on offense where we are laser focused on three key areas. The first area is our take rate with our customers in the mortgage suite. Our primary measure of this in our mortgage suite is economic value per funded loan, or EVPFL. While EVPFL has come down in recent quarters, this pressure is a direct and intentional result of our platform strategy, specifically transitioning to higher margin partnership models and navigating one renewal in this tough market. While this impacts the near-term metric, It is the right decision for our long-term margin structure and profitability and customer base. Our focus is not on this near-term pressure, but instead on the long-term prize. And for 2026, our priority is driving the adoption of the products that create exponential value for our customers. In the mortgage case, rapid refi and blend close. These products are the powerful levers we have to grow our take rate and deliver on the full long-term potential that we see ahead of us. Our second focus is the continued expansion of our consumer banking suite. This business is already a strategic powerhouse for us. It now represents 39% of our total revenue, up from just 29% one year ago. Our customers are using it to solve their most pressing problems, driving high margin, non-interest income, and capturing sticky deposits in a highly competitive market. And our engine provides a powerful, less cyclical revenue stream that enhances the stability and resilience of our entire company. For 2026, the goal is clear. Expand adoption with large accounts and accelerate our speed to market by standardizing more of our out of the box solutions for the rest of our customer base. This is how we scale our business effectively. Our third and final focus is on building the next horizon of growth. As I talked about earlier, we are making targeted, disciplined investments in AI and our suite of rapid products to solve our customers' biggest problems. The great news for us is that these are not massive speculative bets. We are building these world-class solutions with nimble, focused teams. And this innovation is what will keep us and our customers well ahead of the curve. To summarize, when I look at the macro environment broadly and I see it finally showing signs of life, particularly the potential for us when rates come down, and then I combine that with the specific momentum we are generating for ourselves I have never been more excited about our business. To be clear, our entire 2026 plan is built to succeed in the current environment and win in the current environment. But the disciplined, profitable, and simpler cost structure we have built over the last five quarters gives us incredible operating leverage in a recovery. When the mortgage market turns, we are in prime position to have that recovery flow to our bottom line, all on top of the organic platform growth that we are already driving with our rapid solutions, our closed solution, new customer growth, and over time, AI solutions as well. The team has done the hard work to build a resilient, profitable, and scalable platform. We are no longer just ready for what's next. We are building what's next. With that, I'll turn the call over to Jason.

Thank you, Nima. And to everyone on the call today, thank you for joining us. As this is my first earnings call with Blend, I'd like to reflect on my first three months here before I talk about our results. First, the team that I've been lucky enough to join is one of the best I've ever worked with, and they are passionate about making Blend successful. Second, we have a strong portfolio of products that will continue to improve under the leadership of product-focused executives like Nima and Srini. And lastly, the best word I can use to sum up our relationship with customers is partnership. I had the great fortune to be able to attend our annual customer forum only one month into my time at Blend and to talk to a number of our customers. While our customers, of course, have lots of requests and suggestions for our products, everyone I talk to believes that Blend is the best option in the market and that they are on a journey with us. That gives me great confidence in the foundation of this business and our right to win long term. I'm sure I'll talk more with many of you about that over the coming weeks and months, but for now, let's dive into our third quarter financial results and an update on market share trends. Total revenue in the third quarter of 2025 was $32.9 million, ahead of the midpoint of our guidance and down 1% year over year. Digging below those headline numbers, mortgage suite revenue was down 18% year over year. driven by the strategic transition to lower revenue but higher margin partnership models for some of our products, by some churn, and by the effect of the large renewal with lower pricing that we talked about last quarter. On a side note, our work with that customer continues to be very positive, and we continue to believe that the customer can provide meaningful upside to 2026 and beyond. Mortgage suite revenue was down approximately 1% from Q2 to Q3, driven by the ongoing ramp down of several customers that gave churn notices last year, the continued effect of our strategic transition to partnerships, and by some seasonality. Consumer banking suite revenue was up 11% quarter over quarter, based on go-live deployments on some large customer wins, as well as ramping usage at some of our larger customers. The increase came across both core consumer banking products and home equity lending products, which are included in our consumer banking suite. Shifting back to consolidated results, our total gross profit was $24.5 million. After excluding stock-based compensation and the amortization of software development expense, our non-GAAP gross profit was $25.6 million, and our non-GAAP gross margin was 78%. up from 76 last quarter non-gap operating expenses were 21 million dollars up nine percent quarter over quarter almost entirely driven by a q3 specific sales and marketing expense related to blend forum and by higher non-gap r d expense due to a lower capitalization rate of software development expense Non-GAAP operating income was $4.6 million, above the high end of our guidance, and representing a non-GAAP operating margin of 14%. Free cash flow for the quarter was negative $5 million, bringing our year-to-date total free cash flow to positive $1.5 million. Our balance sheet remains strong, thanks to the work Blend did in 2024 to eliminate debt and realign the cost structure of the business for sustainable growth. As of September 30th, 2025, we had approximately $82.3 million of cash, cash equivalents, and marketable securities inclusive of restricted cash. In the third quarter, we repurchased 1.6 million shares worth more than $5 million, bringing the year-to-date total to $9.2 million and leaving $15.8 million remaining under our repurchase authorization as of quarter end. Our EVPFL for Q3 was $86, in line with our guidance. We do see some near-term headwinds, and as we look to Q4, we expect EVPFL to be approximately $83 to $84. We are not providing specific guidance beyond Q4, but believe that most of the recent issues negatively impacting EVPFL will be largely behind us as we enter 2026. It is important to remember that EVPFL, while a useful metric, is somewhat incomplete as it does not capture home equity loans, an area where we see significant momentum in our business, and which are included in our consumer banking suite. Next, I wanted to provide an update on our market share. We've included a slide in our supplemental deck that provides additional numbers and context, including BLEND's annual funded loan volume. As a reminder, we use Home Mortgage Disclosure Act, or HMDA, data as our benchmark for total market size. And the market share we report is measured by dividing blended funded loans by total market volume per HMDA. As anticipated, our 2024 HMDA market share is down from the high water mark of 21.7% in 2023 and landed at 18.6% in 2024. The decline is primarily driven by churn notices that we received from customers in 2023 and 2024 when cyclical pressures in the mortgage industry were at their peak. Since customer roll-off is often a long process, we've continued to see some of the impact of volume from those customers into 2025. We anticipate further market share headwinds in 2026 of approximately 100 basis points, primarily due to lower volume from Mr. Cooper. As we've said before, we signed a contract with Mr. Cooper shortly before the acquisition by Rocket was announced. That contract runs through June 2028 and protects a significant portion of our revenue from them through that time period. As we look to 2026 and beyond, the trajectory from here is encouraging, given the stabilization of churn trends and the new customer wins and expansions that we've been talking about. For the first nine months of 2025, we've only had a few smaller customers indicate their intention to churn, which in aggregate represent less than 10 basis points of 2024 HMDA share. We believe we've created a solid base for long-term share growth. We're not providing any formal macro outlook or company-specific guidance for 2026 at this time, though we will have more to say in February. Still, it's fair to note that we generally agree with the current consensus expectation that lower mortgage rates in 2026 will drive industry growth, which should more than offset the market share headwinds in mortgage. In consumer banking, we have a solid deployment pipeline heading into 2026, though we expect that consumer banking will face some headwinds from the expected churn of Mr. Cooper's home equity business. Please also keep in mind that consumer banking revenue has a tough prior year comparison due to a large customer that went live late in 2024, contributing about 5 million to growth in 2025, and which is now at steady state. Now, turning to our expectations for the fourth quarter. We expect total revenue for the fourth quarter of 2025 to be between 31.0 and $32.5 million, with the midpoint representing a slight decrease from the third quarter. Within total revenue, we expect mortgage-to-tweet revenue to be flat to slightly down quarter over quarter, driven by some one-time revenue in Q3 that we do not expect to repeat in Q4, and partially offset by flat to slightly up mortgage volume. We expect consumer banking to be down mid-single-digit percentages quarter over quarter, largely driven by the impact of Mr. Cooper that we mentioned earlier, and by typical Q4 seasonality. and partially offset by increased revenue with several large customers that went live in Q3 and which will have a full quarter of revenue in Q4. Lastly, we expect fourth quarter total non-GAAP operating income to be between $2.5 and $3.5 million. In August, we shared our Q4 2025 market size expectation of 1.13 million to 1.23 million units, and we think this is still a reasonable range. For Q1 2026, we expect a sequential volume decline in line with normal seasonal patterns. Our current expectation for the first quarter of 2026 is for mortgage volume to be between 1.07 to 1.17 million units. And now, let's take your questions.

Thank you. The floor is now open for questions. To enter the queue, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one. If you are called upon to ask your question and are listening via loudspeaker on a device, please be sure to pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Aaron Kimson with Citizens. Your line is now open.

Great. Thanks for the questions, guys. Neema, you talked on the 1Q25 call about the inflection in pipeline after the Rocket Cooper deal was initially announced. I appreciate the commentary about form in September and pipeline up about 60% year-over-year at the end of Q3. But since the Rocket Cooper deal closed on October 1st, has there been any change in the tone of conversation with FIs that want to keep their largest consumer lending relationship, but know they need to upgrade their tech stack to remain competitive?

Yeah, good question. Yeah, definitely. I think the Cooper Rocket acquisition has been, I'd say one thing that I've seen happen there is big mortgage servicers are starting to think through their strategies. And it's an area where we're very strong. We work with most of the top 10 mortgage servicers in the country. who are the ones who are primed to be able to take advantage of both the current situation with cash out refis and home equity loans. And then if the rates, if the mortgage rates get into the mid to low fives, there's a huge volume of customers between six and 7% who need to be able to take advantage of lower rates, especially if the economy gets worse. And so I've definitely seen companies react. And then I've also seen some of the very largest lenders who are our customers say, we got to do something really important with AI. And so they were the ones calling on me on the AI front saying, We want to not just remain competitive, but we're going to use this time when potentially some companies might be busy integrating or distracted with other things. And we're going to put our best foot forward and come out of this next six to nine months with a much more automated, much higher quality operation than we used to.

That's really helpful. And then switching over to Jason, it's great to have you with us. given that you were a senior MD at Aveli in April 24 when Aveli made its investment in Blend and with Aveli owning about 20% of the company today, can you talk a little bit about your history with Blend dating back to Aveli, how involved you were in that investment process, and then how you came to be the head of finance and administration at Blend? Was it through prior relationships, a third-party recruiter, or something else?

Yeah, so I... You know, Haveli is not a huge firm, so I obviously had visibility into what was happening. I wasn't, you know, part of the investment team that made the investment in Blend, but I did have some contact with the company. Primarily as an operating partner, I was here as a resource for all the – sorry, I was there as a resource for all the port codes that Haveli had. But the switch that I made was really wanting to get back into an operating role, Given the fact that Amir was, you know, had made the decision to leave Blend, you know, I was looking for a good opportunity. Everyone, you know, at Haveli had a really high view and estimation of the team at Blend. And I had gotten to know Nima and the team a little bit as well and, you know, thought Well, that's a really great opportunity. They need a CFO that has experience with public markets. And I was looking to get back into the operating role. And so, essentially, the stars aligned.

Thank you. Your next question comes from the line of Ryan Tomasello with KBW. Your line is now open.

Hi, everyone. Thanks for taking the questions. On Mr. Cooper, can you just help us synthesize the moving pieces you called out there in terms of sizing the revenue impact in 2026? Just juggling the handful of commentary that you gave between both the mortgage and the consumer banking segment. And then beyond 2026, you know, you're mentioning a part of the revenue still being protected through the expiration of that contract. So just help us understand exactly what that looks like and what that cumulative impact might look like post-2028. Thanks.

Yeah, Ryan, this is Jason. So, you know, the specific commentary we gave on the call is that there will be a share headwind, and that is essentially because, you know, we do expect the volume of transactions coming through our system for Mr. Cooper to come down now that the transaction has closed. We didn't really give specific revenue numbers around that. But what I will say is that the majority of the revenue that we've had in the past is protected for some period of time. So, you know, there will be some revenue headwind. We didn't call it a specific number, but the majority is protected through the second quarter of 2028. I'm sorry, the second part of your question, I think we missed that.

No, I think you covered it, but I mean, I have a related follow-up. I think last quarter you called out a mortgage pipeline consisting of roughly 400 bps of market share. Can you provide an update on where that stands today? And then it sounds like net of Mr. Cooper, we should still be expecting market share growth next year. But correct me if I'm misunderstanding. Thanks.

Yeah. Sorry. Yeah. We again, we haven't provided guidance for next year on market share and we'll give you more color on the call. You know, the Q4 call at the beginning of the year. But yes, look, we still have a very strong pipeline for mortgage. Our strategy here is a combination of factors, as Nima talked about on the call. We've got this flywheel effect now going where the mortgage side feeds the consumer banking side, the consumer banking side feeds the mortgage side. And so we're looking for growth on both sides of that. And, you know, obviously share growth in the mortgage industry is something we're driving towards, but we're also driving towards growing consumer banking. And as you know, you'll recall, Home equity, which is a big potential upside for us, feels a lot like mortgage. It is lending, but we report it in the consumer banking side. So you should look to see big growth on both sides.

I talked about this in my prepared remarks. We talked about we have some top 10 lenders, banks in our pipeline right now. actively pursuing you know we we believe and i think the market sees that we have the best product in the market uh for someone like them i got to spend a lot of time at the mortgage bankers association conference with these prospects and you know we've weathered these headwinds and we've kept our reputation good and we've continued to innovate and so it just puts us in the pole position to be the right partner for for some of these big guys and especially as we continue to build capabilities that makes us a true platform for them. You know, building AI into the platform, building the rapid products on top of the platform, it just allows them to get a lot out of us. And so that's why we've seen the pipeline stay strong and why we're excited about even just in our existing customer base, the growth of the existing customer base is where I spend most of my time because those existing customers are the ones that can move faster with us and want to do more with us.

Great, thank you. Your next question comes from the line of Joseph Voffey with Canaccord Genuity. Your line is now open.

Hey, guys. Good afternoon. Just wanted to maybe just drill down on the big renewal a little bit, just kind of, you know, What was maybe going on there in a little more detail, if possible? You know, do you see more renewal risk in the pipeline? And, you know, it feels like you provide a pretty high-value product to customers. So kind of just wondering, you know, why there needs to kind of be a pricing discussion, you know, when you're already adding so much value for customers. Quick follow-up, thanks.

Yeah, really, really good question, Joe. And just to put the timing of when that initial discussion around renewal started happening, it was in either late Q1 or early Q2 of 2024. So we're talking 18 plus months ago and before Jason's time here. And, you know, it was a different time for Blend. I mean, it was before our Haveli investment, before we had taken a new capital. People were worried about our debt in the market. They were worried that we weren't going to necessarily be around. And so to answer your question pretty candidly, no, I don't see renewal risk in the rest of our pipeline. In fact, most of our renewals, if you sort of normalize, we took an internal look at this this week. If you normalize for the contribution that our customers are giving us per loan outside of this one renewal, the value per loan is up actually year over year from Q3 to Q3. We looked at this as a one-time view for ourselves. Because I know there's a lot of moving pieces. There's this one renewal, there's the partnership model transition, which I'm super bullish on and we think is going to drive more upside for us next year. And so, yeah, we did have this one moment with one very large customer in 2024 that we're feeling some impact for. But interestingly, they were the ones who were on stage with us at Forum doing a demo of the AI functionality they're adopting with us. They were the ones on stage with us talking about rapid home equity and talking to us about what they can do with us more on that front. And so I view these things as maybe short-term headwinds where we use that moment together in the trenches to build long-term partnership. And this customer is so big and has been such a good partner for us. There's so many things we're talking to about them. And I'm very happy we did the renewal. I'd do that renewal even at the same rate today if I could, because there's just so much more upside. We're talking about this $11,000 problem in the industry, and we're 80 something dollars into that $11,000. So while we had to spend a couple years cleaning things up internally, getting debt off our balance sheet, getting a good company in a good profitable state, we're there, we're on offense, we're building really cool things and I'm looking forward.

Your next question comes from the line of Michael Turin with Wells Fargo. Your line is now open.

Hey, thanks very much. Appreciate you taking the questions. There were just a few different mentions throughout the call I wanted to unpack a bit if we could. So it sounded like some of the market share impacts you're seeing likely continue to next year, but there are also some comments from NEMA around macro showing signs of life and pipeline growth. building back a bit. So just any more context you can give us to help square those two factors and big picture, just the factors within blends control and driving better growth into next year is helpful.

Yeah, I think, Michael, thanks for the question. There are two dynamics you're referring to. One is our share and the other is sort of the market itself, the macro. I think You know, as we mentioned on the prepared remarks, the general consensus expectation out there is that there will be lower rates in 2026, and that will drive higher mortgage activity, higher refi activity, and that will lift the market overall. We haven't, you know, guided that yet, but we do see that that's our You know, that's our belief as well, following in line with what the sort of general consensus expectation is out there in the market. On the share piece, you know, we do have, we call that one specific headwind, which is Mr. Cooper, right? And as I mentioned on one of the earlier questions, a significant portion of our revenue with them is protected under contract. But, you know, regardless of the revenue, if they move their volume elsewhere, we're not going to count that as a share. And so that is a likely headwind to our share in 2026. That doesn't mean that the share has to stay with just that. That's not the only impact to share. Obviously, we can win new customers. We can get new customers live, et cetera. And that can drive additional share for us. We haven't guided to 2026 yet. But just calling out, we highlighted one headwind, but that's not an indication of where we see the overall going yet.

Okay, that's actually useful supporting color. And just, Jason, on margin, you're delivering above the high end of the prior operating income guide with revenues within the range. So just where the efficiencies are coming from and how you think about different investment levels for the business and various growth scenarios, you know, as some of what you just framed potentially plays through. Thanks very much.

Yeah, look, in terms of where deficiencies are coming from. It's hard to call out one specific area. We obviously we are growing our presence outside of the US, and in some cases those are, you know, lower cost geographies and we're able to get, you know, talent that's as good but at lower costs. That's one specific area of efficiency. But I would say more broadly, there's just a focus on doing things in a lean way. and, you know, trying to use small teams, trying to focus on output as opposed to, you know, just creating an org structure to deliver something. It's really more of a mindset than it is on specific efficiencies. And as we look forward, I think, you know, two things. One, sort of as a foundation, we want to think about, obviously, look, this Industry is cyclical, on the mortgage side at least, and to some extent, you know, perhaps on the home equity part of consumer banking. You know, we're not going to allow our investment decisions to just follow the macro market. In other words, you know, just because revenue increases, if, you know, rates were to drop, you know, really far, we're not going to say, oh, great, let's spend a ton of operating expense just because revenues are high right now. We're sort of building a business that's resilient regardless of macro. The second comment I would make about investment philosophy going forward is that we have some amazing opportunities in front of us. And, you know, today we think that we're well positioned to address those opportunities within the envelope that we've built for the business today. To the extent that, you know, we continue to get traction with those and we know see the top line materially shifting independent of macro um you know we may pour more fuel on the fire in certain areas where those those new initiatives uh you know might might require it but you know we're really being judicious about about the roi essentially of this uh of the investments that we make and and making sure we have places where we have a very clear line of sight to getting a return on additional expense put in the business.

Thank you.

Thank you. And before we take our last few questions, if you would like to re-enter the queue again, reminding you to press star and the number one on your telephone keypad. The next question comes from the line of Michael Ng with Goldman Sachs. Your line is now open.

Hey, good afternoon. Thank you for the question. I just have two, just a big picture one. Just on the economic value per funded loan, is there a way to think about where that could be in the long term? I appreciate that you're guiding to $83 to $84 for next quarter, but where do you see that going in the next two to three years? And then secondly, we've seen some good revenue growth in consumer banking suite revenue. Just as you think about the business more strategically, what's the right mix to think about now between consumer banking and mortgage suite? Where are you focused on and where do you see the biggest opportunities? Thanks.

Yeah, thanks, Michael. I kind of like to work backwards from what the opportunity size is. And we talked about rapid home equity and rapid refi in our prepared remarks and in the last few quarters. And those products themselves as a standalone are a multiple of our core mortgage and core home equity rates. And so I think we're just scratching the surface. Now, to answer your question of where we'll be in two to three years, I don't want to necessarily, we haven't guided that yet, but we are aggressively going after deploying those products to our customers. In fact, I would say that's kind of the top priority for us, given that there is a big market need right now for Rapid Home Equity. And then people are looking forward to, you know, there's a lot of participants in the market that want to help consumers take advantage of their equity, and we want to help them help their consumers. And so that's very important to us. And that has a very high price per unit, although that's in our consumer banking segment. And then on top of that, on the rapid refi side, a lot of these companies are seeing mortgage rates coming down. I don't know if you all saw the jobs numbers today or the job cuts numbers today, but they want to be in a position where for the people who are, who are able to get the benefits of lower rates, once the rates get into the mid to low fives, that'll be kind of an inflection point. I think for the industry, there's a number of consumers that are eligible, like they need to be able to do that extremely effectively and in a very automated fashion. And our rapid refi solution is the best way to do that. And so we're, we're, we've got good interest in that. We have some, some customers that have deployed it and that are scaling it up and we're excited about it and our customers are excited about it. And so I, well, I don't want, we don't want to guide exactly where we'll be in two to three years, maybe in a future investor day, we can spend more time on that given the traction we're seeing. Um, I think the opportunity is really large and that's not even withstanding the, what the AI brings to the table. in this case, which is there's a significant amount of operational effort internally of manually reviewing the loan file and going back and forth with the consumer for days or weeks. And it's something that AI was really built for. And we're happy to be part of that journey with our customers. And so I don't have specific guidance on the two to three year medium term, but I can tell you in the long term, I'm very bullish I think there's a lot of upside for us and our customers in particular. And I think a decent amount of that will come in the form of just continuing to grow our EVPFL with our existing customers, first and foremost.

Great. Thank you, Nima.

And was there a second question, Michael? I think I might have missed it.

No, it was just about the long-term, kind of like the long-term trajectory of EVPL and then the right mix of consumer banking versus mortgage. But I think you've covered it. Makes sense. Yeah.

I mean, you've seen our consumer banking segment grow because we've made some really big customer wins. And actually, you know, one of our biggest deals this quarter was this past quarter was a consumer banking win. Now that also 39% is where we are as a percentage of our total revenue and consumer banking that happens to be on mortgages cyclically low. I think both sides of this business can be much larger than they are today. If we continue to execute with our customers and our customers continue to win in the markets. And so we're not, I wouldn't say we're sort of prioritizing one or the other. We're serving both. And it's sort of, I'd say our focus is our existing customers to start with and growing them first and foremost.

Great. Thanks for the extra color, Nima. Appreciate it.

Thank you so much. Again, if you would like to enter the queue to ask a question, press star followed by the number one on your keypad now. The next question comes from the line of Faith Bruner with William Blair. Your line is now open.

Hey, guys. Thanks for taking my question. Can you maybe double-click on the adoption cadence you're seeing across the different rapid products within your existing customer base and maybe how that's driving durability into the different product suites? And then just a quick one on top of that about AI. And as you get early feedback back from the intelligent origination and some of these other solutions, how that can maybe unlock another long term monetization opportunity for you guys.

Yeah, great, great questions. The the flavor of the day from our customers and where we're focused on the rapid suite, although we have I think it's over ten rapid deals in deployment right now with our customers. I'd have to double check that exact number. But the majority of our big customer's focus is being able to serve a consumer a home equity line of credit or loan in 10-ish days. I mean, there's a lot of consumers who have debt that they're revolving on that's higher interest debt. And so our customers are interested in offering them something we can take advantage of the equity in the consumer's homes. And so in the process today for getting a home equity line of credit is at a bank or credit union that a typical bank or credit union might be 30, 45, 60 days. But the technology is there now, and we have it with Rapid Home Equity to do that much faster and a much higher conversion. So that is the focus for our customer base, I'd say for our largest customers. But we're seeing kind of interest across the board on that and rapid refi with just trying to get ahead of the rates that might come down next year. And then shifting gears to AI. I mean, AI is one of those things. It's like almost like water for us at this point. It was such a breath of fresh air because it allowed us, you know, we had this initiative a couple years ago that we shared with you all around efficiency, and it helps us with our own internal abilities to do things faster and better. And so I think that was part of it. And then it also unlocked, I mean, there was this part of the industry that always stumped me, which I referred to on the call as this $11,000 problem is that the $11,000 problem is that there's so many different, there's hundreds or thousands of different scenarios of consumers finances, and there's hundreds or thousands of different rules you have to apply to those scenarios. And so when you multiply those things together, it's like an intractable rules engine problem in the sense that you can't code all of those things effectively because they change all the time. And so it was sort of impossible to imagine a world where someone could build an engine that was so complex and so magical that I could work across all of those things. And then all of a sudden, out of nowhere, this AI boom came. And it's actually capable of handling those hundreds of thousands of different permutations that might happen on any given loan or line of credit or whatever. And we were demoing this. I was on site with a fairly large client of ours. And we were demoing this. And I can tell you, it was like, You know, the consumer is just going through their normal workflow in our platform, the same thing that everyone uses today. And we were showing them what happens behind the scenes and the AI just picks it up and it's just doing all the background work, just like a human would, prepping the files for them internally. And they were seeing that and it's almost like it does almost feel like black magic because it's so hard to understand how it's even doing all that. And I don't think I even understand how it can even do all those things. as somebody who's very deep in AI and goes to sleep thinking about AI and wakes up thinking about AI, but it is capable of doing those things. And then I asked them how much they spend, you know, fulfilling each of their files manually. And it was, you know, it was not a small amount of money. And so, yeah, to answer your question, that wasn't, that isn't really built into our financial models. It's not built into our, and actually one other thing I want to, I want to reiterate that Jason said is that the other thing that AI has allowed us to do in the spirit of efficiency is is as somebody who loves working with small teams is build these amazing solutions with small teams. And now getting the word out to customers and helping customers understand it and adopt it and buy it from us is a different conversation. But the actual building in these capabilities is best done with small teams where there's little communication gap. Everybody's working on a very similar tight cadence together. And I work with one of the small teams that's building out this, what we call a blend intelligent origination. And it's just so refreshing. There's so much energy around it. Our customers love it. And they're so excited about it. And so while we still have some work to do, I'd say I put that in the very early stages category. And it's not baked into our financial model and certainly not baked into our cost model. In terms of us budgeting a huge amount of spend for that area, it is an area that I view as even more upside beyond some of the things we shared at our last investor day with you all about long-term upsides for the business.

Great, that was super helpful. Thank you, guys.

Thank you so much. There are no further questions at this time. So, on behalf of Blend Labs, Inc., thank you for joining. That concludes today's conference call. You may now disconnect.