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.