Blend Labs, Inc.

Hello, everyone. Thank you for joining us and welcome to the Blend Labs Inc. fourth quarter 2025 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Meg Nunnally, Head of Investor Relations. Please go ahead.

Good afternoon, and welcome to Blend's Financial Results Conference Call for the fourth quarter and full year of 2025. I'm Meg Nunnally, Blend's Head of Investor Relations. Joining me today is Nima 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 will refer to certain non-GAAP measures, which are reconciled to GAAP measures in today's earnings release and in the appendix of our supplemental slides. Non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, all financial measures we'll discuss today, including our profitability, refer to non-GAAP. Also, certain statements made during today's conference call regarding BLEND and its operations, in particular, our guidance for the first quarter of 2026, other commentary regarding 2026, and our expectations about markets, our strategic investments, product development plans, and operational targets may be considered forward-looking statements under federal securities law. We caution you that forward-looking statements involve substantial risk and uncertainties and a number of factors 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 10Qs, our upcoming 10K for the fiscal year 2025, and other SEC filings. We are not undertaking any commitment to update these statements if conditions change, except as required by law. The financial information presented in this call is based on continuing operations and prior periods have been recast to exclude operations that are now discontinued. Furthermore, the financial information presented reflects preliminary estimates and remains subject to completion of the company's financial closing procedures and review by the company's independent registered public accounting firm. Financial results will not be final until Blend files its annual report on Form 10-K for the period. Lastly, We'll 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.

Thanks, Meg, and welcome, everyone. I'm pleased to report that Blend finished fiscal year 2025 with a strong fourth quarter, coming in near the high end of our revenue guidance and beating the high end of our non-GAAP operating income guidance. But the headline numbers, $32.4 million in revenue and $5.4 million in non-GAAP operating income, tell a more important story. They show that we navigated the cycle successfully to emerge as a fundamentally different company. Our consistent performance is not an accident. It is the direct result of the focus and discipline of the entire Blend team. By maintaining a lean, software-first call structure, we have created significant operating leverage. We are generating cash, not spending it. We ended the quarter with zero debt and over 68 million in cash and securities. We have such conviction in our intrinsic value that we repurchased 5.1 million shares worth $15 million in Q4 alone. And our board authorized a new program that allows us to repurchase up to another 50 million in stock and will continue to strategically execute against this authorization. We are now in a position where we can lean into offense, ensuring that as the market recovers, benefits flow directly to our customers and our bottom line. Let's start by talking about our customer wins and strategic expansions. During the fourth quarter, we signed 10 new deals and expansions. As we look forward towards a potential market recovery, we are seeing a fundamental shift in how financial institutions view their technology stack. And our focus continues to be on winning high quality logos and deepening our relationship with our existing base. In Q4, we saw notable activity across both mortgage and consumer banking suites. And along those lines, deals included two notable new mortgage customers, one of which has been a consumer banking customer since 2023 and represents a great motion for us, a cross-sell from consumer banking into mortgage. Both deals include bundled mortgage and close and should be incrementally accretive to our unit economics. And in consumer banking, notable new deals include a rapid home equity cross-sell for a large bank, which this has been a customer with us since 2020 using our flagship home equity product, but now it allows them to use rapid workflows in other parts of their process, like pre-qualification. We also signed a new logo with a top 40 credit union with a product scope across credit cards, deposit accounts, personal loans, and auto loans, highlighting the ability of our consumer banking business to bring a new seven-figure-per-year logo in addition to selling to our existing mortgage customers. Looking ahead, our overall pipeline remains robust, which is up about 40% year over year. And it's not just the volume of the pipeline that excites us with our new focus, it's the composition. We're seeing a structural shift towards bundled deals, and that means that we have opportunities that span mortgage, rapid, close, and consumer banking. The momentum we're seeing now is fueled by our customer's desire to build more scalable businesses. Lenders are exhausted by painful hire and fire cycles and by stare and compare and manual work dictated by interest rate volatility and the state of the consumer. And they're no longer willing to ride the highs and lows of the market by simply adding and removing human labor. They want a technology company that can automate the intractable complexity of lending. which will lead to them having elastic capacity, the ability to handle volume spikes seamlessly without adding fixed human overhead. And that turns their businesses into massively efficient businesses that can be 10 times as efficient as they are today. But the numbers and our customers and our products and our financial results to date, they only tell the story of where we've been to date. So I want to spend a moment on where we're going because this is an area of personal passion for mine. I've been deep in tech since I was a kid. I was building computers and building programs and building games from my childhood. And when we started Blend, we didn't build Blend just to be a slightly better way to do mortgages. That was a great application form and a great way to ability to close the loan digitally. We built it to completely rewire how the financial system operates and how origination is done. And then as we expanded into consumer banking, the same approach, we wanted to make those processes as beautiful and as streamlined as they could be. But that's a difficult problem. That's been an intractable problem because technology to solve such complex regulated originations is not a trivial thing to build. As a result, as I look at that, and I look at the market turmoil recently as investors are grappling with how AI will impact the software industry, which people are calling the SaaSpocalypse, and we're seeing valuations battered as the market worries about AI and how it will commoditize traditional SaaS and destroy seed-based pricing models, I view this completely differently than them. I view this as the greatest filter of our generation. There's a brand new technology frontier technology available to us that's going to bring some transformation, but it's not going to be generic approaches and generic AI wrappers that win in these highly regulated industries. And at Blend, we operate and we have operated deeply within the origination space, the revenue generation funnel of financial institutions of all size, some of the small ones and some of the largest ones in the country. For them, we're not just a user interface. We're a trusted, secure workflow system of record that reconciles immense complexity across some of the most complicated financial products in the world. And critically for us, operating at this depth means we continuously are collecting and analyzing and storing data on what's going on in the loan and how it can move along in the process. And that's something, the combination of our expertise and our passion around this frontier of technology is something that no competitor can replicate. So I think of this as a rich body of structured financial data, including borrower behavior, document processing, underwriting processing. And that sits entirely within how we collect documents, how we process these documents, how we process closings in the blend flow today. And that compounds over time. That'll make our customers smarter, our AI smarter, our platform smarter and stickier for our customers with every single transaction that flows through it. And for our business model, because we monetize the success of our customers, which was always somewhat controversial, people loved seat-based models in the last decade, we've always been a success-based model. And that's a funded loan-based model rather than user seats. AI-driven efficiency in a success-based model is exactly what our customers want and what we want and what you as our investors want. We want to find a way to drive more success for our customers. So if that loan officer closes five times as many loans, they're more successful and our revenue scales with their success. That's how we've always built this company from the very first day. And not their headcount. Growing their headcount is not a sign of success. Growing their seats is not a sign of success for our customers. The cesspocalypse, as they call it, that's happening right now, I think of that as our greatest catalyst. And we're using this moment to stay aggressively on offense in two distinct ways. And I always like to start with our customers first. So first, we're going on offense to make the products we deliver to our customers agent first. And by agent first, what I mean is that the agents are taking a first pass of every single piece of work that's done behind the scenes. And so that means when a new piece of data comes in, a new document comes in, something gets updated on the file, agents take a first pass of underwriting, security, compliance, regulatory checks, all the things that happen manually today behind the scenes that our lenders are required to do. We want the primary way that our customers engage with their customers to be this new way where agents are taking a first pass and the humans that live there at our customers are the oversight layer to make sure the agents are doing the right things and checking the right things. And in this industry, which requires absolute precision, security, compliance, Blend has been a trusted and is a trusted enterprise grade bridge to AI adoption and Gentic AI adoption. And while I think really highly of the generative AI models that are out there in the foundation model companies as thoughtful knowledge bases and delivering really great tools around building agents, what Blend has built It's to drive the right outcome from the right actions. And that's especially important in a heavily regulated industry subject to fair lending laws. And our customers can't afford hallucinations and the calculations around things like income and income verification have to be perfect. And they have to know when they have to jump in to oversee what the AI does. They need a system that doesn't just look at documents and make sure they're the right document, but actually understands the documents and reconciles those documents against complex hundred page or thousand page guidelines that are imposed on them by the credit risk teams, by regulators and investors. And that's a moat that, you know, I don't think generative AI companies understand. really want to cross. I think they want to be the tooling layer. And it's so specific to the industry. And so that's where I'm excited. It gives us an opportunity as an existing workflow layer for our customers to really step in. And so just a few days ago, exactly a week ago, in fact, on March 3rd, we officially launched our flagship product in this space called Blend Autopilot, which is simple. It's an agent that lives alongside every aspect of the Blend origination process as the customer is going through it. And it serves as the product that looks at every data field, every document, checks it against guidelines, runs calculations, creates additional follow-ups, takes action if necessary on that file, generates artifacts so the customer can see all the work that's being done. And it's familiar with the most technical guidelines out there, that some of them are 800, 900 pages long. And I'm thrilled to share that we now have seven large customers who have turned this on or are wanting to turn this on in the coming days. And that's just within a week of us launching it. That's in the preview period. And so we're very excited about that. And that came on the backs of, you know, we have a small group of customers that serve on our customer advisory board, which was last month. And we previewed this for them before our public launch last week. I have to tell you, you know, for me, it was a profound moment. Because we spent the morning there and they were, you know, people were talking about the costs in banking and how much manual work there is, how much stare and compare that is, there is. And then that was a morning session. We had a third party come in and demonstrate that to them and what's going on in the industry. But then when we demonstrated autopilot live, showing them that if you had a really smart brain that was taking a first pass at everything that was doing and could instantly detect something coming in from the consumer and where it needs more data or more documents, validating that against guidelines, doing calculations. updating the loan file without any human intervention. I mean, you could feel the energy in the room shift. For these leaders, it wasn't just another software update, another little feature improvement from Blend. It was a genuine moment of inspiration because they've wanted to have this elastic capacity where in order to grow their loan volume, let's say mortgage rates come down or they're growing their personal loan business or whatever it may be, They didn't want to have to hire hundreds of people. And then if volumes come down, have to go back and fire those people. They wanted to rewire how they do things. And I think this is their first shot at really being able to do that. And it's thanks to some of the generative AI capabilities that we built into our platform. And so traditional, just to give you a little more color on the product, loan officers or underwriters of manual review documents that come in. As an example, and borrowers have to wait a couple of days for that to happen because that's a human process and somebody has to go through all the pages of their documents and all their pages of their loan application file and then go back to them and do some staring and compare and go back to them and say, hey, I need these three or four other things. And then there's this back and forth that takes a few weeks, which is why it takes so long to close a mortgage loan, for example. That's something that Blend Autopilot flips entirely on its head. And so there's four key things that Blend Autopilot brings for our customers. The first is real-time intelligence. So like I said, everything that Autopilot sees comes in in real time. It does the checks. And within 15 to 30 seconds, it's going back to the consumer and saying, hey, I need this additional thing based on the fact that I saw that your bank account's in a trust. And that could be with out-of-the-box guidelines like Fannie Mae and Freddie Mac, or it could be complete custom guidelines. A lot of our customers do home equity lending or auto lending or personal lending. And so we launch with the capability of custom guidelines because we know our customers have their own credit boxes that they have to be able to fit these things into. So the first is that real-time intelligence. The second is contextual workflows. And by that, I mean... It's the agent is triggered by events in our system that have a lot of context to them. And then as the output, they have the ability to trigger native workflows that already exist within the blend infrastructure. And that's which has always been part of our core value proposition. You know, we we've always wanted to and we have driven a better experience for the consumer where we aren't going to them when they need to provide an explanation for something and saying, hey, write up an explanation, print it, sign it, take a photo of it and upload it. When we need an explanation from them, they enter it in plain text. And so when we have those things that we need from the borrower, just like a human would request that in our system, the agent requests it in the same way with that nice workflow that guides the borrower through that. And so it's almost like you're working in a dynamic experience that is aware of everything that's going on in your credit file as a consumer. And so we have native ways of handling that at Blend already, and the agent is aware of that and takes the right actions. That's the second, which is these contextual workflows. The third is, you know, the seamless updates that we get allow autopilot to automatically update application fields. So, for example, income calculation is a very complex part of the lending guidelines, usually, because it's just it's one of the things where there's such a variation how people make money in this country. Yeah. And just to give an example, I ran this on my income, which was a tax return, a W-2 with bonus and some other kinds of income and then K-1s and 1099s. And I ran it dozens of times to see the outcome. And it was calculating my income perfectly every time. And so that's the power when you orchestrate the generative AI in the right ways and you orchestrate the agents in the right way and you give them the right context, you can be almost deterministic in the outcomes that you get, which is very important for this industry. And last, the fourth thing I'd say is it's built for compliance. Autopilot is not making credit decisions. It's taking a first pass, which is overseen by a human ultimately. It's not triggered by a human, but it's overseen by a human. And I think that's the future where agents are going to live. And I said that earlier today, but agents are going to take a first pass of all this busy work and humans are going to be there to make final decisions. And that's exactly how Autopilot is built. You know, the borrower data that our customers have, I know they're very, you know, it's never used to train or improve AI models. So we're not risking our customers data, which is important in this regulated industry. And especially for banks and financial institutions, it's very important that we do that in the right way. So. In summary, to say about automating the stare and compare and calculations and guideline work that's plagued this industry for decades, I talked about the $11,000 problem on our last earnings, and this is our approach to help them solve it head on. I don't want only our customers to have access to an agent-first world. As somebody who is very passionate about this and thinks about how agents can do so many things today and they're only getting better, I also want Blend to be an agent-first company where agents are taking a first pass of our work. And so we're re-imagining everything internally at Blend. And it started with how we build and to now how we sell, how we manage and support our customers. And to me, that doesn't mean just getting our teams access to new tools like Cloud Cowork or Gemini or ChatGPT, which of course we've done those things, but it means fundamentally changing who does the work, when, and who reviews it. And it's the same model that we're building for our customers. The agent gets triggered, it executes something and it goes to the employee to oversee. And I am personally so passionate about this effort. I'm driving this effort myself. And our goal is to be in the top 1% of all companies, not just public companies, but all companies and how we adopt and operate with AI agents at Blend. So what that means for us is that in practice, our software developers are working with agents to write the code already, but I actually want the agents to take a first pass. So as new tickets are created, new support tickets come in that outline a bug, the agent should take a first pass and say, hey, here was the bug. Here's a pull request of the code that needs to change, but then goes to a human to do a final review of to make sure that fixed the bug in the right way. I want the agents to be doing the grunt work and passing that work onto our software engineers to make sure that it's solved. And that means that we're able to handle things like building new things or fixing things 24-7. And that's the same with go-to-market. If there's an upcoming business review, I want the agents to take a first pass. Or if there's internal back office teams... IT support, our revenue teams. I just want to get agents working for them as well, surfacing output and letting people, the humans that we have, focus on judgment and final decisions and reviewing the work the agents do. And for me and for Blend broadly, I think this means we'll be able to move a lot faster and we'll be a lot more efficient. We'll be able to handle you know, growth in our company, you know, without having to have tons of new capacity because agents scale really well and we'll use that to grow our margins. But more importantly than all that, because it lets us move faster, we'll be able to do a lot more for this industry. When agents are handling all this work behind the scenes, we're no longer bottlenecked with the same multi-day or multi-week cycle that exists for our customers that we, you know, have internally with some of the things we have to do. Something comes in. The first pass is done within minutes and become a leaner, more agile organization and one that I hope can simply outpace anybody in our space. And so. To wrap up, you know, I don't think of blend as, you know, the market recovery and all those things that I said in the beginning, those are fully in the rear window. We have spent the last two years doing the hard work of clearing away debt, simplifying our business, and building a foundation for sustainable growth. And I'm not even thinking about those. Now I'm thinking about how do we build an agent-first world, both for ourselves and for our customers? And so we have a profitable, scalable platform that is ready to win in any environment. And whether rates stay flat or they come down and we see big improvements in volume, we're in a pole position to serve our customers and drive massive value for our shareholders. So with that, I'll turn it over to Jason to walk through the financials.

Thank you, Nima, and thanks to everyone else on the call. I am pleased to report that we delivered another quarter of solid financial performance to close out 2025. This quarter's results once again demonstrate the resilience of our core business and the significant operating leverage we have created through disciplined cost management. Total revenue in the fourth quarter of 2025 was $32.4 million, which was just slightly below the high end of our guidance range and was up 7% year over year. This performance was helped by a return to growth in our mortgage suite, which generated $18.8 million in revenue, up 3% year over year. Stabilizing churn and stronger than expected macro bolstered our mortgage revenue results, And Blend's funded loan growth was solid, growing 11% in Q4, and our economic value for funded loan came in at $83 for the fourth quarter, within the guidance range that we gave on our last call. Consumer banking suite revenue for the fourth quarter was $11.5 million, representing 21% year-over-year growth. The sequential decline of 10% from the third quarter was driven primarily by the churn of one large customer that we just talked about last quarter, as well as seasonality and home equity, but partially offset by new deployments. Shifting back to the consolidated results, our total gross profit was $24.5 million. After excluding stock-based compensation and the amortization of capitalized software development costs, our non-GAAP gross profit was $25.8 million, and our non-GAAP gross margin was 80%, up from 78% last quarter. Non-GAAP operating expenses were $20.3 million, or down 4% quarter over quarter. Non-GAAP operating income was $5.4 million, above the high end of our guidance range and representing a non-GAAP operating margin of 17%. And free cash flow for the quarter was positive $1.3 million. For the full year of 2025, we generated total free cash flow of positive $2.8 million. Our balance sheet remains strong. We ended the year with 68.3 million in cash, cash equivalents and marketable securities, and with zero debt. During the fourth quarter, we continued to execute our share repurchase program. We repurchased 5.1 million shares worth approximately $16 million, concluding our $25 million repurchase authorization. This last repurchase, like the new $50 million authorization that we are announcing today is driven by and reflects our confidence in the long term value of the business and our commitment to disciplined capital allocation. Before I turn to our guidance for the first quarter, I'd like to talk about how we're thinking about the business right now and what that means for how our results might play out over the coming quarters. First, our mortgage business returned to year over year growth in the fourth quarter. And based on the stability of our customer base, new deployments that are ramping up in 2026, and a positive mortgage market outlook, we expect to see that trend continue. We will remain cautious in our optimism until rates really come down and mortgage volume, particularly refi, really picks up. But we have seen early signs of improvement and are ready to take advantage of a market uptick. Second, we remain optimistic about our consumer banking business. But as we've told you before, we are still concentrated at the higher end of the market for consumer banking, and both wins and losses can create lumpiness in our results. To give you some specifics, 2025, in which we saw consumer banking growth 35% year over year, was bolstered by a large customer that went live late in 2024, contributing about $5 million to growth in 2025, and which is now at a steady state. Conversely, we talked last quarter about the roll-off of a large customer that was acquired. This customer contributed approximately $2.4 million of consumer banking revenue in 2025, largely through home equity loans, and we do not expect any consumer banking revenue from this customer in 2026. Net-net, you should think about consumer banking Starting off with a little under $11 million of revenue in Q1, and then having similar seasonality in 2026 as it did in 2025. We'll remain conservative in our outlook for the consumer banking business, given the shape of the customer base, but we do see a lot of opportunity going forward, and we're excited about what is to come. Third, as you know, we have been very diligent regarding our costs, both in terms of trimming unnecessary spend, as well as being judicious about any spend that we add. We will continue that mindset going forward. And in fact, I expect that over time, we will get even more effectiveness and efficiency from the leverage of AI in our internal processes. An effort that Nima talked about and that is already prevalent across the company, not just in software engineering. As you model Q1, please note that our early adoption of ASU 2025-06 significantly changes how we report software R&D expense. Because we are now capitalizing less software development costs, you will see a divergence between the growth of our reported expense and the growth of our actual cash outlay for R&D. Specifically, for the first quarter of 2026, we expect non-GAAP R&D expense to be approximately $7 million, which represents a 20% year-over-year increase. However, our underlying cash R&D expense before capitalization and amortization is actually expected to decline by roughly 15% in that same period. While this creates a year-over-year headwind in our reported leverage for Q1, We expect this gap to narrow as the year progresses and we lap prior period comps. You should view this Q1 $7 million figure as the new baseline run rate for your models and ignore the seasonal patterns in our R&D expense that you saw last year, as those were influenced by our prior capitalization policy. Now, turning to our expectations for the first quarter. We expect total revenue for the first quarter to be between $28.5 million and $30 million, which represents approximately 6% to 12% growth over the first quarter of 25. Underneath those headline numbers, we're expecting mortgage suite revenue to grow at or above the high end of that range, but for consumer banking growth to be more muted based on the factors I discussed earlier. We expect mortgage suite revenue growth to be driven by solid growth in mortgage volumes, where we expect the market in Q1 to be between 1.1 and 1.2 million units. This growth should be partially offset by lower year over year economic value for funded loan, which we expect to be in the range of 84 to $85 in Q1, with the decline primarily due to the transition of certain products to a partner model. Turning to profitability, we expect first quarter total non-GAAP operating income to be between $2 to $3 million. This range implies a non-GAAP operating margin at the midpoint of just under 10%. Seasonality typically pushes down operating margins in the first quarter of the year, but the accounting changes I discussed earlier also have a material impact, especially as you compare year-over-year trends. Before we turn the call over for questions, I did want to add, through our assessment of internal control over financial reporting, we identified a material weakness in our revenue process for the year ended December 31st, 2025. While the material weakness was confirmed in the fourth quarter, we're also disclosing immaterial out-of-period adjustments related to the first quarters, first three quarters of 2025. Revised figures are available in the appendix of our supplemental slides on our website and will also be detailed in our upcoming 10K filing. In conclusion, I want to say that we are incredibly excited about a number of aspects of our business in terms of what we can deliver to customers through some of the innovative product initiatives that Nima talked about. in terms of our execution as we focus on what matters and we leverage AI to get more done than we ever have before, in terms of our mortgage revenue returning to year-over-year growth last quarter, and in terms of a market that looks like it might show some real improvement for the first time in several years. We hope that you all are as excited about the journey as we are. And now let's take your questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Dylan Becker of William Blair. Your line is open. Please go ahead.

Appreciate the question here. And Nima, I appreciate all the comments around kind of the strategic positioning with vertical AI. If we're to think about autopilot, I know you kind of said the existing process today costs about $11,000. I guess, how much of that is directly kind of targetable with your current agentic capabilities? And as we think about kind of your capabilities evolving over time, how much value do you think you can kind of extract away against that? And what does that mean for kind of long-term EVPFL economics in your mind as we kind of obviously look to kind of attack or chip away at that kind of relatively exorbitant cost in the process today?

Yeah, great question. Thanks, Dylan. You know, my my approach on this one is going to be to under promise and over deliver on the economics. You know, just to just to share sort of some context, though, which is, you know, the cost of eleven thousand dollars, about four thousand is I'll call it operational cost. And then there's a decent amount of commissions and marketing costs that are also in there. And so I think there's a material amount of manual effort that goes into these. And so if we can make the humans in the process 2x as efficient, 3x as efficient, I think there's a very good market opportunity for us, which is why we're attacking this so swiftly. And the team that's working on this, just to give you a little bit of perspective, is we're moving day to day. like every week where our customers are going to see material new updates to this and new new capabilities because it's an area that we're passionate about and we we we think can really move the needle for them we've always been here for our customers and i think this is a this is sort of the the uh the our magnum opus if you will and so i think you know for me i want while i want to under promise and over deliver i'll leave you with one anecdote which is um I was talking to one of our customers who does similar things, maybe a little bit less scope than what our product does today. And I was like, you know, how should we charge for this long term and short term? You know, we have this preview period which we gave to our customers. And, you know, he said, well, just so you know, I do this with an outside vendor and I pay them more than I pay you per loan by a decent margin just to do a part of the process that you do. And so I think the opportunity is there. It's on us to execute. And so let us go execute and we'll come back to you every few months with updates.

That's helpful. Appreciate the anecdote. And I do think, yeah, to your point, the fact of kind of elevated customer momentum and activity, despite it being in preview for less than a week, does speak to that value proposition. Maybe Jason, for you, it's pretty impressive what you guys have been able to do on the expense side and appreciate the color and kind of some of the moving accounting parts there. But as we kind of think about the potential recovery taking place around the volume dynamic, I guess, could you remind us what to maybe expect from kind of like the potential for incremental operating leverage, how we should think about cost growth relative to potential revenue growth in that scenario? Just kind of any way to think about the operating leverage as you kind of think about and sit there looking at the model.

Thank you. Yeah, good question. Obviously, we haven't guided to the rest of the year, so I can't give you that sort of guidance. But I think, you know, implicit in our Q1 guide is sort of a re-baselining. And I think you can think about That is your starting point. Obviously, we do have some variable costs in our cost of revenue that will scale with revenue. But on the operating side, it's really a question of where we choose to invest and where we are able to get efficiencies. And I think you can think about Q1 as the starting point for that.

Your next question comes from Ryan Tomasello of KBW.

Ryan?

Your line is open. Please go ahead.

Hi, everyone. Sorry, am I coming through? Yes. Sorry about that. Regarding the two new mortgage customers, I believe you cited that you wanted to quarter. Can you just provide some color there on whether those were competitive takeaways? And if so, what you think were the drivers of those wins?

You know, I think, you know, the driver of those wins is that we made a commitment to our customers that we would invest through the cycle. And we would keep innovating. And we've innovated on our mortgage product. We've innovated on our consumer products. We've innovated on our closing product. And now we're building an agentic suite that can live across all those things. And they see that. I mean, it's not easy to rely on partners in this industry because it is such a cyclical industry. And we made the commitment early on. And we're going to keep growing. And obviously, we have our own you know, things that we've had to deal with the last few years. But, you know, I think people have seen that there's our commitment and my commitment is there and we're going to make sure that they're successful. And I think that that's ultimately what leads to customers believing in us and wanting to work with us.

Great. And then on the new rapid products that you've rolled out over the last few quarters, can you just talk about the level of uptake you've been seeing there, if that's tracking in line with what you were expecting, and then on the pricing side, the type of uplift you're seeing from earlier adopters of the rapid products. Thanks.

Yeah, great question. And we mentioned one of the ones that signed with us in Q4, and it's a pretty material uptick in pricing from their EVPFL. It's not live yet. As an example, it's a fairly large bank. But the way I think of Rapid, and it has been something that our customers do really want, and they want it for two reasons. So the two areas that we serve with Rapid are home equity and mortgage refinances. With home equity, it's definitely something that our customers care about, and they want to be able to serve the $315,000 in equity that their consumers have and drive savings to them on their debt if they need to consolidate debt. And so it's something where we have a flagship home equity product, and this is just more of a personalized real-time offer with a real-time pre-approval that is sort of a beautiful tailor experience to that specific consumers. And so I was on a call earlier today with a very large customer that one of the top 10 home equity lenders in the country, who's, who's going live here in a few months. And, you know, it's, this is going to be table stakes for them going forward and, you know, being able to serve a high conversion experience to that top of the funnel, and then pairing that with autopilot, which is going to lead to a lower, um, lower cost of operation because lower variable costs, because they'll be able to have these things happen in real time as the consumer's going through self-fulfillment, if you will. I mean, that's sort of the dream combination. And so the uptake's been good. I mean, it is a big shift for them. I'd say business-wise, that's a much bigger change management exercise in some ways than the the autopilot product because it, you know, it's sort of doing work in the background versus changing your entire up funnel, but yeah, the uptake's been good. And, and again, let's, let's let's let those results continue to play out and, and we'll, we'll try to under promise and over deliver there as well.

Great. Thanks Neiman.

If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Your next question comes from the line of Griffin McMaster of Wells Fargo. Your line is open. Please go ahead.

Hey guys, thanks for the question here. I just wanted to ask on the top of funnel and it's great to kind of see that consumer banking customer also kind of looking at you guys for mortgage solutions. I just wanted to ask you around if there's any way to think about how many customers across the base or your kind of overall landscape could be target customers for both of these products and then kind of along with that, with the, you know, recent hires, um, as new chief of revenue officer, if there's any changes around the go to market and kind of had to think about this going forward.

Yeah, maybe I'll start with the second question. Yeah, we're excited to welcome Matt on board. And one of the key shifts we're making there is having a dedicated client sales team that's focused on our existing clients for the exact reason that you asked your question, I think, and helping our customers, existing customers, both adopt more products that are free, as well as new products that can grow value for them and we charge for. And so that's a dedicated new motion that we have, which, which we're very excited about and it'll help those people be a lot more focused on the existing customer base. And then, you know, a separate new, new client sales motion that'll help us go and get more and more of these great logos that we have added to our roster. And, you know, I think that that's a, that's a nice change for us. And then, you know, to answer to your first question around what's the, what's the target market for all of these things? You know, it's interesting. I think, You know, when I look at what's actually in place in practice in the industry today, these extremely low friction conversion funnels tied to a very automated self-fulfillment process are basically in place now. Nowhere. I mean, some of the technology wasn't there until six months ago. And, you know, you know, on the low conversion funnel, some of the data sources that were required to drive that level of low friction weren't really prevalent until about a year, year and a half ago. And so I think the timing is good for us in the market to be able to serve that. And then I'd say maybe most importantly, the thing I'm most excited about across all of these things, especially for that customer you mentioned, that's that's using us for all the actually all the non home lending products that we want a top 40 credit union. What I really want to do and what they're excited about is help them make their members members for life. And so, you know, a lot of this is not dependent on. why that consumer comes in the door, why that member comes in the door with them in the sense that a member can come in thinking they want one thing from you, thinking, hey, I just want a new credit card. And you're like, hey, did you know that you have a ton of equity in your home and we can save you $1,000 a month if you consolidate these other credit cards and things and personal loans that you have into a home equity line? And so this idea of serving the best thing up for the person at that moment in time is something that I'm excited about long-term for our customers. To be clear, we haven't executed on that yet. That's something that we're excited to start working on at some point soon. But that's where we can have not just individual product lines in these consumer and mortgage and home equity, but have it be a holistic solution for our customers and their consumers and members that are coming in the door. And almost all of our customers, even the IMBs that work with us now offer multiple products. They'll offer a home equity and a cash out refi, for example, for somebody who wants cash. And some of them want to start offering things like personal loans. And so... I think that this industry is in need of having unified technology across these things alongside the agentic experiences that I mentioned earlier. And so, again, I think we're just scratching the surface. We obviously have a lot of work to do. And the fact that we're moving a lot faster as a company is great promise towards that. But I realize that we have to show the outcome, show the ultimate outcome to you all before we can really claim victory.

Your next question comes from the line of Aaron Kimson of Citizens. Your line is open. Please go ahead.

Great. Thank you guys so much for the question. The OpenAI Better Partnership made headlines late last week, and I think the most interesting part of that announcement is there's a bit of a pivot there for better, which is historically focused on originating loans. And now the company is talking about doing more of what you do, using technology to help accelerate the mortgage process for banks and credit unions and IMBs. Do you view that partnership as a validation of your business model? And can you help us think about why in an agentic world, it may make sense for banks, credit unions, and IMDs to try and take back some of the mortgage market share they've seeded since the GFC?

Yeah, I mean, I view, I think that kind of highlights two things. One is that there is a big opportunity in this space. And, you know, I know that team very well, I think very highly of them. Um, and you know, it's just different building software is, is, is different than, than building technology. It's something I explained to our customers a lot. It's, you know, building technology is, is one thing, but building software that's integrated and, and actually, and, you know, delivers your end workflow is, is, is just different. Um, And so I do view it as a big validation of our space. And I view it as something that I'm hopeful. I mean, I think I talked about this on one of our calls maybe, I don't know, a few years ago. But about 10 years ago, Rocket Mortgage came out and said, we're going to make it so you can push a button and get a mortgage. And I think that really catalyzed the industry and feeling like, hey, the sky is the limit for us. We don't have to do things the old way. And that was a big catalyst for Blend. So I view all these things that are happening with AI and some of their competitors doing things with AI and maybe some of their potential partners doing things with AI as potential. I think it's going to drive up awareness and that's a good thing. That's a good thing for the industry. The industry is, is actually, I would say one of the most surprising things. I know we said we've been live for a week with this autopilot product, but the fact that we had seven people turn it on without us even, you know, actually without us even really knowing except for the two that emailed us because they had any, they wanted to help turning it on a year and a half ago. And a lot of those were banks and some of those were very large banks and And a year and a half ago, if you had told me that large banks would adopt AI, I would have said, yeah, I think they will too. I think it's just going to take a long time to convince them and a long time to make sure they understand that it's trustworthy. And now I'd say that the momentum and the appetite and the desire to do something great is not just limited to tech companies. People are trying to feel and see what's possible. And so, you know, I know, you know, I obviously have different thoughts on what's possible. And I think the approach of something where humans are are the central drivers and doing the first pass the work. I mentioned that in my prepared remarks. I don't think that's the right future. I don't think that's the future you want to drive towards. I think the future you want to drive towards is a lot of this work is done in a first pass by these agents that are really, really smart. and winning international math competitions that just need the right context and the right instructions. And they can do things that before a human even has to look at it to prepare it in a nice package way for a human. And so that's our approach. It's a little different than the approach of the rest of the market. I think that background agent, background worker approach has only really been possible for a few months and something that we're batting heavily on it because we think it's the highest leverage way for this industry to adopt agentic AI.

Okay, I appreciate that perspective. And then as a follow-up, Autopilot's the first agent for blend intelligent origination. How should investors think about the cadence for additional agents to be rolled out? And what type of consumer loans would you be most excited for next?

Well, we're going to make autopilot, um, available for all product types. It currently works for mortgage and home equity and custom overlays or custom guidelines or overlays, which could be used for other product lines as well. Um, but we, we don't think of that, that capability, which is call it a real-time underwriter, pre-underwriter that's looking at all this work. Um, but there's other things that I think it could, you'll see coming from us. And some of that might be, um, uh, an agent around analytics. So instead of having to go to dashboards, you know, the agent should be pushing you the insights as a customer of ours. You know, what, what loans that, you know, how did your, for the loans that had autopilot, let's just use autopilot. Yeah. For the loans that have autopilot on, you know, are they closing faster? Is doing all that background work helping you? And so we're building out some agents there. We're building agents around the closing process where the QC is very important, making sure that every single signature line and initial and everything is perfect to make sure that our customers don't have any issues at the closing table. But we really want to build, I would say, with all that being said, we really want to build on autopilot and grow that out as a capability because it is something that we're just scratching the surface on. And I think can be something that can manage a lot of the things that humans are required to trudge through today.

If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Your next question comes from the line of Seth Gilbert of UBS. Your line is open. Please go ahead. I will invite Pallav Sinai, your next speaker, to ask a question. Pallav Sinai of Canaccord Genuity. Your line is open. Please go ahead.

Good evening. Thanks for taking the question. Neema, you mentioned in the prepared remarks that the pipeline is up 40% year over year. and that you're seeing a shift towards bundle deals, which is great. Roughly, what percentage of the pipeline would you say is leaning towards bundle deals right now for you?

That's a good question. I don't know the exact percentage of customers. I don't know, Jason, if you have that off the top of your head.

I don't have that in front of me, but I would say directionally that's sort of a key driver of momentum is customers that are interested in multiple products from us either multiple products within the mortgage suite but more and more customers are interested in the fact that we can deliver mortgage and consumer banking products all with a you know similar similar fields similar you know capabilities and integration

Got it. And any commentary on your market share in Q4 and how do you see it evolving in 2026? Thank you.

Yeah, we only release our actual market share as we calculate it once a year when the HMDA data is released in the fall. What I'll remind you is that we talked about last quarter one large customer that was going to be with us from a contractual standpoint for some period of time, but we expect their volume to be rolling off. And when the volume rolls off, we no longer count the volume in our market share. And we mentioned that that customer would probably have a circa 100 BIP headwind for us. And we talked last year about, I think we ended the year at 17% market share. So if you put that headwind on top of there, it's the right way, probably the right way for you to think about it building from there.

Got it. Thanks for that, Connor. That's all from me.

Your final question comes from the line of Seth Gilbert of UBS. Your line is open. Please go ahead.

Hey, thanks for taking the questions. Maybe just first a quick one on the revenue restatement. It looks like it was just in the neighborhood, about $15,000. So just wanted to make sure I got that right, fairly immaterial. And is there anything else you wanted to add on about the restatement?

Revision, first of all. But yeah, no, we essentially just reallocated some of the revenue between different quarters in 2025.

Got it. Okay, that's helpful. And then maybe on the RPO side, you signed 10 new deals, expansion. I think you mentioned one big annual seven-figure customer as well. By our model, you have around $100 million in short-term RPO. So I was just curious if you can talk about when we should maybe expect some of this to fall off into revenue more materially. Thank you.

Yeah. Look, I'll say that it's always great to have RPO in the sense that it is committed and it will turn into revenue at some point. I do want to caution you that in our business, especially on the mortgage side where we're primarily based on funded loans, as Neiman talked about, success-based pricing, RPO isn't really a great gauge for you. But other than that, yes, the short-term RPO obviously will roll off within the next year.

Got it. Thanks. And then maybe just a quick follow-up. On Blend Autopilot, it sounds like the pricing is still being mapped out, but can you talk about applicability? Is it applicable to your entire base of mortgage customers, or are there certain customers you think who will never use AI for cost, security, other reasons? Thank you.

Yeah, I'd say a year and a half ago, Seth, if you'd asked me who's going to use it, I would say there's going to be fast movers and slow movers. And I think now I, I mean, applicability in terms of the, the, the work, the human work of stare and compare and back and forth and reading guidelines and doing calculations. I think that exists no matter what kind of customer of ours you are. So applicability is pretty broad. do I think we'll get 100% adoption? No, of course not. But I do think that our customers are much more eager around AI. I think something's in the air this year. 2026 has been sort of a statement year for AI and people are seeing what it can do on their desktops and Microsoft made a big announcement today around their co-pilot or yesterday about their co-pilot co-work and Anthropic has been making headlines around that. And so, you know, people are starting to see what it can do when they're driving with AI and it opens their eyes to the possibility of, hey, couldn't it do that in the background while I'm sleeping? And so, yeah, I mean, I... I haven't yet heard a customer in all of our discussions. I'll just tell one more anecdote. I was giving an early preview to a customer who came to our customer advisory board and they wanted their larger team. This is one of the very, very large bank. And they wanted a larger team to look at the product because they were really excited about it. And, you know, the first question I asked on the call was, can somebody find me all the reasons why we couldn't possibly do this so we can work through these issues? Because we really need this. And so the mindset has shifted from, hey, like, let's look at this. Let's consider it to, hey, we really need this capability because everyone's been through this cycle of staffing up, staffing down, having undercapacity when volumes are high and having overcapacity when volumes are low. And nobody likes doing that extremely – I shouldn't say nobody. It's not the favorite activity of most people to do that extremely tedious manually checking that the names on two different documents match letter for letter, that the guidelines tell you exactly how to calculate and your calculation is exactly right. And so it's not something that is prized work, but it's real work that has to get done. And that's whether it's a car loan or a personal loan or a mortgage or a home equity loan or line. And that's work that actually AI is really, really good at. Um, and, and so I, I view this as, uh, something that they've all been waiting for in some ways. They've probably been waiting for, for a long time, a lot longer. They probably wanted us to deliver this 10 years ago. It just wasn't because there's, it's, there's so much complexity and so much unstructured content in this industry. Um, it's something that non-generative ML or, you know, other AI approaches, it's just something that weren't, that wasn't that wasn't good enough to do that. a couple of years or three years or four years ago. And now the capability is there. And so the fact that we're launching this and, you know, we're the first, as far as I know, to launch these background agents to, to serve this industry. I mean, that's something that, you know, that was, that's been our, you know, that's been our position from day one. We want to be driving the frontier. We don't want to be copying the frontier. And the frontier is going to keep growing. And so as long as we're driving the frontier, I feel really good about our business.

Got it. Encouraging. Thank you.

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.