Blend Labs, Inc.

Hello, everyone. Thank you for joining us and welcome to Blen's Financial Results Conference Call for the second quarter of 2026. 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 to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to management for their prepared remarks. Please go ahead.

Good afternoon and welcome to Blend's financial results conference call for the second quarter of 2026. I'm Meg Nunnally, Blend's head of investor relations. Joining me today is Nima Ghamsari, our co-founder and head of Blend, and Jason Ream, 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 third and fourth 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 risks and uncertainties, and a number of factors, many of which are beyond the company's control, could cause actual results, events, or circumstances to differ materially from those described in these statements. Please see the risk factors we've identified in our most recent 10Qs, our 10K for the fiscal year 2025, and other SEC filings. Thanks, Meg.

and welcome everyone. The second quarter was another disciplined, profitable quarter for Blend. Revenue came in near the high end of our guidance range and non-GAAP operating income came in above the high end. And Jason will take you through all the financial details in a few minutes. But today, I want to spend my time on the two pillars of our strategy. Autopilot, the agents we build for our customers, and Blend 3.0. Let me start with Autopilot. The big news for us last quarter was that Autopilot became commercially available on July 1st. If you're following along on the webcast, I'd invite you to advance this slide with the words, our AI strategy, guiding our customers at the top. This is the first of two slides that I'll reference today, and the charts on these slides are also available in the supplemental slides on our investor relations website. The chart shows cumulative loans processed by autopilot from a standing start in February to more than 45,000 today, and it's still compounding. The curve is the proof behind everything I'm about to tell you. During this four-month window, more than 65 lenders activated autopilot. They stress tested, surfaced the hard edge cases, and shaped what we shipped. and the preview data backs up why this matters. We're starting to see evidence Autopilot is driving faster clearance times, higher conversion rates and potentially reducing fulfillment costs. Based on our preliminary data of these loans that have gone through our system, our customers are seeing a 10 to 15% improvement in pull-through rates and two to four days of cycle time improvement. Furthermore, we estimate that Autopilot is automating four and a half hours of loan fulfillment tasks on average per loan. This is huge, and our customers are just beginning to grasp the potential. Now that we are commercial as of July 1st, six lenders have already signed contracts that include Autopilot, including Onity, which is one of the largest mortgage servicers in the nation, which is also building its own experiences on top of Autopilot through our Autopilot MCP server. On monetization, we're executing the plan we described in May, with customers signing flat fee one-year contracts for full access. There's going to be a base level of intelligence built into our workflows, but the paid tiers are where the full product lives, what we call our underwriting intelligence, where Autopilot is reading documents, running calculations, reconciling against guidelines, and driving the full loan file forward. Over time, our intent remains to move the paid tiers to a per-funded loan model, just like the rest of our mortgage suite. And when seed-based pricing, which we don't think survives the agentic world when software does the work, You can't charge by the person. It doesn't make any sense. And others are also moving the consumption models to get paid for the activity their AI generates. We made a different choice, which is we get paid on success. We get paid on the outcome, not for the tasks along the way, but for the outcome. So if Autopilot does 10 times the work on a file that never closes, our customers shouldn't pay 10 times more for it. And under our model, they won't. Our revenue scales with our customer success, and that alignment is the business model we've always had. Agendic AI just makes it more valuable and more scalable. Since I get asked about the competitive landscape constantly, let me be direct about it. What gives Blend the right to win? Our answer comes down to four advantages that are hard to replicate. First, where we sit. Blend is the borrower's first point of contact. And because we're there, we see the problems and we fix the problems as they come along. More than half of borrowers apply outside of business hours, and over 90% of people who complete an application do so within 24 hours of starting. Autopilot catches friction the moment it happens, at 10 p.m. on a Saturday, not Monday morning, at the exact moment the borrower intent is the highest and the engagement is the highest. Next, our data. The question behind every AI question I get is, in a world where anybody can call a frontier model like Claude, is a software like ours replaceable? We believe the answer is no, and the reason is our data. Models are converging, and everyone has access to the same models, including us. But what isn't a commodity is what it takes to get the model to perform on a mortgage that has tons of context, tons of loan documents, guidelines, and lots of things that have to be taken into account to make the right next action on the loan. And that's a combination of 15 years of experience and tens of millions of loan application data processing through our platform, which you can't buy. and you can't synthesize 15 years of real borrower behavior and that compounds. I actually see this in our early autopilot benchmarks against a typical Claude plus skills and we see that autopilot performs better in those tests and much better and much cheaper, about one third the cost. Third, the harness. Autopilot is not a wrapper around a generic model. It runs inside of the infrastructure, the data layer, the integrations, the compliance architecture, orchestrating what the agent sees, what tools it can use, which guidelines to apply to a specific loan in front of it, and what happens when it isn't sure. It hands the file back to the loan team. People stay in control of the decisions that matter, and this harness is part of what makes Autopilot more accurate and cheaper than a generic harness. And last, our relationships. We've spent 15 years building alongside lenders, and Autopilot was built the same way, with lenders, for lenders. and with Autopilot MCP, we've opened up our infrastructure so customers and other technology providers can build on top of us rather than around us. And when you step back, this is the bigger thesis. Blend is and can be the agentic infrastructure for relationship banking. The original promise of banking was a relationship, a lender who got to know you and could make a call based on more than just a credit score. That promise didn't disappear because bankers stopped caring. It disappeared because there's so much process and there's so much manual work and manual effort that has to go in to every single loan. But when Autopilot is handling that grunt work on the loans and helping the people who historically did that focus on the customer, when Autopilot's handling those conditions, the follow-ups, the questions that come in at 2 in the morning, and the loan officer can get back to the capacity of serving the customer, I started Blend with my co-founders back in 2012 with a simple thesis. The mortgage process should drive itself, not because humans aren't needed, because the right technology can handle everything that does not require a human. And Autopilot is finally that thesis arriving. And because of what we're seeing in mortgage, the most complex, most heavily regulated process in consumer finance, We believe the same infrastructure extends naturally to home equity, deposits, auto, cards, personal lending, and I think probably broadly, given how much we've honed the harness and the evals around autopilot, probably beyond that to other aspects of underwriting. Agentic AI doesn't replace and doesn't need to replace relationship banking, but it makes it possible to have our customers, the lenders, be even more focused on their customers once again at scale. Shifting gears, if you're following along the webcast, I'd ask you to advance this slide with the words, our AI strategy transforming how we work at the top. This slide gives you a glimpse of how Blend itself is transforming and how it is going to look in the future. And we're calling that Blend 3.0, where if you think of Blend 1.0 as the first 10 years where we built a market leading company, and we're growing quite a bit, growing our market share, growing our customer base and rolling out our first products. And Blend 2.0 is the last four years where we were creating a profitable, long-term, sustainable entity. Blend 3.0 is an agentic first company. And that doesn't mean just for our products, but that also means how we work internally. And last quarter, I described this pattern. An agent will, in the end state of Blend, take the first pass of the incoming work, especially the grunt work that I described earlier before a team member even touches it and applies their judgment. So I won't repeat all that today, but I want you to look at the graph and the graph shows one specific team in the company, which is actually one of our biggest teams, which is the engineering team. And if you look at the gray line and you look at pull requests, which is the gray line in 2025, it was pretty flat throughout the year. And during the holidays, it trailed off And then you look at the blue line this year, we have 3.6x our throughput as an engineering team with roughly the same headcount just since January of this year. 3.6x the throughput. I don't know if you remember, but I told you in May that we were running roughly one and a half times compared to what we were doing in January. And that was the average. That was just three months ago. And now we're 3.6 times. It's a profound thing to think about, which means if we continue at this pace, we could be doing 10 times as much throughput on the engineering team by the end of this year as what we did the end of last year. And I think that will continue to compound as an advantage for us to turn into velocity of fixing customer bugs, handling customer feature and enhancement requests, building the new things like autopilot that power the future of our industry at a faster and better pace. and that's really important because the essence of any software company is how do you serve your customers and create value for your customers? And I think that trend will continue to steepen as we adopt further AI within our organization and as the models get better over time. But given the success that we're seeing in engineering, the next phase that we're doing and what I believe is our job is to take this to the whole company. And so this past quarter, We expanded our efforts in agentic first approaches and we expanded to our go-to-market organization where agents now are reviewing support tickets that come in immediately. And if it's a bug that needs fixing, it can open a pull request. If it's a simple response that they want or a configuration change, it can draft that up for a human to go and click. Yep, that's right or no, that's wrong. I need to change that. Thank you for joining us. Less of a security issue or less of a code issue or less of something that doesn't even need a human approval. I think eventually over time we'll even not need human approvals for some of those things. But it's different functions that I'm talking about, but it's one operating model of how I think the future of agentic technology is. It's still early days, but this is one of the most active topics inside Blend right now. Our leadership team is meeting regularly about it because becoming an agent-first company is an operating decision, not a side project. It's a whole company effort to figure out how would we reimagine this amazing company and customer base from the ground up. because we now get that opportunity because we're profitable, we have our house in order, and all these technologies are accelerating right in front of our eyes. And I said in May that we aim to be in the top 1% of all companies in agentic AI adoption, and that's still the goal. We're tracking our progress by function, we're taking it one piece at a time, and I expect to share more with you in the coming quarters as this rollout matures. Lastly, I want to talk about growth because I know that's a question on everyone's mind. Well, to start with the bad news, the macro is not helping us right now. Mortgage rates moved from 6.4% or so in May to 6.8% in recent weeks because of wars and things that are going on that are outside of our control. And that keeps activity in the market, especially refinance activity, but also purchase activity, muted. And so I've always said we can't control the macro. I just want you to be aware of it because we're obviously paying close attention to it. and it might sort of mute future quarters like Q4 if we expect a certain amount of refinance activity and it doesn't come because rates are high. Just more being aware of it. But that's okay. Our ultimate goal has been and is to generate long-term sustainable growth regardless of the macro environment. In the quarter, we signed 14 new deals and expansions and there's two that I want to highlight. The first is a new logo with a large credit union that included Autopilot right out of the gate. So I think this will be the new norm with our customers as they sign with us. We have some more deals in pipeline that have the same shape, but it's the first time a customer chose Blend and chose Autopilot as part of that initial package. A Gentic AI is becoming table stakes and our customers want it and need it, in fact, to be the best versions of themselves. And I think, like I said, it's a preview of how many of our deals are going to look going forward. The second deal I want to talk about is a cross-sell of our rapid refi and rapid home equity into a top five credit union, which they signed with us a couple of years ago. They got rolled out. They're happy. And this is a great example of how we can expand and deepen with customers as we drive the initial projects to success. And our pipeline continues to build. On our last call, I told you our overall pipeline was up more than 40% year over year, and that overall pipeline is still growing. But the stat I'm more excited about as the year goes on is a narrower one. We brought in new sales leadership this year, at the start of this year, and our late-stage pipeline, the deals we aim to close within the next quarter, grew nearly 40% just between March and June. Late-stage pipeline is what actually is near signing, so it comes with a lot higher level of visibility and Confidence. Just to put some color around this pipeline, that includes another large mortgage customer, a top 20 financial institution, and a solid set of rapid and autopilot deals, which, for example, we expect two additional large rapid deals to close in the coming months. Now, I want to be honest about timing. We expect our pipeline to become signed deals in the coming quarter or so, and maybe some slip. And those signed deals become revenue But this is all dealing with some of the largest financial institutions in the country. So as they sign and they turn on, we expect them to show up in our financials in the medium term. But it does take some time for very large financial institutions to get through their governance around things like agentic tools. So with all that said, I want to say the direction is very clear. Our customers are excited about it. Our largest customers are really leaning in, and my confidence is very high. Our sales discipline that Matt has put in place isn't just limited to new business. It extends to how we manage renewals. We're doing a better job of getting our customers discussions around renewals with us earlier in the process, which means more relationship aspects to working with them, renewing customers for longer terms, broadening the relationship at renewal, and making sure that our pricing reflects the value we deliver which Jason will give you some more color later on how we're thinking about this, where we're seeing renewals and upsells, where we're seeing churn. So let me give you that other side of the coin right now, which is the core of our customer base is renewing for longer and for more. So to wrap it up, the short-term market with the macro, it sort of is what it is. But we're staying disciplined and profitable inside of it. The medium and long term is what we're focused on. 2027 and beyond, as we get autopilot going commercial and growing that, the pipeline we're building, the speed we're gaining with the agentic transformation internally. I am extremely energized about what Blend looks like on the other side of this cycle, not just for us, but for our customers. and ultimately, because we have a value based pricing model, what that means for our financials and for our investors. And so with that, I'm going to turn it over to Jason to walk through the financials.