• Total Revenue: $41.4 million in Q4, representing 15% year-over-year growth.
• Platform Revenue: $30.1 million, reflecting 16% year-over-year growth.
• Mortgage Suite Revenue: $18.2 million, a 6% year-over-year increase.
• Consumer Banking Revenue: $9.5 million, up 48% from Q4 2023.
• Professional Services Revenue: $2.5 million, slightly up from $2.3 million last year.
• Title Revenue: $11.3 million, near the high end of guidance.
• Non-GAAP Gross Profit: $25.1 million, a 26% increase from the previous year.
• Non-GAAP Operating Profitability: $5.2 million, with an operating margin of 13%.
• Free Cash Flow: Negative $7.2 million, an improvement from negative $20.8 million last year.
• Cash and Equivalents: Approximately $106 million, with no debt.
• Remaining Performance Obligations (RPO): $123 million, a 30% increase year-over-year.
• Non-GAAP Gross Margin: 75% for the platform segment, up from 71% last year.
• Non-GAAP Software Gross Margin: 79%, consistent with the previous year.
• Non-GAAP Title Margin: 21%, up from 15% last year.

• Warning! GuruFocus has detected 4 Warning Signs with BLND.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Blend Labs Inc (NYSE:BLND) achieved 15% year-over-year total revenue growth in Q4 2024, despite a challenging macroeconomic environment.
• The company reported a second consecutive quarter of non-GAAP operating income profitability, with $5.2 million in Q4.
• Blend Labs Inc (NYSE:BLND) expanded its customer base by signing multi-year agreements with a top 10 US bank and PHH Mortgage.
• The consumer banking business grew 42% in 2024, surpassing the 35% target, with Q4 revenue growing 48% year-over-year.
• The company's pipeline is 50% larger than it was the previous year, indicating strong future growth potential.

Negative Points

• The macroeconomic environment remains challenging, with mortgage rates not decreasing as expected despite rate cuts.
• Free cash flow for the quarter was negative $7.2 million, although this was an improvement from the previous year.
• The economic value per funded loan declined sequentially due to strategic partnerships and targeting new customer bases.
• The company faces competition in the market, although it believes it has a strong position due to its resilience and innovation.
• There is uncertainty in the mortgage market, with projections for origination growth being cautious and potentially overly optimistic.

Q & A Highlights

Q: How are customers responding to Blend's offerings in the current macroeconomic environment, and what are they asking for? A: Nima Ghamsari, Chairman of the Board, Co-Founder, Head of Blend, noted that customers are stabilizing their businesses and are willing to spend more, focusing on building scalable operations. They are particularly interested in automation and AI to reduce manual processes, and Blend's platform is well-positioned to help them achieve these goals.

Q: Can you discuss the growth potential of Blend's rapid refinance and home equity products? A: Amir Jafari, Head of Finance and Administration, explained that the rapid refinance and home equity products are expected to drive meaningful increases in economic value per funded loan. These products, built on BlendBuilder, offer flexibility and increased ROI for customers, contributing positively to Blend's growth.

Q: What are the drivers behind the increased growth guidance for the consumer banking segment? A: Amir Jafari highlighted that the increase in growth guidance from 35% to 40% CAGR is driven by Blend's execution across deposits and other solutions. The opportunity size in consumer banking is significant, and Blend is focused on capitalizing on this potential.

Q: How is Blend approaching the independent mortgage banks (IMBs) market, and what is the strategic rationale? A: Nima Ghamsari stated that Blend is focusing on IMBs as a separate business unit to cater to their specific needs, such as branch-level flexibility. This approach allows Blend to serve both banks and IMBs effectively, leveraging its technology to expand its market presence.

Q: What impact do you expect from the rapid products on revenue, and when will they contribute significantly? A: Nima Ghamsari mentioned that the rapid products are already generating revenue, but it will take time for full implementation and ramp-up. Significant contributions are expected throughout the year as more customers adopt these solutions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.