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Blend Labs, Inc. (BLND)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 platform revenue grew 12% year over year to $26.8 million, above the midpoint of guidance; non-GAAP operating income was $1.0 million and free cash flow reached a record $15.5 million .
  • Blend announced an exclusive process to sell its Title insurance business, fully aligning to a software-first model; results from the former Title segment are now presented as discontinued operations .
  • Record commercial momentum: Remaining Performance Obligations (RPO) hit $158.1 million (+70% YoY), and management disclosed its largest-ever renewal/expansion ($50 million) signed early in Q2 .
  • Guidance: Q2 2025 platform revenue $30.5–$32.5 million and non-GAAP operating income $3.5–$5.0 million; FY 2025 platform non-GAAP operating expenses $85–$90 million .
  • Versus estimates: EPS beat (actual $0.008 vs consensus -$0.005*), while revenue missed (actual $26.8M vs consensus $37.9M*); expect estimate revisions to reflect software-first transition and near-term EV/loan trough. Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Consumer Banking Suite revenue rose 45% YoY to $9.6 million; software platform gross margin improved to 77% (non-GAAP) with total gross margin at 73% (non-GAAP) .
  • Positive free cash flow ($15.5M) and operating cash flow ($20.1M) underscore stronger unit economics and billing collections from late-2024 deals .
  • CEO tone on momentum and pipeline: “closing nearly three times as many deals as this time last year…pipeline nearly double what it was a year ago” .

What Went Wrong

  • Mortgage Suite revenue declined 3% YoY to $14.6 million; EV per funded loan fell to $93 and is guided to trough at $88 in Q2 before recovering as accretive solutions ramp .
  • GAAP loss from operations remained at $(7.7)M (operating margin -29%), with GAAP diluted net loss per share of $(0.04) .
  • Revenue missed Wall Street consensus ($26.8M actual vs $37.9M estimated*) even as EPS outperformed; near-term revenue optics reflect the transition of add-on products to high-margin partnerships. Values retrieved from S&P Global.

Financial Results

MetricQ3 2024Q4 2024Q1 2025 ActualQ1 2025 Consensus
Platform Revenue ($USD Millions)$33.104 $30.122 $26.770 $37.852*
GAAP Gross Margin (%)58% 60% 71% —
Non-GAAP Gross Margin (%)58% 61% 73% —
GAAP Diluted EPS (Continuing Ops) ($)$(0.03) $(0.03) $(0.04) —
Non-GAAP Diluted EPS ($)$0.00 $0.00 $(0.01) —
Primary EPS (Consensus vs Actual) ($)——Actual $0.0079*Consensus $(0.00542)*

Values retrieved from S&P Global.

Segment breakdown

Revenue ($USD Millions)Q3 2024Q4 2024Q1 2025
Software Platform$31.066 $27.637 $24.260
Professional Services$2.038 $2.485 $2.510
Mortgage Suite$21.546 $18.179 $14.638
Consumer Banking Suite$9.520 $9.458 $9.622

KPIs and profitability

KPI / ProfitabilityQ3 2024Q4 2024Q1 2025
RPO ($USD Millions)$107.4 $123.0 $158.1
EV per Funded Loan ($)$99 ~$96 (declined; guided to ~$95 by YE) $93
Non-GAAP Operating Income ($USD Millions)~$0.04 $5.179 $0.977
Free Cash Flow ($USD Millions)$(1.356) $(7.167) $15.498

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Platform Revenue ($USD Millions)Q1 2025$25.0 – $27.0 Actual: $26.8 —
Platform Revenue ($USD Millions)Q2 2025—$30.5 – $32.5 New
Platform Non-GAAP Operating Income ($USD Millions)Q2 2025—$3.5 – $5.0 New
Platform Non-GAAP Operating Expenses ($USD Millions)FY 2025—$85.0 – $90.0 New
Consumer Banking Suite CAGR (2023–2026)Multi-year35% target (Investor Day)Raised to 40% Raised
Mortgage Market Size (HMDA units)Q1 2025800,000 – 900,000 Actual commentary alignedMaintained view
Mortgage Market Size (HMDA units)Q2 2025—1,150,000 – 1,250,000 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Software-first transition & partner ecosystemAnnounced homeowners insurance partnership; opening platform to partners Expanded partnerships (Truework), simplification momentum Exclusive process to sell Title; add-on products moved to partnerships Accelerating
Rapid Home Lending (Refi & Home Equity)Pilot and launch framing; accretive EV/loan potential Rapid Refi GA; early adoption; ROI focus Strong adoption; 1.9x EV/loan for signed deals; conversion +50% pilot Building
AI/automation initiativesPlatform flexibility (Blend Builder) and roadmap DocAI, AI leadership hire; opportunity to automate up to 90% Reinvestment in AI; customer-focused efficiency and products Expanding
IMB focus & servicersGrowing pipeline across IMBs & servicers Dedicated IMB business unit; features and pricing tailored Servicer relationships expanded (now 10 of top 20); IMB pursuit continues Strengthening
Macro/rates, HMDA frameworkOptimism despite rates; HMDA share detail Cautious macro; HMDA units view; pipeline +50% YoY Tariff uncertainty offset by deregulation potential; Q1 volatility; HMDA Q2 1.15–1.25M Volatile but stabilizing
Title business strategyStrategy under evaluation Extended Mr. Cooper partnership; simplification moves Entered exclusive sale process; consolidated to single segment Resolution in progress

Management Commentary

  • “We’re delivering strong results…closing nearly three times as many deals…driving strong adoption of our Rapid Home Lending solutions…pipeline nearly double what it was a year ago” — Nima Ghamsari, Co-founder & CEO .
  • “We are in an exclusive process…for the potential sale of our title insurance business…final step in our journey to simplify Blend” — Nima Ghamsari .
  • “Already signed 5 customers to Rapid Home Lending…initial pilot demonstrated conversion improvements of over 50%…customers are paying 1.9x higher economic value per funded loan” — Nima Ghamsari .
  • “Our RPO…$158.1 million…well ahead of the target only 1 quarter into the new year” — Amir Jafari .
  • “We achieved positive free cash flow of $15.5 million…collection of cash from deals signed in the latter part of 2024” — Amir Jafari .

Q&A Highlights

  • Rapid Refi/Home Equity value: Higher pull-through from tailored flows and integrated rate lock/intent-to-proceed; designed to capture refinance and equity demand efficiently .
  • $50M renewal/expansion: Long-standing multi-product relationship; typically ~50% of RPO collected within 12 months; $50M reflected in Q2 RPO .
  • Business deposit account opening: Built to mirror consumer-quality experiences while supporting KYB and complex business structures; pricing/competitive landscape addressed via platform capabilities .
  • Reinvestment priorities: AI-driven efficiency, go-to-market coverage expansion, and partner ecosystem — all within OpEx guardrails .
  • 2025 priorities: 1) Make existing products loved; 2) Expand accretive add-ons (Close, Rapid); 3) Cross-sell into additional product lines once value is proven .

Estimates Context

  • Q1 2025 EPS: Actual $0.0079 vs consensus $(0.00542)* — beat; Q1 2025 revenue: Actual $26.77M vs consensus $37.85M* — miss. Values retrieved from S&P Global.
  • Guidance implies Q2 revenue of $30.5–$32.5M vs Q2 consensus $31.93M*; non-GAAP operating income guided to $3.5–$5.0M . Values retrieved from S&P Global.
  • Expect models to reflect (a) EV/loan trough near-term from partnership transitions and initial mortgage-only deployments, (b) improving contribution profit per loan and margin mix from Rapid and Close .

Key Takeaways for Investors

  • Blend’s software-first pivot is advancing: exclusive Title sale process and partner-driven add-ons compress reported revenue but improve contribution margins and capital efficiency .
  • Commercial traction accelerated: record RPO ($158.1M), largest renewal/expansion ($50M), and broadened servicer/IMB relationships support multi-quarter revenue visibility .
  • Near-term optics: EV/loan to trough ($88 guidance) before rising with Rapid and Close attach; watch Q2 revenue range and operating income expansion .
  • Consumer Banking is a durable growth engine (+45% YoY in Q1), with new business deposit account opening and borrower interaction tools (Glia) enhancing platform stickiness .
  • Cash generation and operating discipline improved: positive FCF ($15.5M) and tighter OpEx guide ($85–$90M FY) enable reinvestment in AI, go-to-market, and product roadmap .
  • Trading setup: EPS beat vs revenue miss (consensus) may focus investors on margin trajectory and RPO-backed growth; catalysts include Title divestiture completion and Rapid adoption milestones .

Additional relevant press releases around Q1 2025:

  • Business Deposit Account Opening launch (May 7, 2025) .
  • Glia interaction integration for lending support (May 6, 2025) .