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Blend Labs, Inc. (BLND)·Q3 2025 Earnings Summary

Executive Summary

  • BLND delivered total revenue of $32.9M and non-GAAP operating income of $4.6M, both ahead of guidance midpoints; GAAP diluted EPS from continuing ops was $0.02 and non-GAAP diluted EPS was $0.00 . Versus S&P Global consensus, revenue and EPS modestly beat, while EBITDA missed materially (see Estimates Context) (values from S&P Global).*
  • Mix shift continued: Mortgage Suite revenue fell 18% YoY to $17.7M, while Consumer Banking Suite rose 34% YoY to $12.7M; Consumer Banking reached 39% of total revenue (up from 29% a year ago) .
  • Q4 2025 guidance: revenue $31.0–$32.5M and non-GAAP operating income $2.5–$3.5M; HMDA market size view maintained at 1.13–1.23M units for Q4 and 1.07–1.17M for Q1’26 .
  • Management highlighted five consecutive quarters of non-GAAP operating profitability, a pipeline up ~60% YoY, and strong traction for Rapid Home Equity and AI “Intelligent Origination,” while flagging 2026 market share headwinds from Mr. Cooper (contract revenue largely protected through Q2’28) .

What Went Well and What Went Wrong

  • What Went Well
    • Achieved non-GAAP operating income of $4.6M (14% margin), up sharply YoY and above guidance high end; non-GAAP gross margin improved to 78% . “We delivered … non-GAAP operating income that exceeded the high end of our guidance. This marks our fifth consecutive quarter of non-GAAP operating profitability” — N. Ghamsari .
    • Strong Consumer Banking momentum: revenue up 11% QoQ and 34% YoY to $12.7M on go-lives and ramping usage at larger customers .
    • Commercial traction and pipeline: 14 new/expanded deals (including a seven-figure expansion with a top-20 bank); pipeline up ~60% YoY . “The question from customers is … ‘How fast can you get [AI] into our hands?’” — N. Ghamsari .
  • What Went Wrong
    • Mortgage Suite headwinds: revenue down 18% YoY to $17.7M due to intentional transition to partnership models, pricing on a large renewal, and some churn; EVPFL guided down to ~$83–$84 in Q4 .
    • Free cash flow turned negative in Q3 (-$5.0M) after two positive quarters YTD; management cited Q3-specific S&M spend (Blend Forum) and lower software capitalization rate as drivers of higher non-GAAP opex .
    • Market share pressure to persist into 2026 (approx. 100 bps headwind) from Mr. Cooper volume migration, even as the contract protects a significant portion of revenue through Q2’28 .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$33.10 $31.52 $32.86
GAAP Diluted EPS – Continuing Ops ($)$(0.02) $(0.03) $0.02
Non-GAAP Diluted EPS – Continuing Ops ($)$(0.01) $0.00 $0.00
GAAP Gross Margin %74% 74% 74%
Non-GAAP Gross Margin %75% 76% 78%
GAAP Operating Income ($M)$(11.28) $(4.62) $(4.91)
Non-GAAP Operating Income ($M)$0.32 $4.71 $4.62
Non-GAAP Operating Margin %1% 15% 14%

Segment revenue

MetricQ3 2024Q2 2025Q3 2025
Mortgage Suite Revenue ($USD Millions)$21.55 $17.96 $17.74
Consumer Banking Suite Revenue ($USD Millions)$9.52 $11.43 $12.72
Total Software Platform ($USD Millions)$31.07 $29.39 $30.46
Professional Services ($USD Millions)$2.04 $2.13 $2.40
Total Revenue ($USD Millions)$33.10 $31.52 $32.86

KPIs and other items

KPI/ItemQ1 2025Q2 2025Q3 2025
Remaining Performance Obligations (RPO) ($M)$158.1 $190.4 n/a
EVPFL ($ per loan)n/an/a$86; Q4 guide: ~$83–$84
Cash, Cash Equivalents, Marketable Sec. + Restricted ($M)$109.8 (incl. restricted) as of 3/31/25 $93.3 (incl. restricted) as of 6/30/25 ~$82.3 (incl. restricted) as of 9/30/25
Share Repurchases$(2.6)M in Q1 $(1.6)M in Q2 $(5.0)M (1.6M shares); $15.8M remaining authorization

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)Q4 2025n/a$31.0–$32.5 New
Non-GAAP Net Operating Income ($M)Q4 2025n/a$2.5–$3.5 New
EVPFL ($/loan)Q4 2025n/a~$83–$84 New
HMDA Market Size (units)Q4 20251.13–1.23M (Aug view) 1.13–1.23M (“still a reasonable range”) Maintained
HMDA Market Size (units)Q1 2026n/a1.07–1.17M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/Intelligent OriginationRapid suite adoption highlighted; no dedicated AI framework release in Q1/Q2 PRs Introduced “Intelligent Origination”; embedded agentic AI targeting full-file QC and back-office automation; strong customer pull Stepping up; commercialization narrative strengthening
Rapid products (Home Equity, Refi)Rapid HE/Refi adoption driving ~1.9x EVPFL on signed deals (Q1) Rapid HE momentum; customer focus on 10-day HE processing; Rapid Refi interest ahead of potential rate decline Expanding deployments, rising urgency
Mix & mortgage cycleQ1/Q2: mortgage still soft; platform focus; exit of Title; record RPO supports visibility Mortgage headwinds from partnership transition and pricing; Consumer Banking up 11% QoQ; pipeline +60% YoY Mortgage near-term pressured; Consumer Banking offsetting
Market sharen/a in Q1 PR; record RPO and large renewal (Q2) HMDA share 18.6% in 2024 vs 21.7% in 2023; ~100 bps headwind expected in 2026 from Mr. Cooper volume Near-term headwind, longer-term pipeline supportive
Capital allocationPositive FCF in Q1; no debt outstanding Q3 FCF -$5.0M; repurchased 1.6M shares; $15.8M remaining authorization Opportunistic buybacks; FCF variability
MacroExpectation of higher volumes when rates fall (implied in outlook) Maintains Q4 volume view; sees potential for lower rates aiding 2026; business built to win in current environment Cautious near-term; optimistic medium-term

Management Commentary

  • “We delivered … non-GAAP operating income that exceeded the high end of our guidance. This marks our fifth consecutive quarter of non-GAAP operating profitability” — N. Ghamsari .
  • “We signed 14 new deals and expansions including a seven-figure expansion with a top 20 bank and a major renewal and expansion with a consumer banking customer across six product lines” — N. Ghamsari .
  • “Our EVPFL for Q3 was $86… for Q4, we expect EVPFL to be approximately $83–$84” — J. Ream .
  • “Our entire 2026 plan is built to succeed in the current environment and win… the simpler cost structure… gives us incredible operating leverage in a recovery” — N. Ghamsari .
  • “We repurchased 1.6 million shares worth more than $5 million… leaving $15.8 million remaining under our repurchase authorization” — J. Ream .

Q&A Highlights

  • Mr. Cooper impact and protection: Share headwind expected in 2026 due to lower transaction volume counted in share, but “the majority of the revenue… is protected… through the second quarter of 2028” (no specific revenue number given) . Management framed ~100 bps share headwind in 2026 from this dynamic .
  • Renewal pricing context: The large renewal repriced during 1H’24 when Blend’s balance sheet/cost structure were in flux; management does not see broad renewal risk and noted per-loan value ex this renewal is up YoY .
  • Margins and investment philosophy: Emphasis on small, high-ROI teams, leveraging lower-cost geographies, and not chasing macro cyclicality with opex; willing to “pour more fuel” selectively if initiatives materially shift top line .
  • EVPFL trajectory and mix: Near-term EVPFL pressure from partnership transitions and a tough renewal; long-term upside targeted via Rapid Refi, Close, and AI; Consumer Banking growth remains a priority alongside mortgage .

Estimates Context

MetricQ2 2025 Consensus*Q2 2025 ActualQ3 2025 Consensus*Q3 2025 Actual
Revenue ($USD)$31,930,590*$31,523,000 $32,735,630*$32,860,000
Primary EPS (GAAP diluted cont. ops)$0.0193*$(0.03) $0.0140*$0.0207*
EBITDA ($)$4,810,000*$(3,556,000)*$4,619,470*$(4,788,667)*
  • Q3 2025: modest revenue and EPS beats; EBITDA a significant miss vs consensus (company emphasizes non-GAAP operating income rather than EBITDA) (values from S&P Global).*
  • Q4 2025: consensus revenue at ~$31.78M* aligns with guidance range; consensus EPS ~$0.01* vs company’s non-GAAP operating income guide of $2.5–$3.5M (values from S&P Global).*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Execution remains solid with five straight quarters of non-GAAP operating profitability and expanding non-GAAP gross margins to 78%, despite Mortgage Suite pressure .
  • Mix shift continues toward higher-quality Consumer Banking (39% of revenue) with 11% QoQ growth, partially insulating the model from mortgage cyclicality .
  • Near-term mortgage KPIs (EVPFL) guided lower on intentional partnership transitions and one renewal; management expects most EVPFL headwinds to be “largely behind” entering 2026 .
  • AI and Rapid suite are emerging growth levers; “Intelligent Origination” differentiates via embedded agentic AI within core workflows—an adoption narrative peers may lack .
  • 2026 market share will likely face ~100 bps headwind from Mr. Cooper volume shifts, but revenue impact is partially contract-protected through Q2’28, and mortgage/CB pipelines remain robust .
  • Q4 guide implies modest sequential downtick (seasonality, one-time Q3 items), but volumes are tracking within expected HMDA ranges; watch Q1’26 seasonal step-down .
  • Trading lens: Expect narrative to focus on AI commercialization milestones, Consumer Banking expansions, and updates on top-10 bank pursuits; execution against EVPFL stabilization and 2026 growth path likely to drive estimate revisions .

Appendix: Additional Relevant Press Releases

  • “Blend Unveils Vision for Intelligent Origination” (Oct 15, 2025) — outlines embedded AI operating model and early pilot results (e.g., “full-file QC before funding”) .