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Blend Labs, Inc. (BLND)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $41.4M, up 15% year-over-year; Blend Platform revenue $30.1M and Title revenue $11.3M. Non-GAAP operating income reached $5.2M with a 13% margin, significantly beating the high end of guidance, while GAAP loss from operations narrowed to $1.8M .
  • Consumer Banking Suite revenue grew 48% YoY to $9.5M, and management raised its 2023–2026 CAGR target from 35% to 40% for FY 2025 outlook; mortgage suite revenue rose 6% YoY to $18.2M .
  • Economic Value per Funded Loan declined sequentially to $96 (from $99 in Q3) due to the homeowner’s insurance (HOI) sale and Truework partnership shift, but contribution profit per funded loan increased; pipeline is ~50% larger YoY, with positive free cash flow expected in Q1 2025 .
  • Q1 2025 guidance: Blend Platform revenue $25–$27M; Platform non-GAAP net operating income ($1)–$1M; HMDA market size expected at 800k–900k units; Consumer Banking CAGR raised to 40% through 2026 .
  • Catalysts: general availability of Rapid Home Lending (Rapid Refi and Rapid Home Equity) with up to 1.5x higher pull-through and >50% faster time-to-close, and the Truework partnership expanding VOIE coverage and efficiency .

What Went Well and What Went Wrong

What Went Well

  • “Non-GAAP operating profitability” and margin improvement: non-GAAP operating income $5.2M (13%), a new record, significantly beating guidance; GAAP gross margin improved to 60% from 55% YoY .
  • Consumer Banking acceleration: $9.5M revenue (+48% YoY), with annual growth of 42% and raised long-term CAGR target to 40% (2023–2026) .
  • Strategic simplification and partnerships: HOI shift and Truework partnership improved efficiency and contribution profit per funded loan; management emphasized platform-first strategy and an expanding ecosystem (“best-in-class providers”) .
    • Quote: “These efforts have led us to our most profitable quarter yet, and sets us up to fully focus on our core mission—delivering frictionless origination software” .

What Went Wrong

  • Sequential revenue decline vs Q3 (seasonality and macro headwinds): Q4 revenue $41.4M vs $45.2M in Q3; mortgage industry remained subdued entering Q1 2025 .
  • Economic Value per Funded Loan lower at $96 vs $99 in Q3 due to HOI sale/partnership and Truework transition; management set a new baseline of $94 for Q1 2025 before recovering to high-90s by year-end .
  • Free cash flow remained negative in Q4 (–$7.2M) despite improvement YoY; cash used in operations was –$4.6M in Q4 .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$36.104 $40.5 $45.184 $41.408
GAAP Diluted EPS ($)$(0.13) —$(0.03) $(0.03)
Non-GAAP Diluted EPS ($)$(0.08) —$0.00 $0.00
GAAP Gross Margin (%)55% —~58% 60%
Non-GAAP Gross Margin (%)55% —~58% 61%
Non-GAAP Income from Operations ($USD Millions)$(13.114) $(5.6) $0.04 $5.179
Non-GAAP Operating Margin (%)(36%) ——13%
YoY Revenue Change——11% 15%
Vs Estimates (Revenue, EPS)N/A (S&P Global consensus unavailable)N/AN/AN/A

Segment revenue trend

Segment ($USD Millions)Q2 2024Q3 2024Q4 2024
Mortgage Suite$18.5 $21.546 $18.179
Consumer Banking Suite$8.0 $9.520 $9.458
Professional Services$2.2 $2.038 $2.485
Total Blend Platform$28.7 $33.104 $30.122
Title$11.8 $12.080 $11.286
Total Company Revenue$40.5 $45.184 $41.408

Key KPIs

KPIQ2 2024Q3 2024Q4 2024
Remaining Performance Obligations (RPO) ($USD Millions)$87.4 $107.4 $123
Economic Value per Funded Loan ($)$97 $99 $96
Free Cash Flow ($USD Millions)$(8.5) $(1.356) $(7.167)
Cash, Cash Equivalents & Marketable Securities ($USD Millions, incl. restricted)~$120 $124.1 $105.8

Notes:

  • Sequential revenue moved from $45.2M (Q3) to $41.4M (Q4), reflecting typical seasonality and macro headwinds .
  • Non-GAAP operating income expanded to $5.2M in Q4, a material improvement from near breakeven in Q3 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Blend Platform Segment Revenue ($M)Q1 2025N/A$25.0 – $27.0 New
Platform Non-GAAP Net Operating Income ($M)Q1 2025N/A($1.0) – $1.0 New
HMDA Mortgage Market Size (units)Q1 2025N/A800,000 – 900,000 New
Consumer Banking Suite CAGR (2023–2026)FY 2025 Outlook35% (Investor Day 2023) 40% Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/automation in originationEarly doc automation and AI integrations to reduce manual steps Continued focus; DocAI, platform embedding DocAI transforming post-closing; aim to automate up to 90% of processes; Srini hired to lead AI Expanding scope and leadership
Partner ecosystem (platform-first)Builder-led modular innovation; new deposit funding via Astra HOI partnership with Covered improves unit economics Truework VOIE partnership; simplification lifts contribution profit per loan Scaling across categories
Rapid products (Refi/Home Equity)Pilot refi flow; customer urgency rising EV per funded loan expected near $95 by YE; set to include Rapid Rapid GA; up to 1.5x pull-through, >50% faster closings; initial customers live From pilot to commercialization
Mortgage macroRates easing could unlock demand Optimism; customers reinvesting; RPO above $100M Agencies’ Q1 2025 originations cut; Blend cautious; HMDA units 800–900k Cautious near term
IMB strategyFeature work for IMBs (configurability, disclosures) IMBs part of pipeline momentum Dedicated IMB unit launched; tailored SKU; lower EV per loan short term Focus and segmentation
Consumer Banking growth$8M (+37% YoY); deposit onboarding strength $9.5M (+54% YoY); accelerating $9.5M (+48% YoY); CAGR raised to 40% Sustained acceleration

Management Commentary

  • “2024 was a pivotal year… we made significant strides in simplifying Blend and sharpening our focus on a pure software model… These efforts have led us to our most profitable quarter yet” — Nima Ghamsari .
  • “We posted a second consecutive quarter of non-GAAP operating income profitability with $5.2 million in Q4, and we're just getting started… pipeline is 50% larger than it was this time last year” — Nima Ghamsari .
  • “We expect this partnership [Truework] to provide greater VOIE capabilities… freeing up internal resources… still participating in revenue stream with expanded profit to Blend” — Amir Jafari .
  • “We expect to achieve our next major financial milestone of becoming free cash flow positive in the first quarter” — Nima Ghamsari .
  • “Our non-GAAP operating profitability… significantly beating the high end of our guidance… setting a new record for Blend” — Amir Jafari .

Q&A Highlights

  • Lender budgets and ROI: Customers leaning into automation and AI for scalability; Blend Builder increases “innovation per dollar,” enabling faster, tailored solutions .
  • Rapid products monetization: Management expects materially higher revenue per funded loan from Rapid Refi and Rapid Home Equity as adoption ramps through 2025 (quantification TBD) .
  • Consumer Banking drivers: Acceleration driven more by execution and product adoption than macro; raised CAGR target to 40% .
  • IMB focus: Separate unit addresses IMB-specific needs (branch configurability, disclosures); targeting middle IMB segment for broader adoption .
  • Sales & marketing: Plan to invest more to capitalize on a 50% larger pipeline; monitor efficiency metrics (e.g., “magic number”) .
  • Guidance detail: First-time platform-only non-GAAP operating income guidance provided; title breakeven commentary remains qualitative .

Estimates Context

  • S&P Global Wall Street consensus for Q4 2024 and FY 2024 was unavailable due to data access limitations during this session. Therefore, estimate comparisons are omitted and references to “beats/misses vs consensus” are not provided. Where applicable, we anchored comparisons to company guidance disclosed in filings and earnings materials .

Key Takeaways for Investors

  • Blend delivered a second consecutive non-GAAP operating profit quarter with a 13% margin; gross margins expanded and operating expenses declined materially YoY, demonstrating operating leverage amidst a tough mortgage backdrop .
  • Consumer Banking is the growth engine (Q4 +48% YoY) and now guided to a 40% CAGR through 2026; this business diversifies exposure away from mortgage cyclicality .
  • The platform-first simplification (Covered HOI sale, Truework VOIE partnership) lowers operational intensity and lifts contribution profit per loan even as EV per funded loan dips near term; this should support margin durability .
  • Rapid Home Lending GA with demonstrable conversion and cycle-time benefits could be a 2025 revenue/margin catalyst as deployments scale, especially in refinance waves and home equity workflows .
  • RPO reached a record $123M (+30% YoY), and pipeline is ~50% larger YoY, supporting forward revenue visibility despite macro caution in Q1 .
  • Near-term setup: Q1 Platform revenue guide ($25–$27M) reflects lower mortgage originations (HMDA 800–900k units). Management still targets positive free cash flow in Q1 and a positive Rule of 40 for Platform by year-end, contingent on macro and execution .
  • Actionable: Watch attach-rate momentum (Blend Close, hybrid/remote notarization), Rapid adoption, and Consumer Banking wins; these are likely the narrative drivers for estimate revisions and stock performance as macro normalizes .