Beeline Holdings - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 revenue was $1.7M, up ~27% versus Q1 ex-spirits, with funded loan volume of $52M; operating loss improved to $(3.9)M and adjusted EBITDA improved by ~$0.8M sequentially, while cash rose to $6.3M.
• Management highlighted debt reduction ($2.7M repaid; non‑warehouse debt at ~$0.8M) and expects to be debt‑free by November 1, 2025 and reach monthly operating profitability by January 2026, contingent on continued execution and product rollout.
• The BeelineEQUITY fractional home equity product soft-launched with the first transaction closed; broader launch shifted to early October to ensure process quality and regulatory alignment post‑GENIUS Act, with 10–15 closings targeted in the next 30–45 days.
• AI initiatives (Bob, BlinkQC, MagicBlocks) are contributing to funnel conversion and efficiency; Bob drove ~$150K in revenue and materially higher application conversion while Hive continues to shorten cycle times to 14–21 days.
• No formal Q3/H2 guidance was provided; the near‑term catalysts are debt‑free status, October product launch, and ongoing cost reductions, with interest‑rate cuts representing upside optionality.

What Went Well and What Went Wrong

What Went Well

• Sequential improvement across revenue (+27% ex-spirits), operating loss (Q2: $(3.9)M vs Q1: $(4.9)M), and adjusted EBITDA (Q2: $(2.8)M vs Q1: $(3.5)M), with CEO noting July likely best month in 3+ years (≈15% above April).
• Debt reduction and liquidity: repaid $2.7M of debt; non‑warehouse debt down to ~$0.8M; cash increased to $6.3M; equity at ~$55.6M.
• Strategic focus and product innovation: divested Bridgetown Spirits; closed first BeelineEQUITY transaction; targeted 10–15 additional closings before full launch; “Beeline is positioned for strong growth driven by unmatched product differentiation, diversification, and disruption” — Nick Liuzza (CEO).

What Went Wrong

• Year-over-year revenue contraction in Q2 vs Q2 2024 due to tough mortgage backdrop (Q2 2025 net revenues $1.717M vs Q2 2024 $3.067M), with operating loss still sizable and non‑GAAP margin negative.
• Mixed KPI prints across sources: press release cited YoY revenue per loan +28% and title revenue +93%, while CFO cited +11% and +64% respectively; sequential avg revenue/loan fell 5% QoQ, reflecting mix/pricing dynamics.
• Execution risk remains: no formal Q3/H2 guidance; BeelineEQUITY scale-up intentionally delayed to early October to ensure crypto-to-cash process robustness; management flagged regulatory/operational dependencies and related-party collaboration.

Transcript

Speaker 4

Thank you for standing by. This is the conference operator. Welcome to the Beeline Holdings Incorporated second quarter 2025 earnings conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Tiffany Milton, Chief Accounting Officer. Please go ahead.

Speaker 0

Thank you. Good evening, everyone, and thank you for joining us today to discuss Beeline Holdings' financial results for the second quarter of 2025. I'm Tiffany Milton, Beeline Holdings' Chief Accounting Officer, and joining us on today's call to discuss these results is Nick Liuzza, our Chief Executive Officer, and Chris Moe, our Chief Financial Officer. Following our remarks, we will open the call to your questions. Now, before we begin with prepared remarks, we submit for the record the following statement.

This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding Beeline Holdings' expected future growth, expected future operating results, and financial condition, including projections concerning our ability to be cash flow positive, profitable, and debt-free within specified timeframes, expected lower interest rates, and the impact on our business, the anticipated Beeline Equity closings, the future development and potential of our technology offering, creation of long-term shareholders' value, and the timing of the eliminating of our indebtedness. Forward-looking statements are typically identified by words such as believe, expect, anticipate, plan, intend, seek, estimate, will, would, could, may, continue, forecast, target, potential, project, undertake, and similar expressions. These statements are based on management's current assumptions, beliefs, and expectations and are not guarantees of future performance.

Actual results may differ materially from those described in forward-looking statements due to various risks and uncertainties. These include, without limitation, the risk factors we provided in our 2024 Form 10-K and the prospective supplements. In addition, there is a risk that our new technologies we are developing may not work as expected. We caution investors not to place undue reliance on any forward-looking statements made during this call. All forward-looking statements speak only as of the date of this presentation and are based on information available to Beeline Holdings as of today. We undertake no obligation to publicly update or revise these statements to reflect events or circumstances occurring after today's date, except as required by law. Now, with that said, I'd like to turn the call over to Nick Liuzza. Nick, please proceed.

Speaker 5

Good afternoon, everyone, and thank you for joining us today. I'm Nick Liuzza, Co-Founder and CEO of Beeline Holdings. With me is our CFO, Chris Moe. We appreciate you spending time with us on our second quarter 2025 earnings call. The quarter marks a pivotal moment for Beeline Holdings by successfully divesting one of our final spirits assets. We are now fully focused on our core mission: operating as a digital mortgage lender with a proprietary SaaS platform, unencumbered by non-core operations. We want to thank our friends at Bridgetown Spirits as they embark on their own journey to grow their business now that we are formally separated. Our efforts in Q2 have been both inspiring and productive, furthering our mission of building repeatable, predictable, and scalable products and services to drive higher volumes.

We are an emerging high-growth story, driving innovation at scale, and when stripping out the Bridgetown Spirits business, we saw a 27% increase in revenue and a decrease of 40% in expenses in Q2 2025 versus Q1 2025. We believe our execution in Q2 will be looked back upon as the foundation for much stronger growth in future quarters due primarily to the introduction of a new equity product, stronger execution of the top-of-the-funnel conversions through enhancements implemented with Bob, our AI sales agent, a stronger balance sheet, a heightened discipline in the management of expenses, and the elimination of distractive non-core service lines. These are facets of the business we can control. Yes, the market has been challenging due to higher interest rates affecting both refinance and purchase transactions.

Going into Q2, our goal was to position Beeline Holdings for much faster growth for future quarters without relying on interest rate cuts while improving our financial condition with a clear strategy to cash flow positive operations. Rate cuts could be on the horizon, and that will have a very positive impact on the business, but that is outside of our control. As previously mentioned, our appetite to grow a high-demand equity product line that is not tied to interest rates provides a competitive advantage and a unique income stream to complement our mortgage business. This strategy has led us to support a fractional sale of equity products, which is not tied to interest rates.

We view Beeline Equity, which has unique features not offered by other mortgage lenders, as a significant opportunity complementing our already diverse suite of conventional and non-QM mortgage products, further distancing our offerings from the big banks and top 50 lenders. Frankly, we are presenting diversified opportunities in one platform to the public that we believe are not being offered by banks and other lenders. We are solving the problems of the industry with innovation and fresh products better designed for an emerging gig economy and for customers with different needs versus offering the same product and services through legacy models. Many of our competitors are trying to fit new characteristics, particularly of younger customers or customers with alternative income streams, into the same old box. Beeline is different. We are positioned to capitalize through diversification and innovation.

The first Beeline Equity transaction has been closed in partnership with an exclusive partner, leveraging a new crypto-backed coin, tying dollar for dollar residential real estate recorded in the public record to the blockchain while eliminating many of the middlemen. As previously discussed, I own 50% of our partner. We expect to close 10 to 15 more transactions over the next 30 to 45 days and are planning a larger launch in October. We believe the passing of the Genius Act will aid our growth, laying the groundwork for Beeline Equity to grow rapidly by quickly infusing liquidity into a difficult market with a product that is not tied to interest rates. The opportunity is massive, but also with several moving parts, which is why it is important we get this product right.

Our decision to slow play this opportunity with our partner aligns with our strategy to deliver quality at scale. More details will emerge as we get closer to a larger launch. For now, we're perfecting the product in real time with a select number of real estate closings. I want to be clear. Beeline is not changing its model, but it's living up to our founding principles of disruption. Beeline is and will continue to be one of the most unique mortgage lending and home equity platforms in the industry. Beeline Equity will complement our offerings, not replace them. Our sales agent, Bob, continues to deliver strong results. As we mentioned on our last call, we saw a six-time increase in lead conversion and an eight-time increase in full mortgage applications, all while operating 24/7 at net zero incremental costs during Q1 through the efforts of Bob.

A larger deployment of Bob in Q2, factored with more sophistication of Bob through accelerated learning models, led to exciting and stronger results. Bob handled 636 more conversations in Q2 while being responsible for generating 123 applications from lead gen initiatives while beating the benchmark set in Q1. We will continue to expand the possibilities with Bob as a lead gen agent. Further deployments include video and voice. Now that Bob's efforts are leading directly to revenue, we will be able to report on closing conversions related to Bob's top-of-the-funnel initiatives in future calls. It's very early for Bob, and while most of his efforts are responding to customer inquiries 24/7, freeing up our loan guides to do more transactions, we're starting to see Bob's efforts lead directly to revenue.

For those keeping score, Bob's efforts have led to approximately $150,000 in revenue in a limited function, which will certainly grow over time. We've also seen strong performance in Hive, our workflow engine, which enables us to close loans in as little as 14 to 21 days, about twice as fast as traditional lenders. This efficiency allows us to handle growing volume without adding proportional cost, giving us a real structural advantage. We finished Q2 with our strongest balance sheet since inception. We paid down $2.7 million in debt, leaving our total non-warehouse line debt owed to outsiders at less than $800,000. We entered 2025 with over $7 million in debt, reducing debt in 2025 by $6.2 million. We saw our net loss trim by $2.79 million in Q2 versus Q1.

To be fair, we were able to take about $300,000 in write-offs in Q2, but we also reduced approximately $225,000 of recurring expenses, which we expect to be fully realized by September of 2025. The net result of these efforts positioned us well towards our goal of being debt-free by November 1st, 2025, and cash flow positive by January of 2026. These are huge accomplishments and in a very short period of time. I'm very proud of our entire company. This was and continues to be a strong organizational commitment from everyone at Beeline Holdings. Our cash flow and profitability models are built on downside cases, which include running at our projected August revenue for the next 12 months. Beeline Holdings is well positioned to grow its revenue quickly, regardless of market conditions in 2026. Of course, lower rates accelerate growth.

We are an emerging growth story with a focus on bottom-line operating income in an industry that typically has very strong net income margins in normal markets, and we may just be headed toward a normal market at some point next year. Beeline Holdings is still in the very early innings, but it's starting to see the cost of development pay off. We achieved meaningful milestones in Q2. We funded loan volume of $52 million, up 31% from Q1 2025. Revenues increased by 27% in Q2 versus Q1, with the spirits business stripped out. We expect monthly operating profitability by early 2026. Our net loss from continuing operations for Q2 was $4 million versus $6.79 million for Q1. Our adjusted EBITDA, a non-GAAP financial measure for Q2, was a $2.8 million loss versus a $3.5 million loss in Q1.

We have seen improvement throughout the quarter, and while July numbers are still being reviewed, we believe it will be our strongest month in more than three years, topping April, our previous best in three years, by about 15%. As mentioned, we paid down $2.7 million in debt in Q2, expecting to be debt-free by November 1. As mentioned, we closed the first fractional sale of equity in residential real estate under our new Beeline Equity product, supported by our crypto issuing partner. We divested Bridgetown Spirits in July of 2025, paving the way for complete focus on the digital mortgage business. We launched BlinkQC into Beeline Holdings' production environment. MagicBlocks is now live with 15 clients and growing by the day. We have a 47.6% ownership in MagicBlocks. MagicBlocks is based in Australia, serving an international market with over half of its clients based outside of the U.S.

I would now like to turn it over to Chris Moe, who will go deeper into our Q2 performance. The future is bright for Beeline Holdings.

Speaker 2

Thanks, Nick. As a reminder, due to pro forma accounting adjustments and GAAP purchase accounting rules, our income statement reflects the impact of our 2024 forward merger transaction, and as such, certain periods are not directly comparable. Additionally, Magic Blocks, our AI product technology company in which we hold a significant minority stake, is not consolidated in our income statement under GAAP. Additionally, our legacy spirits business, Bridgetown Spirits, has been reclassified during Q2 as discontinued operations and was subsequently sold early in Q3. Let me now walk you through the Q2 2025 financial highlights. Total net revenues were $1.7 million for Q2, driven primarily by Beeline Holdings' mortgage activities, which accounted for over 74% of revenue, with the remainder from the Beeline title business and a small amount from data and tech.

In terms of growth rates for our mortgage and title businesses, Q2 2024 versus Q2 2025, we saw a 6% increase in originations, an 11% increase in average revenue per loan, and a 64% increase in title revenue. Comparing Q1 2025 versus Q2 2025, we saw a 44% increase in originations, a 5% decrease in average revenue per loan, and a 24% increase in title revenue. On the operating expense side, expenses totaled $5.6 million for Q2, reflecting costs associated with staffing, transactions, and marketing and advertising. For Q2, there were $2.2 million in salaries and benefits, $1.2 million in professional fees, $0.8 million in marketing and advertising, and $0.8 million in depreciation and amortization. This resulted in a loss from operations of $3.9 million, driven largely by scaling our mortgage platform combined with transaction expenses.

Below the line, we incurred $0.4 million in interest expense, and we reported a net loss from continuing operations of $4 million for the quarter. While this loss was significant, it represents an improvement over our Q1 loss from continuing operations of $6.7 million, and it again reflects deliberate investments and one-time capital structure effects. Our core mortgage operations are scaling well, and we are confident these investments will position us for a step change in performance in the quarters ahead. We are also seeing rapid customer revenue growth from our AI sales agent spin-out, Magic Blocks, whose results are not reflected in these figures. Turning to the balance sheet, we ended the quarter with $6.3 million in cash, up from $1.5 million in cash in Q1. We made debt repayments of $5.8 million. Total equity at period end was $55.5 million, up from $48.1 million in Q1.

Regarding cash flow, net cash used in operating activities was $5.6 million. Net cash provided by investing activities was $59,000. Net cash provided by financing activities was $10.9 million for a net increase in cash of $5.4 million for the period. While I won't provide firm Q3 or H2 guidance, due largely to the rapid pace of transformation of the business, I agree with Nick that Beeline Holdings expects to see continuous improvement in introducing new products, growing revenues, and controlling expenses with the goal of achieving operating profitability and positive cash flow by year-end. With that, I'll turn it over to the operator for questions.

Speaker 4

We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. The first question comes from Glen Mattson with Ladenburg Thalmann. Please go ahead.

Speaker 3

Yeah, thanks for taking the questions and congrats on the result. First, I want to get a little more detail around the home equity cash-out product, an innovative solution that you've introduced to the market. Can you give us some more understanding of what your thought process is there? It looks like you're progressing along the path of starting to do some early transactions and things, but it seems that maybe you pushed out a little bit the timing on the broader launch.

Speaker 5

Yeah. Hey, Glenn, how are you doing? Good to talk to you again. Look, we had discussed, I think, in previous course communication that we were going to launch the product in late August, early September. We pushed that out a bit for a couple of reasons. Number one, the opportunity is massive. There's so much untapped equity in the U.S. market, and the demand is, in our opinion, going to be off the charts. There are a lot of individuals out there who can't qualify for our cash-out refi, or need liquidity, or even qualify for a HELOC. As a result of that, we have a solution that meets their needs.

With the Genius Act passing, a little more clarity in terms of how regulation is going to come down on this particular side of the business with the crypto, we felt like it was important for us to get this product right. We are very early to the market with this. I don't see anyone else doing what we're doing here. In our view, there are a lot of moving parts, primarily around turning the crypto into cash quickly at scale. We wanted to make sure we didn't fumble that. We didn't make any mistakes at scale. Doing 10, 20, 30 transactions is certainly different than doing several thousand. For the next 30 to 45 days, we're going to slow play it a bit. We're going to do a select number of transactions, which have already been identified. We've already started the title work on those transactions.

We're going to do them properly. We're going to get feedback from the customers that we do them with to make sure that when it's time to scale, we meet the mark. That's really the key reason, just to be careful, do it right, and make sure we have the consumer's best interests in mind.

Speaker 3

Yeah, thanks for that color. Makes sense that big opportunities, you want to get it right. Moving on to the financials for a minute, good progress on the profitability this quarter, especially sequentially. You kind of highlighted, pointed to break even by late this year, early next year. Can you, I don't know if this is for Chris or Nick, but can you just give us some more details around your assumptions and how you think you'll get there?

Speaker 5

Yeah, look, I'll take that just because I like to talk. We're feeling really good about a lot of things over here, right? Our software is starting to materialize. We're seeing the fruits of our labor pay off. We've been spending a lot of money creating a really good mousetrap, and we feel good about where we're headed. It just made sense to kind of buckle down a bit and make sure that we are really ready, I guess, to calm before the storm. We're expecting a better market next year. We put a lot of focus on getting to profitability as fast as we can. That includes cutting about $225,000 out of our monthly recurring expense, which we've already done. We'll fully realize that in September. Our locks are way up.

We cut our marketing budget by about $40,000 a month, and we're still seeing really strong lock performance as a result of that. Also, when you look at the Q2 numbers, we had about $500,000 in those numbers of one-time non-recurring expense. When you take that out, when you look at the fact that we're locking much higher loans or many more loans on a reduced budget, and then you take into consideration that we cut $225,000 of recurring cost out, we feel really good about the ability to be profitable by, or net cash positive, I'm sorry, by January of 2026. Interest rate cuts would just fuel the momentum. A big giant launch of our new product, Beeline Equity product, will just fuel the momentum. More title business will just fuel the momentum.

At the end of the day, we kind of took a really modest approach to those points. We feel good about it. We also will be debt-free on November 1. Heading into next year, we'll be debt-free. We will be cash flow positive, and we'll be positioned for greatness.

Speaker 3

Thanks for that color. Yeah, no one knows the future, but these new Fed candidates all seem to be outdoing each other in terms of how aggressive they want to be on the cutting rate side. It looks like the trend is going in your favor. Thanks for the color, guys.

Speaker 5

Appreciate that.

Speaker 4

The next question is from Derek Greenberg with the Maxim Group. Please go ahead.

Speaker 1

Hi, thanks for taking my questions. I wanted to just follow up on the fractional product you guys are rolling out. I was wondering if you could just remind us the economics of that business, if it's similar to the core of mortgage or if it's a little bit different. I was wondering, once it's fully at scale, you mentioned there's a lot of difference in thousands of transactions versus dealing with 10. I was wondering, once fully at scale, what the volumes you expect to flow through that funnel look like?

Speaker 5

Yeah, look, from an economic standpoint, our margins will be a little higher than on our mortgage products. The amount of work that we're going to do will be a little less. We're pretty excited about that. We're underwriting the property, and we're not underwriting the consumer as much. That's the reason why there's less work. The expense associated with the product is less. We expect about 33% on average more revenue per file than we see on the mortgage side. I don't think.

Speaker 2

I'm also going to add to this that, you know, we spend heavily in marketing to bring in the loan business in this case, and I don't think it's appropriate right now to go into the details, but we basically have in the model next to no marketing expense because our partner in this thing is going to drive the business. We're just processing it. The margins are pretty high.

Speaker 5

I don't think we're quite ready to talk about the projections of the business. I will say this, we have denied about 1,000, and you know, about 1,000 people over the last 12 months that would qualify for this product instantly. That's not even trying to drive the business. We're not in a position to project or talk about projections at this point. I think that might be something for a later call.

Speaker 1

Okay, got it. Thank you. That's helpful. Just looking into 2026, you had mentioned that even without rate cuts, you're expecting significant growth. Is that largely coming from this new product, or is it across all the different products? What do you think will be the main driver of growth exclusive of rate cuts?

Speaker 5

Yeah, that's a good question. I think that we are going to see really strong demand for Beeline Equity, the equity product, because we're infusing liquidity into the market in a market where liquidity is needed. The qualification is based on the equity in the home and not the individual. As a result of that, there is just a massive amount of equity that's just sitting on the sidelines that a lot of people can't do anything with in terms of getting a cash-out refi, right? Baby boomers are living longer. They want to stay in their homes longer. A lot of them aren't working, and they don't want to necessarily do a reverse mortgage.

When you start thinking through that and you start thinking through the fact that there are no payments here, you basically are selling a sale of equity, and there's no repayment until the house is sold. If you are an individual that can't qualify for a cash-out refi and need cash, this is an option for you. If you don't want to do a HELOC, this is an option for you. If you don't want monthly payments and interest payments, this is an option for you. If you're looking at a reverse mortgage, this is an option for you. There's just so much potential for this product. I do think this product is going to grow very quickly. At the same time, we've been in the trenches in a really bad market, perfecting our model for a long time on the mortgage side.

We are offering non-qualified and conventional under one roof, and we're getting better at what we do on a monthly basis. I just mentioned a second ago that our locks are way up on a $40,000 per month decrease in our budget. That's a big number, and that's a high % decrease in budget to see an increase in locks. We are expecting a very strong 2026 as a result of both of those two products. I'll also mention, we have a lot of title experience over here. Our team grew and built one of the largest title agencies out there and merged it and brought it public on the TSX back in 2016. Same team. We basically have a lot of the members of the same team over here. As the market improves, I expect our title business to grow.

We don't talk about that much, but that is another big opportunity for Beeline Holdings as we get into next year. I think when you look at it, it's really those three items. I would rank, you know, the Beeline Equity product as probably being our largest generator of revenue next year, with the mortgage business being second, and the title business being third. That'll probably change, you know, when we go into 2027.

Speaker 1

Okay, got it. Just my last question, and this one might be a little difficult to answer, but I was wondering, obviously, with rate cuts, that'd be a huge catalyst for the industry overall. I was wondering if you have like a sensitivity analysis in place in terms of how much a % basis point cut could potentially fuel growth in loan volume for you guys and revenue for you guys, or if that's kind of too in the weeds and it's just a broader great opportunity. I was wondering if you quantified it at all.

Speaker 5

Yeah, look, I don't think we're prepared to provide that sort of information. At a high level, I can tell you that a 0.25% cut will have a significant impact on our business. We are a centralized digital lender. We're not a retail lender. The retail models tend to perform better. Everyone performs better in a low-rate environment, right? When rates are higher, the digital models aren't, on a percentage basis, performing as well as the retail models do. When rates come down, digital models tend to do very well. We're a digital centralized model, and a 0.25% cut will have a big impact on our business. A 1% impact will have a tremendous impact on our business. We'll grow incredibly fast when that happens.

Speaker 2

Yeah, I also just want to add a non-quantitative comment to your quantitative question. It's interesting when you think about it, you know, a 25 or 50 basis point cut in theory equals X, but the longer rates haven't reduced, the more build-up effect it has on the number. Think of it as kind of a dam and the water is filling up behind the dam. If the dam opens up and the lake is only half full, you have X amount of water rushing through the gate, but if the dam is almost at the top and you open the dam a lot, twice the volume rushes through the gate.

I guess what I'm trying to say is since rates have sort of, you know, they came down a little bit last September and nothing since then, it's been almost a year, I think a 25 basis point rate cut will be more significant than it would be otherwise.

Speaker 5

Yeah, that makes sense.

Speaker 1

That definitely makes sense. Thank you. Appreciate the color.

Speaker 5

You're welcome.

Speaker 4

Once again, if you have a question, please press star, then one. Please stand by as we poll for questions. Showing no further questions, this concludes the question and answer session. I would like to turn the conference back over to Nick Liuzza for any closing remarks.

Speaker 5

Thanks, operator. To wrap up, Q2 marks yet another inflection point for Beeline Holdings. We have fully transitioned into a fintech mortgage company. We operate in a $2 trillion plus mortgage market. Yes, we've invested heavily, but these are intentional, foundational investments aimed at capturing meaningful market share over time. We are confident the long-term payoff will be significant. We improved our balance sheet and reduced our expenses at a time when our software costs are starting to pay off. We believe that Q2 of 2025 has been inspirational and productive and will set the foundation for faster growth in the future.