Summary
Blend Labs reported first quarter 2026 revenue of $30.84 million, up from $26.84 million in the first quarter of 2025. Gross profit was $23.36 million, up from $19.00 million. Gross margin was 75.8%, up from 70.8%. The operating loss was $5.06 million, narrowed from $7.98 million. Net loss attributable to the company was $8.05 million, narrowed from $9.52 million. Diluted EPS was -$0.05, improved from -$0.06. Operating margin was -16.4%, up from -29.7%. On a non-GAAP basis, operating income was $4.1 million, up from $0.7 million. Non-GAAP gross margin was 80%, up from 73%, and non-GAAP operating margin was 13%, compared with 3%. Management tied the revenue gain and the higher gross margin to margin expansion from partnership model transitions and a favorable non-recurring benefit recognized in cost of revenue.
Cash generation slowed. Operating cash flow was $7.35 million, down from $20.12 million. Capital expenditures were $1.12 million, down from $4.31 million. Free cash flow was $7.35 million, down from $15.50 million. Deferred revenue was $34.02 million, up from $32.92 million, and that figure is the current portion only. Remaining performance obligations were $183.30 million, up from $158.10 million. The operating cash flow decline tracked changes in working capital, including trade receivables and deferred revenue, and the company still generated positive cash flow from operations for the quarter.
Operational momentum showed in customer activity. Blend added or expanded 15 customer relationships in the quarter, and management said the pipeline was up more than 40% year-over-year. The company repurchased 11.2 million shares for $18.6 million, leaving $31.4 million available under its authorization at quarter end. It completed the sale of substantially all of its title insurance business on March 1, 2026, and the Title segment is now reported as discontinued operations. The divestiture supports a strategic shift to become a platform-first company and to expand its partner ecosystem. Management said the agent-first approach and Autopilot are changing how the company works internally and how customers do business. It expects that combination to drive more efficiency and speed and to open a path to growth acceleration in 2027. Research and development spending rose, sales and marketing fell, and general and administrative costs rose, with the last driven by stock-based compensation for recently granted executive awards.
Guidance for the second quarter of 2026 includes non-GAAP operating income of $5.5 million to $6.5 million and a separate revenue range for the quarter. The company did not provide a GAAP equivalent for its non-GAAP operating income outlook because of uncertainty around stock-based compensation. Risks remain tied to the mortgage market. The 10-Q cites government policies, interest rates, tariffs, regulatory changes, inflation, and consumer confidence as factors that can affect origination activity. Mortgage origination volumes are a major revenue driver, and the company warns that changes in those volumes have had, and are likely to continue to have, material effects on the business. Other named risks include customer retention, competition, restructuring outcomes, and the exit from the title business. The company maintains a full valuation allowance on its net federal and state deferred tax assets. It may require additional capital resources to grow, and if it cannot raise capital on reasonable terms, its business, results of operations, and financial condition would be adversely affected. Management believes current cash, cash equivalents, and marketable securities will be sufficient to fund operations for at least the next 12 months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $30.8M | $32.4M | -4.9% | $26.8M | +15.2% |
| Gross profit | $23.4M | $24.4M | -4.4% | $19.0M | +23.2% |
| Gross margin | 75.8% | 75.4% | +0.4 pp | 70.8% | +4.9 pp |
| Research & development | $9.4M | $9.5M | -0.6% | $7.5M | +25.2% |
| Sales & marketing | $6.2M | $7.1M | -12.2% | $7.2M | -13.8% |
| General & administrative | $12.2M | $12.4M | -1.9% | $11.2M | +8.3% |
| Total operating expenses | $28.4M | $29.0M | -1.8% | $26.7M | +6.7% |
| Operating income (loss) | -$5.1M | -$4.5M | -12.3% | -$7.7M | +34.2% |
| Operating margin | -16.4% | -13.9% | -2.5 pp | -28.7% | +12.3 pp |
| Net income (loss) | -$8.0M | -$3.6M | -121.1% | -$9.4M | +14.5% |
| Net margin | -26.1% | -11.2% | -14.9 pp | -35.2% | +9.1 pp |
| Diluted EPS | -$0.05 | -$0.03 | -$0.02 | — | — |
Risks
Revenue depends heavily on mortgage transaction volumes and interest rates. MD&A says Q1 2026 mortgage transactions decreased versus Q4 2025 due to seasonal purchase-market trends, and risk factors say higher rates have reduced borrowing and refinancing activity.
Top five customers accounted for 39% of 2025 revenue, and 25 customers generated 75% of 2025 revenue. Many customers lack long-term contractual financial commitments, so termination or reduced usage by key customers would pressure revenue.
Operating cash flow was $7.35M in FY2026 Q1, down 63.5% from $20.12M in FY2025 Q1, and cash, cash equivalents, and marketable securities were $59.0M as of March 31, 2026. Series A Preferred Stock redemption rights and a $50.0M share repurchase authorization could strain liquidity.
The company identified two material weaknesses in internal control over financial reporting for the year ended December 31, 2025. Failure to remediate could cause errors or restatement and affect reporting obligations.
Gross margin was 75.8% in FY2026 Q1, up 5.0 pp from 70.8% in FY2025 Q1, but MD&A says the quarter benefited from a favorable non-recurring item in cost of revenue not expected to recur at the same level.
MD&A expects operating expenses to increase slightly in 2026 versus 2025, driven by lower software capitalization under ASU No. 2025-06 as certain agile development activities may not meet the probable-to-complete threshold. Research and development expense rose 20% in FY2026 Q1 versus FY2025 Q1.
The company incorporates AI into its platform and expects it to drive future growth, but customers in regulated industries may be reluctant to adopt AI features, and evolving laws such as the EU AI Act may require changes or restrictions. Competitors may incorporate AI more quickly.
Sales cycles are lengthy, typically six to nine months for smaller financial services firms and twelve to eighteen months or more for larger firms. Macroeconomic conditions including rising interest rates and declining demand for mortgage and consumer banking products may further impact the sales cycle.
The company relies on customer self-reporting of completed transactions because of its primarily success-based model. Inaccurate or untimely reporting could impair revenue estimation and forecasting, and the company does not charge for abandoned or rejected applications even though it incurs costs.
The company completed the sale of substantially all assets and liabilities of its title insurance business on March 1, 2026, and may need to indemnify the purchaser for certain liabilities. The divestiture and platform-first shift carry execution and integration risks.
Since 2022 the company has implemented several workforce reduction actions, and restructuring may harm employee morale, culture, and ability to attract and retain employees. Senior management, including Co-Founder Nima Ghamsari, is at-will and key-person loss could disrupt strategy.
Class B common stock has 40 votes per share, and as of March 31, 2026 Nima Ghamsari beneficially owned all Class B shares, representing about 31% of total voting power, which could rise to about 82% if all equity awards were exercised. Series A Preferred holders also have consent and board designation rights.
SaaS KPIs
All quarters →Free cash flow margin
Free cash flow
Non-GAAP operating margin
Customer relationships added or expanded
Non-GAAP gross profit margin
Summary, forecast, risks and KPIs are extracted from Blend Labs, Inc.'s SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.