Summary
Blend Labs reported second quarter 2024 revenue of $40.48 million, down 5.5% from the prior-year quarter. Gross profit was $21.68 million, down 7.7%, and gross margin was 53.6%, down 1.3 percentage points from 54.9%. The operating loss narrowed to $13.34 million from $36.72 million a year earlier, and operating margin improved to -33.0% from -85.8%. Net loss attributable to Blend Labs was $19.41 million, compared with $41.23 million, and diluted EPS was a loss of $0.09 versus a loss of $0.18. Year to date, revenue was $75.43 million, down 5.9%, while gross profit rose 1.2% to $39.82 million. The year-to-date gross margin was 52.8%, up 3.7 percentage points from 49.1%. Year-to-date operating loss narrowed to $34.51 million from $98.16 million, and year-to-date net loss narrowed to $40.08 million from $106.65 million. Diluted EPS for the six months was a loss of $0.18 versus a loss of $0.45. The top line weakness came from lower mortgage banking transaction volumes and fewer title orders, according to management. The mortgage market remains the main drag, and management said it expects high interest rates to keep pressuring refinance activity in the near term.
Cost discipline remained a central part of the story. Non-GAAP loss from operations was $5.6 million, compared with $17.9 million in the prior-year quarter, and non-GAAP consolidated net loss per share was $0.02, compared with $0.09. Operating cash flow was negative $6.67 million, an 80.6% improvement from negative $34.39 million. Capital expenditures were $1.87 million, up from $0.17 million. Free cash flow was negative $8.5 million, compared with negative $34.6 million. The balance sheet changed materially after the Haveli investment closed in April. Blend repaid its credit agreement in full, leaving no outstanding debt. Deferred revenue rose 74.0% to $20.83 million, and remaining performance obligations increased 64.3% to $87.40 million. Those bookings metrics suggest customers are committing to longer or larger contracts even as reported revenue declines. Year-to-date operating cash flow was negative $10.53 million, compared with negative $81.04 million, and year-to-date capital expenditures were $3.83 million, up from $0.47 million.
Operational momentum is building in consumer banking. Management said the Consumer Banking Suite grew 37% year over year. Economic value per funded loan, a metric Blend uses for its mortgage suite, reached a new high of $97. The company added mortgage customers including Horizon Bank, an $8 billion financial institution, and First National Bank of Fort Smith. Andrews Federal Credit Union selected Blend for deposit account opening. Blend also announced a share repurchase program of up to $25 million, its first ever. The board's authorization reflects confidence in the platform and the market opportunity, according to the release. Blend is also implementing new AI features into the account opening experience for one of its largest customers.
Guidance is for the third quarter of 2024, not the full fiscal year. Blend projects a non-GAAP net operating loss between $7.0 million and $4.0 million for that quarter. The outlook reflects management's internal estimate of U.S. aggregate mortgage originations in the third quarter. Management said it expects the second half of 2024 to be pivotal and plans to launch instant home equity with a key customer during the third quarter. Risks remain substantial. High mortgage rates and weak refinance activity could keep pressure on transaction volumes. The health of financial customers, competition, and the company's ability to retain and expand customer relationships are all cited risks. The Haveli investment brought governance rights and potential dilution. Blend also noted that it may need additional capital to fund growth. The company ended the quarter with no outstanding debt, but sustained operating losses remain a concern.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $40.5M | $34.9M | +15.8% | $42.8M | -5.5% |
| Gross profit | $21.7M | $18.1M | +19.5% | $23.5M | -7.7% |
| Gross margin | 53.5% | 51.9% | +1.6 pp | 54.9% | -1.3 pp |
| Research & development | $12.9M | $14.2M | -8.9% | $22.1M | -41.5% |
| Sales & marketing | $9.4M | $10.2M | -8.3% | $16.1M | -41.9% |
| General & administrative | $12.5M | $13.9M | -10.1% | $19.6M | -36.3% |
| Total operating expenses | $35.0M | $39.3M | -10.9% | $60.2M | -41.8% |
| Operating income (loss) | -$13.3M | -$21.2M | +37.0% | -$36.7M | +63.7% |
| Operating margin | -33.0% | -60.6% | +27.6 pp | -85.8% | +52.8 pp |
| Net income (loss) | -$19.4M | -$20.7M | +6.0% | -$41.5M | +53.2% |
| Net margin | -48.0% | -59.1% | +11.2 pp | -96.9% | +48.9 pp |
| Diluted EPS | -$0.09 | -$0.09 | ±$0.00 | -$0.18 | +$0.09 |
Risks
Business is substantially dependent on financial services and mortgage transaction volumes. Total revenue decreased 5.5% in FY2024 Q2 versus the prior-year quarter and 5.9% year to date, and MD&A expects title revenue headwinds to continue until mortgage origination volumes increase.
A large percentage of revenue is concentrated in a small number of key customers. For 2023, the top five Blend Platform customers accounted for 31.9% of segment revenue, while the top five Title customers accounted for 71.9% and Mr. Cooper alone accounted for 49.8%, exposing results to customer loss or reduced title transaction volume.
In April 2024, the company issued $150.0 million of Series A Preferred Stock and repaid $146.1 million to terminate the Credit Agreement. The preferred stock carries redemption rights and consent rights, and Haveli can designate a board member, which could impact liquidity and governance.
The company has incurred net losses since inception and expects to continue incurring operating losses. Although the FY2024 Q2 net loss narrowed to $19.41 million from $41.23 million in the prior-year quarter, the company remains unprofitable.
The company has incorporated AI into its platform and expects to rely on AI for future growth, but adoption by regulated customers may be slow and competitors may incorporate AI more successfully. Evolving laws such as the EU AI Act may require significant changes and increase liability.
Sales cycles are lengthy and unpredictable, generally six to nine months for smaller financial services firms and twelve to eighteen months or more for larger firms. Macroeconomic conditions and mortgage demand declines may extend cycles and increase costs.
The company has undertaken restructuring actions and may take additional actions. These steps may adversely affect reputation and the ability to recruit, retain, and motivate highly skilled personnel.
The company has not realized the full anticipated benefits of the Title365 acquisition, and failure to do so has adversely affected and could continue to adversely affect revenue, expenses, and results. Further market capitalization declines could require goodwill and intangible asset impairment charges.
The market is intensely competitive, with larger competitors that have greater resources, established relationships, and ability to lower prices. Customers may also develop their own solutions, which could reduce demand or force pricing concessions.
SaaS KPIs
All quarters →Free cash flow margin
Free cash flow
Non-GAAP Loss from Operations
Non-GAAP gross margin
Non-GAAP Software Platform Gross Margin
Summary, forecast, risks and KPIs are extracted from Blend Labs, Inc.'s SEC filings for Q2 FY2024 (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.