Summary
Blend Labs booked second quarter fiscal 2026 revenue of $33.84 million, up 7.0% from $31.63 million a year earlier, and gross profit of $24.88 million, up 6.5%. Gross margin came in at 73.5%, down 0.3 points from 73.8%. For the six months ended June 30, 2026, revenue was $64.68 million, up 10.6%, gross profit was $48.25 million, up 13.9%, and gross margin was 74.6% against 72.4% a year earlier. On a non-GAAP basis, gross margin was 78% for the quarter versus 76%, helped by a cheaper partnership model for verification of income. Management tied the quarter to the commercial launch of Autopilot and an agent-first transformation inside the company, which it describes as steps toward re-accelerating growth in 2027.
The bottom line improved faster than the top line. Operating loss was $1.58 million for the quarter, against a loss of $4.83 million a year earlier, and operating margin improved to -4.7% from -15.3%. Net loss attributable to the company was $1.48 million versus $6.85 million, and diluted EPS was -$0.03 compared with -$0.04. Over six months, the operating loss narrowed to $6.64 million from $12.81 million and the net loss narrowed to $9.53 million from $16.36 million. Non-GAAP operating income was $7.0 million in the quarter, up from $4.6 million, and non-GAAP net income from continuing operations was $7.1 million. Cost discipline is doing much of the work: sales and marketing and general and administrative expense both fell in the quarter, and savings from earlier restructuring actions continue to show up in personnel costs.
Cash flow swung positive. Operating cash flow was $7.93 million in the quarter, up from -$6.50 million a year earlier, and $15.28 million for the six months, up 12.2% from $13.61 million. Capital expenditures dropped 77.1% to $0.82 million from $3.60 million in the quarter, and to $1.94 million from $7.91 million for the six months, a 75.5% decline. Free cash flow, a non-GAAP measure that differs from operating cash flow, was $6.9 million for the quarter against -$9.0 million a year earlier, with a free cash flow margin of 20%. Blend ended June 30, 2026 with $44.9 million in cash, cash equivalents and marketable securities and an accumulated deficit of $1,401.3 million.
Forward-looking indicators look softer. Current deferred revenue of $31.48 million was down 2.7% from $32.36 million, and remaining performance obligations fell 11.5% to $168.50 million from $190.40 million. Blend added or expanded 14 customer relationships in the quarter, six of them tied to Autopilot, the agent product that became commercially available on July 1 and already has six lenders signed on. The 10-Q frames the mortgage market as heavily influenced by Federal Reserve decisions, interest rates, tariffs, trade relations and consumer confidence, and it names customer churn and the shift of verification-of-income products to a partnership model as drags on growth.
Third quarter 2026 guidance calls for revenue of $31.5 million to $33.5 million and non-GAAP operating income of $3.5 million to $4.5 million. Blend did not provide a GAAP equivalent for the operating income outlook, pointing to uncertainty around stock-based compensation. The company keeps returning cash: it repurchased and retired 12,177,584 Class A shares for $20.2 million during the quarter, leaving $13.2 million available under the authorization. Research and development spending rose 16% as less internal-use software cost qualified for capitalization, a pattern the 10-Q expects to continue in 2026 under ASU No. 2025-06. Blend also completed the sale of its title insurance business on March 1, 2026 and reports it as discontinued operations. Management states it may need to raise additional capital if internal funding is not enough.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $33.8M | $30.8M | +9.7% | $31.5M | +7.3% |
| Gross profit | $24.9M | $23.4M | +6.5% | $23.3M | +6.8% |
| Gross margin | 73.5% | 75.8% | -2.2 pp | 73.9% | -0.4 pp |
| Research & development | $8.7M | $9.4M | -7.8% | $7.3M | +18.4% |
| Sales & marketing | $6.7M | $6.2M | +8.7% | $7.0M | -3.0% |
| General & administrative | $11.0M | $12.2M | -9.2% | $13.6M | -19.0% |
| Total operating expenses | $26.5M | $28.4M | -6.9% | $27.9M | -5.3% |
| Operating income (loss) | -$1.6M | -$5.1M | +68.9% | -$4.6M | +65.9% |
| Operating margin | -4.7% | -16.4% | +11.8 pp | -14.7% | +10.0 pp |
| Net income (loss) | -$1.5M | -$8.0M | +81.6% | -$6.6M | +77.7% |
| Net margin | -4.4% | -26.1% | +21.7 pp | -21.1% | +16.7 pp |
| Diluted EPS | -$0.03 | -$0.05 | +$0.02 | — | — |
Risks
MD&A states that in Q2 2026 mortgage transactions increased versus Q1 2026 primarily due to seasonal purchase market trends, but changes in mortgage origination volumes have had, and are likely to continue to have, material effects on the business. Risk Factors state that increases in market interest rates have, and will likely continue to, adversely affect the business, financial condition, and results of operations.
For 2025, the top five customers accounted for 39% of revenue, and 25 customers generating more than $1 million in annual revenue represented 75% of revenue. Because many customers lack long-term contractual financial commitments, loss or reduction of key customers would disproportionately affect revenue.
The company identified two material weaknesses in internal control over financial reporting for the year ended December 31, 2025. Failure to remediate timely could result in errors in the unaudited condensed consolidated financial statements, a restatement, or failure to meet periodic reporting obligations.
Many customers do not have long-term contractual financial commitments and can reduce or cease use at any time without penalty, while a subset can terminate without cause with limited prior notice. MD&A attributes revenue increases in the quarter and year to date partly to customer churn offsets.
The company has incorporated AI and expects to rely on AI to help drive future growth, but customers in regulated industries may be reluctant to adopt AI products and competitors may incorporate AI more quickly. The EU AI Act and proposed or enacted U.S. state AI laws may impose new obligations and require changes to policies and practices.
Sales cycles are typically six to nine months for smaller financial services firms and twelve to eighteen months or more for larger financial services firms. Macroeconomic conditions including rising interest rates and declining demand for mortgage and consumer banking products may further lengthen sales cycles.
On March 1, 2026, the company completed the sale of substantially all assets and liabilities of its title insurance business, and the Title segment is presented as discontinued operations. The company may be required to indemnify the purchaser for certain liabilities, and it has taken multiple workforce reductions since 2022 with additional restructuring actions possible.
The market is intensely competitive, with competitors including point solution vendors, providers of back office software with proprietary digital capabilities, and systems developed internally at financial services firms. Some competitors have greater financial and technical resources and may lower prices or adopt innovations faster.
As of June 30, 2026, accumulated deficit was $1,401.3 million. Although the company generated positive operating cash flow for the six months ended June 30, 2026, it may require additional capital and repurchased $36.8 million of Class A common stock during the six months ended June 30, 2026.
SaaS KPIs
All quarters →Free cash flow margin
Free cash flow
Non-GAAP gross margin
Non-GAAP operating margin
Customer relationships added or expanded
Summary, forecast, risks and KPIs are extracted from Blend Labs, Inc.'s SEC filings for Q2 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.