Summary
Blend Labs posted $45.2 million of revenue in its fiscal 2024 third quarter, an 11.3% increase from the prior-year quarter. Gross profit rose 17.8% to $26.0 million and GAAP gross margin reached 57.5%, up 3.2 percentage points. The Blend Platform carried the growth. Management cited a multi-year mortgage and home equity deal with Pentagon Federal Credit Union, the second-largest federal credit union by asset size with nearly 3 million members, along with a top 300 financial institution that picked Blend for its full consumer banking suite. Consumer Banking Suite revenue grew 54% year over year, ahead of the 35% three-year growth target shared at the 2023 Investor Day, while Mortgage Suite revenue rose 6%. Blend Platform segment revenue came in above the high end of prior guidance by 7%. Through nine months, revenue was $120.6 million, flat against the prior-year period, and gross profit was $65.8 million, up 7.2%.
The GAAP profitability picture improved sharply. Operating loss narrowed 63.2% to $13.3 million, with an operating margin of negative 29.5%, up 59.7 percentage points. Net loss attributable to Blend Labs, Inc. narrowed 94.1% to $2.4 million, and diluted EPS was negative $0.03, an 83.3% improvement. On a nine-month basis, operating loss narrowed to $47.8 million, net loss attributable to the company narrowed to $42.5 million, and diluted EPS was negative $0.21. Management said the company reached non-GAAP operating profitability in the quarter, with non-GAAP income from operations of $0.04 million against a non-GAAP loss from operations of $15.9 million a year earlier, and non-GAAP net income per share of $0.00 against a non-GAAP net loss per share of $0.09.
Backlog and balance sheet items also moved. Remaining performance obligations were $107.4 million, up 82.3% year over year, and deferred revenue was $1.0 million at September 30, 2024. Blend sold its insurance business at the end of September 2024 for $10.1 million of cash proceeds plus a warrant, recognizing a $9.2 million gain in the quarter, and signed a five-year strategic partnership that shifts insurance to a partner model. A September 2024 workforce plan cut roughly 50 positions, or 9% of headcount, at a cost of about $1.7 million, with the eliminated roles representing about $7.9 million of annualized compensation. The company carries no outstanding debt and had $25 million authorized under a share repurchase program it did not use during the quarter. Economic value per funded loan reached a new high of $99.
Cash flow improved as well. Operating cash flow was $2.1 million in the quarter, compared with a use of cash of $25.9 million in the prior-year quarter, and the nine-month operating cash flow figure was negative $8.5 million, a 92.1% improvement. Capital expenditures of $3.4 million were up sharply from $0.03 million a year earlier. Free cash flow, a separate measure from operating cash flow, was negative $1.4 million versus negative $25.9 million a year earlier. For the fourth quarter of 2024, management guided to ranges for total revenue and for both segments and projected non-GAAP net operating income of $0.0 million to $3.0 million. That outlook assumes U.S. aggregate industry mortgage originations will be lower in the fourth quarter than in the third, and it folds in a revenue drag and an operating income benefit from the Covered Insurance partnership. Named risks include mortgage rate and macroeconomic uncertainty, the financial condition of some customers, competition, the outcome of restructuring actions, customer retention and acquisition, and future capital needs.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $45.2M | $40.5M | +11.6% | $40.6M | +11.3% |
| Gross profit | $26.0M | $21.7M | +19.9% | $22.1M | +17.8% |
| Gross margin | 57.5% | 53.5% | +4.0 pp | 54.4% | +3.2 pp |
| Research & development | $10.1M | $12.9M | -21.6% | $18.8M | -46.2% |
| Sales & marketing | $9.9M | $9.4M | +5.5% | $14.5M | -31.8% |
| General & administrative | $13.1M | $12.5M | +4.9% | $15.8M | -16.9% |
| Total operating expenses | $39.3M | $35.0M | +12.3% | $58.3M | -32.5% |
| Operating income (loss) | -$13.3M | -$13.3M | +0.1% | -$36.2M | +63.2% |
| Operating margin | -29.5% | -33.0% | +3.5 pp | -89.2% | +59.7 pp |
| Net income (loss) | -$2.6M | -$19.4M | +86.5% | -$41.8M | +93.7% |
| Net margin | -5.8% | -48.0% | +42.2 pp | -103.0% | +97.2 pp |
| Diluted EPS | -$0.03 | -$0.09 | +$0.06 | -$0.18 | +$0.15 |
Risks
Substantial revenue comes from financial services and mortgage transactions, so higher interest rates and reduced mortgage origination volume have adversely affected results. The Federal Reserve raised the federal funds rate by 525 basis points from March 2022 to July 2023 and lowered it by 50 basis points in September 2024, and while industry forecasters expect mortgage origination activity to increase in the first nine months of 2024 and continue into 2025, the increase is uncertain.
A small number of customers account for significant revenue. For 2023, top five Blend Platform customers were 31.9% of segment revenue, and Title segment top five were 71.9% of segment revenue, with Mr. Cooper alone at 49.8%. The company has experienced lower than anticipated title transaction volume since the Title365 acquisition.
Failure to realize the full anticipated benefits of the Title365 acquisition has and could continue to adversely affect revenue, expenses, and results. Title segment gross margin decreased to 12% for Q3 FY2024 from 17% in Q3 FY2023, and Title revenue decreased 6% for the nine months ended September 30, 2024.
The company has incurred net losses since inception in 2012 and had an accumulated deficit of $1,384.1 million as of September 30, 2024. It expects losses to continue as it invests in the business and may not achieve or maintain profitability.
The April 2024 issuance of 150,000 shares of Series A Preferred Stock for $150.0 million gives Haveli board designation and consent rights, and conversion or exercise of the related warrant for up to 11,111,112 Class A shares at $4.50 would dilute Class A stockholders. The Series A redemption rights could impact liquidity and cash available for other uses.
The success-based model relies on self-reporting of completed transactions by customers, which can make it difficult to estimate and forecast revenue. Usage-based arrangements can generally be terminated at any time by the customer, and the company has seen a shift away from subscription arrangements toward prepaid multi-year usage-based arrangements.
The company has incorporated and may continue to incorporate AI technology into its platform. Customers in highly regulated industries may be reluctant to adopt AI features, competitors may deploy AI more successfully, and evolving regulations such as the EU AI Act may require changes to policies and practices or limit AI use.
As of September 30, 2024, principal sources of liquidity were $116.8 million in cash, cash equivalents, and marketable securities. The company may require additional capital to support business growth, and if it cannot raise capital when desired and at reasonable rates, its business, results of operations, and financial condition would be adversely affected.
The September 2024 workforce reduction plan eliminated approximately 50 current positions, or 9% of the then-current workforce, with about $1.7 million in charges and approximately $7.9 million in annualized compensation savings. Restructuring steps may adversely affect reputation and the ability to recruit, retain, and motivate highly skilled personnel.
Nima Ghamsari beneficially owned shares representing approximately 35% of total voting power as of September 30, 2024, and if all equity awards had been exercised for cash, he would hold approximately 82% of voting power. This concentrated control limits other stockholders' ability to influence corporate matters, including director elections and major transactions.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from Blend Labs, Inc.'s SEC filings for Q3 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.