Summary
Blend Labs reported third quarter 2025 revenue of $32.9 million, down 0.7% from the prior-year quarter. Revenue for the first nine months of 2025 was $91.2 million, up 6.4% from the prior-year period. Quarterly gross profit was $24.5 million, flat versus the prior-year quarter, and GAAP gross margin was 74.4%, up 0.4 percentage points. The GAAP operating loss narrowed to $4.9 million, an improvement of 56.5% from the prior-year quarter. GAAP net income was $12.5 million, a swing to a profit from a net loss in the prior-year quarter. GAAP diluted EPS was $0.02, up from a loss per share a year earlier. On a non-GAAP basis, operating income was $4.6 million, up from $0.3 million in the prior-year quarter, and non-GAAP gross margin was 78%, up from 75%.
The revenue mix kept shifting toward consumer banking. Mortgage Suite revenue fell 18% from the prior-year quarter, while Consumer Banking Suite revenue rose 34% and professional services revenue rose 18%. Management pointed to home equity and deposit account opening deployments for the consumer banking gains. Mortgage Suite was held back by lower homeowner's insurance revenue tied to the sale of the insurance business, the shift of verification of income to a partnership model, customer churn, and renewal pricing on one large contract. Blend signed 14 new deals and expansions in the quarter, including a seven-figure expansion with a top 20 bank and a major renewal and expansion with a consumer banking customer across six product lines. The pipeline was up approximately 60% year over year. Remaining performance obligations were $189.0 million, up 76.0% from the prior-year quarter, a backlog figure that stands out against the slight decline in quarterly revenue.
Cash generation was mixed. Operating cash flow was negative $3.5 million for the quarter, down from positive operating cash flow in the prior-year quarter. Year to date, operating cash flow was $10.5 million, up from a negative prior-year period. Free cash flow, a separate non-GAAP measure, was negative $5.0 million for the quarter and $1.5 million for the first nine months. Capital expenditures were $2.3 million in the quarter, down 33.7% from the prior-year quarter. Liquidity included cash, cash equivalents, and marketable securities. The company also carried an accumulated deficit and has a history of operating losses and negative cash flow. It said it may require additional capital. Blend repurchased shares during the quarter and still had authorization remaining under its buyback program.
For the fourth quarter of 2025, Blend issued guidance for total revenue and for non-GAAP net operating income. The non-GAAP net operating income range for the quarter is $2.5 million to $3.5 million. The company tied the outlook to U.S. aggregate mortgage originations and expects the fourth quarter market at 1.13 million to 1.23 million units. For the first quarter of 2026 it expects a sequential volume decline in line with normal seasonal patterns, with 1.07 million to 1.17 million units. Blend did not provide a GAAP equivalent for the non-GAAP net operating income outlook, citing uncertainty around stock-based compensation and non-recurring items.
The mortgage market remains the biggest swing factor. Management noted sensitivity to Federal Reserve policy, interest rates, tariffs, trade relations, regulatory changes, inflation, and consumer confidence, and warned that the financial condition of some financial customers is uncertain. Blend is also exiting its title operations, with the sale expected to close later in the fiscal year. The company said historical results are not necessarily indicative of future results. A large share of revenue still depends on mortgage and mortgage-related transaction volumes, so a weak origination backdrop would weigh on the software platform.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $32.9M | $31.5M | +4.2% | $45.2M | -27.3% |
| Gross profit | $24.5M | $23.3M | +4.9% | $26.0M | -5.9% |
| Gross margin | 74.4% | 73.9% | +0.5 pp | 57.5% | +16.9 pp |
| Research & development | $8.5M | $7.3M | +16.2% | $10.1M | -15.8% |
| Sales & marketing | $7.9M | $7.0M | +13.3% | $9.9M | -20.3% |
| General & administrative | $12.9M | $13.6M | -5.4% | $13.1M | -2.0% |
| Total operating expenses | $29.4M | $27.9M | +5.1% | $39.3M | -25.3% |
| Operating income (loss) | -$4.9M | -$4.6M | -6.2% | -$13.3M | +63.1% |
| Operating margin | -14.9% | -14.7% | -0.3 pp | -29.5% | +14.5 pp |
| Net income (loss) | $12.5M | -$6.6M | +288.6% | -$2.6M | +577.0% |
| Net margin | 38.1% | -21.1% | +59.2 pp | -5.8% | +44.0 pp |
| Diluted EPS | $0.02 | — | — | -$0.03 | +$0.05 |
Risks
Revenue is substantially dependent on the financial services and mortgage industries. Total revenue was down 0.7% in FY2025 Q3 versus the prior-year quarter, and Q3 mortgage transactions on the platform decreased compared with Q2 primarily due to seasonal trends. Q4 industry mortgage originations are expected to be largely in line with Q3, leaving results exposed to interest-rate and macroeconomic uncertainty.
A large percentage of revenue is concentrated in a small number of key customers. For 2024, the top five Blend Platform segment customers accounted for 33.0% of segment revenue, and 23 customers generating more than $1 million represented 62.8% of segment revenue. The Q3 Mortgage Suite revenue decline included customer churn and renewal pricing impact in one large contract.
The pending sale of Title365 is subject to third-party consents and regulatory approvals and is expected to close later in the fiscal year. The company does not expect to recoup the full revenue loss associated with the sale in 2025, and pendency could disrupt operations, increase near-term costs, and divert management attention.
Blend has incorporated AI into its platform and expects to rely on AI for future growth. Customers in regulated industries may be reluctant to adopt AI features, competitors may incorporate AI more quickly, and evolving laws such as the EU AI Act may require significant changes to policies and practices or limit AI use.
Sales cycles are lengthy, generally six to nine months for smaller financial services firms and twelve to eighteen months or more for larger firms. The primarily success-based model often relies on customer self-reporting of completed transactions, which can make revenue estimation and forecasting difficult.
Since 2022, the company has implemented several workforce reductions and lease optimization actions. These cost-management steps may adversely affect reputation and the ability to recruit, retain, and motivate personnel, and there may be unintended consequences from workforce reductions that impact the business.
The market is intensely competitive, with competitors including point solution vendors, back office software providers, and internally developed systems at financial services firms. Competitors may have greater resources, offer discounts, or adopt platform features, pressuring pricing and margins.
The company may require additional capital to support business growth, and this capital might not be available on acceptable terms. The Series A Preferred Stock has redemption rights that could impact liquidity and reduce cash available for working capital, capital expenditures, and growth opportunities.
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 Q3 FY2025 (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.