Blend Labs Q2 Earnings Call Highlights

Blend delivered a profitable second quarter: Revenue rose 7% year over year to $33.8 million, while non-GAAP operating income reached $7 million, above guidance. The company ended the quarter with $44.9 million in cash and no debt. Autopilot showed early traction: More than 65 lenders activated the AI platform during its preview, with nearly 50,000 loans processed and reported improvements in pull-through rates, cycle times and fulfillment productivity. Six lenders had signed contracts as of the earnings call. Near-term growth remains pressured: Higher mortgage rates, weak refinancing activity and customer churn notices led to conservative third-quarter guidance, including projected revenue of $31.5 million to $33.5 million and funded loan volume of 200,000 to 210,000. Management cautioned that Autopilot revenue may take time to scale. Blend Labs NYSE: BLND reported second-quarter revenue near the high end of its guidance range and non-GAAP operating income above its outlook, while management pointed to continued mortgage-market pressure and early commercialization progress for its Autopilot artificial intelligence product. Total revenue was $33.8 million, up 7% from a year earlier. Non-GAAP operating income reached $7 million, exceeding the company’s guided range of $5.5 million to $6.5 million. Blend ended the quarter with $44.9 million in cash, cash equivalents and marketable securities and no debt. The second quarter was another disciplined, profitable quarter for Blend, Co-founder and Head of Blend Nima Ghamsari said during the company’s earnings call. Mortgage Suite revenue rose 7% year over year to $19.2 million. Funded mortgage loans on Blend’s platform increased 14% to approximately 233,000 during the quarter. Economic value per funded loan was $79, compared with $83 in the first quarter. Head of Finance and Administration Jason Ream said the decline was primarily mathematical, as higher second-quarter loan volumes lower the per-loan calculation when fixed-fee customer arrangements are included. Consumer Banking Suite revenue increased 6% from a year earlier to $12.2 million, while Professional Services revenue was $2.4 million. Non-GAAP gross profit totaled $26.5 million, producing a non-GAAP gross margin of 78.3%, compared with 76.1% a year earlier. Ream said the result was in line with the company’s normalized 77% to 78% gross-margin framework, despite growing, though still relatively low, model costs associated with Autopilot. Non-GAAP operating expenses were approximately flat year over year at $19.5 million. Free cash flow was $6.9 million in the quarter. Blend also repurchased 11 million shares at an average price of $1.65 per share during the quarter. Year to date, the company has repurchased 22.2 million shares for $36.8 million, leaving about $13.2 million available under its $50 million authorization. Autopilot, Blend’s AI-driven agent platform for lenders, became commercially available July 1. Ghamsari said more than 65 lenders activated the product during a four-month preview period beginning in February, during which cumulative loans processed through Autopilot exceeded 45,000. He later said the number was approaching 50,000 loans. Based on preliminary data from loans processed through the system, Ghamsari said customers have seen a 10% to 15% improvement in pull-through rates, cycle-time improvements of two to four days and an average of about 4.5 hours of loan-fulfillment work automated per loan. Six lenders had signed contracts that include Autopilot as of the call, including mortgage servicer Onity. Blend is initially selling the service thro