Blend, now “debt-free,” remains confident about reaching profitability by the end of 2024

By BrokerOwner.net May 9, 2024 Housing News

Mortgage
tech
firm Blend
Labs reported
another
loss
in
the
first
quarter
of
2024,
but
its
executives
remain
confident
the
company
will
deliver
profits
by
the
end
of
this
year.

To
reach
this
goal,
the
company
recently
received
a $150
million
injection from
private
equity
firm Haveli
Investments and
paid
down
the
balance
of
its
outstanding
debt.

The
San
Francisco-based
company
reported
a
non-GAAP
net
loss
of
$15.1
million
from
January
to
March,
lower
than
the
$17.6
million
loss
in
the
previous
quarter
and
$35.6
million
in
the
same
period
of
2023.

The
company’s
GAAP
net
loss
in
Q1
was
$20.7
million,
per
filings
with
the Securities
and
Exchange
Commission (SEC)
on
Wednesday.

To
analysts, Nima
Ghamsari,
head
of
Blend,
said
that
the
deal
with
Haveli
has
“several
strategic
outcomes”
for
the
company,
including
the
“elimination
of
interest
costs
and
improvement
of
the
balance
sheet,
which
for
the
first
time
as
a
public
company
is
debt-free.”

As
of
March
31,
Blend
had
cash,
cash
equivalents,
and
marketable
securities,
including
restricted
cash,
totaling
$135.3
million.
Meanwhile,
at
the
end
of
the
first
quarter,
the
company
had
a
total
debt
outstanding
of
$135.5
million.

However,
Haveli
invested
in
Blend
in
April,
which
came
as
convertible
preferred
equity.
The
proceeds
were
used
to
pay
down
the
company’s
debt,
eliminating
costs
with
interest
and
servicing
to
improve
profitability
and
cash
generation.

In
the
quarter,
Blend’s
cash
burn
—
resulting
in
unlevered
free
cash
flow—was
$1.3
million,
compared
to
$14.4
million
in
the
previous
quarter
and
$40
million
in
the
same
period
of
2023.

The
company
posted
revenues
of
$34.9
million
in
Q1,
near
the
high
end
of
the
guidance,
compared
to
$36.1
million
in
the
previous
quarter
and
$37.4
million
in
the
same
period
of
2023.

Most
revenues
came
from
the
platform
segment
($23.8
million),
compared
to
a
smaller
share
from
the
title
segment
($11.1
million).

Blend’s
platform
segment
includes
the
mortgage
banking
suite,
which
experienced
a
revenue
decrease
of
15%
year
over
year
to
$15.1
million
in
Q1.
Meanwhile,
consumer
banking
suite
revenue
rose
by
29%
over
a
year
ago
to
$6.7
million.
Professional
services
revenue
increased
by
21%
to
$2.1
million
during
the
same
period.

On
the
expenses
side,
non-GAAP
operating
costs
in
Q1
totaled
$29.5
million
compared
to
$47
million
in
the
same
period
the
year
prior.

Ghamsari
told
analysts
that
the
company
grew
its
product
suite
and
customer
base
in
the
first
quarter,
including
two
of
the
top
10
credit
unions
in
the
country.

“Looking
ahead,
our
pipeline
now
has
35
opportunities
for
new
mortgage
customers,
up
from
30
last
quarter,
including
a
couple
of
the
largest
financial
institutions
in
the
country,”
Ghamsari
said.

In
addition,
the
company
added
functionalities
to
its
platforms,
such
as
an
automated
loan
estimate
and an
updated
Spanish
language intake
form
with
additional
capabilities.