Blend Labs at 45th Annual William Blair Growth Stock Conference: Navigating Market Shifts

On Wednesday, 04 June 2025, Blend Labs (NYSE:BLND) presented at the 45th Annual William Blair Growth Stock Conference, outlining its strategic maneuvers amidst the fluctuating mortgage market. While the company highlighted its significant market share growth and financial resilience, it also acknowledged challenges such as the downturn in mortgage volumes and margins.

Key Takeaways

• Blend Labs has more than doubled its market share since 2019, despite a 70% drop in mortgage volumes in 2023.
• The company achieved $15.5 million in free cash flow in Q1 2024 and has maintained non-GAAP operating profitability for three consecutive quarters.
• Blend is shifting towards a pure SaaS model, integrating AI to automate processes and reduce costs.
• The Blend Builder platform is central to its strategy, enabling faster and cheaper product development.

Financial Results

• Mortgage Market: 2023 saw a 70% decrease in volumes and a 60% decrease in margins.
• Market Share Growth: More than doubled since 2019, with economic value per funded loan increasing nearly 60%.
• Q1 2024 Performance: $15.5 million in free cash flow and three consecutive quarters of non-GAAP operating profitability.
• Profitability Guidance: Positive non-GAAP operating profitability expected in Q2.

Operational Updates

• Customer Base Expansion: Recently signed a top 10 bank, a top five credit union, and two major servicers.
• Rapid Home Equity Solutions: Offering a 60% higher price per unit than the base platform, with improved conversion rates.
• Blend Builder Platform: Facilitates the rapid development of consumer and mortgage solutions.
• Divestiture: Finalizing transition out of the title insurance business.
• AI Integration: Focused on automating the mortgage process to cut down on manual labor.

Future Outlook

• Mortgage Market Rebound: Anticipates a return to historical averages of 7-8 million mortgages per year.
• Growth Levers: Emphasizing rapid flows and AI-driven automation.
• Expansion Strategy: Targeting smaller institutions with assets of $1-5 billion.
• Competitive Edge: Unique positioning with a platform that integrates small business, consumer, and mortgage services.

Q&A Highlights

• Mortgage Front Office: Blend serves as a front office for consumers and loan officers.
• Vertical SaaS Positioning: Positioned as a specialist in facilitating data and workflows in a regulated industry.
• Competitive Landscape: Differentiation in approach across consumer segments, with large banks often developing in-house solutions.

In conclusion, Blend Labs remains optimistic about its future, leveraging strategic growth initiatives and technological advancements. For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Dylan Becker, Research Analyst, William Blair: Perfect. Thank you, everyone. Good morning. My name is Dylan Becker. I’m the research analyst here at William Blair that covers Blend Labs.

For all the necessary disclosures, can find those on williamblair.com. We’re joined here today with Nima Gamsari, the CEO and founder of Blend. Nima, you for joining us. There’s probably varying levels of familiarity to the story, Nima. If you don’t mind providing kind of some context, background, kind of the ideology of why you founded Blend, the problems you’re trying to solve and kind of where the industry shapes up today.

Nima Gamsari, CEO and Founder, Blend Labs: Yeah. Sure. So, yeah, basically, I was thrown into the mortgage industry right out of college because it was the financial crisis and I was a Palantir and we were signed by some of the big banks and Fannie and Freddie to go help people avoid foreclosures. And me coming into it as a 22 year old, I was like, wow, dollars 10,000,000,000,000 of assets. There’s got to be some really good tech in here.

And I remember walking into the Bank of America offices fifteen plus years ago, and it was green screens and filing cabinets. And so I worked on that for a few years, and then it sort of inspired me. Was like, man, there’s got to be better tech for this industry. Why isn’t there better tech for this industry? And I thought the reality was that, you know, the mortgage industry, you know, unfortunately, it was just wasn’t something that really great technologists cared about.

It wasn’t like you left Stanford or MIT and you you wanted to go and build software for the mortgage industry, but the same time, was a super critical, super impactful thing for consumers as we saw in the great recession that we saw thereafter. And so I said I’d start Blend in in 2012, and it’s been, yeah, thirteen years since. We wanted to be the best origination platform, or we’re just starting with mortgages originally, and then since then, we’ve expanded to all consumer banking. And the the premise of the company is very simple, which is we’re gonna have digital data driven origination experiences instead of the, you know, legacy technology experiences that that people are used to. And so, yeah, we’ve out thirteen years.

I think the thing that I’m most proud of for the team is just the our customer base, and you can see some of that on the slide. It’s very, very difficult to penetrate financial institutions with software, especially the regulated diversified financial institutions. And we’ve done that, and it’s in the biggest ones. We didn’t go small community banks and credit unions, which is what most people do. Our goal was to get in the door, and we we were talking about, Viva and Guidewire this morning, and Dylan and I were talking about it.

And what they told me early on was like, you get in the door, and then you expand with them over time. We’ve seen that. And so getting in the door with some of these really big financial institutions is extremely difficult. We’ve done that. We’re still growing our customer base.

And then we’ve expanded to other product lines over time.

Dylan Becker, Research Analyst, William Blair: If we start solely on the mortgage side of the house, could you give us kind of some context on where you fit into that process, right? How you’ve evolved to the platform to feature more components of that end to end journey? And then touching on the customer segment as well, who are you catering to on the high end of that segment? What does it look like if we kind of were to delineate the mortgage market?

Nima Gamsari, CEO and Founder, Blend Labs: So think of Blend as we’re front office, so we’re what the consumer uses to apply and upload the documents, sign their documents, do their closing or sort of their system from front to back and then we’re the loan officer who’s typically the salesperson on the mortgage side, their system that they can use throughout the process to help the customer, do work on behalf of the customer, help with the you know, just track what they’re up to. And so we we’re front office. There’s a typically a back office system. ICE has a back office system. There’s a few others in the industry that we we integrate with each other on the on that front.

And then there’s a servicing side, which is after the loan is originated. But we stop when the loan is originated. And so that’s where we’ve historically played, that’s how we play actually across all product lines, consumer, all consumer product lines, small business, etcetera.

Dylan Becker, Research Analyst, William Blair: If we were to think about the factors in the mortgage landscape right now too, right, affordability, supply, rates, kind of how are you thinking about the trend line of where we sit relative to historical averages and how are financial institutions thinking about investing ahead of that impending recovery in more digitally native solutions?

Nima Gamsari, CEO and Founder, Blend Labs: So you all are probably familiar with this, but rates went up a lot from 2022 throughout 2022 and then into 2023 mortgage rates. And as part of that, two things happened for financial institutions in 2023. So worst year ever. It was, volumes went down 70%. And not only that, margins went down 60%.

And so they had this high fixed cost. They were pretty much all losing money in 2023. So no one was buying tech in 2023. They were all losing money. They’re all just trying to get their house in order.

They used 2023 and 2024 first half of twenty twenty four to get their house in order, And now pretty much all our customers that I talked to are are profitable, which has opened the door to them investing because at some point, the historical averages for a number of mortgages in the country is about 8,000,000 per year. We’re currently or 7 to 8,000,000 a year. We’re currently seeing around 4,000,000 mortgages being done a year because rates are still so high. And, you know, who knows with with with where the ten year treasury yields are, when that’ll come down. But the the our customer base believes it’s gonna come down, that’s why in the back half of last year, we really started to see a pickup in sales.

We announced a bunch this is all in our earnings scripts, if if people wanna listen to that. But there’s another top 10 bank signed with us at end of last year, a top five credit union, two of the top the biggest servicers. So it’s been a really good run recently where people are starting to invest again, but there was that lull period in between.

Dylan Becker, Research Analyst, William Blair: Into the things that are within your control, if we think about kind of the three core levers of the business, market share and monetization, you talked about kind of getting a foot in the door and proliferating within an enterprise. Can you talk about the evolution and how you’re tracking in those metrics that are more under your direct kind of purview despite kind of the macro sensitivity piece? Yes.

Nima Gamsari, CEO and Founder, Blend Labs: I think 2019, the year before COVID, we had sub-ten percent market share. And so in that time, you know, we’ve, I think more than, I’d have to go get the exact numbers and look through the exact, I think we’ve more than doubled our market share in five years, and we’re still signing customers, which is great. And then on top of that, our unit our price per unit, which we call economic value per funded loan, but essentially it’s our price per unit, has gone up, I think, close to 60% since I think it was in the 60s or low 60s, something like that. Now it’s in 90s, and that’s because we have add ons like digital closings that they can do now with our platform. Our price has gone up slightly over the last few years as well, like 10%, fifteen %, something like that.

Our base price, I should say, but the add ons really help. And then we have a marketplace of offerings, which you’ve heard about like the home insurance and the title insurance and things like that that people can do on our platform that adds additional value per unit.

Dylan Becker, Research Analyst, William Blair: Within and as we’re talking about kind of this potential impending recovery, you do have some newer solutions as well too that are higher ARPU in nature. Can you talk about kind of what you’re doing to help digitize the refinance component, the home equity component? Maybe that ties into consumer, which we’ll get into, but some of the newer offerings as well.

Nima Gamsari, CEO and Founder, Blend Labs: And so as as part of getting our customers ready for when when right both where where the world is right now and for when rates come down, where the world is right now, they have a lot of consumers who have built up a ton of equity in their homes, and the equity in their homes is becoming necessary for them to tap into, unfortunately. And consumers are struggling a little bit right now, so they were seeing a lot of home equity growth. But that’s resulting in our customers needing more automation because the volumes are growing and they don’t want to staff up a ton of people and they don’t want to have long turn times for customers where the consumer comes in and seven weeks later, they get their home equity line. It’s not a good experience, and they often will go to some other place if we can’t serve them fast enough. And so we rolled out, first and foremost, a new product called Rapid Home Equity.

And think of it as roughly 60% higher price per unit than our base platform. And essentially, what rapid home equity does is it does the full home equity approval where we run a valuation on the home. It’s a it’s an automated valuation on the home. We run credit. We run an income analysis.

We do credit decisioning in the flow and give the customer a line amount and an answer and let them consolidate their debts if that’s what they’re trying to do in our flow, which it’s showing that it’s cutting cycle times for our customers, which is great, even our best customers or our fastest customers. But on top of that, most importantly, it’s increasing conversion. So our typical flagship home equity flow, which is sort of a baseline flow that doesn’t do the decisioning upfront, is what I think the goal is with all of these new flows that we’re rolling out. I’ll get to that in a second. But the flagship flow doesn’t do decisioning upfront, and we see the conversion was about when somebody touches our product to when they eventually get a line of credit was 30%.

With the new platform or the new flow, I should say, it’s we increased that to 45% in our first pilot customer, which is a big scale home equity lender. And so material improvement in conversion for our customers, which I think that’s the name of the game because their their costs are too high. They can’t be leaving business on the at the door. And so that’s about one thing to help them with today. To help them with the future, when rates come down, we’re we have a similar solution called rapid refi, which would happen last time during COVID when rates came down.

There was an influx, a massive amount of volume that came in. Those customers were put in the waiting queue and waited up to ninety days to get their payments lowered. And I just finished saying how much consumers need to help financially right now to lower their payments. The people with 7%, seven point two five % mortgages, when rates go down to 6%, they’re going to need the help financially. And they’re going to want the help as quickly as possible.

And so I expect a big rush of refinances, and so do our customers when rates come down, if rates come down. And so we have this rapid refi product, same concept of what I just said. It’s very personalized to that specific consumer and their specific mortgage they already have and the specific home they already have. And it just walks them through and says within a couple screens, here’s your old payment, Here’s your new payment. Would you like it?

If so, give us intent to proceed. We’ll lock your rate, and then we’ll collect your credit card to go order the appraisal, which is needed in a lot of refinance cases. And so that’s another one that’s great. We have it live with a couple of the largest servicers in the country where refi is especially important to them. But it’s getting interest across our entire customer base and we have a number of signed deals there already.

Dylan Becker, Research Analyst, William Blair: Could you talk to if we point on or press on the refi piece in particular as well too, the importance of positioning around and recapture rates, what that can mean from a market share perspective? Maybe is that an incentive for some of this incremental investment as well?

Nima Gamsari, CEO and Founder, Blend Labs: Yeah. So I I think the the two part of the reason for incremental investment is that there’s new technology from when we built our flagship platform seven, eight years ago to now that we can make the flow materially better. So, like, example, there’s better income verification. You can pre fill high friction fields like social security number from the mobile carriers. You don’t need to collect social security number from consumers anymore.

Those kinds of things make it higher conversion and make it a better experience for the consumers. A part of it is because you can do better and our job is to keep improving. But part of it is because our customers care so much about conversion and recapture rate. When they get a customer coming in the door, they need to make sure they convert that customer and they’re willing to pay us for it. So if you’re a mortgage servicer, recapture rate is for every 100 customers that you have that refinance a loan, what percentage come back to you?

And it’s a very it’s a simple metric that they use, but it’s their sort of their true north in almost every case, and they wanna maximize. The best ones, I think Rocket is something like 75%, eighty %, maybe maybe even a little more. Mister Cooper, I think, which just got announced that it was getting acquired by Rocket is, like, in the sixties, last I last I looked. But most of the industry is in the teens. Like, unless you really die so we’re gonna help them with that, with this this this flow.

I think that they can do a lot better and part of it is marketing, but part of it is the flow itself.

Dylan Becker, Research Analyst, William Blair: Perfect. If we were to kind of summarize at least what we’re seeing on the mortgage side, and we’ll get into consumer as well too, but maybe we step back, how should we think about the financial profile of the business? To your point, there were some structural headwinds. How much of the revenue model is usage based versus subscription? How should we think about kind of the building blocks and levers that you see from a financial perspective?

Nima Gamsari, CEO and Founder, Blend Labs: I mean, guess the things that I think I think let’s talk about what sort of built in and base upside and then additional upside that I see in the business. So the built in upside is we’re about half the size of a typical mortgage market. And all of our contracts have a usage based component. Every single one, maybe minus one or two small ones. Like, there’s not there’s not large ones that are not usage based.

And so when mortgage volumes come back, I expect us to do a lot more volume on our platform and to get paid for it. And at this new higher rate where we have more products attached and we have more, features turned on, and in some cases, the rapid flows, are a much higher price point. So in those cases, we’re you I feel like we have a lot of built in upside in the business from that, which I’m excited about both for our customers’ sake and for our sake. And then I’d say the things to be excited about for the future are the rapid flows are getting a lot of attach. We talked about this in our q one earnings a few weeks ago where that has sold a lot better and a lot faster than I thought.

Typically, it’s a big but, like, it’s so obvious. If start putting all the decisioning upfront, you’re gonna convert more customers, and so they’re willing to pay extra for it. And we made it easy. We kinda gave them a simple a short try before you buy period. And so we’re like, hey.

You’re gonna see the ROI, and if you don’t like it, turn it off. We believe in our products. And so that’s actually worked really, really well with our customers. And we we can afford to do that because it’s all in the same platforms that use the same integrations. We don’t have to do a huge new implementation to get them live.

So that’s one thing to get excited about. I think the long term upside is much bigger than, even that, which is they’re still about putting Blend aside and putting their existing systems aside, putting the software spend aside. There’s about $10,000 to $12,000 of spend for humans and other systems in the process, of which the vast majority of it is people shuffling papers back and forth and reading a document, comparing it to another document. Hey, was the appraiser’s license on the appraisal? Does that license number match the system we have in our system?

Is it expired? And there’s humans who look at these things all day every day. And so what we’ve been building now or we’ve sort of hinted at now is those are things that AI is very good at and with extremely high accuracy and very cheap. And so what I don’t view the world of mortgage as shifting to, hey. We’re gonna just keep getting incremental software spend.

I view it as some combination of their people spend comes down as their software spend goes up. And not to not to make it so that it’s more like we want to give them a five to one or 10 to one ROI. So if we could save them a thousand bucks, we want command another hundred dollars, so it’s a win win or $200, so it’s a win win. But I think there’s real upside there and something that I’m very passionate about and our customers are extremely excited about and navigating with us.

Dylan Becker, Research Analyst, William Blair: On that particular topic around AI as well too, how do you think about the positioning of being a vertical vendor that can help facilitate that specialized data with highly curated workflows in a in what is a very highly regulated industry as well?

Nima Gamsari, CEO and Founder, Blend Labs: Yeah. I mean, look, I think the horizontal vendors will do great because if you’re a large bank or you’re a large insurance company or you’re a large health care company or it doesn’t matter, large consumer company, if you need some sort of horizontal AI strategy across your enterprise that works across all functions. I think where where vertical software companies are especially successfully positioned is that we are actually driving the core workflows that their business spends money doing today, and in this case spends $10,000 doing today. And if you’re, you know, a a large bank or a small bank, that that money is money that’s essentially either coming out of your pocket or it’s coming out of your consumers’ pockets. And so this is a no brainer.

We’re pitching them a win win with AI. We’re not pitching them, you just pay us extra and it’s the science project. We’re saying, you do this pre close, pre fund QC with us, and you can not spend, $100 alone on prefund QC or $200 alone on prefund QC anymore.

Dylan Becker, Research Analyst, William Blair: Sure. Sure. If we’re now switching over to the consumer side, can you walk us through kind of the ideation of Blend Builder, what that kind of helps establish in your ability to kind of penetrate more of the consumer segment?

Nima Gamsari, CEO and Founder, Blend Labs: Yes. So just so people understand the consumer segment, we talk about that, it’s personal loans, credit cards, deposit account opening slash new membership if it’s a credit union, and home equity lines and loans and auto loans. And now we’ve added recently small business as well. And that all the origin of that for us was our customers, being a vertical software company, our customers came to us and said, hey, we do our mortgage with you. Can you create a home equity product?

You do home equity and mortgage with us. We wanna we wanna offer a checking account account to our new when we bring on a mortgage customer, can you make it so that we can open a checking account with them? And then it was like, well, you do the checking account, the most common product that people get with a checking account is a credit card. So can you offer a credit card in your checking account flow? And then it’s like, well, now you do most of our products.

Can we do personal and auto lending? Because there’s legacy systems in place there, and we don’t want to have to get some separate system, that doesn’t integrate with all these things within the within the flow. And so that was the origin of it. And so as we started going down these piece by piece from ’20 I think it was 2018 till now, as we added those line by line to our our product suite, which now I’m happy to say we have all the major products that a consumer bank may offer. As we’ve added those, we’ve we between 2018 and 2021 or 2022, I can’t remember the exact year, we we came to the realization that these products were all basically they’re like different animals with with 98% the same DNA, but they’re essentially the same DNA.

You’re doing some form of credit verification, in some case, an income verification, an identity verification, in some cases, asset verification or valuation, and, and you’re doing a credit decision in the flow. And so and then maybe you have some things that they have to do as a follow what we call stipulations or follow ups after the fact of getting the approval. Hey, I needed additional tax year of tax returns. And so these were all the same thing, even though these are completely run-in silos at these financial institutions. And so what we didn’t want to do, two things.

What we didn’t want to do, one, was create more silos and create separate platforms for all these things. That was one thing. But then the second thing was we wanted to make it really easy for us to build out and manage, more importantly, five or six product lines. And so we created this thing called Blend Builder where we took all those building blocks, income verification, identity verification, credit scoring, credit decisioning, asset verification, document follow ups, e signing. We took all those building blocks.

We made them drag and drop. We put them on a new platform. It’s not only what powers our consumer side, it also powers all the rapid flows, and it integrates with our flagship platform. So all the new flows that we’re building out are on this new Blend Builder platform. And it just it it allows us to build thing I mean, for you all, are the financially savvy ones, it allows us to build things in order of magnitude cheaper and faster because the same DNA.

It’s drag and drop. It’s the same DNA. So we will be launching products cheaper and faster than we have before and than any of our competitors could if they wanted to because, and then there’s one additional upside, but maybe not as relevant because it’s a little early on this. But our customers who see that platform get excited about it and say, hey, could I use that in an area that you won’t productize? So one customer was asking us about a certain kind of unsecured loan related to a home.

Think of like a home improvement type loan. We don’t want to productize that because it’s not a big enough market, but they can use our platform to configure that and then use that within their lending platform. But yeah, Blend Builder is something I’m super excited about. It’s a few years old now that we’ve been building it, and it’s still a work in progress, but it’s the thing that powers all of our consumer and even all our new mortgage flows.

Dylan Becker, Research Analyst, William Blair: Within that, how do you think about configurability as an enabler of kind of more of this ecosystem, opening up the aperture for partners to get more involved into the process and really kind of help compound that value delivery for customers?

Nima Gamsari, CEO and Founder, Blend Labs: Yeah. That’s a good point. So one of the things that I think we’re uniquely positioned to do because we have this amazing customer base that was nearly impossible to penetrate. I I like going back thirteen years, I don’t even know how we landed some of these logos. I mean, I was involved in it, but it’s just it it’s sort of a lot of things.

I think we had a good product and a lot of things worked in our favor. But it took a long time. It was a lot of energy. And now others look at that and say, wow. I’d like to work with those customers, other vendors of theirs or other potential vendors of theirs, and say, I’d like to do more work with those customers.

And then I I probably get 10 vendors a week calling me about something or wanting to partner with these financial institutions. And the way we’re setting that up is this platform, Blend Builder, is going be an open platform. But there’s going to be some, call it, platform revenue exchange for us helping them with distribution and integration into these customers. It was a lot of work. It was very expensive and there has to be a fair exchange of value.

And they understand that and they’re willing to pay. I was talking to one of the income vendors and they would love to have some of these customers. They’re early income verification vendors. So they’re willing to pay us a good fee to to do that. And so that allows us to I mean, the the thing about that is I always tell the team, like, you know you’ve made it in life when you’re making money while you sleep.

And, you know, when we have to do all the work to make the money, it’s one thing. But when we have leverage built into our platform that we’re making money because other partners are building more things into it and then paying us for the privilege to do so, it’s another thing. And so I think that’s the that’s the target state in some cases. And in some areas, we’ll still build things, but, you know, ideally, we’re gonna partner where where things exist in the market unless it’s massively economically beneficial to do something else.

Dylan Becker, Research Analyst, William Blair: Sure. And and going back to that kind of pairability between mortgage and consumer, how do you think about kind the unit economics between the two? Does anything from a go to market perspective have to change or how you can really lean into the referenceability of the value you’ve created in one ecosystem given the interoperability of really kind of those two systems?

Nima Gamsari, CEO and Founder, Blend Labs: Well, I think that their existing customers, definitely, we can lean on the relationship with a lot of who introduces us to at a large customer to their peer who runs credit cards. It comes from like, I was I was at our customer advisory board at the New York Stock Exchange a few weeks ago, and one of our customers, head of the their home lending division was like, hey. I think you have an in now finally with the deposit in as a huge bank, the deposit team and the credit card team. And he’s like, I might need you to talk to their CEO, who I also know, and help convince him that this is the right way to go because he wants to do it. But the business owner historically hasn’t wanted to, but now the CEO wants to do it.

And so a lot of that comes internally. And so yeah. So I think there’s just a lot of a lot of that comes with the but I think with net new customers, I would say, with smaller ones that we haven’t gone in as we’re trying to expand our footprint to 1 to $5,000,000,000 institutions, it’s a little different. They want the full suite. They wanna work with us across all the product lines out of the gate.

And so finding ways to make it really easy for them to commit to that and get live quickly across product lines is something that we’re thinking of for these smaller institutions, is a little bit of a different selling motion.

Dylan Becker, Research Analyst, William Blair: Sure. How if we were to kind of summarize all that as well too, how are we supposed to think about kind of the competitive landscape, right? Is there differences between mortgage and consumer? Obviously, you fit in kind of different parts of the puzzle, at least at this point in time. How should we think about kind of the competitive landscape here?

Nima Gamsari, CEO and Founder, Blend Labs: Yeah. There’s definitely difference. I’d say that on the consumer side, it’s it’s probably different by segment. The really big banks, the way you’re competing with is custom build in house. At the smaller ones, you’re competing with one or two sort of point solutions for that those specific products.

And mortgage at the big banks, it’s mostly us or I’d say, we’re probably the only one who has a top 10 bank at this point, signed on the platform. But we have other as we go down market, we go to the independent mortgage banks, which are great customers of ours as well. The the middle column there, those are we there’s there’s other competitors in that space, and so it gets very nuanced. But I’d say what makes Blend special for these guys is, one, I think we have the best stand alone product in mortgage or the stand alone product in consumer banking. That’s I’m biased, of course.

I’m like their their father. But but putting it together, we’re the own we’re definitely the only one, and this is objectively true, that has small business, consumer, mortgage truly on one platform. It’s not even it’s not even a really you know, it’s not even really a debate there. Think so. So I I truly feel that way, and so I think that’s a differentiator for a small institution and something we’re leaning into.

Sure.

Dylan Becker, Research Analyst, William Blair: And if we were to talk about kind of the financial profile, right, there has been a lot of kind of rightsizing internally, but now you’re at a point of scaling profitability. Can you talk about how that’s kind of giving you flexibility to double down on some of these opportunities that you’re seeing ahead of you and kind of how you think about that balance going forward on growth and profitability perspective? Yes. I think

Nima Gamsari, CEO and Founder, Blend Labs: much like our customers, we were hit pretty hard when mortgage volumes collapsed 70% because they weren’t just normal historical levels in 2022 and 2021. First half of ’20 ’20 ’2 and 2021, they were double the normal historical levels. And so we thought it was going to go down. We just didn’t think it was going go down seventy percent one year and then another 40% down the year after that, which is a particularly hard thing to do, when you’re when you set your cost of operations at being, you know, a certain amount of units that you expect, and it ends up being half that. So but we’ve used the last couple of years just like our customers to get our house in order.

I feel really good about where we are today. We did 15 and a half million in free cash flow in q one. We’ve done we’ve had operating non GAAP operating profitability three quarters in a row. We guided to positive non GAAP operating profitability in Q2. And the really nice thing about being free cash flow I mean, should have known this.

But the really nice thing about being free cash flow positive and having non GAAP operating profitability and having a great customer base that wants to do more with you is you can afford to invest in those things that allow them to do more with you. And so we I’m very proud of what the team did to get to that point. And that is still in the mortgage market that is half as big. And so you can do the math on what happens when the mortgage market rebounds. If it just rebounds at historical levels, let alone to what will actually happen, which I think will will be materially beyond that for a two to three year period given how many mortgages have been done at 7% now the last three years.

Dylan Becker, Research Analyst, William Blair: Sure. Maybe the last piece here as well too, right? Going more recently, we talked about kind of divesting the title business, simplifying kind of the operating structure of Blend. Could you maybe talk to kind of that evolution into the pure kind of vertical SaaS player and and how we got there? Well,

Nima Gamsari, CEO and Founder, Blend Labs: I blame SoftBank for how I got myself into this mess. They actually didn’t have anything to do with us actually doing it other than they were inspired lots of companies in Silicon Valley at the time, 2018, when we did our first add on where we built our home insurance agency in house, because it was an important add on. It’s an important part of the mortgage. Everybody who gets a mortgage has to have home insurance per Fannie and Freddie guidelines. And they were telling everyone you should build all these yourself and, you know, it’s like why give up that value?

And it turns out when you do that now across home insurance and income verification and title insurance, it just creates a lot of complexity and that’s what happened with us. It it became very it became very complex, not necessarily on the each individual business. Yeah. Each individual business was flex, but it’s more in aggregate across the institution. Now you’re across our company, across our institution.

We’re trading off between so many different business lines, which it requires more investment, it requires more overhead, it had a lot of things that were really good about it, but it also had things that we had to think about internally. And, you know, it’s it’s one of those would I would I do it differently in retrospect? Yeah. But at the time, maybe given what the cost of capital was and and growth trajectory of these companies where maybe it was the right thing to do. But now we we the last two years, we’ve been on the simplified blend trajectory.

We’re really the last year where we announced a partnership and and and transition of our home insurance agency to a partner where we get it goes back to what I said earlier. We get money while we sleep. They’re doing the work to improve the home insurance agency, the home insurance flow, grow the home insurance customer base on our platform, and we just get the benefits. And we can be the lean team that’s focused on software. And we just announced that the biggest I think the biggest leg of that was title insurance.

We just announced that a couple of weeks ago during our earnings that we’re in an exclusive process to finalize that transition out at similar to a partnership model where they’re gonna be working to make us money while we sleep. And we still get the upside of volumes return, and we still get unit economics. And, you know, we get to be a software company. Sure. And I wanna build and especially now in this AI wave, it is critically important because the vertical software companies that can figure that out are gonna be massive, and the ones that don’t will still be good companies, but not the same scale.

Dylan Becker, Research Analyst, William Blair: Yeah. Certainly bigger, better, faster, more profitable. Makes sense. I think we are about at time, so thank you, Nima. We will carry on the conversation for those of you that wanna join us in the Burnham A room upstairs, but thank you all very much.

Yeah. Thanks. Thanks, Dylan.

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