The cloud banking software provider maintained steady growth in consumer banking revenue while reversing a decline in its main business of providing services to mortgage lenders.
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Cloud banking software provider Blend Labs Inc. successfully achieved growth in its mortgage and consumer banking businesses in the second quarter, with net losses falling 53% to $19.4 million from the same period a year earlier.
While not a significant improvement from the company’s $20.7 million net loss in the first quarter, Blend now has a longer path to profitability, having secured $1.5 in April from Austin, Texas-based private equity firm Haveli Investments. billion in cash injection. Blend acquired Title365 in 2021, using the money to pay down the debt it took on to get into the title insurance business.
Blend’s second-quarter results exceeded analysts’ earnings and revenue expectations, and Blend’s shares rose 23% to close at $3.30 on Friday. Blend’s shares have changed hands last year as low as $1.03 and as high as $4.14, hitting an all-time low of 53 cents on May 5, 2023.
“The second quarter marked another strong quarter for Blend as we signed several important agreements with new customers in our mortgage and consumer banking businesses,” Blend CEO Nima Ghamsari said in a statement. “While mortgage lending The industry faces continued pressure, but we are excited about the success we are seeing with our new investments in the Blend platform and expanding our relationships with key customers through increased adoption of our add-on products.”
Second-quarter revenue was $40.5 million, down 5% from the same period last year but up 16% from $34.9 million in the first quarter. Blend said it expects third-quarter revenue of $39.5 million to $43.5 million.
Gamsari said the guidance does not take into account the fact that mortgage rates have fallen significantly and will likely continue to fall.
“Earlier this week, mortgage rates hit their lowest levels since April 2023, and we’re already starting to see that through application activity levels,” Ghamsari said on a conference call with investment analysts. “While I would say ”
Growth of consumer banking and mortgage suites
Source: Blend investor presentation.
In the second quarter, Blend’s consumer banking revenue maintained steady growth, increasing 37% year-on-year to $8 million. At the same time, it was able to reverse declining revenue from its main business, servicing mortgage lenders.
After helping lenders process 1.8 million mortgage transactions in 2021, Blend saw mortgage transaction volume drop 32% to 1.23 million in 2022 and another 35% to 805,000 in 2023.
Second-quarter revenue from Blend’s mortgage suite was $18.5 million, up 22% from the first quarter but down 17% from the same period last year. Blend’s title segment generated an additional $11.8 million in its second season.
Blend attributed the quarterly increase in mortgage revenue to the addition of “several new mortgage customers,” including Horizon Bank, as well as existing customers signing up for a wider range of services.
Get more revenue from every mortgage you process
Blend offers a suite of products that lenders can choose from to support the loan origination process, including data collection, verification checks, product selection, pricing, pre-approval, disclosure delivery and signing of closing documents.
As mortgage customers increasingly take advantage of these add-on products, the “economic value” of each mortgage Blend helps process has grown more than 40% in the past 2 1/2 years, from $69 at the start of 2017 More than 40%.
“Customers are realizing the benefits of applying our technology throughout the home buying process, and we are delivering more value as adoption and utilization of our add-on products continues to rise,” Ghamsari said, noting that Blend’s remote online Notary solutions are “a special kind of solution.”
“Customers are already completing hundreds of these high-value transactions every month,” Ghamsari said. “Given the size of our business and the size of the mortgage industry, this may not seem like a lot. But we are just getting started, and we expect these numbers to increase as the solution rolls out to more qualifying loans and more customers. .
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