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Mortgage technology and cloud-based banking platform Blend Labs Inc. continues its quest to return to profitability by deepening existing mortgage relationships and rolling out new and expanded products during the third quarter.
The San Francisco-based tech provider reported a $41.8 million Q3 net loss Tuesday, as revenue was down 27 percent from a year ago, to $40.59 million. That’s an improvement from the $132.7 million net loss the company posted in the same quarter a year ago but about the same as the company’s $41.5 million Q2 loss. Blend has racked up $1.31 billion in cumulative losses since 2012, including $720.2 million in 2022 losses and $149.5 million in losses during the first nine months of 2023.
Blend said it expects a fourth-quarter non-GAAP net operating loss of between $14 million and $17 million, and Q4 2023 revenue of $34.5 million to $40.5 million. That guidance reflects a forecast by the Mortgage Bankers Association that mortgage originations will decline 5 percent year over year during the final three months of the year.
“Our third quarter results represent execution on both our revenue and operating loss targets for the third consecutive quarter,” head of Blend Nima Ghamsari said in a statement. “We are more focused than ever on delivering for our customers in a way that aligns with our long-term vision, and we believe we are in a strong position to continue our pace of innovation with speed, scale and efficiency.”
Shares in Blend, which in the last 12 months have traded for as little as 53 cents and as much as $2.33, closed at $1.48 before Tuesday’s earnings release and were down 5 percent in after-hours trading.
Having already slashed operating expenses from $496.7 million during Q2 2022 to $60.2 million during the three months ending June 30, Blend has little room to trim additional fat — Q3 expenses totaled $58.3 million.
After acquiring national title insurance and settlement services provider Title 365 and going public in 2021, Blend grew from 577 employees to 2,276 workers worldwide, including 587 employed in Title365’s India operations. Most of those employees are gone, in five rounds of layoffs that kicked off in April 2022. Blend announced a fifth and perhaps final round of layoffs in August, which the company said will affect 150 workers when completed in Q1 2024. Those layoffs will bring the company’s U.S. headcount to about 640 workers.
Blend executives are now emphasizing the company’s potential for growth, noting that Blend’s mortgage suite generated $86 in revenue per funded loan during Q3 2023, up from $77 during the same quarter a year ago. That increase reflects continued adoption of its mortgage add-on products and a “deepening of mortgage relationships” with existing clients, the company said.
Last month Blend launched a new edition of its mortgage suite tailored to retail independent mortgage banks (IMBs), Blend IMB Essentials, and expanded its partnership with MeridianLink Inc., which provides software platforms for financial institutions and consumer reporting agencies.
Blend’s integration with MeridianLink Consumer, a loan origination system, gives users access to Blend’s unified platform and consumer banking origination software to speed applications and onboarding for banking, credit card and loan products, the companies said. The new integration expands the partnership between the two companies, with Blend having previously been integrated with the MeridianLink Mortgage loan origination system.
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