Blend achieves financial milestone, says mortgage pipeline is strong

After delivering two straight quarterly losses to start this year, mortgage technology company Blend Labs predicted correctly that it would soon move into the black by one key accounting measure, finally delivering a non-GAAP operating profitability third-quarter 2024 earnings.

The earnings report, released Wednesday, revealed that Blend’s GAAP loss from operations improved to $13.3 million in the third quarter of this year compared to $36.2 million in the same period last year.

“The third quarter resulted in several big wins for Blend, including the signing of multi-year deals with new customers in both mortgage and consumer banking as well as the significant milestone of achieving non-GAAP operating profitability ahead of our fourth quarter target,” Nima Ghamsari, head of Blend, said in the earnings release.

“Reaching this milestone now positions us to enter the next phase of our growth strategy. Our focus will be on generating profitable growth and ensuring our platform continues to deliver even more value for our customers over time.”

Ghamsari also cited new customer growth as a vital part of Blend’s profit-forward quarter, namely a multi-year mortgage and home equity deal with Pentagon Federal Credit Union, the nation’s second-largest federal credit union by asset size with nearly 3 million members.

He added, “The positive outlook for mortgage mixed with our accelerating consumer banking business, which generated more than 50% year-over-year revenue growth in the third quarter, and the achievement of our non-GAAP operating profitability goal makes now an exciting time to be building at Blend.”

Total company revenue for the quarter was $45.2 million, composed of Blend platform segment revenue of $33.1 million and title segment revenue of $12.1 million.

Within the Blend platform segment, the company reported that mortgage suite revenue increased by 6% year over year to $21.5 million. Consumer banking suite revenue totaled $9.5 million in the third quarter, a record increase of 54% compared to the prior-year period. Lastly, professional services revenue totaled $2 million in the quarter, down slightly compared to last year.

Blend’s GAAP and non-GAAP gross margins improved to 58% in the third quarter, up from 54% and 55% in 3Q23, respectively. The GAAP Blend Platform segment gross profit rose to $24.5 million, and non-GAAP reached $24.8 million, both up from the prior year.

Software platform gross margins were stable at 80%. Operational losses decreased significantly, with GAAP losses at $13.3 million compared to $36.2 million in 3Q23, and non-GAAP income turning positive at $0.04 million. Net losses per share also narrowed.

“Looking ahead, the mortgage tech firm forecasts a non-GAAP net operating loss of $4 million to $7 million in the third quarter,” the company said regarding Q4 expectations.