Meets Fourth Quarter 2023 Revenue Guidance and
Delivers Strong Operating Loss Improvement in Every Quarter in
2023
Blend Labs, Inc. (NYSE:BLND), a leader in cloud banking
software, today announced its fourth quarter and full year 2023
financial results.
“Despite a challenging market environment, Blend has achieved
substantial progress on our three strategic priorities over the
course of 2023,” said Nima Ghamsari, Head of Blend. “First, we’ve
expanded our consumer banking footprint by achieving double digit
year-on-year revenue growth in every quarter. Second, we continued
to deepen our mortgage relationships and maintain our leading
market share. And third, we’ve succeeded in streamlining our cost
structure, which resulted in a significant reduction in loss from
operations.
“Looking ahead, we are optimistic about our strong pipeline and
we will continue to accelerate our growth as we work towards our
mission of building simple, proactive, and instant experiences for
any banking product.”
Recent Business
Highlights
- Expanding Consumer Banking Footprint: Closed eight new
consumer banking deals in the fourth quarter, which includes
signing a multi-year consumer banking deal with Citizens Bank, one
of the nation’s oldest and largest financial institutions, to
deliver a more consistent, frictionless application experience to
their customers.
- Growing Mortgage Customer Base and Focus on Continued
Innovation: Welcomed two new top 100 financial institutions by
retail customer base to our mortgage solution, including the 10th
largest credit union in the U.S. based on total assets. Blend’s
ongoing product investments in new data integrations and
AI-enhancements, like Blend Copilot, are positioning its customers
for more efficient growth ahead of a potential industry
rebound.
- Continued Strengthening of Mortgage Suite Unit
Economics: Blend’s mortgage suite economic value per funded
loan rose to $91 in 4Q23 from $81 in 4Q22, representing continued
adoption of its mortgage add-on products.
- Pacing Towards Profitability: Blend GAAP net operating
loss decreased significantly in 4Q23 compared to the same period
last year. Blend non-GAAP net operating loss in 4Q23 outperformed
the top end of guidance on execution of efficiency initiatives.
This increased operating efficiency places the company on track to
achieve non-GAAP profitability within the year.
Fourth Quarter Financial
Summary
Revenue
- Total company revenue in 4Q23 was $36.1 million, composed of
Blend Platform segment revenue of $25.9 million and Title segment
revenue of $10.2 million.
- Within the Blend Platform segment, Mortgage Suite revenue
decreased by 3% year-over-year to $17.2 million, amidst a 20-25%
industry mortgage market volume decline over the same period as
determined by Blend’s internal estimates, which are informed from a
sample of third-party estimates, such as those published by the
Mortgage Bankers Association, Fannie Mae, and Inside Mortgage
Finance where Home Mortgage Disclosure Act data is
unavailable.
- Consumer Banking Suite revenue totaled $6.4 million in 4Q23, an
increase of 15% as compared to the prior-year period.
- Professional services revenue increased 11% year-over-year to
$2.3 million.
Gross Margin & Profitability
- Blend GAAP gross profit margin was approximately 55%, up from
34% in 4Q22. Blend non-GAAP gross profit margin was approximately
55%, up from 35% in 4Q22.
- GAAP Blend Platform segment gross profit was $18.2 million in
4Q23, up from $14.6 million in 4Q22. Non-GAAP Blend Platform
segment gross profit was $18.3 million in 4Q23, up from $14.9
million in 4Q22.
- GAAP and non-GAAP Software platform gross margins were 79% in
4Q23, up compared to 72% on a GAAP and non-GAAP basis in 4Q22.
- GAAP loss from operations was $21.9 million, compared to $75.2
million in 4Q22. Non-GAAP loss from operations was $13.1 million,
compared to $43.1 million in 4Q22.
- GAAP net loss per share attributable to common stockholders was
$0.13 compared to $0.35 in 4Q22. Non-GAAP consolidated net loss per
share was $0.09 compared to $0.21 in 4Q22.
Full Year Financial
Summary
Revenue
- Total company revenue in 2023 was $156.8 million, composed of
Blend Platform segment revenue of $109.5 million and Title segment
revenue of $47.3 million.
- Within the Blend Platform segment, Mortgage Suite revenue
decreased by 18% year-over-year, to $77.6 million.
- Consumer Banking Suite revenue totaled $23.6 million in 2023,
an increase of 22% as compared to 2022.
- Professional services revenue increased 7% year-over-year to
$8.3 million.
Gross Margin & Profitability
- Blend GAAP gross profit margin was approximately 52%, up from
38% in 2022. Blend Non-GAAP gross profit margin was approximately
52%, up from 39% in 2022.
- GAAP Blend Platform segment gross profit was $76.5 million in
2023, up from $75.2 million in 2022. Non-GAAP Blend Platform
segment gross profit was $77.4 million in 2023, up from $76.3
million in 2022.
- GAAP and non-GAAP Software platform gross margins were 78% in
2023, up compared to 73% on a GAAP and non-GAAP basis in 2022.
- GAAP loss from operations was $156.2 million, compared to
$746.2 million in 2022. Non-GAAP loss from operations was $77.6
million, compared to $159.2 million in 2022.
- GAAP net loss per share attributable to common stockholders was
$0.76 compared to $3.28 in 2022. Non-GAAP consolidated net loss per
share was $0.41 compared to $0.78 in 2022.
Liquidity, Cash, & Capital Resources
- As of December 31, 2023, Blend has cash, cash equivalents, and
marketable securities, including restricted cash, totaling $144.2
million with total debt outstanding of $140.0 million in the form
of the Company’s term loan.
- Blend cash used in operating activities was $127.6 million in
2023, compared to $190.4 million in 2022. Free cash flow was
$(128.2) million in 2023, compared to $(192.5) million in
2022.
- During 4Q23, Blend prepaid a portion of its outstanding term
loan balance in an aggregate principal amount of $85.0 million,
terminated the revolving line of credit, and amended the maturity
date of the term loan to provide for a maturity extension to June
30, 2027, provided certain conditions are satisfied. These
conditions were not met as of December 31, 2023.
First Quarter 2024
Outlook
Blend is providing guidance for the first quarter of 2024 as
follows:
$ in millions
Q1 2024 Guidance
Blend Platform Segment Revenue
$22.0 – $24.0
Title Revenue
$10.5 – $11.5
Blend Labs, Inc. Consolidated Revenue
$32.5 – $35.5
Non-GAAP Net Operating Loss
($14.0) – ($12.0)
Blend’s 1Q24 guidance reflects an internally estimated 800,000 -
875,000 U.S. aggregate industry mortgage originations in 1Q24.
Note that economic conditions, including those affecting the
levels of real estate and mortgage activity, as well as the
financial condition of some of our financial customers, remain
highly uncertain.
We have not provided the forward-looking GAAP equivalent to our
non-GAAP Net Operating Loss outlook or a GAAP reconciliation as a
result of the uncertainty regarding, and the potential variability
of, stock-based compensation, which is affected by our hiring and
retention needs and future prices of our stock, and non-recurring,
infrequent or unusual items.
Webcast Information
On Thursday, March 14, 2024 at 4:30 pm ET, Blend will host a
live discussion of its fourth quarter and full year 2023 financial
results. A link to the live discussion will be made available on
the Company’s investor relations website at
https://investor.blend.com. A replay will also be made available
following the discussion at the same website.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements may relate to, but are not limited to,
quotations of management; the “First Quarter and Full Year 2024
Outlook” section above; Blend’s expectations regarding its
financial condition and operating performance, including growth
opportunities and plans for future operations and competitive
position; Blend’s products, pipeline, and technologies; Blend’s
customers and customer relationships, including the businesses of
such customers and their position in the market; Blend’s cost
reduction efforts and ability to achieve profitability in the
future; projections for mortgage loan origination volumes,
including projections provided by third parties; other
macroeconomic and industry conditions; and Blend’s expectations for
changes in revenue, as well as assumptions relating to the
foregoing. Forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or
quantified. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,”
“expect,” “plan,” “anticipate,” “could,” “would,” “intend,”
“target,” “project,” “contemplate,” “believe,” “estimate,”
“predict,” “potential” or “continue” or the negative of these terms
or other comparable terminology that concern Blend’s expectations,
strategy, plans or intentions. You should not put undue reliance on
any forward-looking statements. Forward-looking statements should
not be read as a guarantee of future performance or results and
will not necessarily be accurate indications of the times at, or by
which such performance or results will be achieved, if at all.
Forward-looking statements are based on information available at
the time those statements are made and/or management’s good faith
beliefs and assumptions as of that time with respect to future
events and are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those
expressed in or suggested by the forward-looking statements. These
risks and uncertainties include the risks that: changes in economic
conditions, such as mortgage interest rates, credit availability,
real estate prices, inflation or consumer confidence, adversely
affect our industry, markets and business, we fail to retain our
existing customers or to acquire new customers in a cost-effective
manner; our customers fail to maintain their utilization of our
products and services; our relationships with any of our key
customers were to be terminated or the level of business with them
significantly reduced over time; we are unable to compete in highly
competitive markets; we are unable to manage our growth; we are
unable to make accurate predictions about our future performance
due to our limited operating history in an evolving industry and
evolving markets; we are unable to successfully integrate or
realize the benefits of our acquisition of Title365; our
restructuring actions do not result in the desired outcomes or
adversely affect our business, impairment charges on certain assets
have an adverse effect on our financial condition and results of
operations; or we are unable to generate sufficient cash flows or
otherwise maintain sufficient liquidity to fund our operations and
satisfy our liabilities. Further information on these risks and
other factors that could affect our financial results are set forth
in our filings with the Securities and Exchange Commission,
including in our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2023 and our Annual Report on Form 10-K for the
year ended December 31, 2023 that will be filed following this
press release. In light of these risks and uncertainties, the
forward-looking events and circumstances discussed in this press
release may not occur and actual results could differ materially
from those anticipated or implied in the forward-looking
statements. These factors could cause actual results, performance,
or achievement to differ materially and adversely from those
anticipated or implied in the forward-looking statements. Moreover,
we operate in a very competitive and rapidly changing environment.
New risks and uncertainties emerge from time to time, and it is not
possible for us to predict all risks and uncertainties that could
have an impact on the forward-looking statements contained in this
press release. Except as required by law, Blend does not undertake
any obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future
developments, or otherwise.
About Non-GAAP Financial Measures and
Other Key Metrics
In addition to financial measures prepared in accordance with
GAAP, this press release and the accompanying tables contain, and
the conference call will contain, non-GAAP financial measures,
including non-GAAP gross profit and non-GAAP gross profit margin,
non-GAAP software platform gross profit and gross margin, non-GAAP
Blend Platform segment gross profit and gross margin, non-GAAP
operating expenses, non-GAAP loss from operations, non-GAAP net
operating loss, and non-GAAP consolidated net loss per share. Our
management uses these non-GAAP financial measures internally in
analyzing our financial results and believes they are useful to
investors, as a supplement to the corresponding GAAP financial
measures, in evaluating our ongoing operational performance and
trends, in allowing for greater transparency with respect to
measures used by our management in their financial and operational
decision making, and in comparing our results of operations with
other companies in the same industry, many of which present similar
non-GAAP financial measures to help investors understand the
operational performance of their businesses.
We adjust the following items from our non-GAAP financial
measures as detailed in the reconciliations below:
Stock-based compensation and amortization of warrant. We exclude
stock-based compensation and amortization of warrant, which are
non-cash expenses, from our non-GAAP financial measures because we
believe that excluding these items provides meaningful supplemental
information regarding operational performance. In particular,
companies calculate stock-based compensation expense using a
variety of valuation methodologies and subjective assumptions, and
expense related to stock-based awards can vary significantly based
on the timing, size and nature of awards granted.
Compensation realignment costs. We exclude the compensation
realignment costs incurred in connection with the change in our
compensation strategy from our non-GAAP financial measures. These
costs relate to amortization of one-time two-installment cash bonus
payment made to certain employees in lieu of previously committed
equity-based awards, driven by an organizational initiative to
standardize our equity compensation program. We believe that
excluding these charges for purposes of calculating the non-GAAP
financial measures provides more meaningful period to period
comparisons.
Amortization of acquired intangible assets. We exclude
amortization of acquired intangible assets, which is a non-cash
expense, from our non-GAAP financial measures. We exclude these
amortization expenses because we do not believe these expenses have
a direct correlation to the operation of our business.
Impairment of intangible assets and goodwill. We exclude
impairment of intangible assets and goodwill, which are non-cash
charges, from our non-GAAP financial measures. These charges are
unusual in nature and we do not believe these charges have a direct
correlation to the operation of our business.
Restructuring costs. We exclude restructuring costs as these
costs primarily include employee severance, executive transition
costs and other costs directly associated with resource
realignments incurred in connection with changing strategies or
business conditions. These costs can vary significantly in amount
and frequency based on the nature of the actions as well as the
changing needs of our business and we believe that excluding them
provides easier comparability of pre- and post-restructuring
operating results.
Litigation contingencies. We exclude costs related to litigation
contingencies, which represent reserves for legal settlements.
These costs are non-recurring in nature and we do not believe they
have a direct correlation to the operation of our business.
Foreign currency gains and losses. We exclude unrealized gains
and losses resulting from remeasurement of assets and liabilities
from foreign currency into the functional currency as we do not
believe these gains and losses to be indicative of our business
performance and excluding these gains and losses provides
information consistent with how we evaluate our operating
results.
Transaction-related costs. We exclude costs related to mergers
and acquisitions from our non-GAAP financial measures as we do not
consider these costs to be related to organic continuing operations
of the acquired business or relevant to assessing the long-term
performance of the acquired assets. These adjustments allow for
more accurate comparisons of the financial results to historical
operations and forward looking guidance. These costs include
financial advisory, legal, accounting and other transactional costs
incurred in connection with acquisition activities, and
non-recurring transition and integration costs.
Gains related to carrying value adjustments of non-marketable
equity securities. We exclude gains related to the carrying value
adjustments of non-marketable equity securities because we do not
believe these non-cash gains have a direct correlation to the
operation of our business.
Income taxes. We exclude non-cash non-recurring tax benefits
from our non-GAAP financial measures. These tax benefits consist of
the changes in the valuation allowance resulting from acquisitions
and from changes in U.S. tax law requiring capitalization and
amortization of research and development costs for tax
purposes.
In addition, our non-GAAP financial measures include measures
related to our liquidity, such as free cash flow, unlevered free
cash flow and free cash flow margin. Free cash flow is defined as
net cash flow from operating activities less cash spent on
additions to property, equipment, internal-use software and
intangible assets. Unlevered free cash flow is defined as free cash
flow plus cash paid for interest on our outstanding debt. Free cash
flow margin is defined as free cash flow divided by total revenue.
We believe information regarding free cash flow, free cash flow
margin and unlevered free cash flow provide useful information to
investors as a basis for comparing our performance with other
companies in our industry and as a measurement of the cash
generation that is available to invest in our business and meet our
financing needs. However, given our debt service obligations
(including the existing $140 million remaining principal on the
term loan under our credit agreement due in June 2026) and other
contractual obligations, unlevered free cash flow does not
represent residual cash flow available for discretionary
expenditures.
It is important to note that the particular items we exclude
from, or include in, our non-GAAP financial measures may differ
from the items excluded from, or included in, similar non-GAAP
financial measures used by other companies in the same industry. In
addition, other companies may utilize metrics that are not similar
to ours.
The non-GAAP financial information is presented for supplemental
informational purposes only and is not intended to be considered in
isolation or as a substitute for, or superior to, financial
information prepared and presented in accordance with GAAP. There
are material limitations associated with the use of non-GAAP
financial measures since they exclude significant expenses and
income that are required by GAAP to be recorded in our financial
statements. Please see the reconciliation tables at the end of this
release for the reconciliation of GAAP and non-GAAP results.
Management encourages investors and others to review Blend’s
financial information in its entirety and not rely on a single
financial measure.
About Blend
Blend is the infrastructure powering the future of banking.
Financial providers — from large banks, fintechs, and credit unions
to community and independent mortgage banks — use Blend’s platform
to transform banking experiences for their customers. Blend powers
billions of dollars in financial transactions every day. To learn
more, visit www.blend.com.
Blend Labs, Inc.
Condensed Consolidated Balance
Sheets
(In thousands, except per share
amounts)
(Unaudited)
December 31, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
30,962
$
124,199
Marketable securities and other
investments
105,960
229,948
Trade and other receivables, net of
allowance for credit losses of $149 and $436, respectively
18,345
22,718
Prepaid expenses and other current
assets
14,569
19,231
Total current assets
169,836
396,096
Property and equipment, net
3,945
5,742
Operating lease right-of-use assets
8,565
11,668
Intangible assets, net
2,108
2,127
Deferred contract costs
2,453
1,691
Restricted cash, non-current
7,291
5,358
Other non-current assets
11,867
10,082
Total assets
$
206,065
$
432,764
Liabilities, Redeemable Noncontrolling
Interest and Stockholders’ Equity
Current liabilities:
Accounts payable
$
2,170
$
1,260
Deferred revenue
8,984
8,695
Accrued compensation
5,562
10,059
Other current liabilities
14,858
15,459
Total current liabilities
31,574
35,473
Operating lease liabilities,
non-current
6,982
11,091
Other non-current liabilities
2,228
5,478
Debt, non-current, net
138,334
216,801
Total liabilities
179,118
268,843
Commitments and contingencies
Redeemable noncontrolling interest
46,190
40,749
Stockholders’ equity:
Preferred stock, $0.00001 par value:
200,000 shares authorized and no shares issued and outstanding as
of December 31, 2023; no shares authorized, issued and outstanding
as of December 31, 2022
—
—
Class A, Class B and Class C Common Stock,
$0.00001 par value: 3,000,000 (Class A 1,800,000, Class B 600,000,
Class C 600,000) shares authorized as of December 31, 2023; 249,910
(Class A 240,262, Class B 9,648, Class C 0) and 240,931 (Class A
230,210, Class B 10,721, Class C 0) shares issued and outstanding
as of December 31, 2023 and December 31, 2022, respectively
2
2
Additional paid-in capital
1,321,944
1,286,815
Accumulated other comprehensive loss
441
(708
)
Accumulated deficit
(1,341,630
)
(1,162,937
)
Total stockholders’ equity
(19,243
)
123,172
Total liabilities, redeemable
noncontrolling interest and stockholders’ equity
$
206,065
$
432,764
Blend Labs, Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Revenue
Software platform
$
23,614
$
23,244
$
101,204
$
113,589
Professional services
2,258
2,034
8,345
7,835
Title
10,232
17,507
47,297
113,777
Total revenue
36,104
42,785
156,846
235,201
Cost of revenue
Software platform
5,061
6,555
22,025
30,706
Professional services
2,617
4,133
11,065
15,504
Title
8,700
17,690
42,621
99,340
Total cost of revenue
16,378
28,378
75,711
145,550
Gross profit
19,726
14,407
81,135
89,651
Operating expenses:
Research and development
14,417
33,248
81,591
138,094
Sales and marketing
11,940
19,951
60,130
85,248
General and administrative
14,542
33,406
70,688
139,120
Amortization of acquired intangible
assets
—
—
—
8,411
Impairment of intangible assets and
goodwill
—
—
—
449,680
Restructuring
694
2,959
24,948
15,275
Total operating expenses
41,593
89,564
237,357
835,828
Loss from operations
(21,867
)
(75,157
)
(156,222
)
(746,177
)
Interest expense
(7,085
)
(7,348
)
(30,811
)
(24,790
)
Other income (expense), net
(1,498
)
1,538
7,248
4,916
Loss before income taxes
(30,450
)
(80,967
)
(179,785
)
(766,051
)
Income tax (expense) benefit
74
(476
)
(94
)
2,241
Net loss
(30,376
)
(81,443
)
(179,879
)
(763,810
)
Less: Net loss attributable to
noncontrolling interest
91
874
1,186
43,638
Net loss attributable to Blend Labs,
Inc.
(30,285
)
(80,569
)
(178,693
)
(720,172
)
Less: Accretion of redeemable
noncontrolling interest to redemption value
(1,527
)
(2,141
)
(6,627
)
(48,438
)
Net loss attributable to Blend Labs, Inc.
common stockholders
$
(31,812
)
$
(82,710
)
$
(185,320
)
$
(768,610
)
Net loss per share attributable to Blend
Labs, Inc. common stockholders:
Basic and diluted
$
(0.13
)
$
(0.35
)
$
(0.76
)
$
(3.28
)
Weighted average shares used in
calculating net loss per share:
Basic and diluted
248,616
238,442
245,206
234,161
Comprehensive loss:
Net loss
$
(30,376
)
$
(81,443
)
$
(179,879
)
$
(763,810
)
Unrealized gain (loss) on marketable
securities
801
1,377
1,030
(135
)
Foreign currency translation gain
42
75
119
235
Comprehensive loss
(29,533
)
(79,991
)
(178,730
)
(763,710
)
Less: Comprehensive loss attributable to
noncontrolling interest
91
874
1,186
43,638
Comprehensive loss attributable to Blend
Labs, Inc.
$
(29,442
)
$
(79,117
)
$
(177,544
)
$
(720,072
)
Blend Labs, Inc.
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Operating activities
Net loss
$
(30,376
)
$
(81,443
)
$
(179,879
)
$
(763,810
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
6,223
28,191
46,021
109,702
Depreciation and amortization
608
613
2,464
10,766
Impairment of intangible assets and
goodwill
—
—
—
449,680
Amortization of deferred contract
costs
552
1,078
2,979
4,638
Amortization of debt discount and issuance
costs
689
871
2,968
3,058
Amortization of operating lease
right-of-use assets
846
989
3,296
3,650
Loss on extinguishment of debt
3,970
—
3,970
—
Release of valuation allowance and change
in deferred taxes
—
—
—
(2,864
)
Gain on investment in equity
securities
—
—
—
(2,884
)
Other
(530
)
169
(5,187
)
2,129
Changes in operating assets and
liabilities:
Trade and other receivables
1,245
5,127
4,274
12,289
Prepaid expenses and other assets, current
and non-current
3,544
5,550
2,048
9,374
Deferred contract costs, non-current
(220
)
265
(762
)
2,487
Accounts payable
49
(1,290
)
910
(4,900
)
Deferred revenue
(1,072
)
(1,264
)
289
627
Accrued compensation
(4,305
)
(3,694
)
(4,497
)
(8,081
)
Operating lease liabilities
(1,068
)
(1,225
)
(4,012
)
(3,888
)
Other liabilities, current and
non-current
(846
)
(1,270
)
(2,503
)
(12,391
)
Net cash used in operating activities
(20,691
)
(47,333
)
(127,621
)
(190,418
)
Investing activities
Purchases of marketable securities
(32,798
)
(49,325
)
(236,079
)
(145,543
)
Sale of marketable securities
55,822
6
56,022
6
Maturities of marketable securities
32,795
107,164
310,450
247,036
Additions to property, equipment,
internal-use software and intangible assets
(82
)
(458
)
(587
)
(2,068
)
Investment in note receivable
(2,500
)
—
(2,500
)
—
Net cash provided by investing
activities
53,237
57,387
127,306
99,431
Financing activities
Proceeds from initial public offering, net
of underwriters' fees and issuance costs
—
—
—
(391
)
Proceeds from exercises of stock options,
including early exercises, net of repurchases
248
41
268
2,611
Taxes paid related to net share settlement
of equity awards
(1,314
)
—
(6,171
)
—
Partial repayment of long-term debt
principal
(85,055
)
—
(85,055
)
—
Net cash (used in) provided by financing
activities
(86,121
)
41
(90,958
)
2,220
Effect of exchange rates on cash, cash
equivalents and restricted cash
(21
)
(276
)
(31
)
(116
)
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(53,596
)
9,819
(91,304
)
(88,883
)
Cash, cash equivalents, and restricted
cash at beginning of period
91,849
119,738
129,557
218,440
Cash, cash equivalents, and restricted
cash at end of period
$
38,253
$
129,557
$
38,253
$
129,557
Reconciliation of cash, cash
equivalents, and restricted cash within the consolidated balance
sheets:
Cash and cash equivalents
$
30,962
$
124,199
$
30,962
$
124,199
Restricted cash
7,291
5,358
7,291
5,358
Total cash, cash equivalents, and
restricted cash
$
38,253
$
129,557
$
38,253
$
129,557
Supplemental disclosure of cash flow
information:
Cash paid for income taxes
$
59
$
86
$
107
$
276
Cash paid for interest
$
6,350
$
6,498
$
27,814
$
25,056
Supplemental disclosure of non-cash
investing and financing activities:
Vesting of early exercised stock
options
$
202
$
387
$
1,446
$
4,060
Accretion of redeemable noncontrolling
interest to redemption value
$
1,527
$
2,141
$
6,627
$
48,438
Operating lease liabilities arising from
obtaining new or modified right-of-use assets
$
—
$
—
$
327
$
605
Blend Labs, Inc.
Revenue Disaggregation
(In thousands)
(Unaudited)
Three Months Ended December
31,
2023
2022
Blend Platform:
YoY change
Mortgage Suite
$
17,203
66
%
$
17,653
70
%
(3
)%
Consumer Banking Suite
6,411
25
%
5,591
22
%
15
%
Total Software Platform
23,614
91
%
23,244
92
%
2
%
Professional services
2,258
9
%
2,034
8
%
11
%
Total Blend Platform
25,872
100
%
25,278
100
%
2
%
Title
10,232
17,507
(42
)%
Total revenue
$
36,104
$
42,785
(16
)%
Year Ended December
31,
2023
2022
Blend Platform:
YoY change
Mortgage Suite
$
77,574
70
%
$
94,280
78
%
(18
)%
Consumer Banking Suite
23,630
22
%
19,309
16
%
22
%
Total Software Platform
101,204
92
%
113,589
94
%
(11
)%
Professional services
8,345
8
%
7,835
6
%
7
%
Total Blend Platform
109,549
100
%
121,424
100
%
(10
)%
Title
47,297
113,777
(58
)%
Total revenue
$
156,846
$
235,201
(33
)%
Blend Labs, Inc.
Reconciliation of GAAP to
non-GAAP Measures
(In thousands)
(Unaudited)
Three Months Ended December
31, 2023
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross Profit
Gross Margin
Gross Profit
Gross Margin
Blend Platform
Software platform
$
18,553
79
%
$
6
$
18,559
79
%
Professional services
(359
)
(16
)%
147
(212
)
(9
)%
Total Blend Platform
18,194
70
%
153
18,347
71
%
Title
1,532
15
%
—
1,532
15
%
Total
$
19,726
55
%
$
153
$
19,879
55
%
Three Months Ended December
31, 2022
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross Profit
Gross Margin
Gross Profit
Gross Margin
Blend Platform
Software platform
$
16,689
72
%
$
19
$
16,708
72
%
Professional services
(2,099
)
(103
) %
316
(1,783
)
(88
) %
Total Blend Platform
14,590
58
%
335
14,925
59
%
Title
(183
)
(1
239
56
—
%
Total
$
14,407
34
%
$
574
$
14,981
35
%
Year Ended December 31,
2023
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross Profit
Gross Margin
Gross Profit
Gross Margin
Blend Platform
Software platform
$
79,179
78
%
$
36
$
79,215
78
%
Professional services
(2,720
)
(33
)%
950
(1,770
)
(21
)%
Total Blend Platform
76,459
70
%
986
77,445
71
%
Title
4,676
10
%
146
4,822
10
%
Total
$
81,135
52
%
$
1,132
$
82,267
52
%
Year Ended December 31,
2022
GAAP
Non-GAAP
adjustments(1)
Non-GAAP
Gross Profit
Gross Margin
Gross Profit
Gross Margin
Blend Platform
Software platform
$
82,883
73
%
$
59
$
82,942
73
%
Professional services
(7,669
)
(98
)%
1,003
(6,666
)
(85
)%
Total Blend Platform
75,214
62
%
1,062
76,276
63
%
Title
14,437
13
%
1,007
15,444
14
%
Total
$
89,651
38
%
$
2,069
$
91,720
39
%
Blend Labs, Inc.
Reconciliation of GAAP to non-GAAP
Measures
(In thousands)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
GAAP operating expenses
$
41,593
$
89,564
$
237,357
$
835,828
Non-GAAP adjustments:
Stock-based compensation(1) and
amortization of warrant
6,070
27,617
44,889
107,657
Compensation realignment costs(2)
1,011
—
5,174
—
Amortization of acquired intangible
assets(3)
—
—
—
8,411
Impairment of intangible assets and
goodwill(4)
—
—
—
449,680
Restructuring(5)
694
2,959
24,948
15,275
Litigation contingencies(6)
650
700
405
700
Transaction-related costs(7)
175
183
2,066
3,139
Non-GAAP operating expenses
$
32,993
$
58,105
$
159,875
$
250,966
GAAP loss from operations
$
(21,867
)
$
(75,157
)
$
(156,222
)
$
(746,177
)
Non-GAAP adjustments:
Stock-based compensation(1) and
amortization of warrant
6,223
28,191
46,021
109,726
Compensation realignment costs(2)
1,011
—
5,174
—
Amortization of acquired intangible
assets(3)
—
—
—
8,411
Impairment of intangible assets and
goodwill(4)
—
—
—
449,680
Restructuring(5)
694
2,959
24,948
15,275
Litigation contingencies(6)
650
700
405
700
Transaction-related costs(7)
175
183
2,066
3,139
Non-GAAP loss from operations
$
(13,114
)
$
(43,124
)
$
(77,608
)
$
(159,246
)
GAAP net loss
$
(30,376
)
$
(81,443
)
$
(179,879
)
$
(763,810
)
Non-GAAP adjustments:
Stock-based compensation(1) and
amortization of warrant
6,223
28,191
46,021
109,726
Compensation realignment costs(2)
1,011
—
5,174
—
Amortization of acquired intangible
assets(3)
—
—
—
8,411
Impairment of intangible assets and
goodwill(4)
—
—
—
449,680
Restructuring(5)
694
2,959
24,948
15,275
Litigation contingencies(6)
650
700
405
700
Transaction-related costs(7)
175
183
2,066
3,139
Gain on investment in equity
securities(8)
—
—
—
(2,884
)
Foreign currency gains and losses(9)
6
109
(77
)
458
Income tax benefit(10)
—
—
—
(2,864
)
Non-GAAP net loss
$
(21,617
)
$
(49,301
)
$
(101,342
)
$
(182,169
)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
GAAP basic net loss per share
$
(0.13
)
$
(0.35
)
$
(0.76
)
$
(3.28
)
Non-GAAP adjustments:
Net loss attributable to noncontrolling
interest(11)
—
—
—
(0.19
)
Accretion of redeemable noncontrolling
interest to redemption value(11)
0.01
0.01
0.03
0.21
Stock-based compensation(1) and
amortization of warrant
0.03
0.12
0.19
0.47
Compensation realignment costs(2)
—
—
0.02
—
Amortization of acquired intangible
assets(3)
—
—
—
0.04
Impairment of intangible assets and
goodwill(4)
—
—
—
1.92
Restructuring(5)
—
0.01
0.10
0.06
Litigation contingencies(6)
—
—
—
—
Transaction-related costs(7)
—
—
0.01
0.01
Gain on investment in equity
securities(8)
—
—
—
(0.01
)
Foreign currency gains and losses(9)
—
—
—
—
Income tax benefit(10)
—
—
—
(0.01
)
Non-GAAP basic net loss per
share
$
(0.09
)
$
(0.21
)
$
(0.41
)
$
(0.78
)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net cash used in operating
activities
$
(20,691
)
$
(47,333
)
$
(127,621
)
$
(190,418
)
Additions to property, equipment,
internal-use software and intangible assets
(82
)
(458
)
(587
)
(2,068
)
Free cash flow
(20,773
)
(47,791
)
(128,208
)
(192,486
)
Cash paid for interest
6,350
6,498
27,814
25,056
Unlevered free cash flow
$
(14,423
)
$
(41,293
)
$
(100,394
)
$
(167,430
)
Revenue
$
36,104
$
42,785
$
156,846
$
235,201
Free cash flow margin
(58
) %
(112
) %
(82
) %
(82
) %
Notes:
(1) Stock-based compensation represents
the non-cash grant date fair value of stock-based instruments
utilized to incentivize our employees, for which the expense is
recognized over the applicable vesting or performance period.
Three Months Ended December
31,
Year Ended December
31,
Stock-based compensation by function:
2023
2022
2023
2022
Cost of revenue
$
153
$
574
$
1,132
$
2,069
Research and development
1,996
12,624
19,046
47,280
Sales and marketing
846
3,274
7,137
11,725
General and administrative
3,228
11,719
18,706
48,628
Total
$
6,223
$
28,191
$
46,021
$
109,702
(2) Compensation realignment costs relate
to amortization of one-time cash bonus payment (paid in two
installments in March and May 2023) to certain employees in lieu of
previously committed equity-based awards, driven by an
organizational initiative to standardize our equity compensation
program.
(3) Amortization of acquired intangible
assets represents non-cash amortization of customer relationships
acquired in connection with the Title365 acquisition.
(4) Impairment of intangible assets and
goodwill relates to charges recorded based on the results of the
interim quantitative impairment analysis performed in the three
months ended June 30, 2022 and in the three months ended September
30, 2022, in response to certain triggering events, such as a
continued decline in economic and market conditions, decline in our
market capitalization, and current and projected declines in the
operating results of the Title365 reporting unit.
(5) The restructuring charges relate to
our workforce reduction plans executed as part of our broader
efforts to improve cost efficiency and better align our operating
structure with our business activities.
(6) Litigation contingencies represent
reserves for legal settlements that are unusual or infrequent costs
associated with our operating activities.
(7) Transaction-related costs include
non-recurring due diligence, consulting, and integration costs
recorded within general and administrative expense.
(8) Gain on investment in equity
securities represents an adjustment to the carrying value of the
non-marketable security without a readily determinable fair value
to reflect observable price changes.
(9) Foreign currency gains and losses
include transaction gains and losses incurred in connection with
our operations in India.
(10) Income tax benefit represents the
non-recurring release of historical valuation allowance resulting
from changes in U.S. tax law requiring capitalization and
amortization of research and development costs for tax
purposes.
(11) Net loss attributable to
noncontrolling interest and accretion of redeemable noncontrolling
interest to redemption value relate to the 9.9% non-controlling
interest in our Title365 subsidiary.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240314774103/en/
Investor Relations Bryan Michaleski ir@blend.com
Media press@blend.com
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