Good afternoon, and welcome to Blend’s Fourth Quarter 2023 Earnings Conference Call. My name is Winnie Ling and I'm Head of Legal for the company. Joining us today are Nima Ghamsari, Co-Founder and Head of Blend; and Amir Jafari our Head of Finance and Administration. After Amir and Nima delivered their prepared remarks, we will open up the call for questions moderated by our Investor Relations Lead, Bryan Michaleski. You can find the supplemental slides on our Investor Relations webpage at investor.blend.com. During the call, we'll refer to certain non-GAAP measures, which are reconciled to GAAP results in today's earnings release and in the appendix to our supplemental slides. Non-GAAP measures are not intended to be a substitute for GAAP results. Also, certain statements made during today's conference call regarding Blend and its operations, in particular, its guidance for the first quarter of 2024, may be considered forward-looking statements under Federal Securities Laws. The Company cautions you that forward-looking statements involve substantial risks and uncertainties and a number of factors, many of which are beyond the company's control could cause actual results events or circumstances to differ materially from those described in these statements. Please see the risk factors we've identified in our most recent 10-K, 10-Q and other SEC filings. We're not undertaking any commitment to update these statements if conditions change except as required by law. With that said, I'll now turn the call over to Nima.

Thank you Winnie and hello everyone. Welcome to today's earnings call. The past year was one of focus and execution for Blend and the fourth quarter proved to be no exception. Let me walk you through some of the highlights first. To start with on the Consumer Banking side, we signed several major deals in Q4, including Citizens Bank, a top 20 bank by retail customer base. And we had a solid slate of deployments that give us a high degree of visibility into our expected revenue growth for 2024. As full rollout of all existing customers, including those signed but not yet deployed, we expect our Consumer Banking suite to be approximately $50 million in annual revenue run rate. 2023 was an expansion year for us and 2024 has already started strong. Our Consumer Banking business is well received by existing and net new customers driving growth with a robust pipeline of 70 opportunities. On the mortgage side, we welcome two new top 100 financial institutions by retail customer base to Blend in Q4. We maintained our industry-leading market shares, and we continue to see adoption of our value accretive add-on products, expanding our economic value per funded loan and giving us even more leverage for revenue growth independent of the macro environment. And on the cost side, we delivered significant efficiencies across our business, allowing us to report ahead of our guidance for non-GAAP net operating loss and keeping us on track for our profitability target in 2024. Achieving this momentum despite 2023 being one of the worst years on record for mortgage industry origination volumes, increases our confidence in our ability to navigate the year ahead as the market looks to stabilize. And the cherry on top, we also signed two multiyear eight-figure deals in Q4, which…

Thank you, Nima and good afternoon, everyone. I'm pleased to be joining you today to discuss our financial results for the fourth quarter. Our fourth quarter marks another period of strong execution. I'm encouraged by the progress we made in 2023 and more importantly the momentum we are building across the business. We improved our operating loss in every quarter of 2023. We are picking up pace as we move forward. I'm encouraged by what's ahead for 2024. Before I jump into the results, let me just remind you that unless otherwise stated all results or non-GAAP. Total company revenues in the fourth quarter were $36.1 million in line with our guidance range. We reported platform revenue of $25.9 million which also fell within our guidance range. Our mortgage Suite revenue declined by 3% year-over-year to $17.2 million despite the origination environment declining approximately 20% to 25% over the same period by our own estimates. Our mortgage suite economic value per funded loan rose by $10 over the same period last year reaching $91. This puts us ahead of schedule on the targets we shared with you at our Investor Day with plenty of runway to expand this further as our value accretive solutions like Glen closed are growing in adoption quickly. Turning to Consumer Banking our consumer banking suite revenue totaled $6.4 million in Q4 an increase of 15% as compared to the prior year period. This growth reflects new deployments and ramp-ups across our builder powered consumer suite of offerings over the past year as well as contribution from incremental platform fees. As Nima shared with you these deployments and are already live customers give us a direct line of sight to $50 million of revenue run rate once fully ramped keeping us well on pace to the…

Thank you Nima and Amir for your remarks. With that, we'll begin the Q&A portion of this call. Our first question comes from David Unger with Wells Fargo. David, you can go ahead, and unmute and please state your question. Q – David Unger: Thank you Thank you very much and thanks for taking the question. Flood covenant [ph] prepared remarks. I appreciate it. So I definitely want to get a better sense for Blend stands relative to its 2026 forecast provided from the Investor Day. Obviously rates have been less favorable since and maybe the base case is closer to the conservative case today, based on the updated mortgage volumes. That said, I wonder if the lower volumes, and capture market share or revenue per funded loan in a good way. I heard the comments on the big pipeline. So wondering, if the challenge macro can keep improving your market share given your strong footprint? Any color there would be great.

Yes, good question. Thanks, David. Couple of things, one, we definitely are seeing some of our customers gaining market share in our numbers and taking -- and that's one piece. And we mentioned that earlier and that's how we've really maintained and plan to grow market share over time, on top of signing new customers. The other thing I would say is, they are using this time to get more ready to scale and that's doing things like digital closing. So you're not sending paper back and forth, with title companies. And there's a lot of those things, not only help them, but help us not on the market share side, but help us on the revenue per funded loan side. So, those kinds of things are the baseline and then some of the new logos. I also mentioned that we had one of the largest banks in the country, as a potential new logo for us. That's in the pipeline. And so we're seeing a lot of interest across the board.

And David, just to answer the first part of your question, with regards to the 2026 number, we still feel good about what we shared at Investor Day across both mortgage in terms of the long-term outlook, and to your point, we obviously, gave those scenarios intentionally and also with regards to consumer banking reiterated, just by what we shared in the prepared remarks.

Our next question comes from Ryan Tomasello with KBW. Ryan, you can go ahead and unmute Q – Ryan Tomasello: Hi everyone. Thanks for taking the questions. As we think through the components of the fully loaded revenue per funded loan opportunity in mortgage, are there certain areas you think are more actionable near term. For example, income verification product seems pretty interesting relative to the incumbent solutions out there. Just trying to think about, what are some of the low-hanging fruit opportunities there to grow, revenue per loan and just how you're thinking about the income verification opportunity in particular?

Well, just to call out, we do have a really good near-term pipeline of Blend income products. And that's a nice product, because it's very simple to turn on. It's a flip of a switch and it pulls in new revenue for us in, within a quarter of them and signing that deal typically. But I think where we see the most near term upside Ryan, is on digital closing side. And in particular and you know it's and remote online notarization is becoming very important for our customers. And we're seeing improvements around even states expanding their coverage of what they allow. California had a big change earlier this year. And our customers are taking note because it drives real savings for them. I kind of said this in the prepared remarks but one of our biggest customers is doing a standard rollout around every single loan going towards remote online notary by default. And, of course, there are exceptions and the consumer can opt out if they really don't want to do that but those are really good for the consumer. It's really good for the bank or lender and of course really good for Blend as well.

Great. Thanks for that color Nima. And then just as a follow-up on the remaining performance obligations included clearly strong growth in the RPO metric, $36 million sequentially. Just says the market maybe starts to focus more on that disclosure going forward. Can you just help us understand what is included in that metric given the different contract structures you have, for example, how the success-based pricing on the mortgage side is factored in there versus platform fees. Just as we think about the visibility we can get into your growth profile out of that metric going forward?

What you're seeing in it Ryan is exactly similar. You described with regards to is indicative of customers that we're signing up whether it's renewals and net new logos, it is and it illustrates both what we're seeing from a commitment perspective given our unit economic structure and our revenue model also platform fee. So the point you mentioned, and we've shared this historically, we obviously saw an incredible quarter this last quarter in terms of what we shared. We expect this to continue to grow as you see it just us continue to execute.

Our next question comes from Joseph Vafi with Canaccord. Joe, you please go ahead and unmute.

Can you guys hear me?

Yeah, we can. Go ahead, Joe.

Sorry about that. Probably focused on the consumer banking sector a bit here for a second and kind of talk about what are some of the dynamics going on here with some of the strong recent signings. You know, obviously, there's a continued war for deposits going on out there amongst financial institutions as consumers look for the best interest rate and come and banks look not to have their customers turn those deposits. Wonder if you could balance that versus product offering versus the competitive landscape there. Provide us a little more color on how you're winning some of these new clients?

Yeah, it's a good question. And I think that the hardest parts of opening a new deposit account I'll break into three different components. The first part is you have to be really good at fraud verification. And we have connections from fraud providers to some of our partners. We're not a fraud engine ourselves. We connect to some of the best ones in the market and we do quite a bit of orchestration around that. So that's one piece. The second piece is actually funding and making that your primary deposit account that's something very, very important to our customers and something that we help with. We have the ability to fund in so many different ways now debit cards ACH, direct bank connection, wire transfer and those things are all built into the Blend platform now to maximize deposits. And then the last piece, which is probably the killer app for Blend is it's not just about getting that deposit relationship Joe, it's about turning that deposit relationship into a deeper broader relationships where we can do things like cross-sell that deposit relationship as part of the mortgage offering, or add a credit card to their deposit account opening with alongside their debit card opening. And so that becomes a customer for life for that institution. And that's pretty unique to Blend. I mean, we’re the only platform that solves for mortgage and deposit accounts, which are our two primary product offerings we’re most focused on this year, but all the other products that they might have as well and credit cards and personal loans, auto loans, et cetera. And so I think those are the core differentiators of Blend and where we're spending the most time as we go to market and where we're seeing us win deals with customers who not Blend yet at all.

Our next question comes from Dylan Becker with William Blair. Dylan, you can go ahead and unmute.

Hey, guys. Appreciate the questions here. Maybe to Nima starting with you on mortgage, you kind of talked about investing ahead of a potential inflection into 2025. And you guys have done a really good job of controlling what you can control there in gaining share and increasing that take per funded loan. But just a broader sense of kind of how you're thinking about that that landscape evolving over the next kind of several years here, again given, it seems like you're in a better position now and you're starting to see kind of some of those originations start to stabilize certainly relative to the prior few.

Thanks for the question Dylan. And I'd say we're ahead of schedule. And you see this in the revenue per funded loan ahead of our 2026 targets that we shared at Investor Day on the revenue per funded loan. We're ahead of where we had planned to be and that's because our add-ons like the blend close out on are just getting really wide adoption from our customers. And actually, I would say it's been very helpful to us that the market has stabilized in terms of volumes or haven't been going up a ton or down a ton. Now we were hoping they were been coming back up slowly earlier and they haven't. But eventually interest rates will go down. That will happen, but just the stability has allowed our customers to invest forward a little bit because they have visibility into their revenue and their visibility and what their budgets going to look like, they're worried about that changing is that stability has really helped us and helped our customers invest in things like digital closings, as well as the next generation refinance product that I mentioned on – in the prepared remarks. And I think is going to be so important for our customers to be ready for that refinance wave that's going to happen at some point, well before it comes into place. They can get their processes in order, get the right technology, which you know, hopefully, and this is what I described in the call and also the right people in place that often massively scale up their operations to support that.

Got it. Okay. That makes perfect sense. And then maybe one, other one too. I know the Builder solution. Obviously, pipeline seems pretty healthy here and it's early but as we think about kind of the long-term opportunity there for both mortgage and consumer. Wonder how you're thinking about that partner ecosystem evolution and kind of the opportunity there to layer on configurability and maybe again kind of validation, go-to-market capacity, things of the like. It seems like that could be something that is pretty interesting. But how are you guys thinking about the partner angle and leveraging builder going forward as well? Thanks.

Yes. I mean it I think of it as actually partners will probably be the next ones to really get Blend Builder platform and start to be able to build things that make sense for a broader set of markets that we historically haven't been able to focus on. I mean we at Blend have a limited capacity of not just building products but the product marketing, the marketing, the sales and deployment and being able to do that really, really well. We want to be really focused and why our focus is on the mortgage suite and deposit account opening products in particular. But I do think that there is such a powerful platform and it has taken all the components of origination and made them these building blocks that can be used, not just within banking but I think in other industries as well. And so we're sort of I think taking it piece by piece. We're really hardening the platform with our existing customers. We've already started conversations with some partners in the context of specific customer deployment some of the big ones that we signed last year to start to build out that muscle with them. I think it will take some time but I do agree that it will open up a lot of doors for us.

Great. Thanks, Nima.

Our next question comes from Mike Ng with Goldman Sachs. Mike you can go ahead and unmute.

Hey, good afternoon. Thank you for the question. I just have two. First, on the consumer banking suite opportunity. You called out the potential to hit a $50 million annual revenue run rate. I was just wondering, if you could talk about the visibility reaching that. Could we -- could reach that our annual revenue run rate at some point during 2024? And then I just have a quick follow-up.

Yes, it's a good question. The way that we sort of calculate this is these are existing signed customers for rollouts that are already planned with them. In terms of when that happens, some of these things for what it's worth Michael or will sign a customer for two product lines have to dig one maybe they roll out the first product line in 2024 and the second big product line in 2025. And so, I don't think it'll all happen in 2024, but these are sort of pre-planned things that we've already started working on with our customers and a lot of cases to space out. And so -- and I just also want to call out, I should have mentioned this in our prepared remarks, about half of that signed last year. And so, we're feeling really good about the growth in that business. Again, it's going to take time for that revenue to come to be because of the way that we recognize revenue, but that business is really healthy and we're seeing a lot of interest. And I don't -- I don't know and give away too much on Q1, but the pipeline has been healthy and our customer list is growing. So something we're excited about.

Wonderful, thank you. And just on OpEx, obviously, you guys have done a good job with OpEx coming in better than expected this quarter. And it seems like you're ready on track to hit that $130 million OpEx number for 2024 that you gave at the Investor Day. Are there opportunities to reduce OpEx further and exceed that 2024 target? And what factors might result in profitability coming sooner than the fourth quarter if it does? Thank you.

Thanks, Mike. I would say, starting with the latter as we think about it, obviously the macro has a component to that with regards to when it could we potentially have profitability faster. The piece that we're focused on is really what we can control. And it's indicative of just what you've seen on the top line, but also to your point where you're seeing with regards to our operating expenses, we have stated this. I think we'll continue to reiterate. We're looking at everything that we do just through the lens of operational excellence. We're checking and revamping a lot of our processes to ensure that there is velocity that there's efficiency. It's these types of things in addition to kind of what builders expose which is their ability for us to do things more efficiently, ironically as well. The three things that are allowing us to kind of get to the point that you're making which is we are we are performing quite well with regards to our expectations as it pertains to OpEx.

Great. Thank you.

Our next question is a follow-up from Ryan Tomasello from KBW. Ryan, go ahead and unmute.

Hey guys. Thanks for taking the follow-up. Just on mortgage, I think you called out continued headwinds from churn. Can you quantify where the churn rates have been in recent quarters, whether on a percentage basis or revenue basis money? And also when do you think that might bottom out? And then also on the competitive side, how win rates in the mortgage business changed at all over the last year, just in general trends in terms of competition.

We don't have this. We don't share the broader sort of churn numbers. But what I'll say is that, we've actually, in aggregate, we've kept our market share pretty steady based on our calculations throughout the year. And so, while there is sometimes churn, I think the market share being steady and the revenue per funded loan going up, the combination of those two things, it's just setting us up for the future. And some of the customers that churned, who churn to lower costs and free solutions, some of them are already starting to plan and come back to us. Those kinds of things become you know indicative of I think where the market needs to be in the future which is being able to scale. As far as the competitive environment, I would say in the top 50 to 100. It's pretty similar to what we've always seen, Middleware suite banking credit union. That's our sweet spot. That's where I think we do the best the biggest banks and credit unions. We also have some of the biggest IMBs. And when we're brought into a process and we are competing head-to-head. I haven't seen any notable changes in our win rates in network. So if anything like I said earlier on that than the prior question as the market has stabilized and people are starting to look towards the future again, it's really benefited us.

Great. Thanks for that color. And then another follow-up for Amir, the share count guidance looks like it implies incremental growth of around two million shares in 1Q? And is that a reasonable run rate for share count growth going forward? And then just broadly, if you can discuss your approach to managing dilution from stock comp, if that's a focus as you think about managing the business to profitability inclusive of that of that burden going forward.

It is and yeah the point that you shared in terms of what you've seen from the 249 million to 251 million. We will continue to leverage obviously equity, because of the way we do. We want to in essence incentivize top talent. But we do it just within the confines of being very, very focused with regards to our overall dilution levels. You could see with regards to the Q4 performance. I think again as you think about this on a prospective basis, the best way for me to describe it is just know that it's an area that we spend a lot of time. We focus on it. And while we will continue to ensure that our employee population bases is incentivized given that as we do this on their backs. We will continue to focus on dilution you'll see those numbers tend to be a priority for us, Ryan.

Okay great. Thanks for taking the follow-ups.

All right. Seeing no further questions. This concludes today's earnings call. Thank you all for joining. Have a great day.