Good afternoon and welcome to Blend's Fourth Quarter and Full Year 2024 Earnings Conference Call. My name is Winnie Ling, and I'm the Head of Legal and People 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 Nima and Amir deliver their prepared remarks, we'll open up the call for questions. You can find the supplemental slides on our Investor Relations webpage at investors.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. Unless otherwise stated, all financial measures we discuss today, including our profitability, refer to non-GAAP. Also, certain statements made during today's conference call regarding Blend and its operations, in particular, its guidance for the first quarter of 2025 and full year 2025, and expectations about our markets, 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-Qs and other SEC filings. We're not undertaking any commitment to update these statements as conditions change, except as required by law. With that said, I'll now turn the call over to Nima.

Good afternoon everyone. Thank you for joining our earnings call. 2024 was a pivotal year for Blend one where we sharpened our focus delivered greater value to customers and accelerated our path to sustain profitability as a leaner more software-driven company. In Q4, we continue to strengthen that business. We welcome several new customers most notably the TOP 10 U.S. bank by asset size and PHH Mortgage one of the nation's largest home mortgage servicers, who both signed multi-year agreements across our mortgage and home equity solutions. Our consumer banking business grew 42% in 2024 surpassing our 35% target as discussed at our 2023 Investor Day with Q4 revenue growing 48% year-over-year further establishing consumer banking as a key growth driver for Blend and essential for financial institutions modernizing account opening and consumer lending. Our solid revenue performance coupled with disciplined expense management is delivering tangible results now and generating momentum for the future. In Q4, we achieved 15% year-over-year total revenue growth despite a challenging macroeconomic environment. We are our strongest quarter yet and posted a second consecutive quarter of non-GAAP operating income profitability with $5.2 million in Q4 and we're just getting started. Looking ahead we see several strong tailwinds we believe will allow us to stay on offense and accelerate our plan as the market rebounds. As rates stabilize demands for Blend solution increase as financial institutions invest in technology to capture opportunities like refinance and home equity more efficiently. And we're seeing this momentum firsthand. Our pipeline is 50% larger than it was this time last year giving us even more confidence in sustained growth. And with positive free cash flow expected in Q1, we have the flexibility to invest and to focus on driving more cost effective innovation that attracts even more customers expands our…

Thank you, Nima, and good afternoon, everyone. I'm pleased to be joining you today to discuss our financial results for the fourth quarter of 2024. Our fourth quarter marks another period of strong execution, and you can see it in our results. We continued with another quarter of year-over-year revenue growth. Our Consumer Banking business continues its acceleration. We made significant progress on our mission to simplify Blend, and we set new records for RPO and operating profitability. There's a lot to discuss, but let me just remind you that, unless otherwise stated, including our references to profitability, all results are non-GAAP. We made another announcement around the simplification of Blend, that I'd like to dive into first. As we continue to simplify Blend, we have partnered with Truework which Nima mentioned earlier. We expect this partnership to provide greater verification of income capabilities for our customers, and allows us to further simplify Blend by moving certain operations to our partner, thereby, freeing up internal resources that can be directed elsewhere in the business. This partnership will enable us to expand the product's scope, while still participating in a portion of the revenue stream, but with the expanded profit to Blend. Going into 2025, we are focused. We have conviction in our short- and long-term goals and plan to continue to execute. We are taking strategic action as a way to maintain and improve the profitability of our business and deliver scale for the future. We continue to execute toward our mission of becoming a platform for all financial institutions. Now let's get into the numbers. Total company revenues in the fourth quarter were $41.4 million, ahead of the midpoint of our guidance and representing 15% year-over-year growth. We reported platform revenue of $30.1 million, ahead of the midpoint of…

Thanks Amir. To wrap things up, I want to emphasize that plan is not just surviving in this environment we thriving. For becoming a largely software only business, laser focused on what we do best, so the incredible technology that those powers financial institutions across the country. We're doing this by, first, simplifying and streamlining our operations and focusing on our core strengths. Second, partnering in building a powerful ecosystem that expands our reach and delivers even more value to our customers. And third, innovating and leading the charge with AI and other cutting edge technologies that drive real results for our customers. With a strong pipeline and building momentum for the year to exit with a positive Rule of 40, we are setting up the business to succeed at scale regardless of environment. We believe the future of finance is software driven and blend is leading the way. Thank you, and let's open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Dylan Becker with William Blair. Dylan, please go ahead.

Hey guys. Appreciate the question here, and a lot to digest there. Maybe Nima, just starting with you from higher level, we've talked in the past about the customer economics improving and kind of driving an increased propensity to spend. Especially, leaning into automation, RPO is very strong. You called out some significant kind of tangible ROI components of customers looking at this. It's just how we think about kind of the budget set up in this constrained macro and kind of what customers are asking you for how they're leaning into you guys maybe for more in this period of uncertainty?

Yes. Thanks Dylan. Good question. I think the customers are. You can see this from our the closed deals in Q3 and Q4 including the TOP10 banks that we announced and also our pipeline being good. I think they are willing to spend more now and they've largely stabilized their businesses in 2024. So I think that's a positive, but they're taking an approach to the future that it it's one that's meant to be focused on how do I build a scalable business. I think that's the most common theme I hear from our customers. They want to build a scalable business themselves. They don't want to be riding highs and lows and hiring thousands of people and then having to let them go and when the market crashes again. And so and that's across the board across all product lines. And so a lot of what I think about is kind of twofold. First, I'm really glad we made the investment in BlendBuilder because it allows us to get greater innovation per dollar allows us to be efficient in how we build things and so we can build more. I mean our rapid home equity solution that we announced some of the early results from is one that We built with a small fraction of a typical team that would have been required to build such a complex solution that integrates all aspects of a home equity loan, and it's something that we wouldn't have been able to do without something like without our platform of Blend Builder. So that's the first thing. The second thing I'll say is a lot of where our customers are leaning into is AI. A lot of the work that they do is very manual reviewing documents, extracting information from documents manually, comparing documents, comparing screens, doing work in Excel and it's things that AI can do natively today. And so I hear a lot from our customers, but how do I make it so that I can use these new technologies. I had the CEO of fairly large mortgage customer of ours called me and say how do I get started with AI? It was a good question because there's so much going on it's hard to keep up. And that's I think where we come in. We have a platform that's already ingesting all the documents that consumers are uploading, that is working to get the aggregated loan file, getting all the components of the. That need to happen before closing and so we have a natural entry point to help them make their operations materially more efficient and more to come on that but they are definitely leaning in. They see the opportunity they want to build more scalable businesses and I think we're the right partner for them for those things.

Okay. Great, very helpful there Nima. Maybe switching over to Amir here. Obviously, the mortgage backdrop kind of remains what it is. We have seen rates come down a little bit here but you Nima just called out rolling out the rapid refine and home equity. We talked about cross-selling other solutions maybe kind of any general sense of how the growth algorithm shifts. Between kind of volume and the take rate expansion now that you have kind of more products and market maybe some being higher skews higher attached things like that towards, I think your comments around the long term targets kind of being maintained here? Thanks.

Hey, Dylan, thank you. Let's we'll use an example to answer it. So to your point and to the points that you mentioned, there are two products that we're excited about both in the rapid category for rapid home lending. On rapid refi, it's going to be a product that as you see it in essence for what we've seen from a pilot customer study so far. The contributions from an RR perspective, as always as we take a portion of that in our own success rates, you'll see that start to drive meaningful increases in the economic value for funded loan. It's an example of what we've seen historically and it's an example of what we'll continue to deliver with rapid refi. Similarly on rapid home equity, obviously, a different bucket between the economic value targets that we set for 170 which are specific to the mortgage suite, but the same phenomenon will contribute which means that we will continue to have more modern solutions built on BlendBuilder which not only gives us the flexibility, but also increases our customer ROI. And as that happens, you're going to see that become a creative and positive in essence from a tail and perspective for Blend.

Great thanks. Guys appreciate it.

And your next question comes form the line of Seth Gilbert with UBS. Seth, please go ahead.

Thanks for taking the questions. Maybe two if I can. The first one on the consumer banking side, an increase in the 2023 to 2026 guide means, you're guiding to acceleration here from the 42% in 2024. So I was wondering if you could talk to the drivers is it macro improving that's embedded in this acceleration more time in the market for some of the products signing larger customers maybe kind of talk through and rank order some of the drivers.

I'll start in and Nima can give you an overlay as well. For the most part what we're seeing on the consumer banking side that gave us a conviction to increase that 35% compounded annual growth rate that CAGR to 40% is actually much more tied to our own execution. The execution for what we've been able to achieve across deposits and some of the other solutions that we've shared with you including what we historically had in that base for personal loans and things like home equity, it's much more, again it's much more the execution elements and what we're seeing is the overall opportunity size and we've spoken to the opportunity multiple times. We've talked about how consumer banking over time has a greater opportunity pool and it's an area that we are not just excited about but we're focused on continuing to execute on.

Got it. And then just as a follow-up can you talk about the non-gap net operating income guidance? Have you guys given a historical breakout of the non-gap operating income for specifically the blend platform? Maybe I might have missed it.

No you have not missed it. So this is our first time being very specific about the guide from a non-gap perspective tied to blend platform. It's where we were comfortable guiding to and hence the numbers we were able to share today.

Makes sense. And what's the best way for investors to look at it? I don't know if we have exactly I don't think I have in my model like a way to look at that in the past and kind of see if the negative $1 million to $1 million guide and have a good -- a good handle on it.

I think the numbers there's two things. There's both a qualitative aspect and a quantitative aspect that we've historically shared with title. We've shared that from a title perspective. There's elements of that business that we've gotten close to for example to be breakeven. There's seasonality aspects to be considered of as you think about the overall title business. And so although right now again we're not guiding to a specific number I think there's certain data points that you can we can kind of refer you to help with just the GAAP that you're referencing.

Got it. Thank you.

And your next question comes from the line of Aaron Kimson with JMP. Aaron, please go ahead..

Thanks for the question guys. One of your competitors made a tuck-in acquisition earlier this month that essentially provides connectors into the legacy core banking applications. Can you talk a little bit about the time and resources that went into building your composable origination functionality and how important that functionality is when going after larger financial institutions?

Yeah, good question. It's interesting because I think a lot of what, Larger Financial institutions were. I think were pretty dominant. What they really need is a platform that's both scalable, secure regulated all the things that are required to work with somebody that large which obviously we do in multiple areas of the business today, but also something that is sufficiently flexible without creating customization and it's. A little convoluted to. explain all that. But the simple version is the beautiful thing about Blend Builder is that we moved a lot of the business logic and the workflow into a configuration layer. So that it's drag and drop and it means that if we need to make a change to support a slightly different workflow for a very large financial institution like I gave a couple of examples last quarter about customers that are thinking about other kinds of loans that we don't support on our platform today. They can actually do that with Blend Builder. And so it allows them -- allows both to get in the door with one that is flexibility in the core product lines that we offer but also the ability to expand in other areas of the bank that maybe would have been much more difficult to do. And so it was such an important investment for us not only for the reasons that I just mentioned working with the top financial institutions but even creating the most innovative platform at scale it's so important for us to be able to build these things internally in a very efficient way. And so and be we want to be at the cutting edge of innovation. We need to be at the cutting edge of innovation but we have to do that and we can do that in a way with Blend Builder that is I mean in order of magnitude cheaper for us than it used to be and probably in order of magnitude than it would be for anybody else and any competitor in the market. And so it allows us to get a lot more operational leverage out of our team and make sure our customers are really happy. I mean some of the things that we're able to implement quickly because we have a platform like that. It would have taken months for a competitor to do and we can do it in a week or a weekend. I think that's really special and you're starting to see that in the consumer banking growth numbers. You're starting to see that as we take even our out of the box package solutions down market to some of those consumer banking customers but there's still so much more to come there. And the rapid products are another example of where we're going to use that as a really, really big area of strength.

That's really helpful. Thank you. And then just as a follow-up the launch of the IMB specific unit is interesting given some of the challenges that market's currently facing. Can you help us think about the strategic rationale there and whether you're trying to solidify your positioning with larger IMBs or trying to pursue IMBs more down market versus where you would have historically gone.

I think we're largely where we've been the most dominant the biggest part of our revenue has been the banks and credit unions and we're very happy with that. We're going to keep investing in them making sure they're successful. But IMDs are a slightly different animal. They they're very loan officer driven. They focus a lot more on things like branch level ability so that branches can have some more entrepreneurial impact on the platform. And what we want to do is make sure we're serving them as an independent not to use that word independent -- but independently of the rest of our business and treat that as truly a separate business unit which allows us to create focus in both parts of the business the bank and credit union area as well as the IMB business and they have special -- they have different needs. It's a huge part of the market. It's one that we've while we've served for a long time. With this additional level of focus, I think we can really take it to the next level and it's not necessarily about going after tiny 10, 20 unit a month shops or broker shops. It's about there's a whole middle part of the IMB segment that's pretty large that we want to make sure understand that we have the best technology, that we continue to cater to them. We've already worked with some of the biggest -- if not the biggest ones in the country. We want to make sure that our technology is being used across the board. And so without this separation, I think it would have been much harder, but this is allowing us to create a level of focus on both sides.

Got it. Thanks so much.

And your next question comes from the line of Joseph Barry with Canaccord Genuity. Joseph, please go ahead.

Hey guys, good afternoon. Thanks for the opportunity to ask a couple questions here. I joined a little late. Hopefully these didn't get asked, but just wondering Nima given the kind of current environment on rates et cetera. Has there been any change in the cadence of discussions with potential new logos and then secondly, would you expect the rapid products to be when should we kind of really look for some real revenue contribution from the rapid products? Could it be as early as Q2 or how are you seeing the roll out there? Thanks a lot.

Yeah, I'll take the second question first. The Rapid products we announced yesterday to the world like I think we said, we have three customers live on the Rapid Refi products and one on the Rapid Home Equity product and the Rapid Home Equity products the results are stark in the comparison between the rapid solution and our flagship solution which is the one they've had live for years. And so we're already generating revenue from the Rapid product. It's so early though it takes time to as sell implement get these customers live and ramped up, but throughout the year you should see that start to ramp up with the rapid products. And then going back to your first question, with the macro, I actually say the macro while there's a tick up maybe in Q4. If anything I -- because the customers really stabilized last year, the pipeline seems to have really settled in nicely and we mentioned this in the prepared remarks, but we're up sort of 50% year over year on our pipeline. I think a lot of that is due to the strength of the mortgage pipeline coming back, it's sort of in the most of 23 in the first part of 24 it was very difficult to have conversations, but now those conversations are real. We signed a number of really great new logos in Q4. I have more -- we have more that we're working on right now in Q1 and I think one of the things that I'm proud of the team of Blend is the grip that I mentioned earlier which is we had to go through a lot in the ups and downs to get to the point where we still have a flagship, the flagship product in the space and we are the name that they want to work with. They were just maybe worried about whether it was the macro or other things in '23 and their own issues internally in '23 and early '24 and the fact that those things have kind of gone away opened the door to so many new institutions which I'm very excited about.

Sure, that makes sense. Thanks a lot, Nima.

And your next question comes from the line of David Unger with Wells Fargo. David, please go ahead.

Hi, thanks for taking the question. Just a couple high level ones from us. First, can you just talk through some of your headcount plans and your embedded macro assumptions in addition to what was mentioned in your prepared marks? Start with that first. Thanks.

Hey David. From a headcount plan perspective obviously the numbers aren't what we'll speak to. What we're focusing on right now is making sure that as a company blend is efficient that we execute. Our plans are to make sure that we leverage in essence -- we're a company built on the backbone of our people and to make sure we invest resources in the right places that just tied to the very small kind of set of strategic actions and outcomes that we have But we always do it in the In the lens of the customer ROI and making sure that we deliver value that has stayed true candidly in all of 2024. It's still what stays true today and it's likely going to be what stays true next year as well in terms of how we decide to make investments from a headcount perspective.

Okay, great. And then just to double click a little bit obviously great commentary on pipeline growth of 50% be good to know like which areas are in the most strength? And then just talking about the investment in the business and sales and marketing, how should we think about the pace of hiring just double clicking that. Thank you.

Well this is an area of excitement for us in the sense that we just mentioned and this ties into what Nima was also sharing as you're seeing the opportunities increase more. One of the areas that we've obviously set up a pair of remarks but I'll double down here is in the world of sales and marketing is the area that we want to actually be able to continue to invest in and actually increase our investment. We do this with, obviously, a level of diligence. We are fairly methodical in terms of the way that we operate, so we make sure we monitor again levels of efficiency, for example, things like our magic number. But more and more so what we want to make sure is that there's clear awareness for what Blend does across the entire ecosystem that is not just the IMVs but across what we do as a platform, consumer banking, mortgage and really even some of the future innovations, which as Nima mentioned will include AI. But beyond awareness then, we will make sure that there's the right coverage and that we serve each of the segments properly so that we can help every single one of the customers and our prospects really just unlock value whether that's a net new land for Blend or an expansion opportunity that is going to be an area of investment for us.

Thank you.

And your final question comes from the line of Ryan Tomasello with KBW. Ryan, please go ahead.

Hi, everyone. Thanks for taking the questions. On the Next Gen Refi product, I know you've already had a few questions on this. But any way to contextualize what the revenue for funded loan uplift could look like there relative to the core solution and then how material of a ramp might we expect in 2025 there?

Maybe it's too early to say final numbers on that on how much it's going to increase the overall revenue for funded loan. It is materially higher revenue for funded loan because it's so much more of an automated integrated solution. It drives consumers through that intend to proceed moment all in an integrated way. And so and similar on the Rapid Home Equity product, it's -- the one client that's live it's a materially higher price point, but the ROI is there for them. It drives actually the other thing that that one drives as an example is it drives higher utilization of that credit line because it's helping consolidate higher interest debts, which is good for the consumer, good for the credit union and obviously if those things are good there then the ROI is a no brainer for them to pay more for these solutions, but it is materially higher. We'll share more about that in future quarters but it is something that we want to make these more integrated higher ROI solutions for our customers and in exchange we want to share in some of that upside with them.

And then on consumer banking, I think last year earlier in the year you talked about expanding that go-to-market to a broader set of customers beyond the Top 40. Any updates on how that is going down market with the consumer banking strategy and then it sounds like with this IMB push in mortgage that that also plays into that. So just curious how you're approaching the push down market and what type of investments that might require from a salesforce perspective? Thanks.

Yeah and actually it's interesting because it is a very different motion to go beyond the TOP40 or 50 as you mentioned. It's a very different motion. It's even a different packaging of the product and how you implement. It's different across the board because what they want is a turnkey platform across all their product lines. They want to make some -- they have something that just works, works quickly, drives value quickly increases their deposits or decreases their consumer lending turn times or increases their consumer lending take rates. And it's a very different motion. We started working on that late last year, mid last year and we've been pushing hard on it. So it's an area that we're very focused on, still early, pipeline is good. We're going to keep executing on it and make sure that we deliver throughout the course of the year, but it's something that it does take a different approach and it might even include things like partnerships with some of the major providers in the space, because it allows us to get a bigger footprint without having to necessarily have feet inside the door of every single institution. They're already talking to major technology providers, every single day and a lot of those guys want to work with us because we are the name brand. We are a product that they know is going to work for their customers. And so it's well again while it's early, we're looking at this in a completely different lens and saying from the ground up how would we build this if we had to build this from scratch.

Great. Thanks for taking the questions.

There are no further questions at this time. That includes today's conference call. You may now disconnect.