Hello, everyone. Thank you for joining us and welcome to the Blend Labs Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] I will now hand the call over to Meg Nunnally, Head of Investor Relations. Please go ahead.

Good afternoon and welcome to Blend's financial results conference call for the fourth quarter and full year of 2025. I'm Meg Nunnally, Blend's Head of Investor Relations. Joining me today is Nima Ghamsari, our Co-Founder and Head of Blend; and Jason Ream, our Head of Finance and Administration. Before we start today's call, I'd like to note that we will refer to certain non-GAAP measures, which are reconciled to GAAP measures in today's earnings release and in the appendix of our supplemental slides. Non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, all financial measures we'll 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, our guidance for the first quarter 2026, other commentary regarding 2026 and our expectations about markets, our strategic investments, product development plans, and operational targets may be considered forward-looking statements under federal securities law. We caution you that forward-looking statements involve substantial risks and uncertainties and a number of factors 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-Qs, our upcoming 10-K for the fiscal year 2025 and other SEC filings. We are not undertaking any commitment to update these statements if conditions change, except as required by law. The financial information presented on this call is based on continuing operations and prior periods have been recast to exclude operations that are now discontinued. Furthermore, the financial information presented reflects preliminary estimates and remains subject to completion of the company's financial closing procedures and review by the company's independent registered public accounting firm. Financial results will not be final until Blend files its annual report on Form 10-K for the period. Lastly, we will be providing a copy of our prepared remarks on our website by the conclusion of today's call and an audio replay will also be available soon after the call. I'll now turn the call over to Nima.

Thanks, Meg, and welcome, everyone. I'm pleased to report that Blend finished fiscal year 2025 with a strong fourth quarter, coming in near the high end of our revenue guidance and beating the high end of our non-GAAP operating income guidance. But the headline numbers, $32.4 million in revenue and $5.4 million in non-GAAP operating income tell a more important story. They show that we navigated the cycle successfully to emerge as a fundamentally different company. Our consistent performance is not an accident. It is the direct result of the focus and discipline of the entire Blend team. By maintaining a lean software first cost structure, we have created significant operating leverage. We are generating cash, not spending it. We ended the quarter with 0 debt and over $68 million in cash and securities. We have such conviction in our intrinsic value that we repurchased 5.1 million shares worth $15 million in Q4 alone. And our Board authorized a new program that allows us to repurchase up to another $50 million in stock and we'll continue to strategically execute against this authorization. We are now in a position where we can lean into offense, ensuring that as the market recovers, benefits flow directly to our customers and our bottom line. Let's start by talking about our customer wins and strategic expansions. During the fourth quarter, we signed 10 new deals and expansions. As we look forward towards a potential market recovery, we are seeing a fundamental shift in how financial institutions view their technology stack. And our focus continues to be on winning high-quality logos and deepening our relationship with our existing base. In Q4, we saw notable activity across both mortgage and Consumer Banking suites. Along those lines, deals included 2 new notable new mortgage customers, 1 of which…

Thank you, Nima and thanks to everyone else on the call. I am pleased to report that we delivered another quarter of solid financial performance to close out 2025. This quarter's results once again demonstrate the resilience of our core business and the significant operating leverage we have created through disciplined cost management. Total revenue in the fourth quarter of 2025 was $32.4 million, which was just slightly below the high end of our guidance range and was up 7% year-over-year. This performance was helped by a return to growth in our Mortgage Suite, which generated $18.8 million in revenue, up 3% year-over-year. Stabilizing churn and stronger-than-expected macro bolstered our mortgage revenue results, and Blend's funded loan growth was solid, growing 11% in Q4, and our economic value for funded loan came in at $83 in the fourth quarter, within the guidance range that we gave on our last call. Consumer Banking Suite revenue for the fourth quarter was $11.5 million, representing 21% year-over-year growth. The sequential decline of 10% from the third quarter was driven primarily by the churn of 1 large customer that we talked about last quarter as well as seasonality in home equity, but partially offset by new deployments. Shifting back to the consolidated results. Our total gross profit was $24.5 million. After excluding stock-based compensation and the amortization of capitalized software development costs, our non-GAAP gross profit was $25.8 million, and our non-GAAP gross margin was 80%, up from 78% last quarter. Non-GAAP operating expenses were $20.3 million or down 4% quarter-over-quarter. Non-GAAP operating income was $5.4 million, above the high end of our guidance range and representing a non-GAAP operating margin of 17%. And free cash flow for the quarter was positive $1.3 million. For the full year of 2025, we generated total free…

[Operator Instructions] Your first question comes from Dylan Becker of William Blair.

Appreciate the question here. And Nima, I appreciate all the comments around kind of the strategic positioning with vertical AI. If we're to think about Autopilot, I know you kind of said the existing process today costs about $11,000. I guess how much of that is directly kind of targetable with your current Agentic capabilities? And as we think about kind of your -- those capabilities evolving over time, how much value do you think you can kind of extract away against that? And what does that mean for kind of long-term EV PFL economics in your mind as we kind of obviously look to kind of attack or chip away at that kind of relatively exorbitant cost in the process there?

Yes. Great question. Thanks, Dylan. My approach on this one is going to be to under promise and over deliver on the economics. Just to share sort of some context though, which is the cost of $11,000, about $4,000 is, I'll call it, operational cost, and then there's a decent amount of commissions and marketing costs that are also in there. And so I think there's a material amount of manual effort that goes into these. And so if we can make the humans in the process, 2x efficient, 3x efficient, I think there's a very good market opportunity for us, which is why we're attacking this so swiftly. And the team that's working on this, just to give you a little bit of perspective is we're moving day-to-day. Like every week, our customers are going to see material new updates to this and new capabilities because it's an area that we're passionate about and we think can really move the needle for them. We've always been here for our customers, and I think this is sort of the -- our magnum opus if you will. And so I think for me, while I want to under promise and over deliver, I'll leave you with 1 anecdote, which is I was talking to 1 of our customers who does similar things, maybe a little bit less scope than what our product does today. And I was like, how should we charge for this long term. And short term, we have this preview period, which we gave to our customers. And he said, "Well, just so you know, I do this with an outside vendor and I pay them a lot more than I pay you per loan by a decent margin just to do a part of the process that you do." And so I think the opportunity is there. It's on us to execute. And so let us go execute, and we'll come back to you every few months with updates.

That's helpful. Appreciate the anecdote. And I do think that's your point. The fact of kind of elevated customer momentum and activity despite it being in preview for less than a week does speak to that value proposition. Maybe, Jason, for you, it's pretty impressive what you guys have been able to do on the expense side and appreciate the color on kind of some of the moving accounting parts there. But as we kind of think about the potential recovery taking place, around the volume dynamic. I guess, could you remind us what to maybe expect from kind of like the potential for incremental operating leverage? How we should think about cost growth relative to potential revenue growth in that scenario? Just kind of any way to think about the operating leverage as you kind of think about and sit there looking at the model.

Yes. Dylan, good question. Obviously, we haven't guided to the rest of the year, so I can't give you that sort of guidance. But I think implicit in our Q1 guide is sort of a rebased lining and I think you can think about that as our starting point. Obviously, we do have some variable costs in our cost of revenue that will scale with revenue. But on the operating side, it's really a question of where we choose to invest and where we are able to get efficiencies. And I think you can think about Q1 as the starting point for that.

Your next question comes from Ryan Tomasello of KBW.

Everyone, sorry, am I coming through?

Yes.

Sorry about that. Regarding the 2 new mortgage customers, I believe you cited that you won in the quarter. Can you just provide some color there on whether those were competitive takeaways? And if so, what you think were the drivers of those wins?

I think the driver of those wins is that we made a commitment to our customers that we would invest through the cycle. And we would keep innovating and we've innovated on our mortgage product. We've innovated on our consumer products. We've innovated on our closing product and now we're building an agentic suite that can live across all those things. And they see that. I mean it's not easy to rely on partners in this industry because it is such a cyclical industry and we made the commitment early on. And we're going to keep growing. And obviously, we have our own things that we've had to deal with the last few years, but I think people have seen that. There's our commitment and my commitment is there, and we're going to make sure that they're successful. And I think that that's ultimately what leads to customers believing in us and wanting to work with us.

Great. And then on the new Rapid products that you've rolled out over the last few quarters, can you just talk about the level of uptake you've been seeing there if that's tracking in line with what you were expecting? And then on the pricing side, the type of uplift you're seeing from earlier adopters of the Rapid products.

Yes, great question. And one of the -- we mentioned one of the ones in the -- that signed with us in Q4. And it's a pretty material uptick in pricing from their EV PFL. It's not live yet. As an example, it's a fairly large bank. But the way I think of Rapid, and it has been something that our customers do really want, and they want it for 2 reasons. So the 2 areas that we serve with Rapid are home equity and mortgage refinances. With home equity, it's definitely something that our customers care about and they want to be able to serve the $315,000 in equity that their consumers have and drive savings to them on their debt if they need to consolidate debt. And so it's something where we have a flagship home equity product, and this is just more of a personalized real-time offer with a real-time pre-approval that is sort of a beautiful tailor experience to that specific consumer. And so I was on a call earlier today with a very large customer, 1 of the top 10 home equity lenders in the country who's going live here in a few months. And this is going to be table stakes for them going forward. And being able to serve a high conversion experience at that top of the funnel and then pairing that with Autopilot, which is going to lead to a lower cost of operation because of lower variable costs because they'll be able to have these things happen in real time as the consumer is going through, self-fulfillment, if you will. I mean that's sort of the dream combination. And so the uptake has been good. I mean it is a big shift for them. I'd say business-wise, that's a much bigger change management exercise in some ways than the Autopilot product because it's sort of doing work in the background versus changing your entire up funnel. But yes, the uptake has been good. And again, let's let those results continue to play out, and we'll try to under promise and over deliver there as well.

[Operator Instructions] Your next question comes from the line of Griffin MacMaster of Wells Fargo.

I just wanted to ask on the top of funnel, and it's great to kind of see that Consumer Banking customer also kind of looking at you guys for mortgage solutions. Just wanted to ask you around if there's any way to think about how many customers across the base or your kind of overall landscape could be target customers for all of these products? And then kind of along with that, with the recent hires as new Chief Revenue Officer, if there's any changes around the go-to-market and kind of how to think about this going forward?

Yes. Maybe I'll start with the second question, yes, we're excited to welcome Matt on board. And one of the key shifts we're making there is having a dedicated client sales team that's focused on our existing clients for the exact reason that you asked your question, I think. And helping our customers, existing customers, both adopt more products that are free as well as new products that can grow value for them and we charge for. And so that's a dedicated new motion that we have, which we're very excited about, and it will help those people be a lot more focused on the existing customer base and then a separate new client sales motion. That will help us go and get more and more of these great logos that we have added to our roster. And I think that's a nice change for us. And then to answer to your first question around what's the target market for all of these things. It's interesting. I think when I look at what's actually in place and practice in the industry today, these extremely low friction conversion funnels tied to a very automated, self-fulfillment process are basically in place nowhere. I mean some of the technology wasn't there until 6 months ago. And on the low conversion funnel, some of the data sources that were required to drive that level of low friction weren't really prevalent until about 1 year, 1.5 years ago. And so I think the timing is good for us in the market to be able to serve that. And then I'd say maybe most importantly, the thing I'm most excited about across all of these things, especially for that customer you mentioned, that's using us for all the -- actually all the non-home lending products that…

Your next question comes from the line of Aaron Kimson of Citizens.

Great. The OpenAI and Better partnership made headlines late last week, and I think the most interesting part of that announcement is -- there's a bit of a pivot there for Better, which is historically focused on originating loans. And now the company is talking about doing more of what you do, using technology to help accelerate the mortgage process for banks and credit unions and IMBs. Do you view that partnership as a validation of your business model? And can you help us think about why in an agentic world, it may make sense for banks, credit unions and IMBs to try and take back some of the mortgage market share they've ceded since the GFC?

Yes. I mean I view -- I think that kind of highlights 2 things. One is that there is a big opportunity in this space. And I know that team very well. I think very highly of them. And it's just different. Building software is different than building technology. It's something I explain to our customers a lot. Building technology is one thing, but building software that's integrated and actually delivers your end workflow is just different. And so I do view it as a big validation of our space. And I view it as something that I'm hopeful -- I mean, I think, I talked about this in 1 of our calls, maybe I don't know, a few years ago. But about 10 years ago, Rocket Mortgage came out and said, "We're going to make it so you can push a button and get a mortgage." And I think that really catalyzed the industry and feeling like, hey, the sky is the limit for us. We don't have to do things the old way. And that was a big catalyst for Blend. So I view this all these things that are happening with AI and some of their competitors doing things with AI and maybe some of their potential partners doing things with AI, as I think it's going to drive up awareness and that's a good thing. That's a good thing for the industry. The industry is actually, I would say, one of the most surprising things I know we said we've been live for a week with this Autopilot product, but the fact that we had 7 people turn it on without us even -- actually without us even really knowing except for the 2 that e-mailed us because they had -- they wanted help turning it…

Okay. I appreciate that perspective. And then as a follow-up, Autopilot is the first agent for Blend intelligent origination, how should investors think about the cadence for additional agents to be rolled out? And what type of consumer loans would you be most excited for next?

Well, we're going to make Autopilot available for all product types. It currently works for mortgage and home equity and custom overlays or custom guidelines or overlays, which could be used for other product lines as well. But we don't think of that capability, which is call it a real-time underwriter -- pre underwriter that's looking at all this work. But there's other things that I think it could -- you'll see coming from us and some of that might be an agent around analytics. So instead of having to go to dashboards, the agent should be pushing you the insights as a customer of ours. What loans that -- how did your -- for the loans that had Autopilot. Just use Autopilot as an example, for loans that are Autopilot on, are they closing faster? Is doing all that background work helping you? And so we're building out some agents there. We're building agents around the closing process where the QC is very important. Making sure that every single signature line and initial and everything is perfect to make sure that our customers don't have any issues at the closing table. But we really want to build, I would say, with all that being said, we really want to build on Autopilot and grow that out as a capability because it is something that we're just scratching the surface on, and I think can be something that can manage a lot of the things that humans are required to trudge through today.

[Operator Instructions] Your next question comes from the line of Seth Gilbert of UBS. I will invite Pallav Saini, your next speaker to ask a question. Pallav Saini of Canaccord Genuity.

Nima, you mentioned in the prepared remarks that the pipeline is up 40% year-over-year and that you're seeing a shift towards bundled deals, which is great. Roughly what percentage of the pipeline would you say is leaning towards bundled deals right now for you?

It's a good question. I don't know the exact percentage of customers. I don't know, Jason, if you have that off the top of your head?

I don't have that in front of me, but I would say, directionally, that's sort of a key driver of momentum is customers that are interested in multiple products from us, either multiple products within the Mortgage Suite, but more and more customers are interested in the fact that we can deliver mortgage and Consumer Banking products, all with similar feel, similar capabilities and integration.

Got it. And any commentary on your market share in Q4? And how do you see it evolving in 2026?

Yes. We only release our actual market share as we calculate it once a year when the HMDA data is released in the fall. What I'll remind you is that we talked about last quarter, 1 large customer that was going to be with us from a contractual standpoint for some period of time, but we expect that volume to be rolling off. And when the volume rolls off, we no longer count the volume in our market share. And we mentioned that, that customer will probably have a circa 100 bps headwind for us. And we talked last year about, I think, we ended the year at 17% market share. So if you put that headwind on top of there, is the right way -- probably the right way for you to think about it, building from there.

Your final question comes from the line of Seth Gilbert of UBS.

Maybe just first, a quick one on the revenue restatement. It looks like it was just in the neighborhood of about $15,000. So I just wanted to make sure I got that right, fairly immaterial. And is there anything else you wanted to add on about the restatement?

Revision, first of all. But yes, no, we essentially just reallocated some of the revenue between different quarters in 2025.

Got it. Okay. That's helpful. And then maybe on the RPO side, you signed 10 new deals expansion. I think you mentioned one big annual 7-figure customer as well. By our model, you have around $100 million in the short-term RPO. So I was just curious if you can talk about when we should maybe expect some of this to fall off into revenue more materially?

Yes. Look, I'll say that it's always great to have RPO in the sense that it is committed and it will turn into revenue at some point. I do want to caution you that in our business, especially on the mortgage side where we're primarily based on funded loans, as Nima talked about, success-based pricing. RPO isn't really a great gauge for you. But other than that, yes, the short-term RPO, obviously, will roll off within the next year.

Got it. And then maybe just a quick follow-up. On Blend Autopilot, it sounds like the pricing is still being mapped out. But can you talk about applicability? Is it applicable to your entire base of mortgage customers? Or are there certain customers you think who will never use AI for cost, security, other reasons?

Yes, I'd say 1.5 years ago, Seth, if you'd ask me who's going to use it. I would say there's going to be fast movers and slow movers. And I think -- now -- I mean applicability in terms of the work, the human work of stare and compare and back and forth and reading guidelines and doing calculations, I think that exists no matter what kind of customer of ours you are. So applicability is pretty broad. Do I think we'll get 100% adoption? No, of course not. But I do think that our customers are much more eager around AI. I think something is in the air this year. 2026 has been sort of a statement year for AI and people are seeing what it can do on their desktops and Microsoft made a big announcement today around their Copilot -- yesterday about their Copilot Cowork and Anthropic has been making headlines around that. And so people are starting to see what it can do when they're driving with AI and it opens their eyes to the possibility of, "Hey, couldn't it do that in the background while I'm sleeping." And so yes. I mean I haven't yet heard a customer in all of our discussions. I'll just tell one more anecdote, I was giving an early preview to a customer who came to our customer advisory board, they wanted their longer -- their larger teams. This is one of the very, very large bank. And they wanted their larger team to look at the product because they were really excited about it. And the first question I asked on the call was, can somebody find me all the reasons why we couldn't possibly do this so we can work through these issues because we really need this.…

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.