Blend Labs signals resilient platform momentum with Q4 revenue guidance at $31M-$32.5M amid strategic focus on AI and consumer banking expansion

Earnings Call Insights: Blend Labs, Inc. (BLND) Q3 2025

MANAGEMENT VIEW

* CEO Nima Ghamsari described the third quarter as reflecting "our team's strong execution and the increasing resilience of our business model," emphasizing that "we delivered total revenue just above the midpoint of guidance and more importantly, non-GAAP operating income that exceeded the high end of our guidance. This marks our fifth consecutive quarter of non-GAAP operating profitability, a trend we expect to continue into the fourth quarter."
* Ghamsari highlighted growth in the Consumer Banking Suite, offset by "headwinds to revenue in our mortgage business," attributing this to "intentional strategic transitions" such as moving towards higher-margin partnerships and the roll-off of legacy customers.
* Fourteen new deals and expansions were signed in the quarter, with a "7-figure expansion with a top 20 U.S. bank for solar home equity lending" and a "major renewal and expansion with a consumer banking customer across 6 product lines."
* Ghamsari noted, "Our pipeline activity is strong, building sequentially from Q2 and is up approximately 60% year-over-year."
* The CEO stressed platform innovation, stating, "By embedding agentic AI directly into our core Blend workflow, we can autonomously orchestrate and execute end-to-end processes," and called out customer enthusiasm for the company's Rapid Home Equity product.
* Strategic priorities for 2026 include growing the take rate in Mortgage Suite, expanding the Consumer Banking suite—which now represents 39% of total revenue, up from 29% a year ago—and investing in AI and Rapid products for sustained growth.
* Jason Ream, Head of Finance & Administration, said: "Total revenue in the third quarter of 2025 was $32.9 million, ahead of the midpoint of our guidance and down 1% year-over-year."
* Ream added, "Our total gross profit was $24.5 million. After excluding stock-based compensation and the amortization of software development expense, our non-GAAP gross profit was $25.6 million, and our non-GAAP gross margin was 78%, up from 76% last quarter."

OUTLOOK

* Blend Labs expects fourth quarter 2025 total revenue "to be between $31.0 million and $32.5 million, with the midpoint representing a slight decrease from the third quarter."
* Mortgage Suite revenue is forecasted to be "flat to slightly down quarter-over-quarter," and consumer banking is expected to be "down mid-single digit percentages quarter-over-quarter, largely driven by the impact of Mr. Cooper...and by typical Q4 seasonality."
* Non-GAAP operating income for Q4 is expected "to be between $2.5 million and $3.5 million."
* "For Q1 2026, we expect a sequential volume decline, in line with normal seasonal patterns. Our current expectation for the first quarter of 2026 is for mortgage volume to be between 1.07 million to 1.17 million units," according to Ream.

FINANCIAL RESULTS

* Total revenue for Q3 2025 was $32.9 million, as stated by Ream.
* Mortgage Suite revenue declined 18% year-over-year and was down approximately 1% from Q2 to Q3, attributed to "the ongoing ramp down of several customers that gave churn notices last year, the continued effect of our strategic transition to partnerships and by some seasonality."
* Consumer Banking Suite revenue rose 11% quarter-over-quarter, driven by new deployments and ramping usage among larger customers.
* Non-GAAP gross profit stood at $25.6 million with a non-GAAP gross margin of 78%.
* Non-GAAP operating expenses were $21 million, up 9% quarter-over-quarter, driven by a "Q3 specific sales and marketing expense related to Blend Forum and by higher non-GAAP R&D expense."
* Non-GAAP operating income reached $4.6 million, or a 14% margin.
* Free cash flow for the quarter was negative $5 million, with year-to-date total free cash flow at positive $1.5 million. Cash and equivalents stood at $82.3 million as of September 30, 2025.
* Blend repurchased 1.6 million shares worth more than $5 million in Q3, with $15.8 million remaining under its repurchase authorization.
* Economic value per funded loan (evPFL) for Q3 was $86, and guidance for Q4 is $83 to $84.

Q&A

* Aaron Kimson, Citizens: Asked about post-Rocket-Cooper deal tone and competitive positioning. Ghamsari responded that "big mortgage servicers are starting to think through their strategies" and that "some of the very largest lenders who are our customers say, we got to do something really important with AI."
* Kimson inquired about Ream's transition from Haveli to Blend. Ream explained, "I wasn't part of the investment team that made the investment in Blend, but I did have some contact with the company...I was looking for a good opportunity...They need a CFO that has experience with public markets, and I was looking to get back into the operating role."
* Ryan Tomasello, KBW: Asked about revenue impact from Mr. Cooper and market share trajectory. Ream clarified, "there will be a share headwind...but the majority of the revenue that we've had in the past is protected for some period of time."
* Tomasello followed up on the mortgage pipeline and market share. Ream said "we still have a very strong pipeline for mortgage...we're also driving towards growing consumer banking."
* Joseph Vafi, Canaccord: Probed on renewal risk. Ghamsari said, "no, I don't see renewal risk in the rest of our pipeline...the value per loan is up actually year-over-year from Q3 to Q3" outside of one large renewal.
* Michael Turrin, Wells Fargo: Asked about reconciling market share headwinds and macro optimism. Ghamsari stated, "a significant portion of our revenue with them [Mr. Cooper] is protected under contract...that is a likely headwind to our share in 2026."
* Turrin asked about efficiencies and investment. Ream stated, "there's just a focus on doing things in a lean way...we're really being judicious about the ROI essentially of the investments that we make."
* Michael Ng, Goldman Sachs: Asked about long-term evPFL and business mix. Ghamsari indicated focus on deploying high-value Rapid products and noted, "39% is where we are as a percentage of our total revenue in consumer banking."
* Faith Brunner, William Blair: Queried adoption cadence of Rapid products and AI monetization. Ghamsari discussed, "the majority of our big customers' focus is being able to serve a consumer a home equity line of credit or loan in 10-ish days" and called AI "almost like water for us at this point."

SENTIMENT ANALYSIS

* Analysts pressed for clarity on revenue impact from customer churn, the long-term effect of the Mr. Cooper contract, renewal risk, and monetization of new products, reflecting a slightly negative to neutral tone, with a focus on potential headwinds and sustainability.
* Management maintained a generally confident tone in prepared remarks, highlighting operational resilience and platform momentum, but showed caution and transparency in Q&A responses, especially regarding renewal risk and market share headwinds—using phrases like "To be clear" and "We believe" to signal both confidence and ongoing vigilance.
* Compared to the previous quarter, analyst sentiment was more focused on structural challenges and churn risks than on growth momentum, while management shifted from highlighting stabilization and growth to addressing churn and market share pressures directly.

QUARTER-OVER-QUARTER COMPARISON

* Q3 guidance for revenue and operating income was met or exceeded, but Q4 guidance signals a slight sequential decline in revenue and operating income.
* Strategic focus has shifted from simply expanding new logos and product adoption, as discussed in Q2, to navigating legacy churn and emphasizing high-quality platform deals in Q3.
* Consumer Banking Suite's revenue share increased from 36% in Q2 to 39% in Q3, showing continued strategic pivot toward non-cyclical revenue streams.
* Management sentiment has become more measured, acknowledging macro headwinds and share attrition, compared to the previous quarter's more upbeat narrative on pipeline and customer retention.
* Analyst focus moved from competitive wins and product momentum in Q2 to requests for clarity on churn, contract protection, and long-term monetization paths in Q3.
* Headwinds from Mr. Cooper churn and the impact of strategic transitions were more prominent topics in Q3.

RISKS AND CONCERNS

* Management called out "headwinds to revenue in our mortgage business" due to strategic transitions and legacy customer roll-offs.
* The expected roll-off for Mr. Cooper is a "noteworthy churn on the horizon" and is anticipated to be a headwind for market share in 2026.
* Management noted, "consumer banking will face some headwinds from the expected churn of Mr. Cooper's home equity business."
* Free cash flow was negative $5 million for the quarter.
* Analysts highlighted concerns about renewal risk, contract protection, and the durability of recent customer wins.

FINAL TAKEAWAY

Blend Labs management emphasized the company’s resilient operating model and the strategic transition toward higher-margin, platform-centric partnerships. With a robust pipeline, growing consumer banking share, and deliberate AI investments, the business is positioned to weather near-term churn and macro headwinds, while focusing on operational efficiency and scalable innovation as key drivers of long-term growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/blnd/earnings/transcripts]

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