6 months ago
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Mortgage tech firm Blend Labs reported another loss in the first quarter of 2024, but its executives remain confident the company will deliver profits by the end of this year.
To reach this goal, the company recently received a $150 million injection from private equity firm Haveli Investments and paid down the balance of its outstanding debt.
The San Francisco-based company reported a non-GAAP net loss of $15.1 million from January to March, lower than the $17.6 million loss in the previous quarter and $35.6 million in the same period of 2023.
The company’s GAAP net loss in Q1 was $20.7 million, per filings with the Securities and Exchange Commission (SEC) on Wednesday.
To analysts, Nima Ghamsari, head of Blend, said that the deal with Haveli has “several strategic outcomes” for the company, including the “elimination of interest costs and improvement of the balance sheet, which for the first time as a public company is debt-free.”
As of March 31, Blend had cash, cash equivalents, and marketable securities, including restricted cash, totaling $135.3 million. Meanwhile, at the end of the first quarter, the company had a total debt outstanding of $135.5 million.
However, Haveli invested in Blend in April, which came as convertible preferred equity. The proceeds were used to pay down the company’s debt, eliminating costs with interest and servicing to improve profitability and cash generation.
In the quarter, Blend’s cash burn — resulting in unlevered free cash flow—was $1.3 million, compared to $14.4 million in the previous quarter and $40 million in the same period of 2023.
The company posted revenues of $34.9 million in Q1, near the high end of the guidance, compared to $36.1 million in the previous quarter and $37.4 million in the same period of 2023.
Most revenues came from the platform segment ($23.8 million), compared to a smaller share from the title segment ($11.1 million).
Blend’s platform segment includes the mortgage banking suite, which experienced a revenue decrease of 15% year over year to $15.1 million in Q1. Meanwhile, consumer banking suite revenue rose by 29% over a year ago to $6.7 million. Professional services revenue increased by 21% to $2.1 million during the same period.
On the expenses side, non-GAAP operating costs in Q1 totaled $29.5 million compared to $47 million in the same period the year prior.
Ghamsari told analysts that the company grew its product suite and customer base in the first quarter, including two of the top 10 credit unions in the country.
“Looking ahead, our pipeline now has 35 opportunities for new mortgage customers, up from 30 last quarter, including a couple of the largest financial institutions in the country,” Ghamsari said.
In addition, the company added functionalities to its platforms, such as an automated loan estimate and an updated Spanish language intake form with additional capabilities.
Blend executives estimate the company’s market share was 20.2% in the second half of 2023, considering funded loans via its platform.
The mortgage tech firm forecasts non-GAAP net operating loss between $7.5 million and $10.5 million in the second quarter.
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