In addition to signing a multi-year deal with Pentagon Federal Credit Union, Blend laid off 50 workers in September, or about 9 percent of its workforce.
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Cloud banking software provider Blend Labs Inc. continues to focus on profitability by reducing its workforce, signing new clients, and expanding the services it provides to existing clients.
Blend — which helps mortgage lenders manage one in five mortgages — grew third-quarter revenue 11 percent from a year ago, to $45.2 million. A 32 percent reduction in operating expenses, to $39.3 million, helped the company narrow its Q3 net loss to $2.6 million, down from $19.4 million in Q2, Blend reported Wednesday.
Blend said it laid off 50 workers in September, about 9 percent of its workforce, as part of a layoff it expects to complete by the end of the year.
It also signed a multi-year mortgage and mortgage loan agreement with Pentagon Federal Credit Union, the nation’s second-largest credit union, and entered into an agreement to power credit cards, auto and personal loans for the top 300 financial institutions.
Blend CEO Nima Ghamsari said the company achieved “non-GAAP operating profit” in the quarter, with operating income exceeding expenses by $39,000.
“The third quarter led to significant gains for Blend, including the signing of multi-year agreements with new customers in both mortgage and consumer banking and the milestone of achieving non-GAAP operating profit ahead of our fourth quarter target,” Ghamsari said in a statement.
Blend said it expects to generate $39.5 million to $42.5 million in revenue in the final quarter of the year, and up to $3 million in non-GAAP operating income.
“This success shows the dedication, focus and hard work of our entire team,” said Ghamsari. “Getting to this point now gives us the opportunity to enter the next phase of our growth strategy. Our focus will be on generating profitable growth and ensuring that our platform continues to deliver more value to our customers over time. “
Shares in Blend, which last year changed hands from as low as $1.16 and as high as $4.25, closed at $3.86 on Wednesday before earnings were announced and gained 3 percent in after-hours trading.
After accumulating more than $1 billion in accumulated losses in 2021, 2022 and 2023, Blend’s deficit stood at $1.384 billion as of Sept. 30.
Combine income by source
Blend offers a suite of tools that help banks and lenders process applications for mortgages, home loans and lines of credit, auto loans, personal loans, credit cards, and deposit accounts.
Most of the company’s revenue — 69 percent during Q3 — comes from services it provides to mortgage lenders.
The addition of new clients and the provision of additional services to existing clients helped Blend grow real estate revenue by 16% from Q2 to $21.5 million.
Income per home loan increased 13% from last year
Blend offers a range of products that lenders can pick and choose from to support the loan origination process, including data collection, validation checks, product selection, pricing, pre-approval, delivery of disclosures and signing of closing documents.
The lender’s growing acceptance of add-on products helped Blend increase the “value economy” of each home loan it serves its customers to $99 in Q3, up from $86 a year ago.
Blend estimates it will help process 20 percent of all loan originations by 2024, up from 14 percent by 2021.
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