Blend Labs (BLND) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Head of Investor Relations - Meg Nunnally
• Cofounder and Head of Blend - Nima Ghamsari
• Head of Finance and Administration - Jason Ream

TAKEAWAYS

• Total Revenue -- $32.9 million, representing 1% growth driven by expansion in the Consumer Banking Suite.
• Mortgage Suite Revenue -- $17.4 million, declining 2% due to a decrease in funded mortgage loans on the platform.
• Consumer Banking Suite Revenue -- $13.2 million, increasing 5% behind elevated demand for rapid home equity products.
• Non-GAAP Operating Income -- $4.9 million, exceeding the top end of the $3.5 million to $4.5 million guidance range.
• Non-GAAP Gross Margin -- 77.2%, reflecting an increase in Autopilot model costs that scale with transaction processing.
• Funded Mortgage Loans -- 194,000 units, down 4% following a drop in application volumes during September.
• Economic Value per Funded Loan (EVPFL) -- $81, reaching the high end of the previously guided range of $80 to $81.
• New Sales Activity -- 26 new deals and expansions, which management reported as the best sales quarter in more than three years.
• Autopilot Customer Count -- 10 contracts, an increase from six customers reported in August 2026.
• Autopilot Application Volume -- 90,000 processed applications, doubling from the 45,000 reported in the previous quarter.
• Gross Revenue Retention -- Mid-90s % range on a churn notice basis, with $2 million in notices during the quarter compared to $3 million in the prior period.
• Cash and Marketable Securities -- $44.2 million, with zero debt and $14.3 million in year-to-date free cash flow.
• Q4 Revenue Guidance -- $27.7 million to $29.7 million, forecasting an 8% to 15% decline due to deteriorating mortgage market volumes.
• Q4 Operating Income Guidance -- $2.3 million to $3.3 million, reflecting the impact of lower revenue on the bottom line.
• Q4 EVPFL Guidance -- $86 to $87, including a $3.50 mechanical lift due to fixed fee arrangements interacting with lower loan volumes.
• Industry Volume Outlook -- 850,000 to 910,000 units in the fourth quarter, representing a year-over-year decline of 28% to 33%.
• 2027 Revenue Pipeline -- $5 million in potential incremental revenue from Autopilot deals expected to close in the current quarter.
• LTM EVPFL Trend -- $82, compared to $90 one year ago, primarily due to the loss of one large customer and a shift to net revenue reporting for insurance products.
• Share Repurchase Program -- $37 million completed in the first half of 2026, with $13.2 million remaining under the current authorization.
• Q1 2027 Market Outlook -- Management expects industry volumes to decline 30% against a robust year-ago comparison.
• Full-Year 2027 Volume Forecast -- Management expects industry volumes to decline in the high single digit to low double digit percentage range compared to 2026.

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RISKS

• Ghamsari warned that "refinance applications are now down roughly 60% from earlier this year" as 75% of mortgages sit below 6% rates, impacting total volume.
• Ream noted that Autopilot model costs "are now having some effect on the margin line" because they scale with the number of loans processed.
• Ghamsari indicated that closing contracts with large banks takes time because "they have AI governance to go through," potentially delaying revenue recognition.

SUMMARY

Blend Labs, Inc. (NYSE:BLND) reported third quarter results where growth in consumer banking helped offset declining mortgage volumes in a restrictive interest rate environment. Management emphasized a record sales quarter and the expansion of its AI-driven Autopilot platform, which reached 10 contracts and processed 90,000 applications. While interest rate volatility led to a lowered fourth quarter outlook for mortgage revenue, the company maintained non-GAAP profitability and highlighted a growing pipeline for 2027.

• Management introduced Navigator, an AI assistant for desktop and mobile that prioritizes loan officer tasks and automates work previously requiring multiple systems.
• The company opened its infrastructure via Autopilot MCP, allowing lenders to build custom voice agents and chatbot integrations on top of the Blend compliance framework.
• Ghamsari stated that Autopilot makes Blend an engine rather than solely a user interface by managing loan context and integrations while keeping human officers in control of regulated decisions.
• The company's expansion into Rapid Home Equity served as a significant sales driver, including a cross-sell to a top 20 mortgage originator and a new top 10 bank logo.
• CFO Ream reported that the first quarter of 2027 is expected to see a 30% market volume decline, mirroring the trajectory of the fourth quarter of 2026.

INDUSTRY GLOSSARY

• Autopilot: Blend's AI-driven platform that automates loan processing tasks like document chasing and cycle time management.
• EVPFL (Economic Value per Funded Loan): A metric calculating contractual rates for products relative to the total number of loans funded on the platform.
• Navigator: An AI assistant within the Blend platform designed to help loan officers manage pipelines and automate pre-approval workflows.
• Autopilot MCP: A developer-focused version of the platform allowing customers to build their own user interfaces or third-party agents on the Blend engine.
• Rapid Home Equity: A specialized software product focused on accelerating the approval and origination process for home equity lines of credit.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us and welcome to Blend's financial results Conference Call for the Third Quarter of 26. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to management for their prepared remarks. Please go ahead.

Meg Nunnally: Good afternoon, and welcome to Blend's Financial Results Conference Call for the Third Quarter of 26. I am Meg Nunnally, Blend's head of investor relations. Joining me today is Nima Ghamsari, our cofounder and head of Blend, Jason Ream, our head of finance and administration. Before we start today's call, I would 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 will discuss today, including our profitability, refer to non GAAP.

Also, certain statements made during today's conference call regarding Blend and its operations and in particular, our guidance for the fourth quarter of 26. Other commentary regarding 2026 and 2027, and our expectations about markets, our strategic investments, product development plans, operational targets and the macroeconomic environment, may be considered forward looking statements under federal securities laws We caution you that forward looking statements involve substantial risk and uncertainties and a number of factors many of which are beyond the company's control, could cause actual results or events or circumstances to differ materially from those described in these statements.

Please see the risk factors we have identified in our most recent 10 q's our 10 k for fiscal year 25, and our 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. 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 will now turn the call over to Nima.

Nima Ghamsari: Thank you, Meg. Welcome everyone. I will start with the simple version of the quarter. The market got harder, but we are moving faster than ever. Revenue was in the top half of our guidance range and non GAAP operating income came in above the high end. 3 takeaways for today. 1, we had our best sales quarter in more than 3 years. 2, autopilot went from 6 customers to 10, and the pipeline behind it is now big enough to size and growing. And 3, next year, the market may not help us. Converting autopilot pipeline is how we are going to grow. Let's start with sales. In Q3, we signed 26 new deals and expansions.

In dollar terms, that is more than 2x the first 2 quarters combined. Back in August, I told you we had a late stage pipeline that we expected to turn into signed deals in the coming quarter. And that is exactly what happened. A few of these are worth calling out. We signed a new logo with a top 10 bank for mortgage and rapid home equity. We cross sold rapid home equity into another top 10 bank and into a top 20 mortgage originator and 5 of the 26 deals were autopilot deals. 2 things are driving this. Rapid mortgage and rapid home equity is what lenders want to buy right now.

Because it makes it easier for their customers to work with them and lowers their cost to originate in a market where every basis point counts. And autopilot has changed how the largest lenders see us. We are not just a point of sale to them anymore. We are a system that processes and moves the loan in real time. Which brings me to my second thing. Autopilot and the pipeline behind it. Our autopilot pipeline today includes 3 of the largest 20 banks, 2 of the largest credit unions in the country, and 1 of the largest 20 largest retail mortgage lenders.

The deals we are working to close in the fourth quarter alone could contribute $5 million in incremental revenue to 2027, and the pipeline extends well into 2027. For current customers, Autopilot runs inside customer's existing blend environment. There is no integration project. When a customer signs, we turn it on, the revenue starts, and the value starts almost right away. Compare that to maybe our rapid deals or new logos, which can take multiple quarters to integrate before they show up in our results. This is a very different motion for us. So if we execute against this autopilot pipeline, we believe there is a very real upside scenario for 2027 despite the macro.

And that pipeline does not exist in a vacuum. it is there because of the adoption and the customer outcomes underneath it. Let's talk about adoption, which is the simplest measure of whether this is working. In August, I told you Autopilot had worked on more than 40 thousand loan applications since it launched. Today, that number is more than 90 thousand. it is doubled since our last call. 10 customers are now under contract for Autopilot, up from 6 in early August.

That list runs from 1 of the large mortgage servicers in the country to community banks and credit unions, And while the larger banks are working with us to get this signed, they have AI governance to go through, and so we are expecting some of those to come through here in this quarter. Customers are signing with us because they can see the results These are the same preliminary figures I shared in August. A 10% to 15% improvement in pull through rates, 2 to 4 days cycle time improvement in loans, about 4.5 hours of filling time automated in every loan.

For a loan officer or a processor or underwriter, that is the difference between chasing documents and talking personally to your customer, the borrowers. But customers are also excited about Autopilot because of what we are building around it. And the biggest new piece of that is Navigator. Navigator puts Autopilot in front of the loan officer as an assistant. it is an assistant that is built in to blend so a loan officer can ask, which loans in my pipeline need attention today? How do I get a preapproval letter for Nima? And Navigator does all the work that they used to have to click into multiple systems and take tens of minutes or hours doing.

Similar to the things that you might use in your personal life, like news or Claude Duet. But inside the lenders' own products with their permissions, their guidelines that they have already configured, the integrations they have already set up, all the consequential work that they can do today can now be done via Navigator. And anything that is important that needs the loan officer's attention waits for their approval. So they stay in control, and it is still a permission architecture. We launched on desktop first, In October at the NBA annual convention, unveiled Navigator Mobile, which is the same assistant, but in your pocket. For people on the go.

A lot of loan officers are in the car between appointments working with realtors, and we launched that earlier this week. For our customers. I want to play a short video of that for you here now. The reception has been fantastic. At MBA, a day before the event, we put together a preview lunch on short notice and 17 lenders showed up at that lunch in a small room with me showing this alongside the autopilot team at Blend. And so it was really amazing experience to see them come and get excited about something new that could help make their lives and their teams' lives easier.

It automates the work behind the loan, with Autopilot, and Navigator gives the loan officer back the time to work with their customers. that is a second reason for lenders to adopt Autopilot, and if a loan officer runs their day through Navigator, they are still running it through Blend, but they are doing it in a 10x better way. that is faster and simpler and easier to consume. Which drives utilization, drives retention, and it is a good lever for us to continue to grow with our customers and create value, which is ultimately the value that is going to drive retention for us and our customers.

Back in August, I also laid out 4 advantages that we believe give Blend the right to win in agentic lending. Where we sit with the data, 15 years of data, where we sit in the front end of the process when data and documents are coming in, The harness that autopilot runs inside, which is all of the integrations and all of the compliance that is built into our platform. And on top of that, amazing relationships with lenders who really want a system that can drive outcomes for them. And we have done that for them historically. None of that is changed, so I will not repeat all of that.

But I do wanna reemphasize 1 point because we have new evidence for it this quarter. Autopilot gets stickier and more future proof as customers build on top of it. In August, I told you we would open up our infrastructure through Autopilot MCP so customers and partners could build on us rather than around us. And here's what that looks like 3 months later. 2 large lenders have built voice agents on top of Autopilot MCP, Large fintech lender is building inside its own mobile app and website. Things built into Autopilot MCP, with blends integrations and intelligence underneath, And so, historically, that was a big trade off for them.

Do we use blends UI or do we use our UI? Now that trade off goes away. And a community lender is working with a lead generation partner to take a pre application through a chatbot and open a file directly in Blend. For lenders, 3 very different use cases, and every 1 of them is gonna run faster and better in a more connected way through Blend. And that is the point. This makes Blend and autopilot makes blend engine and not just an interface. The models underneath will keep getting better and faster and cheaper, and that is true for everyone.

But what does not commoditize is the layer that knows how to manage the context of the loan. Holds the integrations and applies the guidelines and then still keeps people in control for the regulated decisions that matter. And durable value on building a harness like that accrues, and every time a customer builds on top of it, it gets more valuable to them and that makes it. They want to keep it longer and use it longer. And that is a different company almost than from the 1 we were a few years ago. And you know, speaking of the speed of autopilot, 1 reason we can move this fast, and we have launched.

Since March, we have launched autopilot MCP Navigator, and Navigator Mobile, and we have more things coming down the pipe towards the end of this year, is our efforts towards Blend 3.0. it is in our effort to be an agent first company. It went from idea to generally available on desktop in September and to a mobile app that we demoed in October and now generally available in the App Store for our customers. In a matter of weeks and months because we have this amazing platform and amazing harness that has all these capabilities already, and it is about building the agent layer around it.

And doing that with agents as well to make our team be able to do these things faster than maybe ever before. Acting speed is a compounding advantage. Over time, we expect it to show up in operating leverage and you are gonna hear more about that as we plan and share our plans for 2027. Now let me close with some final thoughts on the overall growth trajectory. When we spoke in August, mortgage rates were about 6.8%. After the Fed raised rates in September, they hit a high of north of 7.5%.

And as you can expect, applications dropped with them, purchase and refinance both, And refinance applications are now down roughly 60% from earlier this year, with more than 75% of outstanding mortgages sitting below 6%, there is not a lot of refinance demand. At these levels. it is arguably the toughest origination backdrop we have seen at least since 2023, maybe that we have ever seen, and I am not gonna pretend that it does not matter It does.

And that is why, you know, we had to update our Q4 numbers But the macro is the 1 thing in this business that we have never controlled, and we spent the last 4 years making sure that our company does not depend on it. We are building new products that we can monetize We are growing our customer base in ways that we can do more and create more value for them And this quarter, with the 26 new deals, you are seeing that we are moving things in a positive direction regardless of macro. In May, I said that Autopilot and our internal agents would add meaningful growth next year, and here's where that stands.

The autopilot contracts are real. The largest lenders are moving. And while I said earlier, large lenders put AI through model risk compliance security, procurement, and those steps take months. But these are some of the largest financial institutions in the country. So while they are moving and in a lot of cases were selected as the vendor of choice, there is work to do to get it over the finish line so they can rightfully turn it on for them and their customers. And so those big contracts continue to move, and that revenue lands 2027 as they close, but not ahead of that.

So I wanna be honest about that, that does that process of working with large financial institutions does take time. And here's the shape of 2027 as I see it today. Jason will give you our volume outlook in a few minutes, and that is a base case, a market that is down again next year, overall market size, and a business that has to earn its growth against it. Converting the autopilot pipeline I sized for you earlier is what turns that baseline into growth. Converting those rapid deals into deployed at scale products for our customers. Those are levers we control and it is where the company is focused.

The other thing that is important for me to emphasize is that Autopilot revenue from existing customers comes on top of what we earn from them on every loan. Same loan, same customer, more revenue per loan. And the same is true for Rapid. it is a higher per funded loan rate for a more complete product that does real time approvals. And so as the pipeline of those deals closes on autopilot, and as rapid gets deployed, our revenue per funded loan goes up even if the market stays flat. And that is because we are getting more value to our customers.

And Jason's gonna walk you through the trend and the trailing 12-month figure that is come down over the past year for reasons that we have talked about a bunch and you know about, But what I care about is what happens next. it is going up in the fourth quarter, and we expect it is going to rise into 2027. Of course, we cannot perfectly predict the future. And that is with very little of the pipeline that I just sized for you. We try to be thoughtful about what we include and do not include in our forward-looking statements. that is the mechanism I want you to take away.

In 2027, revenue per loan can do the work when volume rising in the market. We do not need to rely on the volume in the market rising for us to continue to grow our business with our customers. So to sum up, the market got harder. But we moved faster anyways. Autopilot went from a product we were launching to a pipeline we can size, with great customers that are building on top of it. And not expecting any help from the market next year. Our job is to convert that autopilot pipeline get these rapid deals deployed, and help us grow despite the market. With that, let me hand it over to Jason.

Jason Ream: Thanks, Nima, and thank you to everyone else joining us on the call. Total revenue for the third quarter was $32.9 million up 1% year over year and in the upper half of our $31.5 to $33.5 million guidance range. Mortgage suite revenue was $17.4 million down 2% year over year. Within the negative 4% to positive 3% range we discussed on our August call. We saw approximately a 194 thousand funded mortgage loans on our platform, down 4% year over year, and modestly below the 200 thousand to 210 thousand range we expected coming into the quarter. As Nima describes, the macro downturn started to affect us in September and drove that shortfall.

Economic value per funded loan came in at $81 at the high end of the $80 to $81 range we guided to in August. Consumer Banking Suite revenue was $13.2 million up 5% year over year above the high end of the negative 5% to positive 1% range we shared on our last call. And professional services revenue was $2.3 million consistent with our expectations. Turning to profitability, Non GAAP gross profit was $25.4 million and non GAAP gross margin was 77.2%, compared with 77.7% in the third quarter of 25 and 78 point 3 last quarter. That puts us at the low end of the 77% to 78% normalized range we have described.

The sequential decline primarily reflects Autopilot model costs. Which scale with the number of loans Autopilot processes. I flagged these costs in August as small but growing. They are now having some effect on the margin line, although we do not expect that to be significant for at least the next year and we are keeping our eye on the trend. Non GAAP operating expenses were $20.5 million in the quarter, which includes the sequential step up quarter-over-quarter due to our annual Blend Forum customer event, which happened in August. Q3 OpEx was down 3% year over year consistent with what we guided to in August.

Non GAAP operating income was $4.9 million above the high end of our $3.5 million to $4.5 million guidance range, representing a non-GAAP operating margin of 14.9%. An improvement of nearly 2 points compared with the third quarter of 25. Free cash flow for the quarter was essentially flat bringing the year to date total to $14.3 million, ended the quarter with $44.2 million in cash, cash equivalents and marketable securities and of course, no debt. Next, I would like to touch on churn because I know it got some attention on our last call. Churn notices in the third quarter represented about $2 million of annual revenue, an improvement from about $3 million last quarter.

Year to date, and based on an even lighter churn quarter in Q1, that works out to gross revenue retention in the mid nineties on a churn notice basis. Very solid result for an enterprise software company. Again, most of the movement we have seen this year is lower end customers moving to lower end solutions along with a few customers that closed or merged in this rate environment. To be clear, we are not seeing new entrants change the competitive landscape in any meaningful way. The churn I just described reflects some of the pain the market is experiencing, with the prolonged high interest rate environment not the change in our competitive position. Turning to guidance.

On our August call, we expected fourth quarter industry volume to be down roughly 8% to 13% year over year. But Fannie Mae's most recent forecast, which came out in October, now calls for a 23% decline year over year. Adding in some conservatism, we expect fourth quarter market volume to be between 850 thousand to 910 thousand units. Down 28% to 33% year over year. As we have seen over the last 2 months, refinance volume is highly sensitive to rate movements in both directions, so the backdrop remains fluid. With that context, here's how we see the fourth quarter playing out for us.

We expect our total revenue to be between $27.7 million and $29.7 million a decline of approximately 8% to 15% year over year. We expect mortgage suite revenue to be down 23% to 28% year over year. Again, our expectations here are driven primarily by the difficult macro environment that we are facing. We expect economic value per funded loan of approximately $86 to $87 up from $81 in the third quarter. As a reminder, that per loan figure moves inversely with volume because of some of the fixed fee arrangements within our customer base. So lower volume in the fourth quarter, mechanically lifts our EVPFL calculation.

About $3.50 of the step-up, we expect between Q3 and Q4 is due to this mechanical lift. We expect year over year consumer banking suite revenue growth of between positive 2% and positive 10% in the fourth quarter. And we expect Q4 non GAAP operating income to be between $2.3 million and $3.3 million implying a non GAAP operating margin at the midpoint approximately 10%. As you might imagine, this is lower than we are expecting before this macro downturn, some of the pressure on revenue does flow through to lower operating income. Lastly, I would also note our fourth quarter outlook includes only Autopilot revenue under contracts signed today.

None of the pipeline that Nima described is included in these numbers. Looking beyond the fourth quarter, I want to touch on 2 things related to 2027. Volume and EVPFL. On volume, the first quarter has an unusual comparison. The first quarter of 2026 was a strong 1 for the industry. With market volume up 37% year over year. And the rate environment we talked about earlier carries straight into what is already the seasonally slowest quarter. So we expect first quarter 27 industry volume to be down around 30% year over year at least as steep as the fourth quarter.

For the full year, our current macro view is 2027 industry volume to be down high single digits to low double digits compared with 2026. With most of the year over year decline in the first half as we lap the more robust early part of 2026. On EVPFL, the quarterly figure moves with seasonal volume. We expect to be highest in the first quarter for exactly that reason. So we have added a trailing 12 month view to the supplemental slides, and I would encourage you to anchor on that. On a trailing 12 month basis, EVPFL was about $90 a year ago and is about $82 today.

Most of that decline came from 2 things that we have discussed before. The loss of 1 large customer and the transition of our verification and insurance products a partnership model where we now record net revenue rather than gross. Core pricing has been stable throughout that time period. From here, we expect that LTM EVPFL number to rise beginning in the fourth quarter of 26 and continuing into 2027. Some of that is the volume math I described earlier but the rest is real economics. Autopilot contracts we have already signed converting to revenue, customers continuing to adopt rapid and close, and more disciplined pricing on renewals.

For the full year, we expect 2027 EVPFL to be up mid single digit percentages year over year, and we see more upside than downside to our estimates. Before I wrap up, I want to add a note on capital allocation. We did close to $37 million in share repurchases in the first half of the year, although we did not have any share repurchases in the third quarter. We still have $13.2 million remaining under our authorization but feel good about where our cash balances currently sit. As we have always said, operational liquidity is the first priority for our cash.

But buybacks remain the next use of excess capital, especially at recent trading levels, we will continue to evaluate that opportunity. In summary, we delivered the third quarter we were aiming for. Revenue in the top half of our range profitability above the high end, and a better quarter in sales than we could have imagined. The macro has become more difficult since our last quarter We have tried to give you a clear, conservative view of how we see volumes through the first quarter into 2027. But the drivers we control pipeline conversion, autopilot adoption, and the cost discipline we have continued to maintain, are what will determine how the long term plays out.

Those are moving in the right direction. And with that, let's open up the call to your questions.

Operator: We will now begin the question and answer session. Star 1 to raise your hand. To withdraw your question, press star 1. Again. Ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Aaron Kimson with Citizens. Erin, your line is now open.

Erin Kimson: Great. Thank you for the questions.

Nima Ghamsari: Nima, you have been upfront about signing 1-year contracts for Autopilot until we can agree on a longer term value with customers? So as customers start to open up the Autopilot box and see the $600 in lower cost per funded loan, 10% to 15% higher pull through rates, and 2 to 4 day lower cycle time. Where on the spectrum of the metaphorical scooter versus a Ferrari Do you see customers viewing autopilot as things stand today?

Erin Kimson: Yeah. it is a good I mean, it is great question.

Nima Ghamsari: And, you know, it is we sort of went into starting to monetize this in July. And we have had such great partnership from our customers. Because I do not think anything starts out as a Ferrari even though there is a lot of promise. behind it. But the partnership with our customers has driven a ton of improvement to it and also new products. And so I would say I do not wanna take it for granted, but I already personally believe it is a Ferrari. And I think some of the continued improvement to the product is going to help, I guess, the world see that.

And some of our customers, the ones who have been the closest to us and working with us already see it that way. So, you know, I do not wanna oversell the product, but I also do not wanna understate the magnitude of improvement it can create, and especially as we drive up more partnerships with this.

Erin Kimson: Okay. that is helpful. And then, Jason, can you talk a little bit about underlying dynamics of RPO? It was sequentially higher, but down 7% year over year. How should investors think about how much of the delta is demand versus maybe a change in sales strategy where RPO today is a higher quality that is gonna convert to revenue on a more specific timeline. Versus in the past, there was always a question of over what time frame RPO would convert to revenue.

Nima Ghamsari: I think-- Yeah. Jason, are you there? I know you are having technical difficulties, but Can you hear me now? Yeah. We can hear you.

Jason Ream: You hear okay. Yeah. I was talking for a while, and I realize that the service had moved me. Sorry, everyone. I would actually urge you to not really pay much attention to RPO. Obviously, as you know, we do not have straight subscription model. We have a usage-based model. And while we do have some commitments and some revenue that does get some deferred, You know, RPO is not really relevant for us because it is-- different types of products have different you know, commitment levels from the customer, so it is it is not something we focus on, and I would urge you not to either.

Erin Kimson: Okay. Thank you.

Operator: Your next question comes from the line of Ryan Tomasello with KBW. Ryan, your line is now open.

Ryan Tomasello: Hi, everyone. I guess just on autopilot, given the maturation of the pipeline there, are you at a point where you can share some more color on the pricing uplift that could come through for like an individual customer relative to baseline? EVPFL? And then in terms of 4Q, Jason, you alluded to being some contribution there to revenue. Are you able to size that for us Just generally looking for some numbers here that I know we are all itching for, but understand you guys wanna keep this close to your chest still at this stage. Thanks.

Nima Ghamsari: Yeah, actually, it is a great question. Yeah. I was going to say, I think, you know, following up on the last question, it is sort of in the same vein. You know, when we price this thing initially for these 1-year deals, you know, we did intentionally price it less like a Ferrari and more like a scooter because actually for 2 reasons that I wish I said to the to the previous question. 1 reason is you know, we are still obviously building out this product, and it is all going well. We wanna keep momentum-minded. But the other reason is it takes time for the market to absorb the changes and understand and believe the changes.

And so you know, I think actually getting adoption for this product is my. Like, that is my focus right now. And so we priced it as a flat fee a total price fee for lenders in year 1 to say, hey. there is-- while we know this is more valuable for you, we do not expect you to sign some big huge, per funded loan long term contract until you really believe and see the value. And so while we do not have specific numbers and what that comes out to, I mean, there is there is pricing tiers from you know, $100 thousand or even less all the way up to $1 million.

For our customers and just depends on where they are from a size perspective. And sorry, Jason, to cut you off.

Jason Ream: No. I think you said everything I was gonna say and more. You know, long story short, we are not disclosing the specific financials right now. Think we are much more focused on as Nima said, the adoption and the traction and the improvement in the product. But you know, as Nima mentioned in his prepared remarks, you know, it could add, you know, $5 million to $5 million to 2027 revenue just with the Q4 deals that we have got in the pipeline. So you know, it could be meaningful, but I do not think we are so early at this point that we are not we are not disclosing any specific financials for Autopilot yet.

Ryan Tomasello: Got it. And then within the consumer banking suite, can you talk about how the home equity product has been holding up in the higher rate environment? I am curious if you are seeing potentially some tailwinds there given the substitution effect versus cash out refi. Maybe improving? Or if home equity is still kind of susceptible to weakening demand on higher rates? Thanks.

Nima Ghamsari: Yeah. The Q3, we mentioned 26 deals in Q3. The rapid home equity products was 1 of the bright spots in Q3. for us, where, you know, it is a competitive market for home equity, and we have a lot of the largest home equity lenders in the country on our platform.

And now it is how do you get customers and consumers that certainty around home equity lines and loans faster in that flow upfront and a real decision or at least a mostly confident decision so you can give confidence to the consumer that you can help them with the renovation, that you can help them consolidate their debt And so, yeah, I think yeah, absolutely, there is a tailwind there, and there is a strong market demand including from, you know, small lenders, medium lenders, and some of the largest lenders in the country, to be able to offer something to help counterbalance their business. So that was a big bright spot for us. In Q2.

In Q3, and you know, we mentioned the top. New top 10 bank logo. They. They have signed up for rapid home equity. We cross sold another top 10 bank. And a top 20 originator with Rapid Home Equity. And so, yeah, I think that helped. And, you know, getting these things rolled out is gonna be I think, great for-- I mean, just generally for the economy. People need to be able to tap their equity in a in a tough financial environment for consumers, and our customers see that, and they feel that is part of their mission to help them do that.

Ryan Tomasello: Great. Thank you, guys.

Operator: Reminder, if you would like to ask a Our next question comes from the line of Joseph Vafi with Canaccord Genuity. Joseph, your line is now open.

Joseph Vafi: Hey, guys. Good afternoon. Congrats on all of the autopilot progress here. Just wondering as it matures, kind of follow-up here. Any tweaks to overall pricing strategy do you think from here to help drive maybe more sales of the entire suite leading with Autopilot. And then secondly, given kind of the outlook, for the industry looking into next year, Just wondering how you are thinking about your cost structure as we look into 2027.

Nima Ghamsari: Yeah. We have not changed our strategy on autopilot. The sense that we. We have kinda said we are gonna do these 1 year flat fee deals with customers for now. I mean, we may change that next year. And may even offer sort of I do think that there is a lot of demand for Agentyx products in the market, including from lenders that are not on Blend yet. As much as it pains me to say that they are not on Blend yet, as much. We would love for them to be on Blend.

And so finding ways for them to get on board quickly and have you know, some pieces of autopilot available to them when they sign up with us so they can see the value and get excited about the value I do think it can be a you know, a market share catalyst for us if we decide to go in that direction. And so while I have not historically you know, talked too much in these forums about how we are gonna use that to drive customer adoption.

I do think that as customers get excited about an agentic product like this, it is gonna also drive their peers who may not be on Blend yet to come towards us. And I will let Jason answer the question about cost structure.

Jason Ream: Yeah. Look, Joe. As you know, we have been very disciplined around cost structure, and we will continue to do so. To be so. I guess, you know, obviously, we are not guiding to 2027 yet, but I think we are. We have built that muscle. We are not gonna let it let it go to waste.

Joseph Vafi: Great. Thanks very much, guys.

Operator: Your next question comes from the line of Michael Turrin with Wells Fargo. Michael, your line is now open.

Michael Turrin: Hey. Thanks very much. Appreciate you taking the questions. I have 2. The first is just can you speak more to what drove the outperformance on the consumer banking side of the business and what is assumed in the guide for 4Q? And just any commentary on how sustainable the growth you are seeing from that segment is from your perspective?

Jason Ream: Yeah. Michael, you know, look, we have a strong customer base. In consumer banking, and obviously, that was. That remained steady in Q4, and that was helpful for us. You know, as the last question highlighted, you know, home equity is a strong point for us as well. I would not say that it completely offsets the macro pressure on the mortgage side of the house, but you know, has been doing well, and I think that is you know, probably more based on the strategic push that we have made around home equity. But I think that was a big contributor to the performance in consumer banking.

Michael Turrin: And just I appreciate the volume, the initial volume outlook for next year and appreciate some of the just forces outside of your control that you are contemplating. Jason, can you just speak to in that volume scenario, you are framing how much you are able to protect margin in the cash flow profile of the business. If that is indeed the scenario that we see in the first half of the coming year.

Jason Ream: Yeah. Do not look as I talked about in our Q4 guidance, like, the you know, the downside of having a you know, profitable model is that when revenue goes down, obviously, you know, you are you know, you are gonna have. Take a little bit of hit on margin. So I cannot say that, you know, we are immune to revenue fluctuations, you know, causing any hit to the to the bottom line. You know, that being said, you know, like, you know, Joe's question around cost discipline expense management, You know, we feel very strong there and able to control our own destiny.

Think, you know, we also are you know, seeing sort of a strong momentum in our customer base, primarily around autopilot and rapid. That leads us to, you know, think that we have real revenue growth opportunity. You know, macro environment aside, obviously, that is a headwind for us, but there is, you know, we have our own tailwinds that we are trying to create. Know, to help us counter those.

Michael Turrin: Thanks very much.

Operator: Our last question comes from the line of Faith Brunner with William Blair. Faith, your line is now open.

Faith Brunner: Hey, guys. Thanks for taking my question. Just looking at the deal volume in the quarter, I guess, would you say it was like a perfect storm of multiple factors, whether it past go-to-market investments, growing awareness of referenceability for Autopilot. Is there anything specific you would call out just how we should think about maybe deal volume momentum going forward and how these deals will layer into the model.

Nima Ghamsari: I would not say it is the perfect storm or luck. I mean, I. I have been flagging late stage pipeline for a couple quarters. And before that, I said the pipeline was growing And then I think lenders saw our progress on innovation within our core products as well as the rapid and autopilot suite. And, you know, rapid home equity, like, somebody asked earlier, is very popular in the macro right now. Autopilot changed the conversation. The largest lenders do not just see us as a point of sale anymore. Actually, 1 point I wanted to make on using. You know, working on autopilot and pricing and packaging to get new logos of the interesting.

I mean, 1 of the most interesting things to me this past quarter was the sort of fintech bank that is, you know, is using Autopilot MCP to integrate this into their own experience, which it is not something we have done historically because it was sort of you use our front end or you do not use Blend, and now they do not have to make that trade off And so I think the combination of those things plus the fact that you know, we were talking to 1 of the large industry players about just how much volume is going through autopilot. it is a lot.

I mean, in an environment like this, 90 thousand applications worked in autopilot. Is a meaningful amount of the loan applications that are out there, and it is such an early product. And so I do not wanna give a forward looking statement on anything but pipeline that I already talked about earlier. I do not think this was luck. I mean, some of these deals were years in the making, and some of them were months in the making. And it is. Some of this is just, you know, like, it is it is a timing game. And you, you know, continue to show our execution. We continue to show our focus.

You know, that we have shown from a financial perspective profitability, and driven confidence in our business, And so you know, we still have you know, a lot of pipeline ahead of us, and on top of that, a lot of innovation that we hope and believe will drive a lot more pipeline in the future. And so I do not think we are even getting I just feel like this is a new era This agentic world was, in a lot of ways, a gift to the blending industry, which has been historically very manual. And very paper based. And it was the thing that I. You know, I.

I have always wanted to make this industry something that felt like it was the most consumer-friendly industry the people working in this industry were not sitting there mired in the hundreds or thousands of pages of documents they had to go through to give to successfully approve someone for a loan. And I feel like we are now finally able to execute on that as a team. And I do not think we have executed yet by any means, but this is our this is our time. This is where execution really matters. And that is why I have been focusing so much with the team on execution.

I do think we have been executing very well on the go to market side. And driving the pipeline to completion. We have been meeting our customers at their. On their sites, at conferences, at our forum, which was a couple months ago, and I think all this stuff together over time boils into what was a really good quarter for us. And, hopefully, we have more of those to come in the future.

Faith Brunner: You are awesome. Thanks for the color. Congrats again.

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

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