Blend Labs Inc

Previous wording

Industry forecasters expect overall mortgage originations, including refinancing loans, to increase for the full year 2024 despite estimating a decline in mortgage origination activity in the first six months of the year compared to the same period in 2023. As a large portion of our revenue is driven by mortgage and mortgage related transaction volumes, changes in the mortgage origination volumes have had, and are likely to continue to have, material effects on our business.

Current wording

Industry forecasters estimate that mortgage origination activity increased in the first nine months of 2024 compared to the same period last year, and predict such increase in activity will continue into the final three months of 2024 and into 2025 compared to the same periods in the prior years, respectively. This increase depends on many factors, such as changes in the Federal Reserve’s policies or pressures in the macroeconomic environment, all of which are uncertain and out of our control. As a large portion of our revenue is driven by mortgage and mortgage related transaction volumes, changes in mortgage origination volumes have had, and are likely to continue to have, material effects on our business.

Previous wording

We have taken actions to manage our operating expenses and focus our investments on initiatives critical to achieving our broader strategy. We expect to see ongoing improvements to our expenses from these actions in 2024.

Current wording

We have taken actions to manage our operating expenses and focus our investments on initiatives critical to achieving our broader strategy. We expect to see ongoing improvements to our expenses from these actions in the remainder of 2024.

Previous wording

Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expense, costs of general marketing activities and promotional activities, travel-related expenses, and allocated overhead costs. Sales commissions that are incremental costs of acquiring a contract with a customer as well as associated payroll taxes, are deferred and amortized on a straight-line basis over the estimated period of benefit. Sales commissions that are not incremental costs of acquiring a contract with a customer are expensed in the period incurred.

Current wording

Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expense, costs of general marketing activities, advertising and promotional activities, travel-related expenses, and allocated overhead costs. Sales commissions that are incremental costs of acquiring a contract with a customer as well as associated payroll taxes, are deferred and amortized on a straight-line basis over the estimated period of benefit. Sales commissions that are not incremental costs of acquiring a contract with a customer are expensed in the period incurred.

Previous wording

General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expense for our finance, accounting, legal and compliance, human resources, and other administrative teams, certain executives, as well as stock-based compensation expense related to the stand-alone stock option award granted to our Co-Founder and Head of Blend in 2021, and professional fees, including audit, legal and compliance, and recruiting services.

Current wording

General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expense for our finance, accounting, legal and compliance, human resources, and other administrative teams, certain executives, stock-based compensation expense related to the stand-alone stock option award granted to our Co-Founder and Head of Blend in 2021, professional services fees, including audit, legal and compliance, software and hosting costs, external consulting expenses, and insurance expenses.

Previous wording

Restructuring charges relate to our workforce reduction plans and are comprised of cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs. Refer to Note 13, Restructuring, for additional information.

Current wording

Restructuring charges relate to our workforce reduction plans and facilities restructuring actions. Charges related to workforce reduction plans are comprised of cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs. Charges related to facilities restructuring actions are comprised of costs related to early termination of the lease agreement and impairment of the right-of-use asset in connection with the abandonment of the property. Refer to Note 13, Restructuring, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Previous wording

Other income (expense), net consists primarily of interest income earned from our investment portfolio. For the six months ended June 30, 2024, other income (expense), net also includes an adjustment to the carrying value of investment in non-marketable equity securities, a loss on extinguishment of debt, and a loss on transfer of our subsidiary in India.

Current wording

Other income (expense), net consists primarily of interest income earned from our investment portfolio. For the nine months ended September 30, 2024, other income (expense), net also includes a gain on sale of insurance business in connection with strategic partnership, an adjustment to the carrying value of investment in non-marketable equity securities, a loss on extinguishment of debt, and a loss on transfer of our subsidiary in India.

Previous wording

(2) Net of $0.5 million and $1.1 million of additions to capitalized internal-use software for the three and six months ended June 30, 2024, respectively, and none for the three and six months ended June 30, 2023.

Current wording

(2) Net of $0.8 million and $1.9 million of additions to capitalized internal-use software for the three and nine months ended September 30, 2024, respectively, and none for the three and nine months ended September 30, 2023.

Previous wording

Revenue decreased $2.3 million, or 5%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven by a decrease in Title segment revenue of $0.7 million, or 6%, primarily due to the lower volume of title orders, and a decrease in Blend Platform revenue of $1.6 million, or 5%. Within Blend Platform revenue, Mortgage Suite revenue decreased $3.8 million, or 17%, primarily due to lower volume of mortgage banking transactions with our customers, Consumer Banking Suite revenue increased $2.2 million, or 37%, primarily due to the increase from new deployments and incremental platform fees, as well as the increase in close and home equity transactions.

Current wording

Revenue increased $4.6 million, or 11%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, driven by an increase in Blend Platform revenue of $4.5 million, or 16%, and an increase in Title segment revenue of $0.1 million, or 1%. Within Blend Platform revenue, Mortgage Suite revenue increased $1.2 million, or 6%, primarily driven by higher attach rates of our add-on products like close and income verification, and Consumer Banking Suite revenue increased $3.3 million, or 54%, primarily driven by an increase in platform fees, fees from new deployments, and an increase in home equity and close transactions.

Previous wording

Gross margin was 54% for the three months ended June 30, 2024 compared to 55% for the three months ended June 30, 2023. Within Blend Platform segment, gross profit decreased by $1.8 million, while gross margin decreased to 71% in the three months ended June 30, 2024, as compared to 73% in the three months ended June 30, 2023, primarily due to lower Blend Platform revenue. Within the Title segment, gross profit and gross margin were consistent period over period.

Current wording

Gross margin was 58% for the three months ended September 30, 2024 compared to 54% for the three months ended September 30, 2023. Within Blend Platform segment, gross profit increased by $4.5 million, while gross margin increased to 74% in the three months ended September 30, 2024, as compared to 70% in the three months ended September 30, 2023, primarily due to higher Blend Platform revenue and flat associated cost of revenue. Within the Title segment, gross profit decreased by $0.5 million, while gross margin decreased to 12% in the three months ended September 30, 2024, as compared to 17% in the three months ended September 30, 2023, primarily due to an increase in cost of revenue from higher vendor and technology costs while revenue remained flat.

Previous wording

Sales and marketing expenses decreased $6.8 million, or 42%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily due to a $3.9 million decrease in personnel related expenses and a $1.1 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $0.9 million decrease in commissions, a $0.4 million decrease in advertising and promotion expenses, and a $0.4 million decrease in software and hosting costs.

Current wording

Sales and marketing expenses decreased $4.6 million, or 32%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily due to a $2.1 million decrease in personnel related expenses and a $0.7 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $1.4 million decrease in commissions, a $0.3 million decrease in software and hosting costs, and a $0.2 million decrease in advertising and promotion expenses.

Previous wording

Restructuring expenses decreased $2.1 million, or 91%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to the execution of the January 2023 workforce reduction plan, which was larger than the January 2024 workforce reduction plan. The restructuring charges included cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs.

Current wording

Restructuring expenses decreased $3.0 million, or 32%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to the execution of the August 2023 workforce reduction plan, which was larger than the September 2024 workforce reduction plan, which was partially offset by facilities-related restructuring charges incurred for three months ended September 30, 2024. The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs.

Previous wording

Interest expense decreased $6.3 million, or 79%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to the optional prepayment of the outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million on November 27, 2024 and repayment of all remaining amounts outstanding and payable under the Credit Agreement in an aggregate amount of $146.1 million on April 29, 2024. The borrowings under the Credit Agreement accrued interest at a floating rate which could be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%. The effective interest rate on our Term Loan was approximately 14.55% as of April 29, 2024, the date of its termination.

Current wording

Interest expense decreased $8.2 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to the optional prepayment of the outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million on November 27, 2023 and repayment of all remaining amounts outstanding and payable under the Credit Agreement in an aggregate amount of $146.1 million on April 29, 2024. The borrowings under the Credit Agreement accrued interest at a floating rate which could be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%. The effective interest rate on our Term Loan was approximately 14.55% as of April 29, 2024, the date of its termination.

Previous wording

Other income (expense), net decreased $7.6 million, or 236%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily due to a $5.5 million loss on extinguishment of debt recognized in the three months ended June 30, 2024, a $1.6 million decrease in interest income on our investment portfolio due to a smaller invested cash balance in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, and a $0.6 million loss on transfer of our subsidiary in India.

Current wording

Other income (expense), net increased $8.1 million, or 307%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to an $9.2 million gain on sale of insurance business in connection with the strategic partnership recognized in the three months ended September 30, 2024, offset by a $1.3 million decrease in interest income on our investment portfolio due to a smaller invested cash balance in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Previous wording

Revenue decreased $4.7 million, or 6%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, driven by a decrease in Title segment revenue of $2.2 million, or 9%, primarily due to the lower volume of title orders, and a decrease in Blend Platform revenue of $2.5 million, or 5%. Within Blend Platform revenue, Mortgage Suite revenue decreased $6.5 million, or 16%, primarily due to the lower volume of mortgage banking transactions with our customers, Consumer Banking Suite revenue increased $3.7 million, or 33%, primarily due to the increase from new deployments and incremental platform fees, as well as the increase in close and home equity transactions, and Professional Services revenue increased by $0.4 million, or 9%, primarily due to an increase in professional services associated with the support of our platform.

Current wording

Revenue remained flat for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven by the offsetting impact of a decrease in Title segment revenue of $2.1 million, or 6%, primarily due to the lower volume of title orders, and an increase in Blend Platform revenue of $2.0 million, or 2%. Within Blend Platform revenue, Mortgage Suite revenue decreased $5.3 million, or 9%, primarily due to the lower volume of mortgage banking transactions with our customers, Consumer Banking Suite revenue increased $7.0 million, or 41%, primarily due to the increase in home equity transactions and incremental platform fees, due to new deployments, and an increase in attach rates of our digital closing solution, and Professional Services revenue increased by $0.3 million, or 5%, primarily due to an increase in professional services associated with the support of our platform.

Previous wording

Cost of revenue decreased $5.2 million, or 13%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, driven by a decrease of $4.6 million, or 19% within the Title segment, primarily due to a decrease in personnel related expenses, attributable to a decrease in headcount related to our restructuring actions, as well as the lower volume of title orders, and a decrease in Blend Platform cost of revenue of $0.6 million, or 4%, primarily due to the lower volume of mortgage banking transactions.

Current wording

Cost of revenue decreased $4.5 million, or 8%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven by a decrease of $3.9 million, or 11% within the Title segment, primarily due to a decrease in personnel related expenses, attributable to a decrease in headcount related to our restructuring actions, as well as the lower volume of title orders, and a decrease in Blend Platform cost of revenue of $0.7 million, or 3%, primarily due to the lower volume of mortgage banking transactions.

Previous wording

Gross margin was 53% for the six months ended June 30, 2024 compared to 49% for the six months ended June 30, 2023. Within Blend Platform segment, gross profit decreased by $1.9 million, while gross margin was 69% in the six months ended June 30, 2024 and 2023. The decrease in gross profit was primarily due to lower Blend Platform revenue. Within the Title segment, gross profit increased by $2.3 million while gross margin increased to 15% in the six months ended June 30, 2024 as compared to 4% in the six months ended June 30, 2023 due to operating efficiencies and ongoing cost optimizations.

Current wording

Gross margin was 55% for the nine months ended September 30, 2024 compared to 51% for the nine months ended September 30, 2023. Within Blend Platform segment, gross profit increased by $2.6 million, while gross margin increased to 71% in the nine months ended September 30, 2024 as compared to 70% in the nine months ended September 30, 2023. The increase in gross profit was primarily due to lower cost of revenue. Within the Title segment, gross profit increased by $1.8 million while gross margin increased to 14% in the nine months ended September 30, 2024 as compared to 8% in the nine months ended September 30, 2023 due to operating efficiencies and ongoing cost optimizations.

Previous wording

Research and development expenses decreased $9.2 million, or 42%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily due to a $4.9 million decrease in personnel related expenses and a $1.8 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $2.3 million decrease due to the capitalization of internal-use software development costs and a $0.5 million decrease in software and hosting costs.

Current wording

Research and development expenses decreased $29.9 million, or 45%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily due to a $12.6 million decrease in personnel related expenses and a $7.0 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $9.0 million decrease due to the capitalization of internal-use software development costs and a $1.3 million decrease in software and hosting costs.

Previous wording

Sales and marketing expenses decreased $14.1 million, or 42%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily due to a $7.5 million decrease in personnel related expenses, and a $2.9 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $1.3 million decrease in commissions, a $1.1 million decrease in advertising and promotion expenses, a $0.7 million decrease in software and hosting costs and a $0.5 million decrease in trade shows and conference costs.

Current wording

Sales and marketing expenses decreased $18.7 million, or 39%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily due to a $9.5 million decrease in personnel related expenses and a $3.6 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $2.7 million decrease in commissions, a $1.3 million decrease in advertising and promotion expenses, a $1.0 million decrease in software and hosting costs and a $0.5 million decrease in trade shows and conference costs.

Previous wording

General and administrative expenses decreased $7.1 million, or 36%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was due to a $3.6 million decrease in stock-based compensation expense, primarily attributable to vesting of the second tranche of Head of Blend options in 2023 and a decrease in headcount related to our restructuring actions, which was also a driver of a $1.2 million decrease in personnel related expenses, a $0.6 million decrease in professional and outside services costs, a $0.6 million decrease in insurance expenses, and a $0.6 million decrease in software and hosting costs.

Current wording

General and administrative expenses decreased $16.5 million, or 29%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was due to a $4.6 million decrease in stock-based compensation expense, primarily attributable to vesting of the second tranche of Head of Blend options in 2023 and a decrease in headcount related to our restructuring actions, which also contributed to a $5.7 million decrease in personnel related expenses, a $1.9 million decrease in external consulting expenses, a $1.7 million decrease in insurance expenses, a $1.4 million decrease in professional and outside services costs and a $1.4 million decrease in software and hosting costs.

Previous wording

Restructuring expenses decreased $13.9 million, or 92%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 due to the execution of the January 2023 workforce reduction plan, which was larger than the January 2024 workforce reduction plan. The restructuring charges included cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs.

Current wording

Restructuring expenses decreased $16.9 million, or 70%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to the execution of the January 2023 and August 2023 workforce reduction plans, which were larger than the January 2024 and September 2024 workforce reduction plans. This decrease in workforce-related restructuring expenses was partially offset by an increase in facilities-related restructuring charges incurred for the nine months ended September 30, 2024. The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs.

Previous wording

Interest expense decreased $8.8 million, or 57%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to the optional prepayment of the outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million on November 27, 2024 and repayment of all remaining amounts outstanding and payable under the Credit Agreement in an aggregate amount of $146.1 million on April 29, 2024. The borrowings under the Credit Agreement accrued interest at a floating rate which could be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%. The effective interest rate on our Term Loan was approximately 14.55% as of April 29, 2024, the date of its termination.

Current wording

Interest expense decreased $17.0 million, or 72%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to the optional prepayment of the outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million on November 27, 2023 and repayment of all remaining amounts outstanding and payable under the Credit Agreement in an aggregate amount of $146.1 million on April 29, 2024. The borrowings under the Credit Agreement accrued interest at a floating rate which could be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%. The effective interest rate on our Term Loan was approximately 14.55% as of April 29, 2024, the date of its termination.

Previous wording

Other income (expense), net decreased $4.9 million, or 80%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily due to the $5.5 million loss on extinguishment of debt recognized in the six months ended June 30, 2024, a $3.3 million decrease in interest income on our investment portfolio due to a smaller invested cash balance in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, and a $0.6 million loss on transfer of our subsidiary in India, offset by the $4.4 million gain on investment on non-marketable equity securities recognized in the six months ended June 30, 2024 due to an observable price change.

Current wording

Other income (expense), net increased $3.2 million, or 37%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily due to an $9.2 million gain on sale of insurance business in connection with the strategic partnership, a $4.4 million gain on investment on non-marketable equity securities due to an observable price change, offset by a $5.5 million loss on extinguishment of debt recognized in the nine months ended September 30, 2024, a $4.6 million decrease in interest income on our investment portfolio due to a smaller invested cash balance in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, and a $0.6 million loss on transfer of our subsidiary in India.

Previous wording

The decrease in income tax expense for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was immaterial.

Current wording

The decrease in income tax expense for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was immaterial.

Previous wording

Since our inception, we have financed our operations primarily through proceeds from the issuance of our stock and warrants and cash generated from the sale of our product offerings, as well as debt financing. As of June 30, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $112.6 million. Cash and cash equivalents are comprised of bank deposits and money market funds. Marketable securities are comprised of U.S. treasury and agency securities, commercial paper, and corporate debt securities. Most of our cash and cash equivalents are held in the United States.

Current wording

Since our inception, we have financed our operations primarily through proceeds from the issuance of our stock and warrants and cash generated from the sale of our product offerings, as well as debt financing. As of September 30, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $116.8 million. Cash and cash equivalents are comprised of bank deposits and money market funds. Marketable securities are comprised of U.S. treasury and agency securities, commercial paper, and corporate debt securities. Most of our cash and cash equivalents are held in the United States.

Previous wording

We have generated significant losses from operations and negative cash flows from operating activities in the past as reflected in our accumulated deficit of $1,381.7 million as of June 30, 2024. We expect to continue to incur operating losses for the foreseeable future due to the investments that we intend to make in our business and the pressures on revenue growth due to the current macroeconomic environment and, as a result, we may require additional capital resources to grow our business.

Current wording

We have generated significant losses from operations and negative cash flows from operating activities in the past as reflected in our accumulated deficit of $1,384.1 million as of September 30, 2024. We may incur operating losses in the future due to the investments that we intend to make in our business and pressures on revenue growth due to the recent macroeconomic environment, and as a result, we may require additional capital resources to grow our business.

Previous wording

On August 7, 2024, our board of directors authorized the repurchase of up to $25.0 million of our Class A common stock. Repurchases may be made from time to time through open market repurchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. The repurchase program does not obligate us to acquire any particular amount of our Class A common stock, and it may be suspended at any time at our discretion. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. The share repurchase program has no set expiration date.

Current wording

In August 2024, we announced the authorization of a share repurchase program for the repurchase of shares of our Class A common stock, in an aggregate amount up to $25 million. Repurchases may be made at out discretion from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements, and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our Class A common stock under this authorization. The share repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares of our Class A common stock. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. During the three and nine months ended September 30, 2024, we did not repurchase any of our Class A common stock under our share repurchase program. As of September 30, 2024, approximately $25 million remained authorized and available under our share repurchase program for future share repurchases. Please refer to Note 11, Stockholder’s Equity, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Previous wording

After the termination of the Credit Agreement, our material cash requirements arising from known contractual and other obligations primarily relate to lease obligations for our office locations and purchase commitments. Other than the termination of one of our leases and the transfer of lease obligations in connection with the transfer of our subsidiary in India to a third-party described in Note 7, Leases, there have been no significant changes in our material cash requirements from the contractual obligations described in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

After the termination of the Credit Agreement, our material cash requirements arising from known contractual and other obligations primarily relate to lease obligations for our office locations and purchase commitments. Other than the changes in our lease obligations described in Note 7, Leases, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there have been no significant changes in our material cash requirements from the contractual obligations described in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

We believe that current cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next 12 months. Our future capital requirements, however, will depend on continued growth in our customer base, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced products and features, the continuing market adoption of Blend’s software platform, and the effectiveness of our efforts to improve cost efficiency. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition would be adversely affected. See the section titled “Risk Factors—Risks Related to Our Business—Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations.”

Current wording

We believe that current cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next 12 months. Our future capital requirements, however, will depend on continued growth in our customer base, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced products and features, the continuing market adoption of Blend’s software platform, and the effectiveness of our efforts to improve cost efficiency. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights; additionally, we may repurchase shares of our Class A common stock from time to time under our share repurchase program. In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition would be adversely affected. See the section titled “Risk Factors—Risks Related to Our Business—Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations.”

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 and 2023 was $10.5 million and $81.0 million, respectively. The decrease in cash used in operations reflects our net loss adjusted for noncash items, such as charges associated with stock-based compensation, depreciation and amortization, gain on investment in equity securities, amortization of deferred contract costs, amortization of operating lease right-of-use assets, and amortization of debt discount and issuance costs on our long-term debt, loss on debt extinguishment, and changes in operating assets and liabilities. Fluctuations in operating assets and liabilities are affected primarily by changes in trade and other receivables, prepaid expenses and other current assets, accrued compensation, deferred revenue, accounts payable and other liabilities.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 and 2023 was $8.5 million and $106.9 million, respectively. The decrease in cash used in operations reflects our net loss adjusted for noncash items, such as charges associated with stock-based compensation, depreciation and amortization, gain on investment in equity securities, amortization of deferred contract costs, amortization of operating lease right-of-use assets, and amortization of debt discount and issuance costs on our long-term debt, loss on debt extinguishment, gain on sale of insurance business, and changes in operating assets and liabilities. Fluctuations in operating assets and liabilities are affected primarily by changes in trade and other receivables, prepaid expenses and other current assets, accrued compensation, deferred revenue, accounts payable and other liabilities.

Previous wording

Net cash provided by investing activities during the six months ended June 30, 2024 was $35.5 million, which was primarily due to sales of marketable securities of $100.3 million and maturities of marketable securities of $15.6 million, offset by $76.5 million used in the purchase of marketable securities and $3.8 million in additions of property and equipment, primarily related to capitalized internal-use software development costs.

Current wording

Net cash provided by investing activities during the nine months ended September 30, 2024 was $47.3 million, which was primarily due to sales of marketable securities of $100.3 million and maturities of marketable securities of $41.9 million, $9.1 million proceeds from sale of insurance business, offset by $96.4 million used in the purchase of marketable securities and $7.3 million in additions of property and equipment, primarily related to capitalized internal-use software development costs.

Previous wording

Net cash provided by investing activities during the six months ended June 30, 2023 was $2.3 million, which was primarily due to the maturities of marketable securities of $197.7 million, offset by purchases of $195.0 million of marketable securities and $0.5 million in purchases of property and equipment.

Current wording

Net cash provided by investing activities during the nine months ended September 30, 2023 was $74.1 million, which was primarily due to the maturities of marketable securities of $277.9 million, offset by purchases of $203.3 million of marketable securities and $0.5 million in purchases of property and equipment.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2024 was $10.5 million, primarily consisting of $144.5 million repayment of long-term debt, $9.1 million payment of issuance costs related to the Series A Preferred Stock and the Warrant, payment of taxes related to net share settlement of equity awards of $7.0 million, offset by $149.4 million proceeds from the issuance of Series A Preferred Stock and the Warrant, and proceeds from the exercises of stock options of $0.7 million.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2024 was $14.7 million, primarily consisting of $144.5 million repayment of long-term debt, $9.5 million payment of issuance costs related to the Series A Preferred Stock and the Warrant, payment of taxes related to net share settlement of equity awards of $11.0 million, offset by $149.4 million proceeds from the issuance of Series A Preferred Stock and the Warrant, and proceeds from the exercises of stock options of $0.9 million.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2023 was $3.5 million, primarily consisting of payment of taxes related to net share settlement of equity awards.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2023 was $4.9 million, primarily consisting of payment of taxes related to net share settlement of equity awards.

Previous wording

We administer escrow and trust deposits held at third-party financial institutions representing funds received under real estate contracts, escrowed funds received under escrow agreements, and/or undisbursed amounts received for settlement of mortgage and home equity loans. Cash held for these purposes was approximately $3.9 million, net of outstanding checks in transit of $26.7 million as of June 30, 2024. These funds are not considered assets of ours and, therefore, are not included in our unaudited condensed consolidated balance sheet; however, we are contingently liable for the disposition of these funds on behalf of consumers.

Current wording

We administer escrow and trust deposits held at third-party financial institutions representing funds received under real estate contracts, escrowed funds received under escrow agreements, and/or undisbursed amounts received for settlement of mortgage and home equity loans. Cash held for these purposes was approximately $23.2 million, net of outstanding checks in transit of $35.8 million as of September 30, 2024. These funds are not considered assets of ours and, therefore, are not included in our unaudited condensed consolidated balance sheet; however, we are contingently liable for the disposition of these funds on behalf of consumers.