Blend Labs, Inc.

Previous wording

The mortgage market is heavily influenced by government policies and overall economic conditions. The real estate environment, including interest rates and the general economic environment, typically impacts the demand for mortgage and mortgage related products. Since 2022, increases in interest rates due to efforts by the Federal Reserve to manage rising inflation, combined with ongoing supply constraints, have resulted in a relative decline in mortgage origination activity, followed by a slight increase in 2024 as compared to 2023, based on the estimates of the industry forecasters.

Current wording

The mortgage market is heavily influenced by government policies and overall economic conditions. The real estate environment, including interest rates and the general economic environment, typically impacts the demand for mortgage and mortgage related products.

Previous wording

In the second quarter of 2025, we saw an increase in mortgage transactions on our software platform compared to the first quarter of 2025, which can primarily be attributed to seasonal trends. We expect that the aggregate industry mortgage originations in the third quarter of 2025 will be largely in line with the second quarter of 2025 volumes based on application volume observed to date through our customer base and our analysis of the latest relevant macroeconomic data.

Current wording

In the third quarter of 2025, we saw a decrease in mortgage transactions on our software platform compared to the second quarter of 2025, which can primarily be attributed to seasonal trends. We expect that the aggregate industry mortgage originations in the fourth quarter of 2025 will be largely in line with the third quarter of 2025 volumes based on application volume observed to date through our customer base and our analysis of the latest relevant macroeconomic data.

Previous wording

We generate revenue from fees paid by customers to access our software platform and complete the transactions. Fees are assessed based on completed transactions, such as a funded loan, new account opening, closing transaction or API call. Completed transaction fees are determined by the number and type of software platform components that are needed to support each product offering. We do not charge for abandoned or rejected applications, even though they cause us to incur costs related to these applications. Arrangements with our customers do not provide the contractual right to take possession of our software at any point in time. Revenue is recognized when access to our platform is provisioned to our customers or as transactions are completed, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We also generate revenue from providing access to Blend Builder, professional services related to the deployment of our platform, premier support services, and consulting services. We also earn revenue from third-party providers which integrate their marketplaces into our platform for services such as property and casualty insurance. We typically charge third-party providers a combination of fixed and variable license fees.

Current wording

We generate revenue from fees paid by customers to access our software platform and complete transactions, such as funded loan, new account opening, closing transaction, or API call. Transaction fees are assessed based on completed transactions and are determined by the number and type of software platform components that are needed to support each product offering. We do not charge for abandoned or rejected applications, even though they cause us to incur costs related to these applications. Arrangements with our customers do not provide the contractual right to take possession of our software at any point in time. Revenue is recognized when access to our platform is provisioned to our customers or as transactions are completed, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We also generate revenue from providing access to Blend Builder, professional services related to the deployment of our platform, premier support services, and consulting services. We also earn revenue from third-party providers which integrate their marketplaces into our platform for services such as property and casualty insurance. We typically charge third-party providers a combination of fixed and variable license fees.

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.

Current wording

Other income (expense), net consists primarily of interest income earned from our investment portfolio, as well as adjustments to the carrying value of investment in non-marketable equity securities.

Previous wording

(2) Net of $1.1 million and $2.3 million of additions to capitalized internal-use software for the three and six months ended June 30, 2025, and $0.5 million and $1.1 million for the three and six months ended June 30, 2024.

Current wording

(2) Net of $0.6 million and $2.9 million of additions to capitalized internal-use software for the three and nine months ended September 30, 2025, and $0.8 million and $1.9 million for the three and nine months ended September 30, 2024.

Previous wording

•Mortgage Suite revenue decreased by $0.5 million, or 3%, primarily due to a decrease in homeowner’s insurance revenue related to the Strategic Partnership and Sale of Insurance Business (Refer to Note 3, Revenue Recognition and Contract Costs)and verification of income revenue in connection with transition to the partnership model, offset by overall mortgage market growth.

Current wording

•Mortgage Suite revenue decreased by $3.8 million, or 18%, primarily due to a decrease in homeowner’s insurance revenue related to the Strategic Partnership and Sale of Insurance Business (Refer to Note 3, Revenue Recognition and Contract Costs), verification of income revenue in connection with transition to the partnership model, customer churn, and the impact of renewal pricing in one of our large contracts, partially offset by overall mortgage market growth.

Previous wording

•Consumer Banking Suite revenue increased by $6.4 million, or 43%, primarily due to an increase in home equity and deposit account opening transaction volumes and an increase in attach rates of our digital closing solution.

Current wording

•Consumer Banking Suite revenue increased by $3.2 million, or 34%, primarily due to deployments of several large customers, resulting in an increase in home equity and deposit account opening revenue.

Previous wording

•Professional Services revenue decreased by $0.1 million, or 4%, primarily due to a decrease in consulting services, partially offset by an increase in professional services associated with the support of our platform.

Current wording

•Professional Services revenue increased by $0.4 million, or 18%, primarily due to an increase in consulting services and an increase in professional services associated with the support of our platform.

Previous wording

Cost of revenue decreased by $0.1 million, or 2%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to a decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions.

Current wording

Cost of revenue decreased by $0.2 million, or 2%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to a decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions.

Previous wording

Research and development expenses decreased by $5.6 million, or 43%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decrease was primarily due to a $2.3 million increase in the capitalization of internal-use software development costs, as well as 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.

Current wording

Research and development expenses decreased by $1.6 million, or 16%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The decrease was primarily due to a $2.3 million decrease in personnel related expenses and a $0.8 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, offset by a $1.4 million increase in the capitalization of internal-use software development costs.

Previous wording

Sales and marketing expenses decreased by $2.1 million, or 23%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decrease was primarily due to a $1.4 million decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions and a $0.6 million decrease in commissions.

Current wording

Sales and marketing expenses decreased by $1.6 million, or 17%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The decrease was primarily due to a $1.4 million decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions.

Previous wording

General and administrative expenses increased by $2.2 million, or 20%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily due to a $1.9 million increase in stock-based compensation expense attributable to executive PSUs as well as a $0.3 million increase in professional and outside services costs.

Current wording

General and administrative expenses increased by $1.4 million, or 12%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily due to a $1.8 million increase in stock-based compensation expense attributable to executive PSUs, partially offset by a $0.2 million decrease in personnel related expenses attributable to a decrease in headcount as well as a $0.3 million decrease in facilities costs, each related to our restructuring actions.

Previous wording

Restructuring expenses decreased by $0.1 million, or 75%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to the 2024 workforce reduction plan being larger than the 2025 workforce reduction plan. The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, employee benefits, payroll taxes and related facilitation costs.

Current wording

Restructuring expenses decreased by $4.6 million, or 98%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to the 2024 workforce reduction plan being larger than the 2025 workforce reduction plan. The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, employee benefits, payroll taxes and related facilitation costs.

Previous wording

Other income (expense), net increased by $0.9 million, or 78%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily due to a $5.5 million loss on extinguishment of debt recognized in the three months ended June 30, 2024, offset by a $4.4 million gain on investment on non-marketable equity securities due to an observable price change in the same period.

Current wording

Other income (expense), net increased by $6.7 million, or 63%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to a $16.6 million gain on investment on non-marketable equity securities due to an observable price change in three months ended September 30, 2025, partially offset by a $9.2 million gain on sale of insurance business during the three months ended September 30, 2024.

Previous wording

•Mortgage Suite revenue decreased by $0.9 million, or 3%, primarily due to a decrease in homeowner’s insurance revenue related to the Strategic Partnership and Sale of Insurance Business (Refer to Note 3, Revenue Recognition and Contract Costs)and verification of income revenue in connection with transition to the partnership model, offset by overall mortgage market growth.

Current wording

•Mortgage Suite revenue decreased by $4.7 million, or 9%, primarily due to a decrease in homeowner’s insurance revenue related to the Strategic Partnership and Sale of Insurance Business (Refer to Note 3, Revenue Recognition and Contract Costs), verification of income revenue in connection with transition to the partnership model, customer churn, and the impact of renewal pricing in one of our large contracts, partially offset by overall mortgage market growth.

Previous wording

•Consumer Banking Suite revenue increased by $3.4 million, or 43%, primarily due to an increase in home equity and deposit account opening transaction volumes and an increase in attach rates of our digital closing solution.

Current wording

•Consumer Banking Suite revenue increased by $9.6 million, or 40%, primarily due to deployments of several large customers, resulting in an increase in home equity and deposit account opening revenue and an increase in attach rates of our digital closing solution.

Previous wording

•Professional Services revenue increased by $0.3 million, or 7%, primarily due to an increase in professional services associated with the support of our platform.

Current wording

•Professional Services revenue increased by $0.7 million, or 11%, primarily due to an increase in professional services associated with the support of our platform.

Previous wording

Cost of revenue decreased by $0.1 million, or 1%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily driven by a decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions.

Current wording

Cost of revenue decreased by $0.3 million, or 1%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily driven by a decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions.

Previous wording

Gross profit increased by $3.0 million, or 15% for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to increased revenue. Gross margin was 74% for the three months ended June 30, 2025 compared to 71% for the three months ended June 30, 2024. The increase in gross profit was primarily due to expanding Consumer Banking Suite revenue while keeping consistent cost of revenue as the Company continues to focus on operational efficiency.

Current wording

Gross profit increased by $5.8 million, or 10%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to increased revenue. Gross margin was 73% for the nine months ended September 30, 2025 compared to 71% for the nine months ended September 30, 2024. The increase in gross profit was primarily due to expanding Consumer Banking Suite revenue while decreasing cost of revenue as we continue to focus on operational efficiency.

Previous wording

Research and development expenses decreased by $12.2 million, or 45%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease was primarily due to a $5.4 million increase in the capitalization of internal-use software development costs, as well as a $4.4 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.

Current wording

Research and development expenses decreased by $13.9 million, or 37%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease was primarily due to a $4.0 million increase in the capitalization of internal-use software development costs, as well as a $6.7 million decrease in personnel related expenses and a $2.6 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions.

Previous wording

Sales and marketing expenses decreased by $4.6 million, or 25%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease was primarily due to a $3.2 million decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions and a $1.3 million decrease in commissions.

Current wording

Sales and marketing expenses decreased by $6.2 million, or 22%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease was primarily due to a $4.7 million decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions and a $1.6 million decrease in commissions.

Previous wording

General and administrative expenses increased by $1.1 million, or 5%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily due to a $1.9 million increase in stock-based compensation expense attributable to executive PSUs, a $1.2 million increase in professional and outside services costs, offset by a $2.4 million decrease in personnel related expenses related to our restructuring actions.

Current wording

General and administrative expenses increased by $2.5 million, or 7%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily due to a $3.7 million increase in stock-based compensation expense attributable to executive PSUs, a $1.0 million increase in professional and outside services costs, offset by a $2.6 million decrease in personnel related expenses related to our restructuring actions.

Previous wording

Restructuring expenses decreased by $0.3 million, or 31%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to the 2024 workforce reduction plan being larger than the 2025 workforce reduction plan. The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, employee benefits, payroll taxes and related facilitation costs.

Current wording

Restructuring expenses decreased by $4.9 million, or 85%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to the 2024 workforce reduction plan being larger than the 2025 workforce reduction plan. The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, employee benefits, payroll taxes and related facilitation costs.

Previous wording

Interest expense decreased $6.7 million, or 100%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to the 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 $6.7 million, or 100%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to the 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

The decrease in income tax expense for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. was immaterial.

Current wording

The decrease in income tax expense for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 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, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $88.3 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, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $77.3 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 $1,400.9 million as of June 30, 2025. 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.

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 $1,388.3 million as of September 30, 2025. 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

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 six months ended June 30, 2025, we repurchased and retired 344,666 and 1,267,662 shares of our Class A common stock for $1.0 million and $4.1 million, respectively. As of June 30, 2025, approximately $20.9 million remained authorized and available under our share repurchase program for future share repurchases. Refer to Note 10, Stockholder’s Equity, of the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, for additional information.

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, 2025, we repurchased and retired 1,589,809 and 2,857,471 shares of our Class A common stock for $5.1 million and $9.2 million, respectively. As of September 30, 2025, approximately $15.8 million remained authorized and available under our share repurchase program for future share repurchases. Refer to Note 10, Stockholder’s Equity, of the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, for additional information.

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2025 was $14.8 million and net cash used in operating activities for the six months ended June 30, 2024 was $6.3 million. The change in cash from 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, 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, deferred contract costs, accrued compensation, deferred revenue, accounts payable and other liabilities.

Current wording

Net cash provided by operating activities for the nine months ended September 30, 2025 was $12.1 million and net cash used in operating activities for the nine months ended September 30, 2024 was $5.0 million. The change in cash from 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, 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, deferred contract costs, accrued compensation, deferred revenue, accounts payable and other liabilities.

Previous wording

Cash (Used in) Provided by Investing Activities

Current wording

Cash Provided by Investing Activities

Previous wording

Net cash used in investing activities during the six months ended June 30, 2025 was $7.5 million, which was primarily due to $23.7 million used in the purchase of marketable securities and $8.3 million in additions to property and equipment, primarily related to capitalized internal-use software development costs, and a $4.0 million investment in non-marketable equity securities, offset by maturities of marketable securities of $27.7 million.

Current wording

Net cash used in investing activities during the nine months ended September 30, 2025 was $20.0 million, which was primarily due to the sale of available-for-sale securities of $20.8 million and maturities of marketable securities of $44.2 million, offset by $30.5 million used in the purchase of marketable securities and $10.6 million in additions to property and equipment, primarily related to capitalized internal-use software development costs, and a $4.0 million investment in non-marketable equity securities.

Previous wording

Net cash provided by investing activities during the six months ended June 30, 2024 was $35.6 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 to property and equipment 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, maturities of marketable securities of $41.9 million, proceeds from sale of insurance business of $9.1 million, offset by $96.4 million used in the purchase of marketable securities and $7.2 million in additions to property and equipment related to capitalized internal-use software development costs.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2025 was $8.8 million, primarily consisting of payment of taxes related to net share settlement of equity awards of $5.5 million and $4.1 million related to share repurchases, offset by $0.8 million proceeds from the exercises of stock options.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2025 was $15.0 million, primarily consisting of payment of taxes related to net share settlement of equity awards of $7.4 million and $9.1 million related to share repurchases, offset by $1.5 million proceeds from the exercises of stock options.

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 Haveli 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 Haveli Warrant, and proceeds from the exercises of stock options of $0.9 million.