Real Estate

Blend prevents loss of mortgage income and minimizes losses.

The mortgage tech and cloud banking software provider says it is debt-free and on a fast track to profitability, thanks to a $150 million cash injection from Haveli Investments.

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Cloud banking software provider Blend Labs Inc. says it is quickly on its way to profitability despite continued declines in income from its mortgage customers, thanks to a $150 million cash injection from Mansion Investments.

“Bland is now debt-free and has achieved its best-ever free cash flow and operating income quarter as a public company, despite persistently high interest rates in the mortgage industry,” the company said Wednesday. Announcement A net loss of $20.7 million in the first quarter.

Blend lost $66.2 million during Q1 2023 on its way to posting a 2023 net loss of $179.9 million. The improvement in net loss was due to the fact that while Q1 revenue was down 6 percent from a year ago to $34.9 million, Blend was able to cut operating expenses faster — by 49 percent. 39.3 million dollars.

While revenue from services Blend provides to its consumer banking customers rose 29 percent to $6.7 million from a year ago, revenue from the company’s title segment fell 12 percent to $11.1 million. Blend’s biggest source of revenue — the services it provides to mortgage lenders — also fell 15 percent to $15.1 million from a year ago.

Blend said its platform handled 14.1 percent fewer mortgage transactions during Q1 2024 than a year earlier, with refinancing volume the biggest hit.

“We attribute the majority of this decline to relatively high interest rates, declining housing affordability, and uncertain global political and economic conditions,” Bland further elaborated. Quarterly report to investors.

But the big news for Bland was a development it announced after the quarter ended on April 29 — a $150 million private equity cash injection from Austin, Texas-based Mansion Investments, which Bland used to pay down debt. used for Title insurance business by acquiring Title365 in 2021.

Blended mortgage loan servicer Mr. Cooper financed part of the deal with $422 million, a $225 million term loan and a $25 million revolving line of credit for a 90 percent stake in Title 365. Two weeks later, Blend raised nearly $360 million in an initial public offering.

Nima Ghamsari

“This is a big deal for our company,” Blend CEO Neema Ghamsari said on a call with investment analysts on Wednesday. “By recapitalizing our balance sheet, we have removed the pressure of any near-term capital obligations and can focus unreservedly on what is most important to us: our customers. To serve and build for the long term through innovative solutions that enable our customers, mortgage companies and consumer banks to better serve their customers.

Blend expects to save $18 million in annual interest expense, “which we expect will help us achieve our goal of generating positive cash flow sooner than we previously planned,” Ghamsari said. “

“It’s important to emphasize that this investment has no coupon,” Ghamsari said. “The Haveli team is making a long-term bet on the company’s technical, financial and customer success, and is fully aligned to grow the business.”

Brian Sheth, founder and chief investment officer of Haveli, is joining Blend’s board of directors as part of the terms of the deal.

Bland said it expects a non-GAAP net operating loss of between $7.5 million and $10.5 million, which would represent an improvement from $11.2 million in Q1.

Shares in BlendThe stock, which has traded as low as 80 cents and as high as $3.40 in the past 12 months, was up 6 percent in after-hours trading after the earnings release, closing at $2.36 on Wednesday.

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