Blend Labs, Inc. (NYSE:BLND) Q3 2023 Earnings Call Transcript

But we’re not just focused on the challenges to now, we’re also building for the future and staying on offense for our customer base. One example of that is we’ve recently begun building and testing Blend Copilot, which is our AI-powered assistant that allows loan officers to be more efficient and offer a far more personalized touch for their prospective borrowers. I’m thrilled with the early interest we’ve been seeing on that. We have over 50 customers and prospects who signed up for the waiting list and after we first see with the capability and we’re continuing to explore with them over time. So to recap, we’ll continue to stand by our customers during this time by delivering leading products that have a tangible return on investment and that help our customers continue to outperform the market average in the mortgage industry.

Shifting gears a bit. In addition to mortgage, we’re also focused on growing adoption of our Builder enabled consumer banking products, which as I mentioned earlier is generating double-digit consumer banking revenue growth for Blend this quarter. This is quickly becoming the biggest revenue opportunity for us next year as we see interest continue to build. And as a result we believe that the revenue growth will accelerate from here. As we mentioned at Investor Day thanks to our Builder Platform, we are now able to get customers deployed in live much faster than before. Many of our new engagements this quarter have been able to kick off within a couple of weeks. As an example of this, we just recently signed a new credit union and are already tracking towards an early January launch.

This time line represents a meaningful acceleration to what we could accomplish even a year ago and something our customers really love about Blend. And we’re encouraged by the urgency our customers have to deploy this value-accretive solution quickly within their business. On top of that, our Consumer Banking solutions are showing significant uplift and efficiency for our customers once lot. We recently expanded our relationship with our regional credit unions taking a unified product experience that has not only simplified their support structure, but also driven increased conversion rates, accelerated onboarding and enhance their overall banking experience. This collaboration has led to substantial improvements. Most notably it reduced manual processing time for deposit accounts from 11 days down to just seven minutes, and additionally mortgage applications that took two weeks are now completed in under an hour.

So overall the team has been able to save over 9,000 manual hours of processing time already, facilitated by dynamic real-time integrations, and a great experience ultimately allowing their team to redirect their efforts towards assisting members rather than processing applications. It’s clear that our customers are increasingly recognizing the value of Blend’s Platform and Blend Builder as the single foundation for their entire ecosystem, enabling them to leverage the speed, flexibility and data across business lines to deliver the highly personalized experiences and recommendations faster and better than they have been able to before. And as we convert more and more of our customers to Blend Builder, they’re well-positioned with our technology to grow their business and their deposit bases, increasing revenue and profitability as a result, which is so important to us to be able to support that kind of success.

And that’s the core of our builder driven growth strategy, which will continue to be a focus area for us going forward. Before passing it over to Amir, I want to briefly touch on something that’s very important to us right now, which is the progress we’ve made on our path to profitability and our cost management efforts. I’m pleased to share that we’re ahead of our cost saving targets that we set out last year. Back then, we told you that we expected to reduce our non-GAAP net operating losses to $20 million per quarter by the end of 2023, we’ve now reported two quarters below this target, reducing our non-GAAP net operating loss to negative $15.9 million in the most recent quarter, well within our narrow guidance range. I also want to call it our Title business, which in Q3 returned to the high teens gross margin, which — this is an encouraging signal, because we found the right operating model even amidst historically low macroeconomic environment for this business.