Blend Labs made a small profit in the second quarter, but this was entirely due to a one-time income tax benefit, otherwise the company would have posted another loss in the reporting period.
In addition, the numbers do not reflect the Title365 acquisition as the transaction did not close until June 30th. The San Francisco-based company completed its IPO on July 16.
Blend posted net income of $ 5.8 million for the second quarter, including a release of $ 45.3 million from its historic deferred tax impairment related to the Title365 acquisition. The company presented a non-GAAP net loss of $ 26.2 million, which includes stock-based payments and acquisition-related expenses. During the conference call, the company reported a pro forma net loss of $ 31.2 million as if it owned Title365 for the quarter.
"Over the past few months we have been growing our sales quarter by quarter, despite the decline in mortgage volume in the country, Blend boss said during the call.
In the first quarter, Blend posted a net loss of $ 27.1 million, compared with a loss of $ 20.6 million a year ago.
Even without Title365, the company's revenue rose to $ 32.1 million in the second quarter from $ 31.9 million in the first quarter and $ 21.9 million in the second quarter of 2020.
"This growth was characterized by strong transaction volumes, which shows increased use and acceptance of our platform, although total mortgage lending in the industry remained roughly the same in the previous year," said Marc Greenberg, Head of Finance.
For the remainder of the year, Blend's revenue will come from two sources, Greenberg said: platform revenue, which will consist of its mortgage and consumer banking products, its home travel marketplaces, and any new products it launches; and from the business generated through Title365.
"Our guidance continues to reflect Fannie and MBA's guidance last month, and we have a really solid start to the third quarter," said Greenberg. "If the volume is higher than these industry forecasts predict, there is definitely room for upward trends."
For the full year, Blend expects sales between 226 million and 232 million US dollars; on a pro forma basis, if Title365 had owned the company for the full year, revenue would be $ 365 million and $ 371 million, respectively.
"Our mortgage business continues to grow, but as we expand into other lines of products outside of the mortgage business, such as personal loans, deposit accounts, credit cards, these price points are different," said Ghamsari. "As a result, the total transaction volume will continue to increase, [but] the dollars per transaction that we receive from the revenue from banking transactions will decrease."
As Blend's product mix shifts more towards consumer banking, the company will be less exposed to the volatility of the mortgage market, Greenberg said.
The integration of Title365 has not brought any surprises so far, adds Tim Mayopoulos, President of Blend.
"We are very pleased that we were able to keep a really talented management team and the most important people there," said Mayopoulos. "We are making good progress with the necessary integration and have prioritized this within our company."
In addition, Title365's former owner and largest customer, Mr. Cooper, is moving to the Blend software platform. “We started deployment in the early third quarter and expect Mr. Cooper to go live on Blend in the first half of next year,” Mayopoulos said. "We also expect to be able to start pilot projects with some of the mutual customers we have between Blend and Title365 before the end of the year."