Q2 2023 Blend Labs Inc Earnings Call
Good afternoon, and welcome to <unk> second quarter 2023 earnings Conference call.
My name is Winnie Lang and I'm head of legal for the company.
Leading today's call I mean, like I'm, sorry, cofounder and had a flattened and EMEA Jafari I'll head of finance and administration.
After the prepared remarks, our team will take questions moderated by our Investor Relations Leanne, Brian Nicholas ski.
You can find the supplemental slides on our Investor relations webpage at in desktop got blend dotcom.
During the call we will refer to certain non-GAAP measures, which are reconciled to GAAP results in today's earnings release and in the appendix child supplemental flat.
non-GAAP measures are not intended to be a substitute for GAAP results.
Certain statements made during today's conference call regarding blend down its operations in particular its guidance for 2023, maybe considered forward looking statements under federal Securities laws.
The company cautions you that forward looking statements involve substantial risks and uncertainties and a number of factors many of which are beyond the company's control could cause actual results events or circumstances to differ materially from those described in these statements.
Please see the risk factors with identified in our most recent 10-K 10, Qs and other SEC filings.
We are not undertaking any commitment to update these statements if conditions change except as required by law.
I'll now turn the call over to Nemo.
Thanks, Tony and good afternoon, everyone.
Our second quarter results exceeded expectations for the second quarter in a row.
Constrained continued progress on our strategic priorities.
Even if it's a tough market, we are deepening wallet share with our mortgage customers.
Build a platform a key driver of our growth strategy is gaining traction.
On marketing efficiencies and speeding time to revenue for both us and our customers.
And with that we're accelerating on our path to profitability.
We outperformed the top end of our total company revenue guidance, owing to strong performance in our Morgan suite of services as well as our growing revenue diversification as we begin to deploy our builder enabled consumer banking product lines to more customers.
I'm also encouraged to see this translate into a pipeline of nearly 40 opportunities between our mortgage and consumer banking products, even if market conditions remain dynamic.
In Q2, we saw this increase as our customers begin to crystallize their budgets for the upcoming year, keeping our sales efforts in full swing.
So far in 2023, we've deployed 18 consumer banking products. This.
This translated into strong results for our blend platform segment, which also exceeded the high end of our prior guidance and we improved our software margins meaningfully quarter over quarter on top of that.
We have also taken significant steps to streamline and improve how we operate as a company and we're seeing these savings show up in our results in a meaningful way.
As a result in Q2, we surpassed the 50% operating loss reduction target, we set last year and we did it two quarters ahead of our original goal.
This is a testament to our focus on execution, regardless of the operating environment.
On top of that there is more work being done on the efficiency side, which you may have seen from our additional cost reduction announcements effective today.
We also achieved two sequential quarterly reductions of non-GAAP operating expenses since the start of the year and have lowered our expense rate by nearly $100 million on an annualized basis. Since this time last year.
We did this all while maintaining the high quality of service and support our customers expect from blood and we're just getting started on leveraging the efficiencies that blend builder can provide us.
To wrap up the highlights we know that executing well in the current environment will pay dividends as market conditions improve we.
We have a great customer base that continues to grow and we continue to expand those customers use of our products.
All the while blend builder is live and enabling our customer success.
With that let's cover our three company priorities for the year and how we're progressing on our mission to bring simplicity and transparency to financial services.
Let's start with our first key strategic priority, which is to support our mortgage customers to a very challenging period.
Mortgage rates are 23 year highs and origination volumes, our stoping as a result.
This is a real headwind for our customers and for blood.
But we arent planning around recovery.
We are planning to be profitable in this type of environment.
That leaves us with two things in our control on the revenue side.
It is helping our customers grow market share by getting the most value they can out of our core product and.
And the second is providing accretive add ons to drive even more value per unit to our customers and more revenue to your blood.
And we're seeing that play out in practice in our customer base today.
First many customers who leverage our technology to power their businesses continue to outperform the broader mortgage origination market and as a result, they are taking more market share.
We only report market share by annually due to a lag in the metric and the timing of the measurements of the industry sized what you've seen us grow there.
And because we continue to rollout new value add features like soft credit pulls in our Spanish language intake form in things like conditions, which drive efficiency, our customers largely renew with us with more value and at higher prices.
On top of that our add on products such as blend closing blend income deliver meaningful improvements in cost and time to close rates.
Especially in a margin pressured environment. These gains are front of mind for mortgage customers, who want to deliver the highest quality experience at the lowest cost to their customers.
And in aggregate. These things ultimately are reflected in our growing more discrete revenue per transaction, which increased to $93 in Q2 from $77 in the same period last year.
So while short and medium term macro headwinds persist, we're focusing on what's in our control.
Driving adoption and utilization growth of our value add features maintaining strong retention and growing our mortgage market share all while continuing to set the foundation for our next generation mortgage products on the builder platform.
But this is only one of our bright spots, which leads me to the second big priority for the year.
Adoption of our builder enabled consumer banking products.
In 2023 alone as I said earlier, we've deployed 18 consumer banking products and twenty-five since Q2 of last year and we're already seeing revenue growth in these rollouts in Arkansas banking suite revenue.
In addition, our customers are interested and they see the value and blend builder.
We have an active backlog of over a dozen projects underway, which will continue to drive incremental growth as these rebuilt go live and ramp overtime.
And while we continue to see market environment lengthening sales cycles the level of pipeline that we see gives us a high degree of confidence in the long term outlook for blend and blend builder and our ability to transform the banking space.
And just as our builder platform generates value for our customers. There are also several other positive outcomes for our business.
I'll, let him cover this in more detail, but overall, we are seeing the benefits that our platform model has an improving the stability and diversification of our revenue profile and lengthening our customer relationships the best as they make longer and larger commitments.
And that will become apparent in our growing remaining performance obligation.
In all over the past decade, we became a leader in innovation, establishing a stronghold in the mortgage market when a leading market share with quality financial institutions and expanding across the entire consumer banking portfolio.
All while developing and strengthening the transformational blend builder platform that will propel our mission forward.
And now as we can.
Our next chapter, which we shifted from building to deploying.
We're in a position to leverage the efficiencies upon builder to deliver more innovation per dollar for our customers, which brings me to our third priority our path to profitability.
Now the builders scaled across many of our customers.
And as our primary internal development tool for new products blend as foundation only setup to be more efficient.
We can innovate on builder in order of magnitude faster and with marginal costs.
As a quick example, one of our larger longtime clients in the unsecured loan origination space came to us with around 40, new feature enhancement requests as they try to navigate a complicated macro.
We scope the work to add this to our original platform.
And those 40 features would've taken six or more months to do across multiple people to implement.
In addition, some of the request for specific to that client, making it difficult to support because we have a standardized product.
And so overall this path would have taken significant resourcing cost and lead to a less than happy client.
Fortunately, we had already been in the process of migrating that client to our builder platform and when we scope. The 40 enhancement request on the new platform ahead of that go lives.
Not only were many of these features simple configurations, but the one specific to that client were handled by our professional services team as configuration and their unique environment.
Like us to keep our gold general products, we standardized offering the customer the flexibility they need.
This meant that the entire request list or almost the entire request quest list can be done in weeks and at a much much lower cost our customers can be more successful happier and at a lower cost with blend.
In short.
Builder allows for a fundamental shift in our operating model. It has been a big investment to get here, but the leverage it gives us sets us up well for the next decade.
So what does this means practically.
Today, we announced a few key changes in support of this to further accelerate our path to profitability and make the most of that platform.
First disability to build products faster and cheaper allow us to deliver more innovation per dollar that we spent and.
And we have tightened our research and development spend going forward as a result.
We believe we can do this without sacrificing innovation and in fact in some areas increase our pace of innovation and new product development.
And as a side note for investors. Please come to our Investor day in September which is directly after our customer conference blend forum, where we'll be announcing some new products.
While we aren't stopping there.
We're also reducing and focusing our sales and marketing spend around the blend builder platform and the related mortgage investors for our customers.
We know sales efficiency matters.
And the market is tight and we're paying very close attention to how we spend our sales and marketing dollars, making sure we get the best ROI.
And this overall simplified organization as a whole has meaningful effects on the required corporate support and our general and administrative functions getting to further lowering costs in those areas.
But while the reductions we are announcing today are sizable they are targeted to the areas I just mentioned and importantly, there are certain areas where not touching.
For example, our customer support and customer success teams are largely remaining intact in some cases growing because we want to be responsive to customers, who are navigating a very complicated macro situation.
And professional service and integration are.
Very important to work through the backlog of customer Rollouts, which drive more value to them and more revenue to blend.
I also want to address our title business we.
We have achieved a number of goals for this business over the past couple of years by digitizing key parts of the title process.
We have also significantly improved the cost structure and operating model for title returning it to positive gross margins despite record low volumes.
With the steps we've undertaken to date, including today, we are on track to return title business to positive non-GAAP operating profit contribution within the next several quarters. This is now more sustainable business for us with operating leverage potential as the refi market ultimately returns.
We remain committed to our title business and our customers.
And as a result of all of these efforts cross blend, where even leaner and more focused today.
We expect that these actions will further accelerate our path to profitability and we expect those savings to start materializing in our bottom line in Q3.
And because of our overall long term foundational investments with bundled or we believe we can not only be profitable with this expense base.
We can continue to innovate grow our customer base and our product suite ultimately expanding our addressable market even further.
Now, let me turn it over to Omer to talk through our key numbers for Q2, and our guidance for the next quarter.
Thank you NEMA and good afternoon, everyone.
Im pleased to be joining you today to discuss our financial results for the second quarter.
As Nemo highlighted we delivered another great quarter executing ahead of our targets both for revenue and non-GAAP operating loss. We are also continuing to take the necessary steps that allow us to both control of our own future and ensure we achieve our long term goals, including our path to profitability.
As I jump into the results. Let me just remind you that unless otherwise stated all results are non-GAAP .
Total company revenues in the second quarter were $42 8 million outperforming the top end of our outlook by 4%.
We reported platform revenue of $30 3 million, which was 8% ahead of guidance.
We credit this outperformance to two dimensions first our customer base is demonstrating resilience in a tougher origination environment by gaining share in a market where volumes were a little better than we expected.
Second our customers are demonstrating faster adoption and go live of blends add on products.
Similar trends are benefiting our consumer banking suite revenue as our backlog converts to new deployment, reaching go lives at a time when the industry is seeing stronger than expected personal loan volumes.
Our mortgage banking suite revenue declined by 17% year over year to $22 3 million. Despite the origination environment declining 37% over the same period as measured by the mortgage Bankers Association.
As we gain traction with our customers through continued adoption of add on products, coupled with our customer renewals and new logos, we are generating improved mortgage suite revenue per transaction.
Our fee per funded loan rose to $93 from 77 in the same period last year.
Our consumer banking suite revenue totaled $5 8 million in Q2, an increase of 27% as compared to the prior year period.
This growth reflects new deployments and ramp ups on the builder platform over the past year, particularly our home equity solution.
We also generated $2 2 million of professional services revenue up 10% from last year due to fees associated with consumer banking appointments.
We reported title revenue of $12 5 million in line with our expectation amidst the challenging refinance environment.
Moving on to gross profit total company non-GAAP gross profit was $23 8 million down only 8% from last year against the 35% decline in total revenue.
non-GAAP platform gross margins improved meaningfully, reaching 74% compared with 61% a year prior.
Looking specifically at blends platform performance gross profit on a dollar basis increased 9%. Despite a 37% decrease in market origination volume over the same period. This is strong evidence that our software platform business model combined with the cost optimization and efficiency programs that we've undertaken are materially improving.
Our ability to generate incremental profit and a lower market volume environment.
We also reported record non-GAAP software gross margins of approximately 81% in the second quarter up from 73% for the same period last year.
Our gross margin expansion reflects the benefit of increased higher margin consumer banking suite revenues as well as the vendor optimizations, we've implemented within our mortgage suite.
Effectively we are lowering the cost of power the origination of the same loan while delivering more value for customers through add on products, which in turn is driving higher per loan funded loan rates.
Q2 gross margin performance demonstrates that we remain well ahead of our target ranges for this year.
While gross margins can fluctuate a bit quarter to quarter, partly due to the differences in timing of certain expenses. We expect 2023 will remain strong and we believe 80% isn't achievable run rate for our software business by next year.
I also want to point out the progress we've made evolving our professional services model to realize the benefits of the investments in our Configurable platform.
As more of our deployments shifted blame builder, we are deploying more efficiently positioning us to drive industry standard gross margins from this line item.
And our title segment, we made great progress this quarter to align our costs to deliver this service in a very low refinance volume environment.
We achieved our goal of returning to positive gross margins in Q2 and have undertaken additional actions to further support our operating profitability goals for this business.
As Neil mentioned, we have executed a business process redesign our focus is title on becoming a profitable entity that will operate sustainably and is ready for scale.
Some of these undertakings include <unk>.
First reducing processing times by leveraging technology, and workflow enhancements that translates to productivity gains measured by orders processed per associate.
Second implementing a flatter organization structure and reducing the span of control and third optimizing our utilization of lower cost resources, including our in house offshore team.
We believe these measures will return title to a positive operating profit within the next several quarters, even with the current market conditions.
non-GAAP operating costs for the second quarter totaled $41 6 million compared with $65 3 million in the previous year.
We are delivering on our operational excellence grows at a faster rate than expected.
The actions we announced in January of 2023 are now fully realize we successfully executed against our re target is now evident in our financial results at the same time as we've directed more organizational effort towards our platform strategy. We also launched a deeper examination into areas, where we felt we have more opportunity to drive incremental operational.
Excellent.
Youre seeing that in the restructuring initiatives, we announced today, which are expected to reduce our operating expenses and an additional $33 million on an annualized basis.
We're confident this was the right time to take these actions as we move expeditiously from Glen's first phase to phase III.
As builder deployments accelerate we are structuring our operating model to support customer growth rapid deployment and outstanding service with the goal of achieving operating excellence across the company.
Additionally, our builder platform enables us to continue our pace of innovation much more efficiently serving both our mortgage and consumer banking customers.
I want to reiterate a point in the MMA here as well the changes that we've made were designed to not have any impact on the level of service our customers expect from us or the speed at which we can deploy these solutions for them.
We have always wanted to align our success with our customers and this remains core to us as we enter the second phase we.
We believe these changes have put our business in a position to maximize value for our customers and shareholders as the market conditions improve.
Putting all this together our non-GAAP loss from operations was $17 9 million versus $39 5 million in the prior year.
This step function improvement reflects the velocity of our strategic actions as I described a moment ago.
This surpasses our $20 million net operating loss target for Q4 2023, two quarters ahead of the target we established at this time last year.
This achievement is a testament to our evolving operational focus and commitment to execution, regardless of the operating environment.
This gives us strong confidence we are well on our way to reaching our next goal of becoming a profitable company next year.
The business is positioned to benefit from higher revenue better margins and now much greater financial leverage.
I am encouraged that as performance optimization becomes core to our culture, we're finding new ways to do this better everyday this new culture and the ability to leverage the investment we made in our platform is what has enabled us to accelerate the achievement of the ambitious operating loss targets, we established last year and drive us to profitability faster than we had initially thought possible.
We are making an incredible amount of progress and we're excited to share more details about how this informs our long term outlook for Blaine at our Investor day in late September .
Now turning to our balance sheet.
Our cash cash equivalents marketable securities inclusive of restricted cash totaled $278 million as of the end of the second quarter.
With the actions we've undertaken we remain confident our business remains well capitalized to reach our profitability goals and we have ample liquidity based on our current projections in this macro environment.
I also want to note that our remaining performance obligations top $50 million this quarter at $53 2 million at the end of Q2 as.
As we've discussed on recent calls our business model is evolving constructively as part of our broader transition to a platform first organization.
Generally as our customers add more products had renewal they are increasingly entering into platform deals with longer and larger commitments.
This strengthens the foundation of our customer relationships and importantly brings to primary economic benefits for blend.
First we are increasing the stability of our future cash flows by adding a recurring SaaS like fee, while retaining the upside associated with our consumption based model.
We believe this shift in payment terms should improve our overall free cash flow was more fees being paid in advance.
We are at the beginning of this shift and as we migrate to the platform model with more customers you will see the growth in <unk> and free cash flow benefits in our financial performance.
We are encouraged by the stability of the business and the results. We've seen to date that said industry and macro conditions related to the mortgage origination market remains highly uncertain and that is reflected in our guidance for Q3.
We expect platform revenue to be between 27% and $30 million in Q3 2023.
We expect our title business revenue to be between 11 and $12 million or total company revenue outlook is expected to be between $38 million and 42 million for Q3.
Our total non-GAAP net operating loss is expected to be between $17 $5 and $15 5 million for Q3.
With the midpoint, representing an 8% sequential improvement from the prior quarter and a greater than 50% improvement year over year.
We expect to continue to see sequential improvement in our operating loss through the balance of this year and believe our strong business performance and cost actions, we've undertaken have accelerated us reaching our non-GAAP profitability to go earlier in 2024 than originally planned.
With that let me turn the call back to the EMA for his closing remarks.
Thanks, Amir we are exiting this quarter, feeling energized about our position and our opportunity.
I am proud of the accelerated progress we've made on our 2023 priorities and our path to profitability.
We still have more work to do and while we cannot control the market. We can control how we deliver for customers to help them optimize performance and build for the future.
If we continue to focus on this objective, we will strengthen <unk> business and performance as well.
With that thank you again for joining Brian we're now ready for questions.
Thank you need better o'meara for your remarks, I will now turn to the Q&A portion of the call. Our first question comes from Michael <unk> with Goldman Sachs. You can mute and please go ahead.
Hey, good afternoon. Thank you very much for the question.
I just have two both on gross margins.
You saw a lot of gross margin trend in the quarter.
81% and software and you talked about.
The higher margin consumer banking suite and vendor optimization and mortgage.
I was just wondering if you could expand on both those points is.
Is there something inherent in consumer banking that.
Is it a higher margin than than mortgage and then.
Within the vendor optimization.
Are you just using.
Different or less expensive like API tools.
What exactly is that vendor optimization than I have.
A second question, which is just about the trajectory of gross margins for the rest of the year.
EMEA you talked about 80% software gross margins for next year.
But is this.
81% gross margin for the rest of the year.
A good way to think about the back half. Thanks.
Thanks, Michael I think a few follow ups. So that people will just I'll give you a little bit of clarity for the questions. The best way to think about what we did on gross margins and the execution that we are able to deliver its more so from just a structural shifts that we are able to execute against with builder first and foremost so that ties into your question with regards to what we see in our consumer banking.
And the margin upside that we're seeing from a mix perspective.
Further follow up aspect of it with regards to just the vendors and it's not so much that we're changing the API. There's just we're continuing to optimize how the.
Our shift in essence this whole notion that we talked about from phase one to phase two and a platform that enables us actually allow us to be lower cost in certain aspects of the business, which also then enable us to drive higher margins.
The last part of your question, Yes, I think again to the prepared remarks, what we stated is we feel very comfortable that in 2024, we were able to execute at these levels on a consistent basis.
And then just I just wanted to ask from a product perspective, Michael on the consumer banking side. There are fewer products that are offered in terms of how can how banks offer these products are simpler and so theres fewer vendors.
We bundle them together, so yes structurally higher margin.
But our mortgage product test additional margin opportunity as well as we optimize the vendors under the hood.
Great. Thank you Dana Thanks Amir.
Our next question comes from Matt Stotler with William Blair.
And please go ahead.
Hi, there thanks for taking the questions just two for me.
One good to see the revenue per transaction, the mortgage suite increase year over year.
Down a little bit sequentially, So would love to just get some color on the dynamics that can.
Influenced out on a quarterly basis, how you're thinking about that in the second half of the year. The second question would be.
Just an update on <unk>.
Patrick with newer products like blend income an update there would be helpful. As well. Thank you.
Let me start with the PFS I'll, just I think what Youre seeing is really just movements from a timing and a mix perspective quarter over quarter. What we stated last quarter is that we expect it to be in the mid to high Eighty's, where again, we're executing ahead of that we're seeing strong adoption of the value add on solutions that on solutions for Brian just given the value that they add.
So thats whats driving the upside on the 93 and then the second part of your question. If you can just repeat that one more time.
I'll answer it.
Sure just looking for an update on the attach rate that you're seeing with newer products like blend income.
And what that's looking like in the installed base at this point where that can go.
Absolutely well I think again, we haven't shared the attach rate very specific to two blend income, but what youre able to see is the follow through a blend of income and also what we do for example, with close on some of our other solutions the ability to actually allows us to attach to what we do in terms of renewals with our existing mortgage customers into those two outcomes together that are actually driving an increase in our funded loan.
And to the first part of your question. So we're seeing stronger adoption in general we're seeing it come through in terms of the results and what you saw this quarter in terms of the 93.
Got it thank you.
Our next question comes from Joe Mirrors Truest you. Please on mute.
Yes.
Hey, guys. Thanks for taking the question I appreciate it.
Earlier in the quarter, you announced the availability soft credit functionality, noting that it saves lenders $50 profiles.
I'm just curious how how this is trending so far if you have any early customer feedback and if there's any pricing uplift from this feature.
It's a feature thats built into our platform today and it's just.
Always try to add new functionality for our customers and that's what creates more value for them and ultimately when it comes to renewal time for creating more value with are often willing to renew with us at higher rates. So you're kind of seeing that in our customer base. Today. So we don't charge extra for that feature.
And it's very important.
Basically I think of soldiers.
And not only cost, but additionally, its also a conversion because theres a concept called trigger leads in the industry. It's a hot topic in the mortgage bankers Association.
When you get your credit pulls for a mortgage somewhere probably at 25 other calls from other lenders trying to sell you something.
And by using soft credit during that Prequalification preapproval of shopping phase.
We're able to help the customer get them, what they want the consumer to what they want which is an approval.
Without.
Bombarding them hundreds of calls and maybe turning them away from the lenders and apply the applied with them. So it's been a really important feature for our customer base.
Turning to investing in our products and our customer base to make sure they're getting there.
Value they need to get to this really tough cycle.
That's great and that the consumer will appreciate not getting rewarded as well.
As a follow up.
How are you thinking about the product portfolio and the higher for longer interest rate environment.
I appreciate that the consumer portion grew very very strongly.
But if youre cutting R&D with this new cost savings are you going to be able to continue to do.
To develop new products on the consumer side, how are you guys thinking about that thanks, so much.
Yes, I wanted to go back to something I said in the prepared remarks, which is that blend builder is a fundamental structural shift in how we can build things and it's really only this year that we're starting to see those benefits or maybe late last year, we started.
But because we're able to make changes and I gave that example of a customer that had 40 new feature requests I mean any company taking on 40, new feature requests would be it would be a bear and you could do all of them and you'd have to get on your roadmap.
And the speed at which we're able to iterate on blend builder, because we've made the DNA any lending product where account opening product drag and drop.
Because we've been able to do that.
He has many pieces of it.
Almost all of the pieces of it.
Just allows us to innovate more with less.
And like I think the real the real show of strength for our company.
Is how much you can get done per dollar.
Per unit of energy spend and Thats something that were really gearing towards going forward. So no actually I think our innovation will speed up.
I gave it a club during the prepared remarks, please come to the Investor day.
If you can it's going to be following our customer Forum, which is late September and we're gonna be announcing some really great new product features and new products for our customer base, who they need to see this kind of innovation for us to continue to bet on us and so we're going to keep innovating.
Thanks again.
Our next question comes from David <unk> with Wells Fargo. You can please on mute and go ahead.
Hi can you hear me okay.
Yes.
I'm, just wondering how AI co pilot going with the customers.
Any initial observations you can share with us in terms of productivity gains banks. Thanks.
Yes, we havent launched anything formally there I do think lending and banking where.
Lot of the recent innovation and AI has been around.
How you can understand using natural language understanding natural language of the person puts in and really understand the intent of that question that natural language and then use that to formulate a response I think because most people interact with their bank.
A lot of times in person or on the phone and especially the named mortgage on person or on the phone quite a bit and thats using natural language AI is sort of uniquely positioned to help here.
And so we're excited we're not ready to share anything broadly yet, but but we're excited about the space and we think it can be used in our customer base and drive the material benefit and how they can serve their customers. The end consumer who wants to build interact however, they want to interact with their bank and we can help enable that overtime.
Our final question comes from Brian Thomas <unk> with <unk>, Brian you complete the mutant go ahead.
Hi, everyone. Thanks for taking the questions just unpacking the.
Cost reductions have been more.
I mean, how long should we expect these to take the phase in.
And any updated timing on.
On cash flow breakeven beyond operating income breakeven.
And I guess, just thinking about the uncertain volume environment next year do you feel like you've cut as much as you can hear or are there are still other levers that you'd be willing to pull in order to hit these targets.
Thanks, Brian .
I'll try to get through each of them. Let me know if there is something I missed.
First in terms of just the phasing it's immediate so there is no you'll see the in essence the outcomes.
Flow through instantaneously.
With regards to the cash flow breakeven, we shared obviously in the last call that we were accelerating our path to profitability by a full year from 2025 to 2024, you can again our targets are to.
To allow our operating profit to match, what we what we target from a free cash flow perspective, and so I think our intention is to have a very similar timeline.
Third with regards to just the.
Alright.
The other components that you asked I think for US I mean, if you can remind me. Your last question around really quick because I want to answer both of them.
And then just to clarify I mean, the cash flow breakeven target I think would be inclusive of the 30 or so million dollars of.
Financing costs. So just wanted to clarify that what the timing looks like there from a breakeven perspective and then just the last question was if theres any other levers you are willing to four depending on how the mortgage volume environment shakes out next year.
I just feel like you can cut me further yes, absolutely. It was a lever is one that I must thank you first I think again the actions that we've taken that allow us to achieve our path to profitability, which we spoke to it or not even accelerate and that implies that even if the mortgage volumes or does it remain at these levels, we feel very confident with our future and the targets that we've set.
Just period for us and that's how we that's how we've kind of.
We rolled this out the second part of that with regards to the levers what we said in Q1 and really we are re emphasizing that we will continue to look for different ways to become more efficient the level of focus that we have internally today from the lens of operational excellence are going to are not going to stop we're going to continue down this path and so we'll continue to look at those.
And Ryan let me know if I missed anything.
No I guess I just had another follow up if I can squeeze one in would be just around the capital structure.
I believe you alluded to in the past, but just any thoughts around being opportunistic with.
What potential restructuring or a negotiation around the term loan or the put option with the title business.
Anything that you could explore there to alleviate some of those overhangs or do you feel like now you are on a path just in terms of organic execution.
Have those be manageable.
Yes. The answer is both Ryan I think we felt very strong about where we are as a company and where we've positioned ourselves well always be strategic in terms of not just how we listen and explore options, but also the actions that we think we recognize the difference right now from our from what we guide to from a net operating loss perspective to the essence of your question about free cash flow. The biggest driver there is.
Obviously, our interest expense and so that's top of mind for us.
We have a great partner and blow out Ryan and so look we are going to stay very strategic we will explore options, but it's where again I think what's more important to the question you're asking is we feel very good about where we are today to be able to sustain with or without this type of optionality in front of us.
Seeing no further questions. This concludes today's earnings call. Thank you for joining and have a nice day.