Q1 2024 Blend Labs Inc Earnings Call
Unknown Executive: Joining us today are Nima Ghamsari, co-founder and head of Blend, and Amir Jafari, our head of finance and administration. After Nima and Amir deliver their prepared remarks, we'll open up the call for questions, moderated by our Investor Relations Lead, Bryan Michaleski. You can find the supplemental slides on our Investor Relations webpage at investor.blend.com. During the call, we'll refer to certain non-GAAP measures which are reconciled to GAAP results in today's earnings release and in the appendix to our supplemental slide. Non-GAAP measures are not intended to be a substitute for GAAP results.
Joining us today, I mean, Mike I'm, sorry, cofounder and had a fun and EMEA Jafari I'll head of finance and administration.
Unknown Executive: After nemer at them you have to live with their prepared remarks, well open up the call for questions moderated by our Investor Relations laid Brian Mccleskey.
Unknown Executive: You can find the supplemental slides on our Investor relations webpage at Investor <unk> Dot one dot com.
Unknown Executive: During the call, we'll refer to certain non-GAAP measures, which are reconciled to GAAP results in today's earnings release and in the appendix child supplemental slides.
Unknown Executive: non-GAAP measures are not intended to be a substitute for GAAP results.
Unknown Executive: Also, certain statements made during today's conference call regarding Blend and its operations, in particular its guidance for the second quarter of 2024, may be 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 we've 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. With that said, I'll now turn the call over to Nima.
Unknown Executive: Also some statements made during today's conference call regarding blend and its operations in particular its guidance for the second quarter of 'twenty 'twenty four may be considered forward looking statements under federal Securities laws.
Nima: 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.
Nima: Other SEC filings, we're not undertaking any commitment to update these statements if conditions change except as required by law with that said I'll now turn the call over to Nemo.
Nima Ghamsari: Thank you, Winnie, and good afternoon, everyone. Amir and I have a lot to share today, given the company's recent strategic announcement, as well as several important business highlights since our last earnings call. We'll first discuss the investment we received from Paveli last week, which involves a $150 million capital infusion, as well as the beginning of a partnership that will deliver value across our business and, most importantly, to our customers. This has several strategic outcomes for us, including the elimination of interest costs and the improvement of our balance sheet, which, for the first time as a public company, is debt-free.
Nima: Thank you Wendy and good afternoon, everyone.
Nima Ghamsari: I mean, you don't have a lot to share today, given the company's recent strategic announcements as well as several important business highlights since our last earnings call.
Nima Ghamsari: Well first discussed the investment we received from Gabelli last week, which involved $150 million capital infusion as well as the beginning of a partnership that will deliver value across our business and most importantly to our customers.
Nima Ghamsari: This has several strategic outcomes for us, including the elimination of interest costs and improving our balance sheet, which for the first time as a public company is debt free.
Nima Ghamsari: With this investment, we've enhanced our financial flexibility and can focus on what we've always done best, which is innovating for our customers in the mortgage and consumer banking space now and for the foreseeable future. We also made progress on some important customer deployments, including the official go-live of Navy Federal Credit Union, new membership, and deposits that occurred last month. Early data points indicate that this was a very successful launch, and our financial results for the rest of the year will be inclusive of the Navy Federal Credit Union partnership.
Nima Ghamsari: With this investment we have enhanced our financial flexibility and can focus on what we've always done best which is innovating for our customers in the mortgage and consumer banking space now and for the foreseeable future.
Nima Ghamsari: We also made progress on some important customer deployments, including the official go live of Navy Federal credit Union membership in deposits that occurred last month.
Nima Ghamsari: The data points indicate that was a very successful launch and our financial results for the rest of the year will be inclusive the Navy federal credit Union partnership.
Nima Ghamsari: Beyond them, we're also working on a robust pipeline of other deployments that is active and growing, including another top 10 credit union that is in the process of a mortgage rollout. On top of that, I'm happy to announce that the team signed a new seven-digit contract with a credit union last week, and Blend is going to help them streamline their deposit account opening experience. We've been thinking through how to tailor our solutions to better fit the needs of specific segments, in particular credit unions, that come in different sizes yet collectively serve a large swath of customers.
Nima Ghamsari: Beyond that we're also working on a robust pipeline of other deployments that is active and growing including another top 10 credit Union. That's in the process of mortgage rollout.
Nima Ghamsari: On top of that I'm happy to announce the team signed a new seven digit contract with a credit Union last week and blend is going to help them streamline their deposit account opening experience.
Nima Ghamsari: So in thinking through how to tailor our solutions to better fit the needs of specific segments in particular credit Union.
Nima Ghamsari: Different sizes, yet collectively serve a large swath of customers.
Nima Ghamsari: This deal is a direct result of focusing on the unique needs of this specific customer segment. And lastly, as far as our financials go, I'm excited to report that our unlevered free cashflow was negative 1.3 million in the first quarter, which is a huge improvement from last quarter. And on top of that, that includes cash outflows exceeding this amount relating to certain non-operating items like settlements of litigation contingencies and restructuring
Nima Ghamsari: This deal was a direct result, focusing on the unique needs of this specific customer segment.
Nima Ghamsari: And lastly, as far as our financials go I'm excited to report that our Unlevered free cash flow was negative $1 3 million in first quarter, which is a huge improvement from last quarter.
Nima Ghamsari: And on top of that that includes cash outflows excuse me. This is not related to certain non operational items like settlements of litigation contingencies and restructuring actions and so in aggregate. We see this as a testament to our execution and a reminder, that we are on the cusp of achieving our positive cash generation goals.
Nima Ghamsari: And so, in aggregate, we see this as a testament to our execution and a reminder that we are on the cusp of achieving our positive cash generation goal. Before I pass it on to Amir, who will go into more detail on the first quarter's financial results and our Q2 guidance, let me dive deeper into these highlights. Let's start with the Heveli investment. We started a new chapter with our announcement last week, a $150 million strategic investment from Favelli.
Amir: Before I pass it onto a mere tool go into more detail on the first quarter's financial results and our Q2 guidance, let me dive deeper into these highlights.
Nima Ghamsari: They're a technology investor with meaningful fintech experience and a strong track record of helping companies like Blend scale and achieve long-term success. They invested in the form of convertible preferred equity, with the conversion price representing a 44% premium to the closing share price on the date of the announcement.
Nima Ghamsari: Let's start with a valley investment.
Nima Ghamsari: We started a new chapter with our announcement last week, a $150 million strategic investment from Gabelli.
Nima Ghamsari: There are technology investor with meaningful Fintech experience and a strong track track record of helping companies like Glenn scale and achieve long term success.
Nima Ghamsari: We invested in the form of convertible preferred equity with a conversion price representing a 44% premium to the closing share price on the date of the announcement.
Nima Ghamsari: This is a big deal for our company. By recapitalizing our balance sheet, we've taken the pressure off of any near-term capital obligations and can focus without distraction on what's most important to us, serving our customers and building for the long term through modern solutions that enable our customers, the mortgage companies, and consumer banks, to better serve their customers. And no debt for us means no outgoing interest expense; we anticipate saving approximately $18 million in annualized interest expense, which we expect will help us achieve our goal of positive cash flow generation sooner than we previously planned. And it's important to emphasize that this investment has no coupon.
Speaker Change: This is a big deal for our company by.
Nima Ghamsari: By Recapitalizing, our balance sheet, we've taken the pressure off of any near term capital obligations and can focus without distraction on what's most important to us serving our customers and building for the long term through modern solutions that enable our customers to mortgage companies and consumer banks to better serve their customers.
Nima Ghamsari: I know that for us means no outgoing interest expense, we anticipate saving approximately $18 million annualized interest expense, which we expect will help us achieve our goal of positive cash flow generation sooner than we had previously planned.
Nima Ghamsari: And it's important to emphasize that this investment has no coupon develops you're just making a bet our long term debt on the company's technical financial and customer success.
Nima Ghamsari: The Valley team is making a bet, a long-term bet on the company's technical, financial, and customer success. We are fully aligned with growing the business. This investment is also important because of the strength of the team we're partnering with. They have a history of working with technology companies and serving financial services in particular, and making them industry-leading and industry-changing companies. They're going to be a strong partner for us in supporting our innovation efforts across the business.
Nima Ghamsari: We're fully aligned on growing the business.
Nima Ghamsari: This investment is also important because of the strength of the team we're partnering with <unk>. They have a history of working with technology companies, serving financial services in particular.
Nima Ghamsari: And making them industry, leading and industry changing companies, they're going to be a strong partner for us and supporting our innovation efforts across the business.
Nima Ghamsari: And alongside this, as we announced last week, Brian Sheff, Haveli's Founder and Chief Investment Officer, has joined our board. He has nearly 25 years of experience investing in technology companies, and more than 20 of those were spent at Vista Equity Partners, where he served as president. He's made or advised on investments valued at over $100 billion and has served on the board of directors for dozens of companies.
Nima Ghamsari: And alongside this as we announced last week, Brian Chess I've always founder and Chief Investment Officer has joined our board. He has nearly 25 years of experience investing technology companies and more than 20 of those were spent at this equity partners, where Brian served as president.
Nima Ghamsari: He has made or advise on investments valued at over $100 billion in asserted in the board chairman for dozens of companies.
Nima Ghamsari: Bryan and his team are already working with me and providing value across our business and helping us to continue to drive operational and financial best practices, as well as helping us grow the business. This deal signifies a vote of confidence in Blend's journey to this point and our vision ahead, and it should leave our customers and shareholders as excited as we are about what's possible. Now, shifting over to Morgan. Let's start with some new wins. Among this group, there are a couple that I want to call out.
Nima Ghamsari: Brian and his team are already working with me and providing value across our business and helping us to continue to drive the operational and financial best practices as well as helping us grow the business.
Nima Ghamsari: This deal signifies a vote of confidence in Glens journey to this point and our vision ahead.
Nima Ghamsari: And it should leave our customers and shareholders as excited as we are about what's possible.
Morgan: Now shifting over to mortgage let's start with some new wins.
Nima Ghamsari: Among this group there are a couple that I wanted to call out.
Nima Ghamsari: In Q1, there was a competitive takeaway in mortgage that had to get live in 30 days. We signed them, got them live within that timeframe, and they are now actively originating on Blend. We also have another top 10 credit union that has been in the process of rolling out during Q1 and should be live in the next two weeks. These two data points are important to me because the only way to achieve something like that is with a modern integrated platform and a prescriptive approach.
Nima Ghamsari: Q1, there was a competitive takeaway and mortgage that had to get live in 30 days.
Nima Ghamsari: We signed them got it.
Nima Ghamsari: <unk> wireless in that timeframe and they are now actively originating on blend.
Nima Ghamsari: We also have another top 10 credit Union that has been in the process of rolling out during Q1 and should be live in the next two weeks.
Nima Ghamsari: These two data points are important to me because the only way to achieve something like that because with a modern integrated platform and a prescriptive approach.
Nima Ghamsari: Our customers want to execute quickly and with high quality, and we can help them deliver that. Looking ahead, our pipeline now has 35 opportunities for new mortgage customers, up from 30 last quarter, including a couple of the largest financial institutions in the country. Our growing pipeline is an encouraging sign. As more mortgage companies and banks and credit unions prepare for the next cycle, they're increasingly evaluating incorporating technology like ours to power their businesses and emerge stronger. New customers are only part of the story.
Nima Ghamsari: Our customers want to execute quickly and with high quality and we can help them to look at that.
Nima Ghamsari: Looking ahead, our pipeline now has 35 opportunities for new mortgage customers up from 30 last quarter, including a couple of the largest financial institutions in the country.
Nima Ghamsari: Our growing pipeline is an encouraging sign as more mortgage companies and banks and credit unions prepare for the next cycle. They are increasingly evaluating incorporating incorporating technology like ours power their businesses and emerge stronger.
Nima Ghamsari: New customers are only part of the story versus we serve hundreds of customers today, who rely on our technology to better drive operational outcomes for their businesses.
Nima Ghamsari: We serve hundreds of customers today who rely on our technology to better drive operational outcomes for their businesses. The benefit of using a single platform to serve this is that as we invest in and improve our solution, we create incremental value that attracts new business while simultaneously enhancing our offering for existing customers. This is a testament to what strengthening our balance sheet allows us to do, and we've already made some significant improvements.
Nima Ghamsari: The benefit of using a single platform to surface.
Nima Ghamsari: We invest and improve our solution, we create incremental value that our contracts new business, while simultaneously enhancing our offering for existing customers.
Nima Ghamsari: This is a testament to what strengthening our balance sheet allows us to do and we've already executed on some significant improvements.
Nima Ghamsari: This includes connecting to major fee providers and mortgage insurance providers as well as being an early entrance into the Fannie Mae and Freddie Mac verification pilots to drive more automation and other early funnel tools to help first-time homebuyers see what they can afford in a tough market.
Nima Ghamsari: This includes connecting to make major fee providers in mortgage and insurance providers as well as the early entrants into the Fannie Mae and Freddie Mac verification pilots drive more automation and other early funnel tools to help first time homebuyers, who what they can afford in a tough market.
Nima Ghamsari: These kinds of things are the things that we'll continue to invest in during the downturn to ensure that our customers can benefit for years to come. This focused investment has resulted in one of our highest ROI solutions for our customers, the closing process powered by Blend Close. Today, the closing process in a mortgage still consists of paper being mailed, manual document reviews, long post-closing cycle times, and ultimately cost and potential errors to our customers. And all that, not to mention a terrible consumer experience in the age of everything being digital.
Nima Ghamsari: These kinds of things are the things that we'll continue to invest in during the downturn to ensure our customers can benefit for years to come.
Nima Ghamsari: This focused investment has resulted in one of our highest ROI solutions for our customers. The closing process powered by blend close.
Nima Ghamsari: Jay the closing process and a mortgage still consist of paper being mailed manual document or use long post closing cycle times, and hopefully cost of potential errors to our customers and.
Nima Ghamsari: And all of that not to mention a terrible consumer experience and the age of everything being digital.
Nima Ghamsari: We invested in this solution at the peak of COVID out of necessity, making the process more digital. But since then, it's become a core part of our business and one of the fastest growing parts of our business because customers are demanding a digital first experience, and regulations are now catching up to allow just this. With Blend, our customers can have all the documents presented and signed digitally by the consumer. On the surface, this means a better experience, of course, but that's just the tip of the iceberg.
Nima Ghamsari: We invested in the solution at the peak of Covid out of necessity, making the process more digitally but since then it's become a core part of our business and one of the fastest growing parts of our business because customers are demanding a digital first experience and regulations are now catching up to allow justice.
Nima Ghamsari: With blend our customers can have all the documents presented and signed digitally by the consumer.
Nima Ghamsari: On the surface. This means a better experience of course, but that's just the tip of the iceberg.
Nima Ghamsari: Because signatures are digital, there are far fewer errors that need to be corrected after signing. The documents are delivered digitally, which means they can be received by third parties instantly, and the funding of these projects can happen faster. All of these things lead to a better and more efficient process that reflects the digital age that we're in today. To put some numbers behind this, we estimate that our closed solution reduces funding cycle times by almost six days. This translates to more than $150 saved per loan on hedge and carry costs for our customers.
Nima Ghamsari: Because signatures of digital there are far fewer errors that need to be correct after signing.
Nima Ghamsari: The documents are delivered digitally which means it can be received by third parties instantly in the spa.
Nima Ghamsari: Funding of those can happen to SaaS.
Nima Ghamsari: All of these things lead to a better and more efficient process that reflects the digital age that we're in today.
Nima Ghamsari: So it's a numbers behind us we estimate our close solution reduces funding cycle times by almost 6%.
Nima Ghamsari: This translates to more than $150 per loan.
Nima Ghamsari: Jim Carrey cost for our customers at a time, where every dollar counts that savings presents our customers with an improved experience improved cycle times.
Nima Ghamsari: And at a time when every dollar counts, that savings presents our customers with an improved experience and improved cycle times. These are all benefits of the technology. Speaking of experience, our customers see an average of 17 points increase in their net promoter scores when adding a closed solution to the lending process, showcasing the positive impact it can have for their brands. And our customers seem to understand this, as we now see our close attach rates at an all-time high. We expect the growth to continue. And just last week, another one of our largest customers fully standardized on digital signatures with a digital note, making this the default way they close their line.
Nima Ghamsari: Benefits of the technology.
Nima Ghamsari: Speaking of experience our customers see an average of 17 points increase to their net promoter scores, we're adding a close solution to the lending process showcasing a positive impact to give has for their brand.
Nima Ghamsari: And our customers seem to understand this as we now see our clothes attach rate's at an all time high.
Nima Ghamsari: We expect the growth to continue and just last week. Another one of our largest customers fully standardized on digital signings with digital note, making this the default way they close their loans.
Nima Ghamsari: The success of BlendClose is a direct result of being aligned with our customers. As we build great solutions that our customers love, we save our customers money and time while growing our revenue base. You'll see this expansion or economic value per funded loan already ahead of the $90 target for 2024 we shared with you on Investor Day and have significant upside potential in the future. Now, on to the next bright spot, consumer banking. We spent last year focused on our critical early adopters and the very top end of the market.
Nima Ghamsari: The success of blend closed.
Nima Ghamsari: The direct result of being aligned with our customers as we build great solutions that our customers love, we save our customers money and time, while growing our revenue base.
Nima Ghamsari: See this expansion or economic value per funded loan already ahead of the $90 target for 2024, we shared with you at our Investor day and has significant upside potential in the future.
Nima Ghamsari: Now onto the next bright spot consumer banking.
Nima Ghamsari: We spent last year focused on our critical early adopters and the very top end of the market and we had pretty good success validated by our customer wins and notable announcements of federal credit Union and citizens Bank and a few others.
Nima Ghamsari: And we had pretty good success, validated by our customer wins and notable announcements like Federal Credit Union and Citizens Bank and a few others. And we're going to continue to see progress as we execute against the value outcomes that are important to those customers. We now have more than half of the top 10 credit unions by total assets on the platform. And this year, we're offering our products to the broader market, making sure a credit union or a small bank that serves a local community can get the benefits of Blend as well.
Nima Ghamsari: And we're going to continue to see progress as we execute against the value outcomes that are important to those customers.
Nima Ghamsari: We now have more than half of the top 10 credit unions by total assets in the platform and this year, we're offering a product suite to a broader market, making sure our credit union or a small bank in terms of local community can get the benefits of blend as well.
Nima Ghamsari: This strategy is already showing early signs of success. An example of that is that just last week, as I mentioned earlier, we signed a seven-figure committed deposit account opening deal with a new community credit union customer. We have plans to get them live quickly, and there's upside to the commitment as we do. The deal was a three-month sales cycle in an industry where sales cycles can stretch to a year and beyond, and this sale is indicative of both the strength of our offering and the velocity with which we can execute. To this part of the market, we built a specific implementation plan that is prescriptive and standardized, which means we believe we can get customers live in a week, not quarters or years.
Nima Ghamsari: This strategy is already showing early signs of success and example of that just last week as I mentioned earlier, we signed a seven figure committed deposit account opening deal with a new community credit Union customers.
Nima Ghamsari: We have plans to get them live quickly and there is upside to the commitment as we execute.
Nima Ghamsari: The deal was a three month sales cycle in an industry, where sales cycles can stretch for a year and beyond and this sale is indicative both the strength of our offering and the velocity with which we can execute.
Nima Ghamsari: To this part of the market. We built the specific implementation plan that is prescriptive and standardized which means we can believe we believe we can get customers live in weeks.
Nima Ghamsari: Not quarters or years.
Nima Ghamsari: On top of that, our pipeline grew to 80 new opportunities, up from 70 last quarter. This includes opportunities that suit the vast majority of the market that we support on our platform with out-of-the-box solutions to grow their deposits and offer consumer lending. But importantly, it also includes customers who want to use our platform's flexibility and power to address bespoke lending products outside of our current suite of consumer lending applications, which further expands our TAM of the problems that our software can solve. Flexibility embedded in our platform also sets the foundation for us to work with system integrators to solve a variety of use cases for financial institutions. And we continue to explore avenues in which we can expand our reach in new customer domains There are two things that are important indicators for the future of consumer banking.
Nima Ghamsari: On top of that our pipeline grew to 80, new opportunities up from 70 last quarter.
Nima Ghamsari: This includes opportunities that suit the vast majority of the market and we support on our platform with out of the box solutions to grow or to grow their deposits and offer consumer lending products.
Nima Ghamsari: But importantly, it also includes customers who want to use our platform's flexibility and power to address the spoke lending products outside of our current suite of consumer lending applications, which further expands our tam of the problems that our software can solve.
Nima Ghamsari: The flexibility embedded in our platform also sets the foundation for us to work with system integrators to solve a variety of use case for financial institutions, and we continue to explore avenues, which we can expand our reach into new customer demands and problems.
Nima Ghamsari: There are two things that are important indicators for the future consumer banking.
Nima Ghamsari: One, we are growing our pipeline and executing quickly. And two, there's a lot of opportunity in the market, and we're only starting to scratch the surface. On top of the work that we're doing to maximize the applicability of our solution and find new customers, we have a number of critical rollouts with customers in progress. As I mentioned earlier, we're in the midst of a rollout with Navy Federal, one of the largest financial institutions in the country, with an intense focus on member experience coupled with a complex account opening process.
Nima Ghamsari: One we are growing our pipeline and executing quickly.
Nima Ghamsari: Two there's a lot of opportunity in the market and we're only starting to scratch the surface yet.
Nima Ghamsari: On top of the work that we're doing to maximize the applicability of our solution and find new customers. We have a number of critical rollouts with customers in progress as I mentioned earlier, we're in the midst of a rollout maybe federal one of the largest financial institutions in the country with an intense focus on member experience coupled with a complex have an open process.
Nima Ghamsari: And as I said earlier as well, I'm happy to announce that we've rolled out the first phase of that solution and are now seeing applications running successfully; feedback from the customer to me has been exceptionally positive.
Nima Ghamsari: And as I said earlier as well I'm happy to answer we rolled out the first phase of that solution and are now seeing applications rank you successfully.
Nima Ghamsari: The feedback from the customer to me has been exceptionally positive.
Nima Ghamsari: And for once, this is probably the largest rollout we've done of any kind for any customer. And while the progress over time will be measured, I expect that we'll continue to see volume grow and start turning to meaningful revenue at the end of the year. All of these things together are leading to positive outcomes for us in consumer banking. And we're seeing that in our numbers, and we'll continue to keep pushing the boundaries and expanding our capabilities.
Nima Ghamsari: For what it's worth this is probably the largest rollout we've done of any kind for any customer.
Nima Ghamsari: And while the progress over time will be measured.
Nima Ghamsari: We will continue to see volume grow in structuring a meaningful revenue.
Nima Ghamsari: A year.
Nima Ghamsari: All of these things together are leading to positive outcomes for us consumer banking and we're seeing that in our numbers and will continue to keep pushing the boundaries and expanding our capabilities.
Nima Ghamsari: And lastly, I'm excited to highlight the improvements we made to our free cash flow and profitability. This was our best quarter ever in terms of operating profitability and free cash flow as a public company. Meares is going to explain how we made this happen in his section, but I want to take a moment to reflect on how just a year ago, we were getting questions about the longevity of blend in this tough macro.
Nima Ghamsari: And lastly, I'm excited to highlight the improvements we made to our free cash flow profitability.
Nima Ghamsari: This was our best quarter ever in terms of operating profitability and free cash flow as a public company.
Nima Ghamsari: There is going to explain how we made this happen.
Nima Ghamsari: In his section, but I want to take a moment to reflect on this.
Nima Ghamsari: Just a year ago, we were getting questions about the longevity of blend in this tough macro.
Nima Ghamsari: Now, with the new financing as well as the numbers I just mentioned around our unlevered free cash flow, we're confident in the strength and resilience of our company and our ability to continue to transform mortgage and consumer banking in tough environments like this. In environments like this, it's taken a lot of work and change to make this happen internally at Blend. And for this, I could not be prouder of the Blend team and our customers, who all make this possible.
Nima Ghamsari: Now with the new financing as well as the numbers I just mentioned around our unlevered free cash flow.
Nima Ghamsari: We're confident in the strength and resilience of our company and our ability to continue to transform mortgage and consumer banking.
Nima Ghamsari: In tough environments like this it's taken a lot of work and change to make this happen internally a blend and for this I could not be prouder of the <unk> team and our customers, who all bank as possible.
Nima Ghamsari: To wrap up the summary of Q1, we're encouraged by our progress in the last quarter and energized to focus on innovation in partnership with our customers. First, we're debt-free and have a balance sheet calibrated for long-term growth. We're still committed to achieving non-gap profitability this year, and with the equity investment from and the partnership with Valley Investments, that's only going to accelerate our growth. And second, we're on track to grow our consumer banking business and increase the value for our mortgage customers.
Nima Ghamsari: To wrap up the summary of Q1, we're encouraged by our progress in the last quarter and energized to focus on innovation and partnership with our customers.
Nima Ghamsari: First we are debt free and have a balance sheet calibrated for long term growth.
Nima Ghamsari: We're still committed to achieving non-GAAP profitability this year.
Nima Ghamsari: With the equity investment from and the partnership with our investments that's only going to accelerate our growth.
Nima Ghamsari: And second we are on track to grow our consumer banking business and increase value for our mortgage customers. Despite the challenging macro and we're well prepared to ensure our customers will take advantage of the market recovery when that eventually comes in mortgage which hopefully come sooner rather than later.
Nima Ghamsari: Despite this challenging macro environment, we're well prepared to ensure our customers will take advantage of the market recovery when that time eventually comes for mortgages, which hopefully comes sooner rather than later. Now I'll pass it over to Amir, who will go over our financial results and our outlook. Amir, over to you.
Nima Ghamsari: Now I'll pass it over to Amir who will go over our financial results and our outlook Amir over to you.
Amir Jafari: Thank you, Nima, and good afternoon, everyone. I'm pleased to be joining you today to discuss our financial results for the first quarter. We started the year strong, and I'm encouraged by the momentum of our go-to-market efforts. We are managing to grow our pipeline across our business while executing to complete deployments faster for our customers. While the economic headlines may read that higher rates are here to stay for a bit longer, our customers are busy getting ready. Building out their technology suite with Blend is the core solution to enable automation and scale as markets stabilize and prepare for the next rebound.
Amir: Thank you NEMA and good afternoon, everyone I'm pleased to be joining you today to discuss our financial results for the first quarter. We started the year strong im encouraged by the momentum of our go to market efforts, we are managing to grow our pipeline across our business, while executing to complete deployments faster for our customers.
Amir Jafari: While the economic headlines maybe reading that higher rates are here to stay for a bit longer our customers are busy getting ready building out your technology suite with blend as the core solution to enable automation and scale as market stabilized and prepare for the next rebound.
Amir Jafari: We continue to make sure our business is poised to do the same. Before I jump into the results, let me just remind you that, unless otherwise stated, all results are non-GAAP. Total company revenues in the first quarter were $34.9 million, near the high end of our guidance. We reported platform revenue of $23.8 million, also near the high end of our guidance range. Our mortgage suite revenue was $15.1 million, in line with our expectations for the seasonally low first quarter of the year.
Amir Jafari: We continue to make sure our business is poised to do the same.
Amir Jafari: Before I jump into the results. Let me just remind you that unless otherwise stated all results are non-GAAP.
Amir Jafari: Total company revenues in the first quarter were $34 9 million near the high end of our guidance.
Amir Jafari: We reported <unk> revenue of $23 8 million also near the high end of our guidance range.
Amir Jafari: Our mortgage fee revenue was $15 1 million in line with our expectations for the seasonally low first quarter a year.
Amir Jafari: As you have heard from us before, determining our market share amidst changing estimates of the total origination size has proven to be challenging. For this quarter, we have evolved our thinking and modified the presentation of our share slightly here to incorporate the different forecasts available to us until we have the Home Mortgage Disclosure Act data available, which we expect to be later this year. The main takeaway here is that our market share has remained relatively stable amidst a challenging mortgage industry for the past year.
Amir Jafari: As you heard from us before determining our market share.
Amir Jafari: Ranging estimates of the total origination size has proven to be challenging.
Amir Jafari: This quarter, we have evolved our thinking and modified the presentation of our share slightly here to incorporate the different forecasts available to us until we have the home mortgage disclosure act data available, which we expect to be later this year.
Amir Jafari: The main takeaway here is that our market share has remained relatively stable amidst the challenging mortgage industry for the past year. We calculate we ended second half of the year with a market share of 22%.
Amir Jafari: We calculate that we ended the second half of the year with a market share of 20.2%. Additionally, incorporating the various forecasts for the first half of the year tells us that our market share was 21.2%, which was 140 basis points greater than what we previously reported. This change illustrates that sizing the market based on estimated data instead of actuals can lead to volatile results that are challenging to interpret their true meaning.
Amir Jafari: Additionally, incorporating the various forecasts for the first half of the year tells us that our market share was 21, 2%.
Amir Jafari: Which was 140 basis points greater than what we previously reported.
Amir Jafari: This change illustrates that sizing the market based on estimated.
Amir Jafari: Net of actuals can lead to a volatile results that are challenging to interpret their true mean.
Amir Jafari: As we shift forward, rest assured we are focused on the areas that will grow this business and lead to further market share expansion. We are encouraged by the early traction in Q1. Our mortgage pipeline is as healthy as we've seen it since the beginning of the cycle, and we're observing early signals that our customer base is set up to be winners as the market improves. Over the long run, we know executing on these items will drive further share growth, and in the future, we will update you on our progress when we receive the finalized Home Mortgage Disclosure Act data each year.
Amir Jafari: As we shift forward.
Amir Jafari: Assured we are focused on the areas that will grow this business and lead to further market share expansion.
Amir Jafari: We are encouraged by the early traction in Q1, our mortgage pipeline is as healthy as we've seen it since the beginning of this cycle and we're observing early signals that our customer base is set up to be winners as the market improves.
Amir Jafari: Over the long run we know executing on these items will drive further share growth and in the future. We will update you on our progress when we received the finalized home mortgage disclosure act data each year.
Amir Jafari: Turning to another highlight our mortgage suite economic value per fund alone rose by approximately $7 over the same period last year.
Amir Jafari: Turning to another highlight, our mortgage suite economic value per funded loan rose by approximately $7 over the same period last year, reaching $92. The step up in the per-funded loan rates is primarily the result of higher attach rates on our value of creative add-on products.
Amir Jafari: <unk> $92.
Amir Jafari: The snap up in the per funded loan rates are primarily the result of higher attach rates on our value accretive add on products.
Amir Jafari: Shifting to the other key part of our platform, consumer banking products continue to drive expansion of our footprint with customers, with revenue for those products growing 29% year over year to a total of $6.7 million. Our pace of growth is accelerating as we launch new deployments and add incremental platform fees, as well as more adoption of our full suite of solutions. We saw strong increases in funding for a large credit card customer and the benefit of our closing solution being applied to more home equity loans.
Amir Jafari: Shifting to the other key part of our pipeline consumer banking products continue to drive expansion of our footprint with customers with revenue for those products growing 29% year over year to a total of $6 $7 million.
Amir Jafari: Our pace of growth is accelerating as we launch new deployment and add incremental platform fees as well as more adoption of our full suite of solutions.
Amir Jafari: We saw strong increases in funding for a large credit card customer and the benefit of our closing solution being applied to more home equity loans.
Amir Jafari: More importantly, we are continuing to execute at a pace that will deliver results in line with the 35% CAGR that we shared at our investor day. We also generated 2.1 million of professional services revenue, up 21% from last year due to fees associated with our ongoing slate of consumer banking and mortgage deployment. We reported title revenue of $11.1 million, also beating the midpoint of our guidance. Moving on to gross profit, total company non-GAAP gross profit was $18.3 million.
Amir Jafari: More importantly, we are continuing to execute at a pace that will deliver results in line with the 35% in CAGR that we shared at our Investor day.
Amir Jafari: We also generated $2 1 million of professional services revenue up 21% from last year due to fees associated with our ongoing slate of consumer banking and mortgage deployments.
Amir Jafari: We reported title revenue of $11 1 million also beating the midpoint of our guidance range.
Amir Jafari: Moving on to gross profit total company non-GAAP gross profit was $18 3 million.
Amir Jafari: Our non-GAAP Blend Platform segment growth margins were 68% compared with 67% the year prior. For software, we reported non-GAAP software gross margins of 76%, up from 75% from the same period last year. Our non-GAAP title margins came in at 19% for the first quarter, increasing meaningfully year over year from this time last year when we reported negative gross margins for title. This improvement reflects the optimization of all of our processes and highlights our ability to deliver differentiated benefits to our customers.
Amir Jafari: Our non-GAAP blend platform segment gross margins were 68% compared with 67% in the year prior.
Amir Jafari: For software, we reported non-GAAP software gross margins of 76% up from seven.
Amir Jafari: <unk>, 5% from the same period last year.
Amir Jafari: Our non-GAAP title margins came in at 19% for the first quarter, increasing meaningfully year over year from this time last year, when we reported negative gross margins for title.
Amir Jafari: This improvement reflects the optimization of all of our processes and highlights our ability to deliver differentiated benefits to our customers and we've done a lot of the work on improving the margin profile for our title business and we are now in a position to provide financial leverage.
Amir Jafari: And we've done a lot of work on improving the margin profile for our title business, and we are now in a position to provide financial leverage. Non-GAAP operating costs for the first quarter totaled $29.5 million compared with $47.1 million in the previous year.
Amir Jafari: non-GAAP operating costs for the first quarter totaled $29 $5 million.
Amir Jafari: Compared with $47 1 million in the previous year.
Amir Jafari: This improvement reflects the full realization of all cost savings initiatives we started last year and additional programs that boost efficiency and generate additional synergies across the business. As we move forward, these initiatives are gaining momentum, and we continue to identify more areas for efficiency without compromising sustainable growth and investment. Our non-gap loss from operations was 11.2 million in Q1, coming in well ahead of the high end of our guidance. We expect more improvement in Q2 and reiterate that we're tracking towards reporting non-gap operating profitability in Q4 of this year.
Amir Jafari: This improvement reflects the full realization of our cost savings initiatives, we started last year and additional programs that boost efficiency and generate additional synergies across the business.
Amir Jafari: As we move forward. These initiatives are gaining momentum and we continue to identify more areas for efficiency without compromising sustainable growth and investment.
Amir Jafari: Our non-GAAP loss from operations was $11 2 million in Q1 coming in well ahead of the high end of our guidance range.
Amir Jafari: We expect more improvement in Q2, and reiterate that we are tracking towards reporting non-GAAP operating profitability in Q4 of this year.
Amir Jafari: While we continue to take efficiency actions that we believe could accelerate this earlier in the year, the timing continues to depend on the level of origination activity. We are also scaling up certain areas where we see an immediate payback for our investors. As Nima has shared already, the depth of our pipeline and increasing speed of our go-to-market motion is an encouraging signal for us to begin to reignite our investment in this area, and we are doing so with a focus on sales efficiency and scale.
Amir Jafari: While we continue to take efficiency actions that we believe could accelerate this earlier in the year. The timing continues to depend on the level of origination activity.
Amir Jafari: We are also scaling up certain areas, where we see an immediate payback for our investments.
Amir Jafari: As <unk> shared already the depth of our pipeline and increasing speed of our go to market motion is an encouraging signal for us to begin to reignite our investment in this area and are doing so with a focus on sales efficiency and scale.
Amir Jafari: That said, we're unwavering in our pursuit of profitability, and our consistent execution here should leave you confident that we're doing everything in our power to achieve this important milestone by the year's end. For the first quarter, our remaining performance obligations landed at $93 million, which represents an increase of $49.1 million compared to the first quarter of 2023, when our appeal was $43.9 million. RPO in the first quarter decreased by 1.9 million compared to Q4 of 2023.
Amir Jafari: That said, we are unwavering in our pursuit of profitability and our consistent execution here should we be confident that we're doing everything in our power to achieve this important milestone by year's end.
Amir Jafari: For the first quarter, our remaining performance obligations landed at 93 million, which represents an increase of $49 1 million compared to the first quarter of 2023, when <unk> was $43 9 million.
Amir Jafari: <unk> in the first quarter decreased by $1 9 million compared to Q4 of 2023 Keith.
Amir Jafari: Keep in mind that the first quarter of the year is typically a slower period for sales activities and their associated renewals. However, new customer signings and renewals have already picked up in the second quarter, including the seven-digit contract we closed on last week that Nima shared earlier.
Amir Jafari: Keep in mind that the first quarter of the year is typically a slower period for sales activities and their associated renewals.
Amir Jafari: New customer signings and renewals have already picked up to date in the second quarter, including a seven digit contract. We've closed on last week the NEMA shared earlier.
Amir Jafari: Q1 resulted in a significant improvement in our cash burn, as measured by our free cash flow. Free cash flow for the quarter was just $5.8 million away from breakeven, which compares to negative $47 million in the same quarter last year. Unlevered free cash flow, which excludes the impact of interest, was only 1.3 million away from break-even for the quarter. Given the proximity to breakeven, it made sense to remove the interest burden from holding debt, which we accomplished following the Haveli investment.
Amir Jafari: Q1 resulted in significant improvement in our cash burn as measured by our free cash flow.
Amir Jafari: Free cash flow for the quarter was just $5 8 million away from breakeven, which compares to a negative $47 million in the same quarter last year.
Amir Jafari: Our unlevered free cash flow, which excludes the impact of interest expense was only $1 3 million away from the breakeven for the quarter.
Amir Jafari: Given the proximity to breakeven.
Amir Jafari: Hence to remove the interest burden from holding debt, which we accomplished following the <unk> investment.
Amir Jafari: We achieved this free cash flow improvement as we executed with discipline across contract standardization, with more customers opting to make meaningful commitments and pre-purchases up front. Additionally, we've moved some of our cost structure towards a variable basis, aligning the timing of the expense with revenue.
Amir Jafari: We achieved this free cash flow improvement as we executed with discipline across our contract standardization with more customers opting to make meaningful commitments and pre purchases upfront.
Amir Jafari: Additionally, we have moved some of our cost structure towards a variable basis aligning the timing of the expense with revenue.
Amir Jafari: In combination, these changes have resulted in favorable outcomes for our free cash flow profile. These items, along with a removal of our cash interest burden, are expected to have meaningfully accelerated our timeline to generating positive cash flow and providing the business with a sustainable cash profile. We've been guiding you to non-GAAP operating profitability by the year's end and assumed we'd reach positive free cash flow sometime shortly after that. This quarter's financial results, and our unlevered free cash flow, in particular, is a positive indicator in this area and a step in the right direction for our financial goals. Now turning to the balance sheet. Our cash, cash equivalents, and marketable securities, inclusive of restricted cash, totaled $135 million as of the end of the first quarter.
Amir Jafari: In combination these changes have resulted in favorable outcomes from our free cash flow profile.
Amir Jafari: These items along with the removal of our cash interest burden are expected to have meaningfully accelerated our timeline to generating positive cash flow and providing the business with the sustainable cash profile.
Amir Jafari: We've been guiding you to non-GAAP operating profitability by year's end and assume we'd reached positive free cash flow sometime shortly after that.
Amir Jafari: This quarter's financial results and our Unlevered free cash flow in particular is a positive indicator in this area and a step in the right direction for our financial goals.
Amir Jafari: Now turning to the balance sheet.
Amir Jafari: Our cash cash equivalents in marketable securities inclusive of restricted cash totaled $135 million as of the end of the first quarter.
Amir Jafari: Given the actions we've undertaken, we are confident our business remains well capitalized, and we have sufficient liquidity based on our current projections and in this macro environment. Lastly, let me move to our outlook for the second quarter of 2020. We expect platform revenue to be between $27 million and $30 million in Q2 2024, and we expect our title business revenue to be between $10.5 million and $11.5 million. Our total company revenue outlook is expected to be between $37.5 million and $41.5 million for Q2.
Amir Jafari: Given the actions we've undertaken we are confident in our business remains well capitalized and we have sufficient liquidity based on our current projections and in this macro environment.
Amir Jafari: Lastly, let me move to our outlook for second quarter of 2024.
Amir Jafari: We expect platform revenue to be between $27 million and $30 million in Q2 2024 weeks.
Amir Jafari: We expect our title business revenue to be between $10 5 million and $11 5 million.
Amir Jafari: Our total company revenue outlook is expected to be between $37 5 million and $41 5 million for Q2.
Amir Jafari: Our guidance is based on an internal assessment of customer level growth, as well as our own outlook for Q2 origination activity based on the application volume observed to date through our customer base. Our total non-GAAP net operating loss is expected to be between $7.5 million and $10.5 million for Q2, with the midpoint representing approximately a 50% improvement year-over-year. With that, thank you again for joining us. Bryan, we're now ready for questions.
Amir Jafari: Our guidance is based on an internal assessment of customer level growth as well as our own outlook of Q2 origination activity based on the application volume observed to date through our customer base.
Amir Jafari: Our total non-GAAP net operating loss is expected to be between $7 5 million and $10 5 million for Q2.
Amir Jafari: With the midpoint, representing approximately a 50% improvement year over year.
Speaker Change: With that thank you again for joining Brian we're now ready for questions.
Bryan Michaleski: Thank you, Nima and Amir, for your remarks. We will now begin the Q&A portion of the call. As a reminder, if you wish to ask a question, please raise your hand in the portal. Our first question today comes from Dylan Becker with William Blair. Dylan, you can unmute, and please go ahead.
Bryan: Thank you Naeem and Amir for your remarks, we will now begin the Q&A portion of the call. As a reminder, if you wish to ask a question. Please raise your hand and the portal.
Bryan Michaleski: Our first question today comes from Dylan Becker with William Blair.
Speaker Change: You can now mute and please go ahead.
Dylan Becker: Hey guys, appreciate you taking the question. I guess to start off, Nima, obviously a lot of emphasis on the capital injection and kind of the flexibility that affords the business. I guess what's the right way of thinking about what that enables you guys to utilize those savings towards, whether that's reinvesting in product, or going to market to capitalize on the consumer opportunity. Maybe help us digest kind of what this helps unlock.
Dylan Becker: Hey, guys.
Dylan Becker: Appreciate you taking the question I guess.
Dylan Becker: To start off name, obviously, a lot of emphasis on the capital injection in kind of the flexibility that the business I guess.
Dylan Becker: What's the right way of thinking about what that enables you guys to utilize those savings towards whether that's reinvesting in product go to market to capitalize on the consumer opportunity, maybe maybe help me or help us digest kind of what this helps unlock.
Nima Ghamsari: Yeah, so yeah, I think part of it is the new capital. And then, you know, to your point there, the interest expense as well was quite significant in terms of the savings there.
Nima Ghamsari: Yes, so I think part of it is the new capital and then to your point there the interest expense as well was quite significant in terms of the savings there and so I think what we're looking at is is growing the business on two fronts. One is investing more in the platform investing more in our mortgage product and the consumer banking products and the underlying platform.
Nima Ghamsari: Self that allows our customers to get more value from our suite.
Nima Ghamsari: And so, you know, I think what we're looking at is growing the business on two fronts. One is investing more in the platform, investing more in our mortgage product and the consumer banking products and the underlying platform itself, which allows our customers to get more value from our suite. But on top of that, yeah, we're also going to invest more in the go-to-market side, and we're seeing our pipeline grow.
Nima Ghamsari: But on top of that yes, we're also going to invest in more.
Nima Ghamsari: More on the go to market side, and we're seeing our pipeline grow.
Nima Ghamsari: I haven't seen a pipeline this strong, and I think maybe it's because the macro is stabilizing a little bit. I haven't seen a pipeline this strong in a long time, probably since COVID times. And so we want to make sure that we're there for our customers; we want to make sure our customers get ready for when interest rates come down, have better automation in place, so they can take advantage of the lower interest rate environment themselves.
Nima Ghamsari: I haven't seen our pipeline is strong and I think maybe because of the macro stabilizing a little bit I haven't seen our pipeline is strong and our long time, probably since Covid times and.
Nima Ghamsari: And so we want to make sure that we're there for our customers we want to make sure our customers get ready for when interest rates come down have better automation in place. So they can take advantage of the lower interest rate environment themselves and so.
Nima Ghamsari: Yes, I think those are kind of the primary areas that will we'll look at in <unk>.
Nima Ghamsari: And so, yeah, I think those are kind of the primary areas that we'll look at, but just to reiterate, we're also still committed, and we believe we can achieve non-gap operating profitability by the end of the year as well.
Nima Ghamsari: But just to reiterate we're also still committed and we believe we will we can achieve that.
Nima Ghamsari: non-GAAP operating profitability by the end of the year as well.
Unknown Attendee: Sure. No, that makes perfect sense.
Speaker Change: Sure no that makes that makes perfect sense and you did call out as well and I think your prepared remarks.
Nima Ghamsari: And you did call out as well, and I think your prepared remarks around the consumer suite and kind of the high velocity and high ROI that you guys are offering there, delivering there. I guess what's the, how are you thinking about the opportunity or the potential here to see that dynamic snowball? It seems like the pipeline's growing very healthily there, but the implications of customers driving adoption and seeing kind of incremental share gains and benefits and how that can have kind of a drag-along effect from the broader ecosystem, it's one that seems to have some pretty healthy momentum behind it. Yeah, I mean, I actually do think, interestingly,
Unknown Attendee: Round, the consumer suite and kind of the high velocity and high ROI that you guys are offering their delivering there I guess.
Nima Ghamsari: I guess, what's the how are you thinking about the opportunity of the potential here to see that dynamic a snowball. It seems like the pipeline is growing very healthily, there, but the implications of customers driving adoption and seeing kind of incremental share gains and benefits and how that can have kind of a drag along effect from the broader ecosystem. It's one that that seems to have some some.
Nima Ghamsari: Pretty healthy momentum behind it.
Nima Ghamsari: Yeah, I mean, interestingly, even though we have such momentum there, it's kind of masked because as lending markets tighten when rates go up, and people are worried about people's personal balance sheets and doing less personal loans and less home equity lines, banks and credit unions are doing fewer than they were maybe a year or two years ago. But despite that, we're growing that business because, to your point, we're just getting more customers.
Speaker Change: Yes, I mean, I do think actually interestingly, even though we have such momentum there it's that kind of masked because.
Nima Ghamsari: As lending markets to tighten up when rates go up.
Nima Ghamsari: And people are worried about people's personal balance sheets, and doing less personal loans unless home equity lines.
Nima Ghamsari: The banks and credit unions are doing are getting fewer than they were maybe a year or two years ago.
Nima Ghamsari: But despite that we're growing that business because to your point, we are just getting more customers and I actually think it is I'm seeing early indications of it starting to snowball already.
Nima Ghamsari: And I actually think it is, I'm seeing early indications of it starting to snowball already; people want to be digital. But there are very few solutions that work at the top of the market and all the way down to the smallest community bank and credit union.
Nima Ghamsari: <unk>.
Nima Ghamsari: People want to be digital.
Nima Ghamsari: There are very few solutions that work at the top of the market and all the way down to the smallest community bank and credit Union.
Nima Ghamsari: And we have a solution that's, you know, I believe is best in class and gets a consumer through the funnel the fastest and in the most digital and automated way. And we're kind of starting to see that snowball happen in the pipeline numbers and the actual rollouts, the consumer banking transactions, we don't disclose this right now, but we're trying to see those numbers really start to grow internally. So we're excited to just keep building on that momentum.
Nima Ghamsari: And we have a solution. That's I believe is best in class and gets a consumer through the funnel the fastest and the most digital and automated way.
Nima Ghamsari: And we're kind of starting to see that snowball happenings in the pipeline numbers in the actual rollouts the consumer banking transactions, we don't disclose this right now but.
Nima Ghamsari: We're starting to see those numbers really start to grow and internally. So we're excited too.
Nima Ghamsari: And actually, one of the maybe last points I'll make on this is that the most interesting part of any of these businesses is not necessarily the initial use case that we got with. So as you get customers in any vertical software company, they come to you with the next thing that they want support with or the next thing they want help with. And so it does become a geometric curve over time, because then you have signed 10 customers, and then you add, you know, those 10 products live with them, they come to you with 10 more things while you go sign 10 or 15 more customers on top of that. And so suddenly, these things become multiplicative. And I believe that our platform is best positioned to take advantage of those things. And so we're excited about the future.
Nima Ghamsari: Just keep building on that momentum and actually one of the maybe last point I'll make on this is.
Nima Ghamsari: The most interesting part of any of these businesses is not necessarily the initial use case that we got with <unk>.
Nima Ghamsari: So as you get customer successful and any vertical software company.
Nima Ghamsari: They come to you with the next thing that they want support with over the next thing they want help with.
Nima Ghamsari: And so it does become a geometric curve overtime. Because then you have signed 10 customers and then you add does 10 products live with them. They come to you with 10 more things. While you guys signed 10 or 15 more customers on top of that and so suddenly these things become multiplicative in it.
Nima Ghamsari: Believe that our platform is best positioned to take advantage of those things.
Nima Ghamsari: And so we're very excited about the future.
Speaker Change: That's great. Thank you.
David B. Unger: Our next question comes from David Unger with Wells Fargo. David, you can unmute and go ahead.
Nima Ghamsari: Our next question comes from David <unk> with Wells Fargo. David Go ahead.
David B. Unger: Great, thank you. Thanks for taking the questions. Can we please double-click on the key operational best practice? (inaudible)
David B. Unger: Great. Thank you thanks for taking the questions.
David B. Unger: Can we please double click on the key operational best practices you plan to explore a partnership anything initially pop out you obviously, you've made a number of great efficiencies in the past couple of years, but would love to hear more about the next strategic review. Thank you.
Unknown Executive: What we plan to do is really just to double down on the momentum that we've been creating, David. So, first and foremost, I'm going to take it from what Nima mentioned.
David B. Unger: While we plan to do is really just a double down on the momentum that we've been creating David So first and foremost I'm gonna carrier from what Nemo mentioned on the go to market side being an incredibly just intuitive in terms of where we need to spend and ensuring that we get the right ROI that serves our customers. It also serves what we're solving for it will be a key area.
Unknown Executive: On the go-to-market side, being incredibly intuitive in terms of where we need to spend and ensuring that we get the right ROI that serves our customers and also serves what we're solving for will be a key area. Making sure that we build and leverage really what we've said a few times now is that Builder actually unlocks opportunities for how we build internally, how we deploy at a faster rate, but also how our customers think about their future deployments.
Unknown Executive: Making sure that we build and leverage really what we've said a few times now is that builder actually unlocks opportunities for how we build internally how we deploy at a faster rate, but also how our customers think about their future deployment. That's another area. These are these are probably the two biggest kind of I would say opportunity areas for us and then just to close it out on the G&A side, just know that that's in <unk>.
Unknown Executive: That's another area. These are probably the two biggest kind of, I would say, opportunity areas for us. And then, just to close it out on the G&A side, just know that that's an area that we're going to continue to kind of keep focused on and be best in class in terms of what we do.
Unknown Executive: Area that we're going to continue to kind of keep focused on and be best in class in terms of what we do.
Unknown Executive: Okay, thanks. And just a follow-up for me, you know, I know you're not giving full year guidance, but can you, you know, it's obviously difficult to forecast for us on the street, but can you just step through, you know, the potential shape for the rest of the year, just based on your internal forecast, volumes, and market share? Thank you.
Speaker Change: Okay. Thanks, and just a follow up for me I know youre, not giving a full year guidance, but can you.
Unknown Executive: It's obviously difficult to forecast for crossing the street, but can you just step through the potential shape for the rest of the year just based on your internal forecast volumes market share. Thank you.
Unknown Executive: Yeah, absolutely. I think to your point, you probably said it better than I will.
Speaker Change: Yes, absolutely I think to your point.
Speaker Change: You, probably said it better than I will one there's very little visibility when you think about the full year and we see a lot of this volatility back and forth and so what we do is we try to stay focused on the things that we can control I'll speak to market share in just one second I think what's really important for us as we share. This is the following though.
Unknown Executive: One, there's very little visibility when you think about the full year, and we see a lot of this volatility back and forth. And so what we do is we try to stay focused on the things that we can control. I'll speak to market share in just one second. But I think what's really important for us as we share this is the following, though. Putting aside what's happening on a macro basis, which again, what we control is what we deliver for our customers.
Unknown Executive: Aside what's happening on a macro basis, which again, what we control is what we deliver for our customers youre seeing that come to fruition with our economic value per funded loan youre, saying, what the progress has been on the <unk> side, which is really how we're in essence able to sign new logos and really expand on the historical practices that we've had from our contracts amortization perspective.
Unknown Executive: You're seeing that come to fruition with our economic value per funded loan. You're seeing the progress that has been made on the RPO side, which is really how we're, in essence, able to sign new logos and really expand on the historical practices that we've had from a contract standardization perspective. And then from a consumer banking perspective, to be able to see an uptick in terms of just the overall pipeline that we spoke about a quarter ago and really what Nima referenced this quarter, that is how we're seeing this year kind of come together.
Unknown Executive: And then from a consumer banking to be able to see an uptick in terms of just the overall pipeline that we spoke to about a quarter ago and really what Nemo reference this quarter that is how we're seeing this year kind of come together we're seeing.
Unknown Executive: We're seeing strong execution so far, and we want to continue down this path. And then David, to your point though, about macro, we see this kind of band of events that can happen. We see a lot of data points coming into us. We always say to you that we're not economists. What we try to really just become very focused on is what's happening with our customers, the data that we have visibility into, with regard to applications, where they're continuing to win and how we kind of help them do so, so that we can be balanced in market share, but then really again, just take advantage of the unit economics, which again come across in things like our economic value per fundament
Unknown Executive: Strong execution execution, so far we want to continue down this path and then David to your point, though about macro we see this this kind of band of events that can happen, we see a lot of data points coming into us we always say to you, though that we're not economists what we try to really just become very focused on is what's happening at our customers. The data that we have visibility to with regards to <unk>.
Unknown Executive: Applications, where they're continuing to win and how we kind of help them do so so that we can be balanced in market share, but then really again just take advantage of the unit economics, which again come across in things like our economic value per funded loan.
Unknown Executive: Yes.
Ryan John Tomasello: Our next question comes from Bryan Tomasello with KBW. Bryan, you can please unmute and go ahead.
Unknown Executive: Our next question comes from Brian Tomasello with <unk>, Brian you can please go ahead.
Ryan John Tomasello: Hi, everyone. Thanks for taking the questions. Just on consumer banking, if you can elaborate more, Nima, on the go-to-market strategy there. In your prepared remarks, you talked about broadening the reach of that product, you know, beyond the top tier of FIs that you originally were focused on. What additional opportunities does that open up in terms of other categories of customer sets that you think this might resonate more with? and also how you might look to lean more on systems integrators to expand the reach there? Thanks. Yeah, so on the topic of consumer banking, the last probably.
Ryan John Tomasello: Hi, everyone. Thanks for taking the questions.
Speaker Change: Our consumer banking, if you can elaborate more nemo and the go to market strategy there.
Ryan John Tomasello: In your prepared remarks, you talked about broadening the <unk>.
Speaker Change: Reach about products beyond the top tier.
Speaker Change: You originally were focused on.
Speaker Change: What additional opportunities does that open up in terms of other categories of customer sets.
Ryan John Tomasello: This is Mike resonate more with <unk>.
Speaker Change: And also how are you.
Speaker Change: Look to lean more on the systems integrators.
Speaker Change: To expand the reach there thanks.
Speaker Change: Yes, so on the topic of consumer banking in the last probably.
Nima Ghamsari: For two years, we've been getting that product suite off the ground. Just to give a little historical context, at our entry point into mortgage, we started at the top of the market. And, you kind of see that in the numbers. As we mentioned, more than half of the top 10 credit unions buy assets as customers of ours. A number of the large, net regional and super regional banks, as well as some of the largest mortgage, and independent mortgage banks are customers.
Speaker Change: Two years is we've been getting that product suite off the ground just to give you a little historical context, our entry point into mortgage we start at the top of the market and you kind of see that in the numbers with.
Nima Ghamsari: Like we mentioned more than half of the top 10 credit unions by assets as customers of ours.
Nima Ghamsari: Number of the large.
Nima Ghamsari: Regional and Super regional banks as well as.
Nima Ghamsari: Some of the largest mortgage independent mortgage banks as being customers and once we did that once we had the success there.
Nima Ghamsari: And once we did that, once we had the success there, we turned that into a repeatable practice that we took to the rest of the market because we want to make sure that this technology can be in any consumer's hands and any lender's hands. And so we're taking the same playbook here.
Nima Ghamsari: We turn that into a repeatable practice that we took to the rest of the market because we want to make sure that this technology can be in any consumers' hands in any lenders' hands and so we're taking the same playbook here. The last couple of years. We spent a lot of time with the top 2030 40 financial institutions bank on the consumer banking side too.
Nima Ghamsari: In the last couple of years, we spent a lot of time with the top 20, 30, 40 financial institutions on the consumer banking side to make sure that we could build a product that would scale to the very top of the market. I think one thing that you probably noticed, when you cover a lot of companies, you probably noticed that a lot of them don't, when they offer fintech solutions to these customers, they very rarely touch the top five or six banks. There's probably one or two examples.
Nima Ghamsari: Make sure that we can build a product that will scale to the very top of the market.
Nima Ghamsari: The one thing that you probably you cover a lot of companies you probably noticed that a lot of them don't when they offer fintech solutions.
Nima Ghamsari: These customers they very rarely touched the top five or six banks, that's probably one or two examples. So we have a solution where the top top bank in the country can use our platform and that same platform and a more prescriptive way less configured way can be used by the number 1000 financial institution in the country and so yes.
Nima Ghamsari: But we have a solution where the top top bank in the country can use our platform. And that same platform, in a more prescriptive way, in a less configured way, can be used by the number 1000 financial solution in the country. And so, it's put some numbers around that probably last year we were focused on the top 30 or 40 financial institutions. And now we're thinking more about the top 1000 financial institutions.
Nima Ghamsari: <unk> put out some numbers around that probably yeah last year, we were focused on the top 30 or 40.
Nima Ghamsari: Financial institutions, an hour, we're thinking more about the top 1000 financial institutions.
Nima Ghamsari: You know, the one I mentioned that signed a pretty good-sized contract with us in the last week here wasn't a top 100 credit institution, sorry, credit union, or bank; it was just, sorry, a financial institution, but they have a lot of needs. And it's an underserved part of the market that is desperate for new technology. And we think we can give it to them in a way that's beneficial to them financially, helps them grow their deposits, and grow their lending book, but is also beneficial to us financially.
Nima Ghamsari: The one I mentioned that signed up a pretty good sized contract with us in the last week here.
Nima Ghamsari: Wasn't a top 100 credit institution, sorry, a credit Union or bank, just sorry financial institution, but.
Nima Ghamsari: But they have a lot of needs and it's an underserved part of the market that is desperate for new technology, and we think we can give it to them in a way that's beneficial to them financially helps them grow their deposits grow their lending book.
Nima Ghamsari: But also beneficial to us financially.
Ryan John Tomasello: Great, thanks for that color. And then, you know, just continuing on the topic of consumer banking. If you can just provide additional color around the type of deal that you're typically executing on here in terms of if this is a written replacement of a legacy competitor, replacing an in-house solution, just any color on how that typically looks for the clients that you've signed so far in consumer banking. And then at your investor day last fall, you talked about some aspirations, the optionality of expanding into commercial banking, also international, if there' Thanks.
Nima Ghamsari: Great. Thanks for that color and then just continuing on the topic of consumer banking.
Ryan John Tomasello: If you can just provide additional color around the type of.
Ryan John Tomasello: When type of deal that Youre typically executing on here in terms of if this is.
Ryan John Tomasello: We will place a.
Ryan John Tomasello: Our legacy competitor.
Ryan John Tomasello: Replacing an internal solution just any color on how that typically looks for clients that we've signed so far in consumer banking and then at your Investor Day last fall you talked about some aspirations.
Ryan John Tomasello: Optionality is exceeding its commercial banking also international.
Ryan John Tomasello: Just any update you can provide on those initiatives as well thanks.
Unknown Executive: [inaudible] Yeah, let me start with the last one. The last one, because I think you asked about system integrators.
Speaker Change: Yes, let me start with the last.
Speaker Change: The last one because I think you asked about system integrators I think those are areas in particular international aware the size could be particularly helpful.
Nima Ghamsari: I think those are areas, in particular international, where the SIs could be particularly helpful. And on the commercial side, there is no update there, but it is an area of opportunity. And we see a lot of demand from our customers around that, and we just want to make sure we're measured and focused in what we do. And when we deliver something, it's the best in the market. We're not going to deliver something that we think is just average or above average. So we'll, when the time is right, we'll, we'll...
Nima Ghamsari: And on the on the commercial side no update there, but it is an area of opportunity and we see a lot of demand from our customers around that and we just want to make sure we're measured and focused in what we do and when we deliver something that's the best in the market, we're not going to deliver something that we think is just average or above average.
Nima Ghamsari: So when the time is right well we'll.
Nima Ghamsari: Explore that solution and go to market with that solution. Unknown Speaker, And then on the first part of your question, what kinds of solutions are we replacing when we walk in the door here? It is oftentimes some sort of rip and replace in the sense that they had something in place, typically very lightweight. You know, so for example, if you go to your local regional bank or community bank or community credit union.
Nima Ghamsari: Explore that solution and go to market with that solution.
Nima Ghamsari:
Speaker Change: And then on the first part of your question on.
Nima Ghamsari: What kinds of solutions already replacing when we go in the door here.
Nima Ghamsari: Often times it is some sort of rip and replace in the sense that they had something in place its typically very lightweight.
Nima Ghamsari: So for example, <unk>.
Nima Ghamsari: Going to your local regional bank or a community banker.
Nima Ghamsari: At Union.
Nima Ghamsari: You might go to their website and have a few fields you can fill out to open a new account, and then they'll tell you to walk into a branch or to get a personal loan. You'll fill out a lead form or a credit card. Maybe they'll have a little bit more technology in place, but they won't issue you their credit card digitally.
Nima Ghamsari: You might go to the website I think I have a few fields you can fill out to open a new account and then they'll tell you to walk into a branch or to get a personal loan you fill out a lead feed form our credit card, maybe they'll have a little bit more technology in place, but they won't issue either credit card digitally and so it would typically be a lighter weight.
Nima Ghamsari: And so it will typically be a lighter weight approach to these products. And they lean a lot on people internally, which I think is good from a relationship aspect, but not great from a reach of what customers want, and consumers want, and not great from an efficiency standpoint for the bank or credit union. So a lot of times, it's replacing a solution like that. And now also, we're starting to see, you know, we launched a customer in Q1 that was a rip and replace of a more modern competitor because investing in these products is, it's an ongoing effort.
Nima Ghamsari: Our approach to these products and they are lean a lot on people internally, which I think is good from a relationship aspect, but not great from a reach of what customers want consumers want and not great from an efficiency standpoint for the bank or credit Union. So.
Nima Ghamsari: A lot of times, it's replacing a solution like that.
Nima Ghamsari: I'll also we're starting to see we'd be lunch or customer in Q1 that was a rip and replace of a more modern competitor because investing in these products is it's an ongoing effort.
Nima Ghamsari: It takes a lot of energy, and I think our platform, the BlendBuilder platform, makes it possible for us to be not just in these markets, but, like I said earlier about commercial banking, we want to be the best in these markets and every one of these product areas over time. And so we have to take that measured approach, but we're starting to see some of that as well.
Nima Ghamsari: It takes a lot of energy.
Nima Ghamsari: And I think our platform to blend builder platform makes it possible for us to be not just in these markets, but like I said earlier about commercial banking, we want to be the best in these markets and every one of these product areas over time and so we've got to take that measured approach, but we're starting to see some of that as well.
Joseph Anthony Vafi: Our next question comes from Joseph Vafi with Canaccord Genuity. Joe, you can please unmute. Go ahead.
Nima Ghamsari: Our next question comes from Joseph <unk> with Canaccord Genuity, Joe you can please go ahead.
Joseph Anthony Vafi: Thanks, Bryan. And congratulations to the whole team here on good progress operationally and on the balance sheet as well. Great, great progress.
Joseph Anthony Vafi: Thanks, Brian and congrats to the whole team here on good progress operationally and on on the balance sheet as well great great progress.
Nima Ghamsari: Just one, you know, just listening to your prepared remarks, Nima, I mean, there was a lot of credit union in there, both on mortgages and deposits. And I think you might actually, David Unger, Unknown Attendee, Nima Ghamsari, Ryan Tomasello, Joseph Meares, Dylan Becker, Unknown Attendee, Nima Ghamsari, Bryan Michaleski, Sebastian Joll I know that there's a war for deposits, and credit unions have kind of been losing ground compared to other financial institutions.
Nima Ghamsari: One.
Nima Ghamsari: Listening to your prepared remarks, you name it I mean.
Nima Ghamsari: There was a lot of credit Union and they're both on mortgage.
Nima Ghamsari: Posits and I think you might've actually.
Nima Ghamsari: David that maybe you've tailored those solutions, a little more to the credit Union market.
Nima Ghamsari: So maybe without giving away any secret sauce or anything.
Nima Ghamsari: <unk>.
Nima Ghamsari: Why are we hearing so much about the credit Union channel right now I know that there's a war for deposits and credit unions have kind of been.
Nima Ghamsari: Been losing ground compared to other financial institutions, but.
Nima Ghamsari: But, you know, this was kind of, you know, maybe, you know, less discussed back when you did your IPO, and now, all of a sudden, there's a lot of credit union action. Just so you know, it would be helpful to get a view of this particular market, and then I'll get a follow-up. Yeah, and I think some of this comes down to timing, Joe.
Nima Ghamsari: This was kind of.
Nima Ghamsari: Maybe less discussion.
Nima Ghamsari: I guess when you did your IPO now all of a sudden there is a lot of credit Union action.
Speaker Change: Just be helpful to get out of you.
Speaker Change: You have this particular market and then I'll get out of a follow up.
Nima Ghamsari: Yeah, and I think some of this comes down to timing Joe.
Nima Ghamsari: You know, we have four of the top 10 banks by assets as customers, too. And, you know, many more in the top 50.
Nima Ghamsari: We have four of the top 10 banks by assets as customers too.
Nima Ghamsari: And many more of the top 50.
Nima Ghamsari: So I don't want to say that our solutions only work for credit unions, but maybe the reason why now with credit unions is, one, it is a historically underserved space by technology providers. And I do believe that they want to continue to grow, and they are member-owned organizations. And so they want to continue to serve their members in the best way possible. And one nice thing that's common among every credit union I've talked to is that
Nima Ghamsari: Don't want to say that our solution to only work for credit units, but maybe the reason why now with credit unions is one it is a historically underserved space by technology providers.
Nima Ghamsari: And I do believe that they want to continue to grow and they their member owned organizations and so they want to continue to serve their members and the best way possible and one nice thing that's common among every credit Union I've talked to is.
Nima Ghamsari: They are all very focused on member experience. And so some of these questions, you know, they come down to prioritization, and so they prioritize member experience first, whereas, you know, we have also a number of the top 10 independent mortgage banks as customers as well. And so, you layer all these things together, and they'll have different priorities sometimes.
Nima Ghamsari: They are all very focused on member experience and so some of these questions.
Nima Ghamsari: They come down to prioritization and so they prioritize member experience first whereas now we have also a number of the top 10 independent mortgage banks as customers as well.
Nima Ghamsari: And so you know you layer all these things together and they'll have different priorities, sometimes and right now the credit units all have priorities around that member experience and so that's really good for us.
Nima Ghamsari: And right now, the credit unions all have priorities around the member experience, and so that's really good for us, good for our product suite. And we're going to make sure we make them aware that we have this amazing solution that can change their business. And so we're excited to work with a lot of them and take a leadership position.
Nima Ghamsari: But for our product suite, and we're going to make sure we.
Nima Ghamsari: Make them aware that we have this amazing solution that can change their business and so we're we're excited to work with a lot of them.
Nima Ghamsari: Take a leadership position in that industry.
Joseph Anthony Vafi: So I know you mentioned you had a follow-up question just to see if you got one. Yeah, I do. Thanks, Brian.
Speaker Change: So I know you mentioned you had a follow up question just.
Speaker Change: Got one yes I do.
Brian: Thanks, Brian.
Joseph Anthony Vafi: Maybe just on the CLOSE product, I know it sounds like, you know, it's doing really well, and you mentioned that you got an attache on one of your largest customers. It'd just be interesting to know kind of where CLOSE is on a penetration basis across your mortgage customer base, and then maybe drill down a bit into how the, you know, the regulatory environment is helping this to go electronic. Are we fully there, like in all states? Is this a process, or is it kind of a done deal already in terms of electronic CLOSE? Thanks, guys. Well, that's a good question.
Speaker Change: Maybe just on the closed product I know it sounds like.
Speaker Change: It's doing really well and you mentioned that you've got an attach on one of your largest customers.
Speaker Change: Interesting to know kind of where closes on a penetration basis across your mortgage customer base and then just maybe drill down a bit into the.
Joseph Anthony Vafi: How the regulatory environment is helping this to go electronic are we fully there like in all states is this a process or is it kind of is it kind of a done deal already in terms of electronic close thanks guys.
Nima Ghamsari: Well, there are good questions. It's still, you know, a decent chunk of our customer base of the applications flowing through our product or closed loans flowing through our product that are now getting digital closings, but it's not even close to the majority. We don't want to share specific numbers on this.
Speaker Change: Well, there's good questions.
Nima Ghamsari: Still well its a decent chunk of our customer base of the applications falling through our product our closed loans flowing through our product that are now getting digital closings, but its not even close to the majority we don't want to share specific numbers on this.
Nima Ghamsari: But, but it's a very fast growing part of our business. And so, on the regulatory side, we track what percent are eligible for fully digital closings, and about, call it, 90% of loans that we do through our platform are eligible for a fully digital closing, and even greater percentages than that are eligible for what is just a digital note, which allows for what's called a hybrid closing. And so it goes.
Nima Ghamsari: But.
Nima Ghamsari: It's a very fast growing part of our business and so.
Nima Ghamsari: I guess on the on the regulatory side, we track what percent are eligible for a fully digital closings at about call. It 90% of loans that we do through our platform are eligible for a fully digital closing.
Nima Ghamsari: And even greater percentages than that are eligible for what it is.
Nima Ghamsari: Just the digital note, which allows for what's called the hybrid closing.
Nima Ghamsari: And so.
Nima Ghamsari: There's a lot of opportunity there, and it's big savings for our customers. I mean, it's big savings. They're so these things are so operationally complex that things such as having one signature, be slightly off center by the consumer off the line by the consumer needs to go back to the consumer and be re signed after the closing. Those kinds of things cost money to handle and are a terrible experience on top of that.
Nima Ghamsari: There are a lot of opportunity there and it's a big savings for our customers I mean, it's big savings. There. So these things are so operationally complex that things such as being having one signature be slightly off center by the consumer off the line by the consumer needs to go back to the consumer and be re signed after the closing those kinds of things cost.
Nima Ghamsari: Money to handle and are a terrible experience on top of that and so.
Nima Ghamsari: And so, it's a really important part of our product, and so we're investing in things like that to make sure our customers get the benefit on one platform. And then we're investing in things like, you know, we see this in our press release. We updated the Spanish language intake form because one thing our customers are trying to do is grow their business. And to grow your business, you want to serve a broader set of consumers.
Nima Ghamsari: It's a really important part of our product and so we're investing in things like that to make sure our customers get the benefit on one platform and then we're investing in things like.
Nima Ghamsari: So in our press release.
Nima Ghamsari: We updated the Spanish language intake form because one thing our customers are trying to do is grow their business and to grow your business you want to serve a broader set of consumers and so that Spanish language and take form of Super helpful to our to our customers. In this time. We're also building more tools for loan officers on their mobile apps, we added new capabilities in the last quarter as well there.
Nima Ghamsari: And so that Spanish language intake form is super helpful to our customers at this time. We're also building more tools for loan officers on their mobile app. We added new capabilities in the last quarter as well to make sure the loan officers could serve customers on the go even more than they could. And that's something that a lot of our customers, especially independent mortgage banks, appreciate. I think in aggregate, all these things, we just take the lens of there is still so much to do.
Nima Ghamsari: To make sure the loan officers could serve customers on the go even more and that good and thats something that a lot of our customers in particular independent mortgage banks appreciate and so.
Nima Ghamsari: I think in aggregate all these things.
Nima Ghamsari: Just take the lens of there are still so much to do and some of the things will offer as an additional fee like the blend close product because there's so much complexity to it and some of the things will be baked into the current per unit VZ out with our customers like the digital closing or the mobile app for loan officers.
Nima Ghamsari: And some of the things we'll offer as an additional fee, like the BlendClose product, because there's so much complexity to it. And some of the things will be baked into the current per-unit fees we have with our customers, like the digital closing or the mobile app for loan officers.
Seth Gilbert: All right, our next question comes from Seth Gilbert with EBS. Seth, you can go ahead and unmute.
Nima Ghamsari: Alright. Our next question comes from Seth Gilbert with UBS, Seth you can go ahead and mute.
Seth Gilbert: Thank you guys for taking the question. Maybe just one for me, the free cash flow improvement was nice to see, and I'm wondering if you can talk about the upfront pre-purchase agreements that you mentioned that led to the strong free cash flow results. It's still a very hard macro environment, and so I'm wondering if discounting plays at all into this or if maybe there was a different strategy there.
Seth Gilbert: Hey, Thanks, guys for taking the question.
Seth Gilbert: Maybe just one for me the free cash flow improvement was nice to see and I'm wondering if you can talk about.
Unknown Executive: Thank you.
Unknown Executive: The upfront pre purchase agreements that you mentioned that led to the strong free cash flow results, it's still very hard macro environment and so I'm wondering if discounting place at Owens. Mr. If maybe there is a different strategy there. Thank you.
Seth Gilbert: Thanks, Seth. On free cash flow, there are a few fronts. It's just really like the discipline of what we've been sharing in multiple quarters is really coming to fruition. If you saw the update that we shared, obviously, in Q4, in terms of our overall pipeline and execution, what you're seeing come to fruition is the ability for us to execute against that. What that translates to is not as much discounting at all, that's not the issue. We're signing more and more customers that either have an element of their contract be what we consider platform-centric, which leads to the ability to collect that annually.
Speaker Change: Thanks, Ed on free cash flow. That's a few fronts. It's just really like it's the discipline of what we've been sharing and multiple quarters are really coming to fruition.
Seth Gilbert: You saw the update that we shared obviously in Q4 in terms of our overall pipeline and execution, while youre seeing come to fruition is the ability for us to to execute against that what it translates to is not as much discounting at all that thought the issue is we're signing more and more customers that either have an element of their contract be what we consider a platform centric, which leads to the ability to collect.
Seth Gilbert: That annually it adds more and more customers that are coming to us in essence being able to get a larger commit them. They gave historically that's both due to the blend platform, but it's also due to where they see the macro bringing those two together just a small examples with what we've done internally to just be better aligned from a cost perspective, when you think about variable to fixed.
Seth Gilbert: It adds more and more customers that are coming to us and, in essence, being able to give larger commits than they have given historically. That's both due to the Blend platform, but it's also due to how they see the macro. Bringing those two together, just a few examples of what we've done internally to just be better aligned from a cost perspective when you think about variable to fixed, it's those types of motions and movements that are creating just our ability, again, to deliver on free cash flow.
Seth Gilbert: It's those types of motions and movements that are creating the just our ability again to deliver on free cash flow.
Seth Gilbert: Got it. Thanks, guys. Actually, one more. One more, if I may, I was just curious, and if you could give an update on the $50 million run rate in consumer banking, saw a, at least in line with our model, so a good result for consumer banking, and, you know, 50 million run rate. Just kind of curious as to how, you know, how that's progressing. And, you know, is there any risk to this, given the macro?
Speaker Change: Got it thanks, guys actually one more.
Seth Gilbert: One more if I may I was just curious if you could give an update on the $50 million run rate in consumer banking.
Seth Gilbert: Sorry.
Seth Gilbert: At least in line with our model. So a good result for consumer banking and $50 million run rate.
Seth Gilbert: Just kind of curious as to how how that's progressing and is there any risk to this given the macro.
Speaker Change: Thank you.
Seth Gilbert: No, actually, that was just existing customers. So I think if anything, I mean, there's always risk to anything, of course, because there's a macro that we're dealing with. And who knows? We had a pretty good-sized bank almost go out of business last year and get acquired by another bank. So there's always risks, I guess.
Speaker Change: No actually that was just existing signed customers. So I think if anything I mean, there's always risk to anything of course, because there is a macro that we're dealing with and who knows we had a we had a pretty good sized bank almost go out of business last year and get acquired by another bank. So there's always risks I guess, but if anything I think that there is we should.
Nima Ghamsari: But if anything, I think that there's, we should, hopefully, see that number continue to grow as we sign new customers. And so, yeah, we're hard at work on that, and we'll try to keep people updated as we get material updates to that number and as the year progresses. Yeah, we're feeling like we're on track right now. Got it. Thanks, Nima.
Nima Ghamsari: You'll hopefully see that number continue to grow as we sign new customers and so yes, we're hard at work on that and we're going to try.
Nima Ghamsari: Try to keep people updated as we get material updates to that number and as the year progresses, but yes.
Nima Ghamsari: Yes, we're feeling like we're on track right now.
Speaker Change: Got it thanks Nina.
Bryan Michaleski: Seeing no further questions, this concludes today's earnings call. Thank you all for joining us. Have a nice rest of your day.
Speaker Change: Seeing no further questions. This concludes today's earnings call. Thank you all for joining have a nice rest of your day.