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What changed in Blend Labs, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Blend Labs, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+425 added−456 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-14)

Top changes in Blend Labs, Inc.'s 2024 10-K

425 paragraphs added · 456 removed · 319 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

63 edited+10 added−15 removed60 unchanged
Biggest changeThese data services providers include credit bureaus, payroll service providers, tax preparers, consumer asset data integrators, employment verification services, and anti-fraud services. • Marketplace Partners — we partner with real estate agents and insurance carriers who offer their services through marketplaces integrated into our consumer journeys, enabling consumers to shop for service providers at the precise moment they need these services. 5 • Settlement Services Partners — we onboard settlement agents onto our software platform, enabling us to streamline the settlement and closing process for consumers getting a mortgage, home equity line of credit, or home equity loan.
Biggest changeFor example, our strategic partnership with Covered Insurance Solutions, LLC (“Covered”) allows us to integrate their extensive marketplace directly into our mortgage application workflow to accelerate the loan process and provide greater convenience to our mortgage customers due to expanded options and access to additional top-rated national and regional insurance carriers across all 50 states. • Settlement Services Partners — we onboard settlement agents onto our software platform, enabling us to streamline the settlement and closing process for consumers getting a mortgage, home equity line of credit, or home equity loan.
New product offerings can be rapidly created by Blend by assembling our modular components into workflows using Blend Builder Platform, which includes tools for: • Experience design — through low-code design tools, we enable the creation of flexible, consumer-facing forms, user flows for data collection, and automated communications that reflect the brand of each of our customers. • Process orchestration — through a drag-and-drop editor, we enable the creation of workflows that guide consumers through the process of getting a loan or opening a deposit account. • Persona-based workspaces — our software platform provides omni-channel user experiences for a broad range of stakeholder personas, including consumers, loan officers, and bankers.
New product offerings can be rapidly created by assembling our modular components into workflows using Blend Builder, which includes tools for: • Experience design — through low-code design tools, we enable the creation of flexible, consumer-facing forms, user flows for data collection, and automated communications that reflect the brand of each of our customers. • Process orchestration — through a drag-and-drop editor, we enable the creation of workflows that guide consumers through the process of getting a loan or opening a deposit account. • Persona-based workspaces — our software platform provides omni-channel user experiences for a broad range of stakeholder personas, including consumers, loan officers, and bankers.
In particular, certain laws, regulations, and rules our customers are subject to, and we facilitate compliance with, include: • The Truth in Lending Act, or TILA, and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their loans and credit transactions, and require creditors to comply with certain lending practice restrictions as well as the TILA-RESPA Integrated Disclosure rule, or TRID, which imposes specific requirements around the collection of information, charging of fees, and disclosure of specific loan terms and costs upon receipt of an application for real property-secured credit; • The Truth in Savings Act, or TISA, and Regulation DD promulgated thereunder, which impose disclosure requirements with respect to the terms and conditions of deposit accounts; • The Real Estate Settlement Procedures Act, or RESPA and Regulation X promulgated thereunder, which require certain disclosures to be made to the borrower at application, as to the financial services firm’s good faith estimate of loan origination costs, and at closing with respect to the real estate settlement statement, prohibits giving or accepting any fee, kickback or a thing of value for the referral of real estate settlement services or accepting a portion or split of a settlement fee other than for services actually provided for affiliated business relationships, prohibits receiving anything other than a legitimate return on ownership, requiring use of an affiliate, and failing to provide a disclosure of the affiliate relationship; • The Equal Credit Opportunity Act, or ECOA, and Regulation B promulgated thereunder, and similar state fair lending laws, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any 10 public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act; • The Fair Credit Reporting Act, or FCRA, and Regulation V promulgated thereunder, impose certain obligations on consumer reporting agencies, users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining consumer reports, marketing using consumer reports, taking adverse action on the basis of information from consumer reports and protecting the privacy and security of consumer reports and consumer report information; • Section 5 of the Federal Trade Commission Act, or FTC Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive or abusive acts or practices; • The Gramm-Leach-Bliley Act, or GLBA, and Regulation P promulgated thereunder, which include limitations on financial services firms’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial services firms to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and requires financial services firms to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other laws and regulations relating to privacy and security; • The Electronic Fund Transfer Act, or EFTA, and Regulation E promulgated thereunder, which provide guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including requirements for overdraft services and a prohibition on a creditor requiring a consumer to repay a credit agreement in preauthorized (recurring) electronic fund transfers and disclosure and authorization requirements in connection with such transfers; • The Homeowners Protection Act, or HPA, which requires certain disclosures and the cancellation or termination of mortgage insurance once certain equity levels are reached; • The Home Mortgage Disclosure Act, or HMDA, and Regulation C, which require the collection and reporting of loan origination data, including the number of loan applications taken, approved, denied and withdrawn, as well as certain demographic information of the applicant; • The Fair Housing Act, or FHA, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics; • The Secure and Fair Enforcement for Mortgage Licensing, or the SAFE Act, which imposes state licensing requirements on mortgage loan originators; • State laws and regulations impose requirements related to unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, data protection, information security, and conduct in connection with data breaches; • The Telephone Consumer Protection Act, or TCPA, and the regulations promulgated thereunder, which impose various consumer consent requirements and other restrictions in connection with telemarketing activity and other communication with consumers by phone, fax or text message, and which provide guidelines designed to safeguard consumer privacy in connection with such communications; • The Federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or CAN-SPAM Act, and the Telemarketing Sales Rule, or TSR, and analogous state laws, which impose various restrictions on marketing conducted by use of email, telephone, fax or text message; • The Electronic Signatures in Global and National Commerce Act, or ESIGN Act, and similar state laws, particularly Uniform Electronic Transactions Act, or UETA, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require financial services firms to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; • The Americans with Disabilities Act, or ADA, which has been interpreted to include websites as “places of public accommodations” that must meet certain federal requirements related to access and use; • The Right to Financial Privacy Act, or RFPA and similar state laws enacted to provide the financial records of financial services firms’ customers a reasonable amount of privacy from government scrutiny; • The Bank Secrecy Act, or BSA and the USA PATRIOT Act, which relate to compliance with anti-money laundering, borrower due diligence and record-keeping policies and procedures; 11 • The regulations promulgated by the Office of Foreign Assets Control, or OFAC under the U.S.
In particular, certain laws, regulations, and rules our customers are subject to, and we facilitate compliance with, include: • The Truth in Lending Act, or TILA, and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their loans and credit transactions, and require creditors to comply with certain lending practice restrictions as well as the TILA-RESPA Integrated Disclosure rule, or TRID, which imposes specific requirements around the collection of information, charging of fees, and disclosure of specific loan terms and costs upon receipt of an application for real property-secured credit; • The Truth in Savings Act, or TISA, and Regulation DD promulgated thereunder, which impose disclosure requirements with respect to the terms and conditions of deposit accounts; • The Real Estate Settlement Procedures Act, or RESPA, and Regulation X promulgated thereunder, which require certain disclosures to be made to the borrower at application, as to the financial services firm’s good faith estimate of loan origination costs, and at closing with respect to the real estate settlement statement, prohibits giving or accepting any fee, kickback or a thing of value for the referral of real estate settlement services or accepting a portion or split of a settlement fee other than for services actually provided for affiliated business relationships, prohibits receiving anything other than a legitimate return on ownership, requiring use of an affiliate, and failing to provide a disclosure of the affiliate relationship; • The Equal Credit Opportunity Act, or ECOA, and Regulation B promulgated thereunder, and similar state fair lending laws, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act; • The Fair Credit Reporting Act, or FCRA, and Regulation V promulgated thereunder, impose certain obligations on consumer reporting agencies, users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining consumer reports, marketing using consumer reports, taking adverse action on the basis of information from consumer reports and protecting the privacy and security of consumer reports and consumer report information; • Section 5 of the Federal Trade Commission Act, or FTC Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive or abusive acts or practices; • The Gramm-Leach-Bliley Act, or GLBA, and Regulation P promulgated thereunder, which include limitations on financial services firms’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial services firms to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and requires financial services firms to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other laws and regulations relating to privacy and security; • The Electronic Fund Transfer Act, or EFTA, and Regulation E promulgated thereunder, which provide guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including requirements for overdraft 10 services and a prohibition on a creditor requiring a consumer to repay a credit agreement in preauthorized (recurring) electronic fund transfers and disclosure and authorization requirements in connection with such transfers; • The Homeowners Protection Act, or HPA, which requires certain disclosures and the cancellation or termination of mortgage insurance once certain equity levels are reached; • The Home Mortgage Disclosure Act, or HMDA, and Regulation C, which require the collection and reporting of loan origination data, including the number of loan applications taken, approved, denied and withdrawn, as well as certain demographic information of the applicant; • The Fair Housing Act, or FHA, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics; • The Secure and Fair Enforcement for Mortgage Licensing, or the SAFE Act, which imposes state licensing requirements on mortgage loan originators; • State laws and regulations impose requirements related to unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, data protection, information security, and conduct in connection with data breaches; • The Telephone Consumer Protection Act, or TCPA, and the regulations promulgated thereunder, which impose various consumer consent requirements and other restrictions in connection with telemarketing activity and other communication with consumers by phone, fax or text message, and which provide guidelines designed to safeguard consumer privacy in connection with such communications; • The Federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or CAN-SPAM Act, and the Telemarketing Sales Rule, or TSR, and analogous state laws, which impose various restrictions on marketing conducted by use of email, telephone, fax or text message; • The Electronic Signatures in Global and National Commerce Act, or ESIGN Act, and similar state laws, particularly Uniform Electronic Transactions Act, or UETA, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require financial services firms to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; • The Americans with Disabilities Act, or ADA, which has been interpreted to include websites as “places of public accommodations” that must meet certain federal requirements related to access and use; • The Right to Financial Privacy Act, or RFPA and similar state laws enacted to provide the financial records of financial services firms’ customers a reasonable amount of privacy from government scrutiny; • The Bank Secrecy Act, or BSA and the USA PATRIOT Act, which relate to compliance with anti-money laundering, borrower due diligence and record-keeping policies and procedures; • The regulations promulgated by the Office of Foreign Assets Control, or OFAC under the U.S.
Examples include: • Pre-approvals — we automate the generation of a pre-approval decision when consumers meet specific underwriting criteria established by a financial services firm. • Cross-selling — we enable financial services firms to present personalized product recommendations to consumers based on data collected in the course of another product application. 4 • Adverse actions — we automatically generate adverse action notifications for consumers that do not meet minimum credit criteria established by a financial services firm.
Examples include: • Pre-approvals — we automate the generation of a pre-approval decision when consumers meet specific underwriting criteria established by a financial services firm. • Cross-selling — we enable financial services firms to present personalized product recommendations to consumers based on data collected in the course of another product application. • Adverse actions — we automatically generate adverse action notifications for consumers that do not meet minimum credit criteria established by a financial services firm.
Title insurance rates are regulated differently in various states, with some states requiring us to file and receive approval of rates before such rates become effective and some states promulgating the rates that can be charged. See “ Risk Factors—Risks Related to Our Legal and Regulatory Environment ” for additional information and a discussion of our regulatory risks.
Title insurance rates are regulated differently in various states, with some states requiring us to file and receive approval of rates before such rates become effective and some states promulgating the rates that can be charged. See “ Risk 11 Factors—Risks Related to Our Legal and Regulatory Environment ” for additional information and a discussion of our regulatory risks.
We also position our customers for long-term success by helping them streamline operations and increase efficiency through: • Faster innovation cycles — through our software platform, we help financial services firms evolve their business at a faster pace and adapt more quickly to changing market conditions than ever before.
We also position our customers for long-term success by helping them streamline operations and increase efficiency through: 5 • Faster innovation cycles — through our software platform, we help financial services firms evolve their business at a faster pace and adapt more quickly to changing market conditions than ever before.
We believe the complexity, cost, and level of effort to duplicate this operational scale is difficult for others to replicate. • Extensive network of customers — we supply mission-critical software to hundreds of financial services firms, including many of the largest chartered banks and non-bank mortgage lenders in the United States.
We believe the complexity, cost, and level of effort to duplicate this operational scale is difficult for others to replicate. 6 • Extensive network of customers — we supply mission-critical software to hundreds of financial services firms, including many of the largest chartered banks and non-bank mortgage lenders in the United States.
Our internal teams are highly incentivized to go beyond the initial sale and to get accounts live and fully adopted on Blend. Our products are sold through a direct sales force that continues to manage customer relationships on an ongoing basis post-sale.
Our internal teams are highly incentivized to go beyond the initial sale and to get accounts live and fully adopted on Blend. 7 Our products are sold through a direct sales force that continues to manage customer relationships on an ongoing basis post-sale.
From the moment a consumer starts an application for a loan or a deposit account to the moment they digitally sign the final documents, our software platform streamlines the process. Consumers expect modern banking experiences to be as simple as other online shopping experiences.
From the moment a consumer starts an application for a loan or a deposit account to the moment they digitally sign the final documents, our platform streamlines the process. Consumers expect modern banking experiences to be as simple as other online shopping experiences.
The modular components that make up our products generally fall under the categories of verification, decisioning, workflow intelligence, and marketplaces. Verification Components Our verification components automate confirmation tasks that are needed to underwrite a loan or approve the opening of a new deposit account.
The modular components that make up our products generally fall under the categories of verification, decisioning, and workflow intelligence. Verification Components Our verification components automate confirmation tasks that are needed to underwrite a loan or approve the opening of a new deposit account.
We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective. Despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, or challenged.
We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective. Despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, 9 circumvented, or challenged.
Our ability to remain competitive will depend on our ongoing efforts to expand our product capabilities and increase the value we deliver to our customers. 9 Intellectual Property We believe that our success depends in part on our ability to protect our core technology and innovations.
Our ability to remain competitive will depend on our ongoing efforts to expand our product capabilities and increase the value we deliver to our customers. Intellectual Property We believe that our success depends in part on our ability to protect our core technology and innovations.
For additional information, see the section titled “Risk Factors—Risks Related to Our Intellectual Property—Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations.” Government Regulation Our customers and prospective customers are highly regulated and are generally required to comply with stringent regulations in connection with performing business functions that our products and services address.
For additional information, see the section titled “ Risk Factors—Risks Related to Our Intellectual Property—Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations. ” Government Regulation Our customers and prospective customers are highly regulated and are generally required to comply with stringent regulations in connection with performing business functions that our products and services address.
Our integrated shopping experiences can generate additional commissions with zero incremental consumer acquisition costs, while enabling financial services firms to deliver better consumer experiences and drive operational efficiency. Our Customers Strong customer relationships are a cornerstone of our success. Our customer relationships grow over time as our software platform is used for a broader range of products.
Our integrated shopping experiences can generate additional fees with zero incremental consumer acquisition costs, while enabling financial services firms to deliver better consumer experiences and drive operational efficiency. Our Customers Strong customer relationships are a cornerstone of our success. Our customer relationships grow over time as our software platform is used for a broader range of products.
The terms of various open source licenses have not been interpreted by United States courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our services. As of December 31, 2023, we had one issued patent in the United States.
The terms of various open source licenses have not been interpreted by United States courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our services. As of December 31, 2024, we had one issued patent in the United States.
As more consumers use our software platform, we are able to attract a broader range of ecosystem partners, which allows us to deliver more value to consumers and attract more financial services providers as customers. This creates a powerful network effect and differentiator for our business. Strong customer relationships are the cornerstone of Blend’s success.
As more consumers use our software platform, we are able to attract a broader range of ecosystem partners, which allows us to deliver more value to consumers and attract more financial services firms as customers. This creates a powerful network effect and differentiator for our business. Strong customer relationships are the cornerstone of Blend’s success.
As a large portion of our revenue is driven by mortgage and mortgage related transaction volumes, changes in the mortgage origination volumes have had, and are likely to continue to have, material effects on our business. Our Solutions Blend Builder Platform is designed to power the end-to-end consumer journey for any banking product.
As a large portion of our revenue is driven by mortgage and mortgage-related transaction volumes, changes in mortgage origination volumes have had, and are likely to continue to have, material effects on our business. 2 Our Solutions The Blend Platform is designed to power the end-to-end consumer journey for any banking product.
Through our deep customer relationships, we gain insights that help us align our roadmap and strategy with the most pressing needs of financial services firms. While we focus today on consumer banking, we believe we can rapidly expand our library of modular components to support commercial banking products as well.
Through our deep customer relationships, we gain insights that help us align our roadmap and strategy with the most pressing needs of financial services firms. While we focus today on consumer banking, we believe we can rapidly expand our library of modular components to support commercial banking products.
We continue to evaluate our intellectual property portfolio, and may seek patent protection for additional intellectual property developed by us in the future. Additionally, we have registered the term “Blend” in the United States, Canada, the United Kingdom, and the European Union, and as of December 31, 2023, we had pending trademark applications in the United States.
We continue to evaluate our intellectual property portfolio, and may seek patent protection for additional intellectual property developed by us in the future. Additionally, we have registered the term “Blend” in the United States, Canada, the United Kingdom, and the European Union, and as of December 31, 2024, we had pending trademark applications in the United States.
In addition, through extensive automation, we enable loan teams to handle a greater volume of loan and deposit account applications. • Increased consumer conversion — by leveraging the modular components and orchestration capabilities of our platform, financial services firms are able to accelerate the development and delivery of new financial products, ultimately increasing the number of borrowers that complete their loan and deposit account applications. • Increased consumer satisfaction — we enable consumers to apply for products in minutes on any device, transition seamlessly between channels throughout the origination process, benefit from as much human support as they prefer, and save money on real estate agent commissions, home insurance, title insurance, and automobile purchases.
In addition, through extensive automation, we enable loan teams to handle a greater volume of loan and deposit account applications. • Increased consumer conversion — by leveraging the modular components and orchestration capabilities of our platform, financial services firms are able to accelerate the development and delivery of new financial products, ultimately increasing the number of borrowers that complete their loan and deposit account applications. • Increased consumer satisfaction — we enable consumers to apply for products in minutes on any device, transition seamlessly between channels throughout the origination process, benefit from as much human support as they prefer, and save money on home insurance, title insurance, and automobile purchases.
The Blend Platform segment also includes a software platform, called Blend Builder Platform, which offers a set of low-code, drag-and-drop design tools, modular components and integrations to allow our customers to create and deploy their own new product offerings.
The Blend Platform segment also includes Blend Builder, which offers a set of low-code, drag-and-drop design tools, modular components and integrations to allow our customers to create and deploy their own new product offerings.
We are also subject to a variety of laws, rules, and regulations relating to the real estate, property and casualty insurance, title insurance and settlement services industries, mobile- and internet-based businesses, and information security, advertising, privacy, data protection, and consumer protection laws.
We are also subject to a variety of laws, rules, and regulations relating to the property and casualty insurance, title insurance and settlement services industries, mobile- and internet-based businesses, and information security, advertising, privacy, data protection, and consumer protection laws.
We have used, and intend to continue to use, our website, investor relations website, news site (https://www. https://blend.com/company/newsroom), blog (https://blend.com/blog) and social media accounts, including our X account (formerly known as Twitter) (@blendlabsinc), our Facebook account (@BlendLabs) and our Instagram account (@blendlabs), as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
We have used, and intend to continue to use, our website, investor relations website, news site (https://www. https://blend.com/company/newsroom), blog (https://blend.com/blog) and social media accounts, including our X account (@blendlabsinc), our Facebook account (@BlendLabs) and our Instagram account (@blendlabs), as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
Our growing library of composable product and workflow modules unlock the 2 limitations of our customers’ existing technology stack, empowering financial services firms to deliver personalized, proactive and simple experiences without sacrificing speed or spend. Blend is well positioned to benefit from the acceleration in digital transformation investment taking place across the financial services sector.
Our growing library of composable product and workflow modules remove the limitations of our customers’ existing technology stack, empowering financial services firms to deliver personalized, proactive and simple experiences without sacrificing speed or spend. Blend is well positioned to benefit from the acceleration in digital transformation investment taking place across the financial services sector.
Sales and Marketing Our team focuses on building successful long-term customer relationships through a customer-first go-to-market approach. Accounts are staffed with account teams who are responsible for making customers successful using our products, whether it is through technical implementations, organizational change, loan officer enablement, or industry best practices.
Our team focuses on building successful long-term customer relationships through a customer-first go-to-market approach. Accounts are staffed with account teams who are responsible for making customers successful using our products, whether it is through technical implementations, organizational change, loan officer enablement, or industry best practices.
As a result, consumers benefit from more opportunities to save time and money, financial services firms benefit from increased operational efficiency, our partners benefit from increased distribution, and Blend generates additional revenue. We believe this win-win-win-win model creates a powerful network effect that will continue to expand our serviceable addressable market over time.
As a result, consumers benefit from more opportunities to save time and money, financial services firms benefit from increased operational efficiency, our partners benefit from increased distribution, and Blend generates additional revenue. We believe this shared success model creates a powerful network effect that will continue to expand our serviceable addressable market over time.
Our marketing approach focuses on helping the industry understand the value of Blend’s suite of products and the power of the Blend Builder Platform. We aim to provide highly personalized experiences for customers and prospects as they engage with Blend and regularly highlight the success of our customers and share the impact Blend has had on their business.
Our marketing approach focuses on helping the industry understand the value of Blend’s Platform and the suite of products the platform powers. We aim to provide highly personalized experiences for customers and prospects as they engage with Blend and regularly highlight the success of our customers and share the impact Blend has had on their business.
In connection with the release of Composable Origination, we changed our reporting segments so that the composition of the Blend Platform segment excludes the digitally-enabled title component and instead the digitally-enabled title component is reported within the Title segment. The comparative prior period amounts have been reclassified to conform to current period presentation.
In connection with the release of Blend Builder, we changed our reporting segments so that the composition of the Blend Platform segment excludes the digitally-enabled title component and instead the digitally-enabled title component is reported within the Title segment. The comparative prior period amounts have been reclassified to conform to current period presentation.
Customer Success We work in close partnership with our customers to help them rapidly deploy our software platform and realize value as quickly as possible from the breadth of our features. By investing deeply in the success of our customers, we seek to build a strong foundation for long-term relationships.
Customer Success We work in close partnership with our customers to help them rapidly deploy our solutions and realize value as quickly as possible from the breadth of our features. By investing deeply in the success of our customers, we seek to build a strong foundation for long-term relationships.
By automating these tasks and developing pre-built integrations, we help our customers potentially avoid years of expensive in-house software development, in addition to increasing productivity by freeing up resources for other initiatives. Composable Origination, powered by Blend Builder Platform Product Offerings Blend Platform powers the mission-critical interface between financial services firms and consumers.
By automating these tasks and developing pre-built integrations, we help our customers potentially avoid years of expensive in-house software development, in addition to increasing productivity by freeing up resources for other initiatives. The Blend Platform Product Offerings Blend Platform powers the mission-critical interface between financial services firms and consumers.
Blend Platform The Blend Platform segment comprises a suite of products that power the entire origination process from back end workflows to consumer experience. Our growing suite of out-of-the-box, white-label products currently powers digital-first consumer journeys for mortgages, home equity loans and lines of credit, vehicle loans, personal loans, credit cards, and deposit accounts.
Blend Platform The Blend Platform segment comprises a suite of products that power the entire origination process from back end workflows to consumer experience. Our growing suite of out-of-the-box products currently enables digital-first consumer journeys for mortgages, home equity loans and lines of credit, vehicle loans, personal loans, credit cards, and deposit accounts.
Financial services firms can rapidly deploy our growing number of out-of-the-box, white-labeled products for: • Mortgage — provides an end-to-end digital mortgage experience from application to close that puts financial services firms at the center of the broader homeownership journey. • Home Equity — modernizes home equity line of credit and home equity loan origination experiences, delivering higher application submission rates and faster closings. • Vehicle Loans — enables rapid financing that helps consumers get into their car, boat, recreational vehicle, or powersport vehicle faster. • Credit Cards — increases application conversions through a configurable product selection experience, streamlined data collection, and instant approvals. • Personal Loans — drives faster pre-approvals for unsecured and secured personal loans, lines of credit, and overdraft protection lines. • Deposit Accounts — increases application conversion rates and reduces fraud risk with features that support financial services firms’ Bank Secrecy Act and anti-money laundering policies. 3 In addition, we have developed a suite of add-on products that we offer to enhance consumers’ journeys to homeownership that are integrated into the end-to-end digital experience.
Financial services firms can rapidly deploy our growing number of out-of-the-box, white-labeled products for: • Mortgage — provides an end-to-end digital mortgage experience from application to close that puts financial services firms at the center of the broader homeownership journey. • Home Equity — modernizes home equity line of credit and home equity loan origination experiences, delivering higher application submission rates and faster closings. • Vehicle Loans — enables rapid financing that helps consumers get into their car, boat, recreational vehicle, or powersport vehicle faster. • Credit Cards — increases application conversions through a configurable product selection experience, streamlined data collection, and instant approvals. • Personal Loans — drives faster pre-approvals for unsecured and secured personal loans, lines of credit, and overdraft protection lines. • Deposit Accounts — increases application conversion rates and reduces fraud risk with features that support financial services firms’ Bank Secrecy Act and anti-money laundering policies.
Changes in Segment Composition In the first quarter of 2023, we introduced Composable Origination, which gives customers the ability to easily configure or build custom workflows from a prebuilt set of components.
Changes in Segment Composition In the first quarter of 2023, we introduced Blend Builder, which gives customers the ability to easily configure or build custom workflows from a prebuilt set of components.
Blend Builder Platform Each of our products is built from an extensive library of modular components that typically include data collection, verification checks, product selection, pricing, pre-approvals, disclosures, addressing stipulations, and signing closing documents.
Blend Builder Each of our products leverage an extensive library of modular components or module registry that typically include data collection, verification checks, product selection, pricing, pre-approvals, disclosures, addressing stipulations, and signing closing documents.
We have pre-built integrations with providers of technology and services to address requirements for: • Identity verification — to help financial services firms reduce fraud risk and address compliance requirements for know-your-customer (KYC) and anti-money laundering (AML) laws, we have integrations that can capture data from government issued identification cards and engage third-party identity verification service providers. • Asset verification — with consumer permission, we enable financial services firms to verify account assets from directly-sourced data, sparing applicants the burden of manually collecting this information and providing financial services firms with greater assurance of data accuracy and reliability. • Income and employment verification — we integrate with payroll data providers to retrieve paystubs, enabling financial services firms to verify an applicant’s income, employment details, and work history. • Credit — our software platform allows financial services firms to retrieve credit reports from any of the three major credit bureaus and supports both soft and hard credit inquiries.
We have pre-built integrations with providers of technology and services to address requirements for: • Identity verification — to help financial services firms reduce fraud risk and address compliance requirements for know-your-customer (KYC) and anti-money laundering (AML) laws, we have integrations that can capture data from government issued identification cards and engage third-party identity verification service providers. • Income and employment verification — we integrate with payroll data providers to retrieve paystubs, enabling financial services firms to verify an applicant’s income, employment details, and work history. • Credit — our software platform allows financial services firms to retrieve credit reports from any of the three major credit bureaus and supports both soft and hard credit inquiries.
Our customers are currently based in the United States and range in size from the largest banks, credit unions, fintechs, and other non-bank mortgage lenders in the nation to smaller community lenders with less than $1 billion in assets under management. We focus our go-to-market strategy on large financial services firms.
Our customers are currently based in the United States and range in size from the largest banks, credit unions, fintechs, and other non-bank mortgage lenders in the nation to smaller community lenders with less than $1 billion in assets under management.
Recent Developments The industry in which we operate is heavily influenced by government policies and overall economic conditions. The real estate environment, including interest rates and the general economic environment, typically impact the demand for mortgage and mortgage related products.
Recent Developments The mortgage market is heavily influenced by government policies and overall economic conditions. The real estate environment, including interest rates and the general economic environment, typically impacts the demand for mortgage and mortgage related products.
We provide the central hub through which these partners collaborate to deliver best-in-class consumer journeys in highly efficient ways. In addition, we provide our ecosystem partners with a critical distribution channel to reach a universe of more than 100 million consumers at the precise moment they are looking for products and services through the financial services firms we serve.
In addition, we provide our ecosystem partners with a critical distribution channel to reach a universe of more than 100 million consumers at the precise moment they are looking for products and services through the financial services firms we serve.
We believe we distinguish ourselves from the competition through the breadth of our product offerings, the flexibility of our configurable platform architecture, our ability to support multi-product shopping experiences, the scale of our ecosystem, the service-provider marketplaces integrated into our product offerings, the size and scale of our customer base, and our ability to power superior end-to-end consumer journeys.
We believe we distinguish ourselves from the competition through the breadth of our product offerings, the flexibility of our configurable platform architecture, our ability to support multi-product shopping experiences, the scale of our ecosystem, the service-provider marketplaces integrated into our product offerings, the size and scale of our customer base, and our ability to power superior end-to-end consumer journeys. 8 Competition in the title insurance industry may impact our business and is intense, particularly with respect to price, service, and expertise.
We invest substantial resources in research and development to expand our software platform by developing new components, features, and product offerings. Our engineering, product, and design teams build our software platform and products in close partnership with our customers and use focus groups with both customers and consumers to gain a deep understanding of the tasks and workflows we automate.
Our engineering, product, and design teams build our software platform and products in close partnership with our customers and use focus groups with both customers and consumers to gain a deep understanding of the tasks and workflows we automate.
We also automate key processing tasks so consumers can begin to address stipulations immediately after a loan application is submitted, including product and pricing selection, automated requests for letters of explanation, and capturing digital signatures on disclosures packages, resulting in faster turn-around times.
We also automate key processing tasks so consumers can begin to address stipulations immediately after a loan application is submitted, including product and pricing selection, automated requests for letters of explanation, and capturing digital signatures on disclosures packages, resulting in faster turn-around times. 4 APIs and Integrations Through our open APIs we are able to seamlessly integrate the capabilities of technology, data, and service providers into our software platform.
We continue to invest in research and development to build our software platform and grow our business. 6 • Composable Origination, powered by Blend Builder Platform — we enable financial services firms to rapidly build and launch new product offerings by leveraging our low-code design tools and an extensive library of modular components purpose-built for loan origination, account opening, and consumer onboarding.
We continue to invest in research and development to build our products and grow our business. • Blend Builder — we enable financial services firms to rapidly build and launch new product offerings by leveraging our low-code design tools and an extensive library of modular components purpose-built for loan origination, account opening, and consumer onboarding. • Expansive partner ecosystem — we partner with more than 130 technology vendors and data service providers and we expect to continue to expand our partner ecosystem.
Through our software platform, we deliver product updates on a weekly basis. Our products are highly complex and require us to have advanced knowledge of modern software development techniques as well as deep industry expertise, including in-depth knowledge of financial services regulations, product offerings, and operational workflows for approving loans and opening accounts.
Our products are highly complex and require us to have advanced knowledge of modern software development techniques as well as deep industry expertise, including in-depth knowledge of financial services regulations, product offerings, and operational workflows for approving loans and opening accounts. We manage this complexity for our customers, allowing them to focus on driving their business priorities.
Although we provide title and settlement services to large commercial and residential customers and mortgage originators, there are other title insurance agencies that have substantially greater capital than we do, especially those affiliated with large title insurance underwriters. The size and number of title insurance agencies vary in the geographic areas in which we conduct our title business.
Larger residential mortgage originators also look to the size and financial strength of a title insurance provider. Although we provide title and settlement services to large commercial and residential customers and mortgage originators, there are other title insurance agencies that have substantially greater capital than we do, especially those affiliated with large title insurance underwriters.
In 2021 we acquired a 90.1% interest in Title365, one of the largest title insurance agencies in the United States, with licenses and partnerships covering all 50 states and the District of Columbia in order to deliver the benefits of our software platform to financial services firms at greater scale.
Our aim is to become the distribution platform of choice for technology, data, and service providers to efficiently reach and serve consumers undertaking financial transactions. • Agency subsidiaries and licensing — In 2021 we acquired a 90.1% interest in Title365, one of the largest title insurance agencies in the United States, with licenses and partnerships covering all 50 states and the District of Columbia in order to deliver the benefits of our software platform to financial services firms at greater scale.
Human Capital Our employees are a key reason for our success and are essential for our continued growth. Our culture, industry success, and competitive compensation enable us to successfully retain our employees and to effectively recruit new talent aligned with our vision. We have received numerous awards for corporate culture and professional development.
Human Capital Our employees are a key reason for our success and are essential for our continued growth. Our culture, industry success, and competitive compensation enable us to successfully retain our employees and to effectively recruit new talent aligned with our vision. As of December 31, 2024, we had a total of 540 employees.
We also provide both free and paid training services and maintain an online knowledge base with best practices and training information to help our customers educate loan originators, processors, and support staff.
We also provide both free and paid training services and maintain an online knowledge base with best practices and training information to help our customers educate loan originators, processors, and support staff. We publish weekly release notes featuring product updates, and we employ dedicated support professionals to answer questions and help customers resolve issues.
These are: • Close — streamlines traditional, hybrid, and fully digital closing experiences for mortgages, home equity lines of credit, and home equity loans. • Income Verification for Mortgage and Home Equity — leverages data integrations with payroll data providers to deliver income reports that are recognized as verified sources of income. • Title — enables streamlining of the title, settlement, and closing processes at scale for mortgages, home equity lines of credit, and home equity loans. • Homeowners Insurance — allows consumers to easily compare quotes from as many as 30 insurance carriers, depending on carriers’ coverage areas, and connect with an insurance specialist to purchase a policy.
These are: • Close — streamlines traditional, hybrid, and fully digital closing experiences for mortgages, home equity lines of credit, and home equity loans. 3 • Income Verification for Mortgage and Home Equity — leverages data integrations with payroll data providers to deliver income reports that are recognized as verified sources of income. • Title — enables streamlining of the title, settlement, and closing processes at scale for mortgages, home equity lines of credit, and home equity loans.
Each of our products is built from an extensive library of modular components assembled into consumer journeys that typically include data collection, verification checks, product selection, pricing, pre-approvals, disclosures delivery, addressing stipulations, and signing closing documents.
Each of our products is guided by rules and a decisioning framework leveraging an extensive library of pre-defined rules that typically include data collection, verification checks, product selection, pricing, pre-approvals, disclosures delivery, addressing stipulations, and signing closing documents.
Our principal executive offices are located at 415 Kearny Street, San Francisco, California 94108, and our telephone number is (650) 550-4810. Additional Information Our website is located at https://www.blend.com and our investor relations website is located at https://investor.blend.com.
Our principal executive offices are located at 7250 Redwood Blvd., Suite 300, Novato, California 94945, and our telephone number is (650) 550-4810. 12 Additional Information Our website is located at https://www.blend.com and our investor relations website is located at https://investor.blend.com.
ITEM 1. BUSINESS Company Overview It’s our vision to bring simplicity and transparency to financial services, so every consumer can more easily access the capital they need to reach their financial goals.
ITEM 1. BUSINESS Company Overview It’s our vision to bring simplicity and transparency to financial services, so every consumer can more easily access the capital they need to reach their financial goals. To realize this vision, we have built a market-leading digital origination platform and suite of products designed to transform consumer banking experiences and streamline workflows for financial providers.
Completed transaction fees are determined by the number and type of software platform components that are needed to support each product offering. Where applicable, we may also charge licensing fees for access to our platform.
Completed transaction fees are determined by the number and type of software platform components that are needed to support each product offering. Where applicable, we may also charge partners fixed and/or variable license fees to provide consumers specialized services through our platform, such as providing property and casualty insurance carrier options or settlement services.
Our competitors include other major title brokers, agencies and underwriters, as well as other regional title insurance companies, underwritten title companies, and independent agency operations at the regional and local level. Competition, expansion of existing competitors, or new entrants to the title business could affect our business operations and financial condition.
The size and number of title insurance agencies vary in the geographic areas in which we conduct our title business. Our competitors include other major title brokers, agencies and underwriters, as well as other regional title insurance companies, underwritten title companies, and independent agency operations at the regional and local level.
We believe we are well-positioned over the long term to become one of the top cloud-based banking platforms responsible for powering end-to-end consumer origination experiences. 7 • Integrate marketplaces into our end-to-end consumer journeys — we generate commissions as consumers use our integrated marketplaces to select a real estate agent, purchase property, casualty and title insurance, or shop online for used cars, which helps us increase our revenue per banking transaction.
We believe we are well-positioned over the long term to become one of the top cloud-based banking platforms responsible for powering end-to-end consumer origination experiences. • Integrate ecosystem partners into our end-to-end consumer journeys — we receive fixed and/or variable license fees from our integrated marketplace partners for access by consumers to specialized services through our platform, such as providing property and casualty insurance carrier options or settlement services, which helps us increase our revenue per banking transaction.
In addition, financial services firms can use our APIs to develop integrations with the back office systems in their tech stack, creating a unified, agile architecture for powering superior consumer journeys. The Blend Ecosystem We bring together an extensive partner ecosystem through our software platform consisting of technology, data, and service providers.
As we develop integrations with new partners, our customers can quickly experience the benefits across their product suite. In addition, financial services firms can use our APIs to develop integrations with the back office systems in their tech stack, creating a unified, agile architecture for powering superior consumer journeys.
We offered our terminated employees severance pay with continued health insurance coverage, COBRA pay, and outplacement services to assist them in finding their next opportunity.
Since April 2022, we have undertaken several workforce reduction actions as part of our broader efforts to improve cost efficiency and better align our operating structure with our business activities. We offered our terminated employees severance pay with continued health insurance coverage, COBRA pay, and outplacement services to assist them in finding their next opportunity.
The scale of our partner ecosystem has been growing, and the acquisition of Title365 further added to our software platform and operational capacity. By aggregating transaction volume across multiple financial services firms, we are able to negotiate competitive rates for technology and data services we bundle into our products.
Through our integrations and marketplaces, we enable technology, data, and service providers to collaborate through our software platform and provide superior consumer experiences. By aggregating transaction volume across multiple financial services firms, we are able to negotiate competitive rates for technology and data services we bundle into our products.
After three years of research and development, the Blend Builder Platform has evolved to the point where it can now power Composable Origination, the ability to easily configure or build custom workflows from a pre-built set of components, all while leveraging existing infrastructure.
After years of research and development, our platform has evolved to the point where it can now power highly configurable workflows from a pre-built set of components, all while leveraging existing infrastructure. In 2024, our products within the Blend Platform segment helped financial services firms process nearly $1.2 trillion in loan applications.
We publish weekly release notes featuring product updates, and we employ dedicated support professionals to answer questions and help customers resolve issues. 8 Research & Development Our software platform operates as the interface that connects consumers, financial services firms, and third-party service providers such as real estate agents, property and casualty insurance providers, title agencies, and notaries.
Research & Development Our software platform operates as the interface that connects consumers, financial services firms, and third-party service providers such as property and casualty insurance providers, title agencies, and notaries. We invest substantial resources in research and development to expand our software platform by developing new components, features, and product offerings.
Purchase volume and refinance activity were strong in 2021 and 2020 relative to historical averages over the preceding decade; however, an increase in interest rates due to efforts by the Federal Reserve to manage rising inflation, combined with ongoing supply constraints, resulted in a decline in mortgage origination activity in both 2022 and 2023.
Since 2022, increases in interest rates due to efforts by the Federal Reserve to manage rising inflation, combined with ongoing supply constraints, have resulted in a relative decline in mortgage origination activity, followed by a slight increase in 2024 as compared to 2023, based on the estimates of industry forecasters.
As consumers use our software platform to access financial products, they can also shop for real estate agents, title and property and casualty insurance products, and other service providers through integrated marketplaces that are introduced at the precise moment these products or services are needed.
As consumers apply for financial products, our digital-first consumer journeys enable them to shop for services providers, such as title and property and casualty insurance products, through our integrated ecosystems that introduce products or services provided by our marketplace partners at the precise moment these products or services are needed.
We support multi-product shopping experiences and enable consumers to move seamlessly across digital devices, contact centers, and branches throughout the origination process. We also provide additional benefits and incentives for customers to standardize on our software platform across products and channels.
We also provide additional benefits and incentives for customers to standardize with us across products and channels. Through our software platform, we deliver product updates on a regular basis.
What Sets Us Apart We believe we are well positioned to serve as a long-term strategic innovation partner and provider of mission-critical software to financial services firms due to the following factors: • Single software platform designed for any banking product — as a leading cloud-based software provider that streamlines the end-to-end consumer journey for mortgages, consumer loans, and deposit accounts through a single, unified software platform, we are a trailblazer with powerful competitive advantages.
What Sets Us Apart As a leading cloud-based software provider that streamlines the end-to-end consumer journey for mortgages, home equity, consumer loans, and deposit accounts, we leverage our unique capabilities to create distinctive competitive advantages.
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To realize this vision, we have built a market-leading, cloud-based software platform and suite of products for financial providers to transform consumer banking experiences and streamline workflows for their teams which enables these financial providers to quickly deliver modern experiences that are easy to access and use.
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In 2024, we saw a decrease in total mortgage transactions on our software platform compared to 2023, which can be attributed to normal customer churn amidst relatively high interest rates, decreased housing affordability, and uncertain worldwide political and economic conditions.
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Financial services firms can experience Composable Origination with custom solutions built using Blend Builder Platform, or with pre-built solutions such as Instant Home Equity, Deposit Accounts, Credit Cards, and others. In 2023, our products within the Blend Platform segment helped financial services firms process nearly $1.4 trillion in loan applications.
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While industry forecasters estimate that mortgage origination activity increased slightly in 2024 compared to 2023 and currently project that mortgage origination activity will expand throughout 2025, we anticipate a more moderate growth rate in 2025.
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Additionally, we generate revenue through commissions or service fees when consumers use our marketplaces to select a property and casualty insurance carrier, or settlement services provider.
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Mortgage origination activity depends on many factors, such as changes in the Federal Reserve’s policies or pressures in the macroeconomic environment, all of which are uncertain and out of our control. We expect the Federal Reserve's decision-making to continue to have impacts on mortgage origination activity.
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In 2022, we saw a 31.9% decrease in mortgage transactions, particularly refinance transactions, on our software platform compared to 2021. In 2023, we saw a further decrease in mortgage transactions of 34.7% on our software platform compared to 2022.
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In addition, we have developed a suite of add-on products that we offer to enhance consumers’ journeys to homeownership that are integrated into the end-to-end digital experience.
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We attribute the majority of this decrease to relatively high interest rates, decreased housing affordability, and uncertain worldwide political and economic conditions. We expect the Federal Reserve's decision-making to continue to have implications on mortgage origination activity.
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The Blend Ecosystem We bring together an extensive partner ecosystem through our software platform consisting of technology, data, and service providers to deliver best-in-class consumer journeys in highly efficient ways.
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Marketplace Components Our curated marketplace components enable consumers to shop for products and services presented at the precise moment of need during an application for a loan. We currently offer marketplaces that enable consumers to find real estate agents, and insurance carriers online.
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These data services providers include credit bureaus, payroll service providers, tax preparers, consumer asset data integrators, employment verification services, and anti-fraud services. • Marketplace Partners — we leverage strategic partnerships to enable consumer optionality when shopping for certain products and services that can be presented at the precise moment of need during the consumer journey.
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These marketplaces help consumers quickly locate service providers with competitive rates and enable financial services firms to increase operational efficiency by providing a one-stop shopping experience.
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We believe we are well positioned to serve as a long-term strategic innovation partner and provider of mission-critical software to financial services firms due to the following factors: • All banking products under one umbrella — we support multi-product shopping experiences and enable consumers to move seamlessly across digital devices, contact centers, and branches throughout the origination process.
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Our acquisition of Title365 enabled us to integrate the title, settlement, and escrow process further into our platform and develop a marketplace that provides consumers and financial services firms with the flexibility to choose title insurance partners that provide services at competitive rates.
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In 2024, 62.8% of our Blend Platform segment revenue was generated from 23 customers with more than $1 million each in revenue, and 79.4% of our Title segment revenue was generated from 7 customers with more than $1 million each in revenue. Sales and Marketing We focus our go-to-market strategy on financial services firms.
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APIs and Integrations Through our open APIs we are able to seamlessly integrate the capabilities of technology, data, and service providers into our software platform. As we develop integrations with new partners, our customers can quickly experience the benefits across their product suite.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeGAAP”); • maintaining employee morale and retaining key employees; • integration of operations, systems, technologies, products, and personnel of each acquired company, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration; • implementation of internal controls, procedures, and policies, in particular, with respect to the effectiveness of internal controls, cyber and information security practices, incident response plans, and business continuity and disaster recovery plans, compliance with privacy, data protection, information security, and other regulations, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • implementation of restructuring actions and cost reduction initiatives to streamline operations and improve cost efficiencies; • our acquisitions or investments may not achieve the planned objectives or return on investment and we may incur impairment charges for acquired intangible assets, goodwill or investments; • we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration; • significant costs incurred in connection with acquisition transactions, such as professional service fees; • the risk that any additional stock-based compensation issued or assumed in connection with an acquisition or strategic transaction may dilute our current stockholders, which may in turn impact our stock price and results of operations; • in the case of foreign acquisitions or acquisitions that include a foreign entity or operations, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries as well as tax risks that may arise from the acquisition; • tax risks, including any requirement to make tax withholdings in various jurisdictions in connection with such transactions or as part of our continuing operations following a transaction, and companies or businesses that we acquire may cause us to alter our international tax structure or otherwise create more complexity with respect to tax matters; • increasing legal, regulatory, and compliance exposure, and the additional costs related to mitigate each of those, as a result of adding new offices, employees, and other service providers, benefit plans, equity awards, job types, and lines of business globally; and 22 • liability for activities of the acquired company before the acquisition, including intellectual property, commercial, and other litigation claims or disputes, cyber and information security vulnerabilities and incidents, violations of laws, rules and regulations, including with respect to employee classification, tax liabilities, and other known and unknown liabilities.
Biggest changeAny future acquisitions, or similar strategic transactions involve numerous risks, any of which could harm our business and negatively affect our financial condition and results of operations, including: • diversion of management’s attention, including oversight over acquired or disposed businesses; • difficulty in accurately forecasting and accounting for the financial impact of any such transaction, including accounting charges, write-offs of deferred revenue under purchase accounting, and integrating and reporting results for acquired companies that have not historically followed U.S. generally accepted accounting principles; • maintaining employee morale and retaining key employees; • integration of operations, systems, technologies, products, and personnel of each acquired company or strategic partner, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration; • implementation of internal controls, procedures, and policies, in particular, with respect to the effectiveness of internal controls, cyber and information security practices, incident response plans, and business continuity and disaster recovery plans, compliance with privacy, data protection, information security, and other regulations, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s or strategic partner’s operations; • implementation of restructuring actions and cost reduction initiatives to streamline operations and improve cost efficiencies; • our acquisitions, partnerships or investments may not achieve the planned objectives or return on investment and we may incur impairment charges for acquired intangible assets, goodwill or investments; • we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration; • significant costs incurred in connection with acquisition transactions, such as professional service fees; • the risk that any additional stock-based compensation issued or assumed in connection with an acquisition or strategic transaction may dilute our current stockholders, which may in turn impact our stock price and results of operations; • in the case of foreign acquisitions or acquisitions that include a foreign entity or operations, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries as well as tax risks that may arise from the acquisition; • tax risks, including any requirement to make tax withholdings in various jurisdictions in connection with such transactions or as part of our continuing operations following a transaction, and companies or businesses that we acquire may cause us to alter our international tax structure or otherwise create more complexity with respect to tax matters; • increasing legal, regulatory, and compliance exposure, and the additional costs related to mitigate each of those, as a result of adding new offices, employees, and other service providers, benefit plans, equity awards, job types, and lines of business globally; and • liability for activities of the acquired company before the acquisition, including intellectual property, commercial, and other litigation claims or disputes, cyber and information security vulnerabilities and incidents, violations of laws, rules and regulations, including with respect to employee classification, tax liabilities, and other known and unknown liabilities.
If we are unable to continue to increase the number of other customers on our platform or if any of our key customers were to suspend, limit, or cease their operations or otherwise 16 terminate their relationship with us or lose market share, our business, financial condition, and results of operations would be adversely affected.
If we are unable to continue to increase the number of other customers on our platform or if any of our key customers were to suspend, limit, or cease their operations or 16 otherwise terminate their relationship with us or lose market share, our business, financial condition, and results of operations would be adversely affected.
If we are unable to successfully implement AI to our platform, core solutions, or applications, our business could be harmed . We have incorporated and may continue to incorporate additional AI technology into our platform and otherwise within our business, and AI technology may become more important to our operations or to our future growth over time.
If we are unable to successfully implement AI to our platform, core solutions, or applications, our business could be harmed. We have incorporated and may continue to incorporate additional AI technology into our platform, our operations and otherwise within our business, and AI technology may become more important to our operations or to our future growth over time.
The investments in our portfolio are subject to our investment policy, which focuses on the preservation of capital, fulfillment or our liquidity needs, and maximization of investment performance within the parameters set forth in our investment policy and subject to market conditions. The investment policy sets forth credit rating minimums, permissible allocations, and limits our exposure to specific investment types.
The investments in our portfolio are subject to our investment policy, which focuses on the preservation of capital, fulfillment or our liquidity needs, and maximization of investment performance within the parameters set forth in our investment policy and subject to market conditions. Our investment policy sets forth credit rating minimums, permissible allocations, and limits our exposure to specific investment types.
Risks Related to Our Title365 Business Our exposure to regulation and residential real estate transaction activity may be greater in California and Texas, where we source a significant proportion of our premiums. A large portion of our title segment revenue has historically originated from residential real estate transactions in Texas, California and Florida.
Risks Related to Our Title365 Business Our exposure to regulation and residential real estate transaction activity may be greater in Texas, California and Florida, where we source a significant proportion of our premiums. A large portion of our title segment revenue has historically originated from residential real estate transactions in Texas, California and Florida.
These risks and difficulties include our ability to: • accurately forecast the impact of macroeconomic or other external factors on our business, including the timing and extent of such impacts; • accurately forecast our revenue and plan or adjust our operating expenses in light of fluctuations in our revenue; • appropriately adjust our operating expenses in line with our revenue and that adequately supports our operations and future growth; • develop a scalable, high-performance technology infrastructure that can efficiently and reliably handle increased usage, as well as the deployment of new features and services; • maintain and increase the volume of transactions enabled through our platform; • enter into new and maintain existing customer relationships; • successfully identify, negotiate, execute, and integrate acquisitions or partnerships; • successfully compete with current and future competitors; • successfully build our brand and protect our reputation from negative publicity; • increase the effectiveness of our marketing strategies; • successfully adjust our proprietary technology, products, and services in a timely manner in response to changing macroeconomic conditions and fluctuations in the credit market; • enter into new and maintain existing ecosystem partnerships; • successfully introduce and integrate new products and services and enter new markets and geographies; • adapt to rapidly evolving trends in the ways customers and consumers interact with technology; • comply with and successfully adapt to complex and evolving regulatory environments; • protect against fraud and online theft; • avoid interruptions or disruptions in our service; • effectively secure and maintain the confidentiality of the information received, accessed, stored, provided, and used across our systems; • successfully obtain and maintain funding and liquidity to support continued growth and general corporate purposes; • attract, integrate, and retain qualified employees; and • effectively manage growth in our personnel and operations.
These risks and difficulties include our ability to: • accurately forecast the impact of macroeconomic or other external factors on our business, including the timing and extent of such impacts; • accurately forecast our revenue and plan or adjust our operating expenses in light of fluctuations in our revenue; • appropriately adjust our operating expenses in line with our revenue and that adequately supports our operations and future growth; • develop a scalable, high-performance technology infrastructure that can efficiently and reliably handle increased usage, as well as the deployment of new features and services; • maintain and increase the volume of transactions enabled through our platform; • enter into new and maintain existing customer relationships; • successfully identify, negotiate, execute, and integrate acquisitions or partnerships; • successfully compete with current and future competitors; • successfully build our brand and protect our reputation from negative publicity; 18 • increase the effectiveness of our marketing strategies; • successfully adjust our proprietary technology, products, and services in a timely manner in response to changing macroeconomic conditions and fluctuations in the credit market; • enter into new and maintain existing ecosystem partnerships; • successfully introduce and integrate new products and services and enter new markets and geographies; • adapt to rapidly evolving trends in the ways customers and consumers interact with technology; • comply with and successfully adapt to complex and evolving regulatory environments; • protect against fraud and online theft; • avoid interruptions or disruptions in our service; • effectively secure and maintain the confidentiality of the information received, accessed, stored, provided, and used across our systems; • successfully obtain and maintain funding and liquidity to support continued growth and general corporate purposes; • attract, integrate, and retain qualified employees; and • effectively manage growth in our personnel and operations.
Negative perception of our platform or company may harm our reputation and brand, including as a result of: • perceptions of cloud-based software and our industry and our company, including the quality, security, and reliability of our cloud-based software platform; • the overall user experience of our platform; • changes to our platform; • a failure to provide a range of options sought by customers or consumers; • our ability to effectively manage and resolve customer and consumer complaints; • fraudulent, illegal, negligent, reckless, or otherwise inappropriate behavior by users or third parties; • actual or perceived disruptions to, failures of, or defects, bugs, vulnerabilities, or errors in our platform or similar incidents, such as privacy or security breaches or other security incidents, site outages, payment disruptions, or other incidents that impact or may be perceived to impact the reliability of our services, including services provided by third parties we rely on; • litigation over, or investigations by regulators into, our platform; • customers’ or consumers’ lack of awareness of, or compliance with, our policies; • a failure to comply with legal, tax, privacy, data protection, information security, or regulatory requirements; • changes to our practices with respect to collection and use of customer and consumer data; • a failure to enforce our policies in a manner that users perceive as effective, fair, and transparent; • a failure to operate our business in a way that is consistent with our values and mission; • inadequate or unsatisfactory support experiences for our customers; • perceptions about our liquidity or financial strength; 26 • illegal or otherwise inappropriate behavior by our management team or other employees or contractors; or • a failure to register and prevent misappropriation of our trademarks.
Negative perception of our platform or company may harm our reputation and brand, including as a result of: • perceptions of cloud-based software and our industry and our company, including the quality, security, and reliability of our cloud-based software platform; • the overall user experience of our platform; • changes to our platform; • a failure to provide a range of options sought by customers or consumers; • our ability to effectively manage and resolve customer and consumer complaints; • fraudulent, illegal, negligent, reckless, or otherwise inappropriate behavior by users or third parties; • actual or perceived disruptions to, failures of, or defects, bugs, vulnerabilities, or errors in our platform or similar incidents, such as privacy or security breaches or other security incidents, site outages, payment disruptions, or other incidents that impact or may be perceived to impact the reliability of our services, including services provided by third parties we rely on; • litigation over, or investigations by regulators into, our platform; • customers’ or consumers’ lack of awareness of, or compliance with, our policies; • a failure to comply with legal, tax, privacy, data protection, information security, or regulatory requirements; • changes to our practices with respect to collection and use of customer and consumer data; • a failure to enforce our policies in a manner that users perceive as effective, fair, and transparent; • a failure to operate our business in a way that is consistent with our values and mission; • inadequate or unsatisfactory support experiences for our customers; • perceptions about our liquidity or financial strength; • illegal or otherwise inappropriate behavior by our management team or other employees or contractors; or • a failure to register and prevent misappropriation of our trademarks.
In particular, certain laws, regulations, and rules our customers are subject to, and we facilitate compliance with, include the: • TILA, and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their loans and credit transactions, and require creditors to comply with certain lending practice restrictions as well as the TILA-RESPA Integrated Disclosure rule, or TRID, which imposes specific requirements around the collection of information, charging of fees, and disclosure of specific loan terms and costs upon receipt of an application for credit; 37 • TISA, and Regulation DD thereunder, which impose disclosure requirements with respect to the terms and conditions of deposit accounts; • RESPA, and Regulation X, which require certain disclosures to be made to the borrower at application, as to the financial services firm’s good faith estimate of loan origination costs, and at closing with respect to the real estate settlement statement; prohibits giving or accepting any fee, kickback or a thing of value for the referral of real estate settlement services or accepting a portion or split of a settlement fee other than for services actually provided; for affiliated business relationships, prohibits receiving anything other than a legitimate return on ownership, requiring use of an affiliate, and failing to provide a disclosure of the affiliate relationship; • ECOA, and Regulation B promulgated thereunder, and similar state fair lending laws, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act; • FCRA, and Regulation V promulgated thereunder, impose certain obligations on consumer reporting agencies, users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining consumer reports, marketing using consumer reports, taking adverse action on the basis of information from consumer reports and protecting the privacy and security of consumer reports and consumer report information; • Section 5 of the FTC Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive or abusive acts or practices; • GLBA, and Regulation P promulgated thereunder, which include limitations on financial services firms’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial services firms to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information, and requires financial services firms to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other laws and regulations relating to privacy and security; • EFTA, and Regulation E promulgated thereunder, which provide guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including requirements for overdraft services and a prohibition on a creditor requiring a consumer to repay a credit agreement in preauthorized (recurring) electronic fund transfers and disclosure and authorization requirements in connection with such transfers; • HPA, which requires certain disclosures and the cancellation or termination of mortgage insurance once certain equity levels are reached; • HMDA, and Regulation C, which require reporting of loan origination data, including the number of loan applications taken, approved, denied and withdrawn; • Fair Housing Act (“FHA”), which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics; • SAFE Act, which imposes state licensing requirements on mortgage loan originators; • state laws and regulations impose requirements related to unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, data protection, information security, and conduct in connection with data breaches; • TCPA, and the regulations promulgated thereunder, which impose various consumer consent requirements and other restrictions in connection with telemarketing activity and other communication with consumers by phone, fax or text message, and which provide guidelines designed to safeguard consumer privacy in connection with such communications; • CAN-SPAM Act, and the TSR, and analogous state laws, which impose various restrictions on marketing conducted by use of email, telephone, fax or text message; • ESIGN Act, and similar state laws, particularly UETA, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require financial services firms to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; 38 • ADA, which has been interpreted to include websites as “places of public accommodations” that must meet certain federal requirements related to access and use; • RFPA, and similar state laws enacted to provide the financial records of financial services firms’ customers a reasonable amount of privacy from government scrutiny; • BSA, and the USA PATRIOT Act, which relate to compliance with anti-money laundering, borrower due diligence and record-keeping policies and procedures; • the regulations promulgated by OFAC, under the U.S.
In particular, certain laws, regulations, and rules our customers are subject to, and we facilitate compliance with, include the: • TILA, and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their loans and credit transactions, and require creditors to comply with certain lending practice restrictions as well as the TILA-RESPA Integrated Disclosure rule, or TRID, which imposes specific requirements around the collection of information, charging of fees, and disclosure of specific loan terms and costs upon receipt of an application for credit; • TISA, and Regulation DD thereunder, which impose disclosure requirements with respect to the terms and conditions of deposit accounts; • RESPA, and Regulation X, which require certain disclosures to be made to the borrower at application, as to the financial services firm’s good faith estimate of loan origination costs, and at closing with respect to the real estate settlement statement; prohibits giving or accepting any fee, kickback or a thing of value for the referral of real estate settlement services or accepting a portion or split of a settlement fee other than for services actually provided; for affiliated business relationships, prohibits receiving anything other than a legitimate return on ownership, requiring use of an affiliate, and failing to provide a disclosure of the affiliate relationship; • ECOA, and Regulation B promulgated thereunder, and similar state fair lending laws, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act; • FCRA, and Regulation V promulgated thereunder, impose certain obligations on consumer reporting agencies, users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining consumer reports, marketing using consumer reports, taking adverse action on the basis of information from consumer reports and protecting the privacy and security of consumer reports and consumer report information; • Section 5 of the FTC Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive or abusive acts or practices; 36 • GLBA, and Regulation P promulgated thereunder, which include limitations on financial services firms’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial services firms to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information, and requires financial services firms to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other laws and regulations relating to privacy and security; • EFTA, and Regulation E promulgated thereunder, which provide guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including requirements for overdraft services and a prohibition on a creditor requiring a consumer to repay a credit agreement in preauthorized (recurring) electronic fund transfers and disclosure and authorization requirements in connection with such transfers; • HPA, which requires certain disclosures and the cancellation or termination of mortgage insurance once certain equity levels are reached; • HMDA, and Regulation C, which require reporting of loan origination data, including the number of loan applications taken, approved, denied and withdrawn; • Fair Housing Act (“FHA”), which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics; • SAFE Act, which imposes state licensing requirements on mortgage loan originators; • state laws and regulations impose requirements related to unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, data protection, information security, and conduct in connection with data breaches; • TCPA, and the regulations promulgated thereunder, which impose various consumer consent requirements and other restrictions in connection with telemarketing activity and other communication with consumers by phone, fax or text message, and which provide guidelines designed to safeguard consumer privacy in connection with such communications; • CAN-SPAM Act, and the TSR, and analogous state laws, which impose various restrictions on marketing conducted by use of email, telephone, fax or text message; • ESIGN Act, and similar state laws, particularly UETA, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require financial services firms to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; • ADA, which has been interpreted to include websites as “places of public accommodations” that must meet certain federal requirements related to access and use; • RFPA, and similar state laws enacted to provide the financial records of financial services firms’ customers a reasonable amount of privacy from government scrutiny; • BSA, and the USA PATRIOT Act, which relate to compliance with anti-money laundering, borrower due diligence and record-keeping policies and procedures; • the regulations promulgated by OFAC, under the U.S.
The number of mortgage loans and refinances has been and may continue to be affected by negative trends in the general economy in the United States and abroad, including conditions resulting from changes in gross domestic product, financial and credit market fluctuations, the potential recessionary environment and macroeconomic uncertainty, increased interest rates, the availability and cost of credit, reductions in business and consumer confidence, stock market volatility, increased unemployment, political turmoil, pandemics, natural catastrophes, warfare, such as the current war in Ukraine and the potential effects of sanctions, the current conflict in Israel, and terrorist attacks on the United States, Europe, the Middle East region, the Asia Pacific region or elsewhere, and any such decrease in mortgage origination volumes is likely to have an adverse impact on our business.
The number of mortgage loans and refinances has been and may continue to be affected by negative trends in the general economy in the United States and abroad, including conditions resulting from changes in gross domestic product, financial and credit market fluctuations, the potential recessionary environment and macroeconomic uncertainty, increased interest rates, the availability and cost of credit, reductions in business and consumer confidence, stock market volatility, increased unemployment, political turmoil, pandemics, natural catastrophes, warfare, such as the current war in Ukraine and the potential effects of sanctions, the current conflict in the Middle East, and terrorist attacks on the United States, Europe, the Middle East region, the Asia Pacific region or elsewhere, and any such decrease in mortgage origination volumes is likely to have an adverse impact on our business.
Our systems and those of our third-party service providers are potentially vulnerable to and may be subject to unintentional, inadvertent, or malicious, internal and external cyberattacks and other means of compromising the security, integrity, or availability of systems and data, including hacking, intrusions, malware, ransomware and other malicious code, social engineering attacks, phishing and spearphishing attempts, fraudulent inducement, electronic fraud (including attempts to misrepresent personal or financial or information to obtain loans or other financial products), wire fraud attempts to overload our servers with distributed denial-of-service attacks, employee theft, error, or malfeasance, unauthorized access by third parties (including foreign governments or state actors with significant financial and technological resources) or internal actors, or other attacks, and other types of disruptions, exposure, 24 and security breaches and incidents.
Our systems and those of our third-party service providers are potentially vulnerable to and may be subject to unintentional, inadvertent, or malicious, internal and external cyberattacks and other means of compromising the security, integrity, or availability of systems and data, including hacking, intrusions, malware, ransomware and other malicious code, social engineering attacks, phishing and spearphishing attempts, fraudulent inducement, electronic fraud (including attempts to misrepresent personal or financial or information to obtain loans or other financial products), wire fraud attempts to overload our servers with distributed denial-of-service attacks, employee theft, error, or malfeasance, unauthorized access by third parties (including foreign governments or state actors with significant financial and technological resources) or internal actors, or other attacks, and other types of disruptions, exposure, and security breaches and incidents.
The CCPA, CPRA, CAADCA, other new and evolving state legislation, and other changes in laws or regulations relating to privacy, data protection, and information security, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of laws or regulations, that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer, or disclosure, could add additional complexity and variations in requirements, restrictions, and legal risks, greatly increase the cost of providing our platform, require significant changes to our operations and additional investment of resources, impact strategies and the availability of previously useful data for processing, or prevent us from providing our platform in jurisdictions in which we currently operate and in which we may operate in the future.
The CCPA, CPRA, CAADCA, COPPA, other new and evolving state legislation, and other changes in laws or regulations relating to privacy, data protection, and information security, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of laws or regulations, that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer, or disclosure, could add additional complexity and variations in requirements, restrictions, and legal risks, greatly increase the cost of providing our platform, require significant changes to our operations and additional investment of resources, impact strategies and the availability of previously useful data for processing, or prevent us from providing our platform in jurisdictions in which we currently operate and in which we may operate in the future.
In addition, our Amended and Restated Certificate of Incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • any amendments to our Amended and Restated Certificate of Incorporation require the approval of at least a majority of the voting power of the outstanding shares of our Class A common stock and Class B common stock voting as a single class; • our amended and restated bylaws provide that approval of the holders of at least a majority of the voting power of the outstanding shares of our Class A common stock and Class B common stock voting as a single class is required for stockholders to amend or adopt any provision of our amended and restated bylaws; • our multi-class common stock structure, which provides Nima Ghamsari with the ability to determine or significantly influence the outcome of matters requiring stockholder approval, even if he owns significantly less than a majority of the shares of our outstanding Class A common stock, Class B common stock, and Class C common stock; • until the first date on which the outstanding shares of our Class B common stock represent less than a majority of the total combined voting power of our Class A common stock and our Class B common stock (the “Voting Threshold Date”), our stockholders will only be able to take action by written consent if such action is first recommended or approved by our board of directors, and after the Voting Threshold Date, our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; • our Amended and Restated Certificate of Incorporation does not provide for cumulative voting; • vacancies on our board of directors are able to be filled only by our board of directors and not by stockholders; • a special meeting of our stockholders may only be called by the chairperson of our board of directors, our principal executive officer, our president, or a majority of our board of directors; • certain litigation against us can only be brought in Delaware; 54 • our Amended and Restated Certificate of Incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
In addition, our Amended and Restated Certificate of Incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • any amendments to our Amended and Restated Certificate of Incorporation require the approval of at least a majority of the voting power of the outstanding shares of our Class A common stock and Class B common stock voting as a single class; • our amended and restated bylaws provide that approval of the holders of at least a majority of the voting power of the outstanding shares of our Class A common stock and Class B common stock voting as a single class is required for stockholders to amend or adopt any provision of our amended and restated bylaws; 52 • our multi-class common stock structure, which provides Nima Ghamsari with the ability to determine or significantly influence the outcome of matters requiring stockholder approval, even if he owns significantly less than a majority of the shares of our outstanding Class A common stock, Class B common stock, and Class C common stock; • until the first date on which the outstanding shares of our Class B common stock represent less than a majority of the total combined voting power of our Class A common stock and our Class B common stock (the “Voting Threshold Date”), our stockholders will only be able to take action by written consent if such action is first recommended or approved by our board of directors, and after the Voting Threshold Date, our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; • our Amended and Restated Certificate of Incorporation does not provide for cumulative voting; • vacancies on our board of directors are able to be filled only by our board of directors and not by stockholders; • a special meeting of our stockholders may only be called by the chairperson of our board of directors, our principal executive officer, our president, or a majority of our board of directors; • certain litigation against us can only be brought in Delaware; • our Amended and Restated Certificate of Incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
We have expended and expect to continue to expend substantial financial and other resources on product development, including investments in our product, engineering, and design teams and the development of new products and new functionality for our existing products and our platform; our technology infrastructure, including systems architecture, management tools, scalability, availability, performance, and security, as well as disaster recovery measures; our sales, marketing, and customer success organizations; acquisitions or strategic investments; and general administration, including legal and accounting expenses.
Further, we have expended and expect to continue to expend substantial financial and other resources on product development, including investments in our product, engineering, and design teams and the development of new products and new functionality for our existing products and our platform; our technology infrastructure, including systems architecture, management tools, scalability, availability, performance, and security, as well as disaster recovery measures; our sales, marketing, and customer success organizations; acquisitions or strategic investments; and general administration, including legal and accounting expenses.
Numerous factors can influence our results of operations, including: • our ability to attract and retain customers in a cost-effective manner; • our ability to maintain or increase loan volumes, transactions processed, platform utilization, and title orders closed, and improve loan mix; • our ability to successfully expand in existing markets and successfully enter new markets; • changes in financial services firm behavior with respect to cloud-based software products and solutions; • the amount and timing of operating expenses related to maintaining and expanding our business, operations, and infrastructure, including acquiring new and maintaining existing customers; • our restructuring actions and the timing of incurring expenses and cash expenditures related to such actions; • our ability to successfully identify, negotiate, execute, and integrate strategic acquisitions or partnerships; • the mix of revenue we generate from our products and our marketplace; • the timing and success of new products and services; • the impact of worldwide economic conditions, including economic slowdowns, changes in market interest rates, recessions, housing affordability, and tightening of credit markets, including due to the war in Ukraine and the conflict in Israel; • the seasonality of our business; • our ability to maintain an adequate rate of growth and effectively manage that growth; • our ability to keep pace with technology changes in our industry; 20 • the success of our sales and marketing efforts; • the effects of negative publicity on our business, reputation, or brand; • our ability to protect, maintain, and enforce our intellectual property; • costs associated with defending claims, including intellectual property infringement claims, and related judgments or settlements; • changes in governmental or other regulations, including state and federal banking laws and regulations or in federal monetary policies, affecting our business; • interruptions in service and any related impact on our business, reputation, or brand; • the attraction, retention and engagement of qualified employees and key personnel; • our ability to choose and effectively manage partners, vendors, and other service providers; • the effects of natural or man-made catastrophic events; • the effectiveness of our internal control over financial reporting; and • changes in our tax rates or exposure to additional tax liabilities.
Numerous factors can influence our results of operations, including: • our ability to attract and retain customers in a cost-effective manner; • our ability to maintain or increase loan volumes, transactions processed, platform utilization, and title orders closed, and improve loan mix; • our ability to successfully expand in existing markets and successfully enter new markets; • changes in financial services firm behavior with respect to cloud-based software products and solutions; • the amount and timing of operating expenses related to maintaining and expanding our business, operations, and infrastructure, including acquiring new and maintaining existing customers; • our restructuring actions and the timing of incurring expenses and cash expenditures related to such actions; • our ability to successfully identify, negotiate, execute, and integrate strategic acquisitions or partnerships; • the mix of revenue we generate from our products and our marketplace; • the timing and success of new products and services; • the impact of worldwide economic conditions, including economic slowdowns, changes in market interest rates, recessions, housing affordability, and tightening of credit markets, including due to the war in Ukraine and the conflict in the Middle East; • the seasonality of our business; • our ability to maintain an adequate rate of growth and effectively manage that growth; • our ability to keep pace with technology changes in our industry; • the success of our sales and marketing efforts; • the effects of negative publicity on our business, reputation, or brand; • our ability to protect, maintain, and enforce our intellectual property; • costs associated with defending claims, including intellectual property infringement claims, and related judgments or settlements; • changes in governmental or other regulations, including state and federal banking laws and regulations or in federal monetary policies, affecting our business; • interruptions in service and any related impact on our business, reputation, or brand; • the attraction, retention and engagement of qualified employees and key personnel; • our ability to choose and effectively manage partners, vendors, and other service providers; • the effects of natural or man-made catastrophic events; 20 • the effectiveness of our internal control over financial reporting; and • changes in our tax rates or exposure to additional tax liabilities.
Our business, financial condition, and results of operations depend on our ability to adapt to technological change as well as global trends in the way customers access cloud-based banking software and successfully introduce new and enhanced products, services and business models. 19 We operate in industries that are characterized by rapidly changing technology, evolving industry standards, and frequent new product introductions.
Our business, financial condition, and results of operations depend on our ability to adapt to technological change as well as global trends in the way customers access cloud-based banking software and successfully introduce new and enhanced products, services and business models. We operate in industries that are characterized by rapidly changing technology, evolving industry standards, and frequent new product introductions.
Although state insurance regulators have primary responsibility for administering and enforcing insurance regulations in the United States, such laws and regulations are further administered and enforced by a number of additional governmental authorities, each of which exercises a degree of interpretive latitude, including state securities administrators, state attorneys general as well as federal agencies including the Federal Reserve Board, the Federal Insurance Office and the U.S.
Although state insurance regulators have primary responsibility for administering and enforcing insurance regulations in the United States, such laws and regulations are further administered and enforced by a number of additional governmental authorities, each of which exercises a degree of interpretive latitude, including state securities administrators, state attorneys general as well as federal agencies including the Federal Reserve, the Federal Insurance Office and the U.S.
The concentration of control will limit or preclude your ability to influence corporate matters for the foreseeable future and could have the effect of delaying, preventing, or deterring a change in control of our company, could deprive you and other holders of Class A common stock of an opportunity to receive a premium for your Class A common stock as part of a sale of our company and could negatively 50 affect the market price of our Class A common stock.
The concentration of control will limit or preclude your ability to influence corporate matters for the foreseeable future and could have the effect of delaying, preventing, or deterring a change in control of our company, could deprive you and other holders of Class A common stock of an opportunity to receive a premium for your Class A common stock as part of a sale of our company and could negatively affect the market price of our Class A common stock.
We may be unable to identify or complete prospective acquisitions or partnerships, strategic collaborations, joint ventures or licensing arrangements and investments for many reasons, including, competition for acquisition targets, our inability or unwillingness to pay for targets with high valuations, the absence of a market for certain strategic transactions we may want to pursue or our inability to identify suitable targets, or our inability to finance an acquisition.
We may be unable to identify or complete prospective acquisitions or dispositions or partnerships, strategic collaborations, joint ventures or licensing arrangements and investments for many reasons, including, competition for acquisition targets, our inability or unwillingness to pay for targets with high valuations, the absence of a market for certain strategic transactions we may want to pursue or our inability to identify suitable targets, or our inability to finance an acquisition.
In addition, international expansion may increase our risks in complying with various laws and standards, including with respect to anti-corruption, anti-bribery, export controls, and trade and economic sanctions. 33 We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
In addition, international expansion may increase our risks in complying with various laws and standards, including with respect to anti-corruption, anti-bribery, export controls, and trade and economic sanctions. We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
Although we provide title and 46 settlement services to large commercial and residential customers and mortgage originators, there are other title insurance agencies that have substantially greater capital than we do, especially those affiliated with large title insurance underwriters. The size and number of title insurance agencies varies in the geographic areas in which we conduct our title business.
Although we provide title settlement services to large commercial and residential customers and mortgage originators, there are other title insurance agencies that have substantially greater capital than we do, especially those affiliated with large title insurance underwriters. The size and number of title insurance agencies varies in the geographic areas in which we conduct our title business.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our reputation, brand, business, financial condition, and results of operations.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large 24 deductible or co-insurance requirements, could have an adverse effect on our reputation, brand, business, financial condition, and results of operations.
Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm our reputation and adversely affect our ability to scale our platform and business, our financial condition, and our results of operations. We experience significant seasonal fluctuations in our financial results, which could cause our Class A common stock price to fluctuate.
Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm our reputation and adversely affect our ability to scale our platform and business, our financial condition, and our results of operations. We experience seasonal fluctuations in our financial results, which could cause our Class A common stock price to fluctuate.
Such regulations include, for example, the GLBA, FCRA, California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (the “CPRA”). These laws, rules, and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in interpretation or enforcement, and may impose conflicting and inconsistent obligations.
Such regulations include, for example, the GLBA, FCRA, California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (the “CPRA”). These laws, rules, 38 and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in interpretation or enforcement, and may impose conflicting and inconsistent obligations.
Negative conditions in the general economy in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, the potential recessionary environment and macroeconomic uncertainty, increased interest rates, the availability and cost of credit, reductions in business and consumer confidence, stock market volatility, increased unemployment, political turmoil, pandemics, natural catastrophes, warfare, such as the current war in 15 Ukraine and the potential effects of sanctions, the current conflict in Israel, and terrorist attacks on the United States, Europe, the Middle East region, the Asia Pacific region or elsewhere, has caused and could further cause a decrease in lending activity and business investments, including spending on technology, and as a result, negatively affect the growth of our business.
Negative conditions in the general economy in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, the potential recessionary environment and macroeconomic uncertainty, increased interest rates, the availability and cost of credit, reductions in business and consumer confidence, stock market volatility, increased unemployment, political turmoil, pandemics, natural catastrophes, warfare, such as the current war in Ukraine and the potential effects of sanctions, the current conflict in the Middle East, and terrorist attacks on the United States, Europe, the Middle East region, the Asia Pacific region or elsewhere, has caused and could further cause a decrease in lending activity and business investments, including spending on technology, and as a result, negatively affect the growth of our business.
We may face unexpected challenges related to the complexity of our customers’ deployment and configuration requirements. Deployment of our software platform may be delayed or expenses may increase when customers have unexpected data, software, or technology challenges, or unanticipated business requirements, which could adversely affect our relationship with 28 our customers and our business, financial condition, and results of operations.
We may face unexpected challenges related to the complexity of our customers’ deployment and configuration requirements. Deployment of our software platform may be delayed or expenses may increase when customers have unexpected data, software, or technology challenges, or unanticipated business requirements, which could adversely affect our relationship with our customers and our business, financial condition, and results of operations.
Our investment portfolio may become impaired by conditions in the financial markets and failures at financial institutions at which we deposit funds or maintain investments could adversely affect us. We deposit substantial funds in financial institutions and may, from time to time, maintain cash balances at such financial institutions in excess of the Federal Deposit Insurance Corporation Limit.
Our investment portfolio may become impaired by conditions in the financial markets and failures at financial institutions at which we deposit funds or maintain investments could adversely affect us. We deposit substantial funds in financial institutions and may, from time to time, maintain cash balances at such financial institutions in excess of the Federal Deposit Insurance Corporation (“FDIC”) limit.
In our position as a licensed insurance agent, we may perform the search and examination function for policies we issue on behalf of underwriters or we may purchase a search product from another partner, vendor, or service provider. In either case, we are responsible for ensuring that the search and examination is completed.
In our position as a licensed insurance agent, we may perform the search and examination function for policies we issue on behalf of underwriters or we may purchase a search product from another partner, vendor, or service provider. In either case, we are responsible for ensuring that the search and examination is completed for title insurance policies.
If a court were to find the exclusive forum provisions in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could adversely affect our results of operations.
If a court were to find the exclusive forum provisions in our amended and restated bylaws to be inapplicable or unenforceable in an 53 action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could adversely affect our results of operations.
These system failures generally 27 occur either as a result of software updates being deployed with unexpected errors or as a result of temporary infrastructure failures related to storage, network, or compute capacity being exhausted. These events have resulted in losses in revenue, though such losses have not been material to date.
These system failures generally occur either as a result of software updates being deployed with unexpected errors or as a result of temporary infrastructure failures related to storage, network, or compute capacity being exhausted. These events have resulted in losses in revenue, though such losses have not been material to date.
If competitors introduce new offerings embodying new technologies, or if new industry standards and practices emerge, our existing technology, services, and website may become obsolete. Our future success could depend on our ability to respond to technological advances and emerging industry standards and practices in a cost-effective and timely manner.
If competitors introduce new offerings embodying new technologies, or if new industry standards and practices emerge, our existing technology, services, and website may become obsolete. Our future success could 19 depend on our ability to respond to technological advances and emerging industry standards and practices in a cost-effective and timely manner.
The CFPB is also authorized to prevent “unfair, deceptive or abusive acts or practices” through its rulemaking, supervisory, and enforcement authority. To assist in its 43 enforcement, the CFPB maintains an online complaint system that allows consumers to log complaints with respect to various consumer finance products.
The CFPB is also authorized to prevent “unfair, deceptive or abusive acts or practices” through its rulemaking, supervisory, and enforcement authority. To assist in its enforcement, the CFPB maintains an online complaint system that allows consumers to log complaints with respect to various consumer finance products.
The current regulatory environment, increased regulatory compliance efforts, and enhanced regulatory enforcement have resulted in us undertaking significant time-consuming and expensive operational and compliance efforts, which may delay or 36 preclude our ability to provide certain new products and services to our customers and/or delay adoption of new products and services by our customers.
The current regulatory environment, increased regulatory compliance efforts, and enhanced regulatory enforcement have resulted in us undertaking significant time-consuming and expensive operational and compliance efforts, which may delay or preclude our ability to provide certain new products and services to our customers and/or delay adoption of new products and services by our customers.
For example, under provisions enacted in the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), 45 beginning January 1, 2022, all U.S. and non-U.S. based research and experimental expenditures must be capitalized and amortized over five and fifteen years, respectively.
For example, under provisions enacted in the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), beginning January 1, 2022, all U.S. and non-U.S. based research and experimental expenditures must be capitalized and amortized over five and fifteen years, respectively.
Certain other state laws impose similar privacy, data protection, and information security obligations and we also expect that more states may enact new legislation to provide consumers with new privacy rights and increase the privacy, data protection, 40 and information security obligations of entities handling certain personal information of such consumers.
Certain other state laws impose similar privacy, data protection, and information security obligations and we also expect that more states may enact new legislation to provide consumers with new privacy rights and increase the privacy, data protection, and information security obligations of entities handling certain personal information of such consumers.
Any of these events, if realized, could adversely affect our business, financial condition, and results of operations. Failure to obtain or maintain state licenses or other regulatory infractions resulting in license revocation could impact our ability to offer products and services.
Any of these events, if realized, could adversely affect our business, financial condition, and results of operations. 40 Failure to obtain or maintain state licenses or other regulatory infractions resulting in license revocation could impact our ability to offer products and services.
Accordingly, our use of partners, vendors, and other service providers could adversely impact the frequency and severity of claims, and any such impact could adversely affect our business, financial condition, and results of operations. 42 We and our insurance carriers and underwriters are subject to extensive insurance industry regulations.
Accordingly, our use of partners, vendors, and other service providers could adversely impact the frequency and severity of claims, and any such impact could adversely affect our business, financial condition, and results of operations. We and our insurance carriers and underwriters are subject to extensive insurance industry regulations.
We offer our digital lending platform and products to financial institutions through software-as-a-service agreements where fees are assessed for each completed transaction, such as a funded loan, new account opening, or API call.
We offer our digital lending platform and products to financial institutions through software-as-a-service agreements where fees are assessed for each completed transaction, such as a funded loan, new account opening, closing transaction or API call.
Our ability to manage our growth and business operations effectively and to integrate new employees, technologies, and acquisitions into our existing business will require us to continue to expand our operational and financial infrastructure and to continue to effectively integrate, develop, and motivate employees, while maintaining the beneficial aspects of our culture.
Our ability to manage our growth and business operations effectively and to integrate new employees, technologies, and acquisitions into our existing business will require us to continue to expand our operational and 25 financial infrastructure and to continue to effectively integrate, develop, and motivate employees, while maintaining the beneficial aspects of our culture.
Any breach of privacy, or any security breach or other incident, could interrupt our operations, result in our platform being unavailable, result in loss of or improper access to, or acquisition, disclosure, or other processing of sensitive or confidential information, personal 25 information, or other data, result in fraudulent transfer of funds.
Any breach of privacy, or any security breach or other incident, could interrupt our operations, result in our platform being unavailable, result in loss of or improper access to, or acquisition, disclosure, or other processing of sensitive or confidential information, personal information, or other data, result in fraudulent transfer of funds.
However, we base our spending and investment plans on forecasts and estimates, and we may not be able to adjust our spending quickly enough if our revenue is less than expected, causing our results of operations to fail to meet our expectations or the expectations of investors. 29 The market for cloud-based banking software is still in relatively early stages of growth and if this market does not continue to grow, grows more slowly than we expect, or fails to grow as large as we expect, our business, financial condition, and results of operations could be adversely affected.
However, we base our spending and investment plans on forecasts and estimates, and we may not be able to adjust our spending quickly enough if our revenue is less than expected, causing our results of operations to fail to meet our expectations or the expectations of investors. 28 The market for cloud-based banking software is still in relatively early stages of growth and if this market does not continue to grow, grows more slowly than we expect, or fails to grow as large as we expect, our business, financial condition, and results of operations could be adversely affected.
In addition, as a public company, we may be subject to stockholder activism, which can lead to additional 35 substantial costs, distract management, and impact the manner in which we operate our business in ways we cannot currently anticipate.
In addition, as a public company, we may be subject to stockholder activism, which can lead to additional substantial costs, distract management, and impact the manner in which we operate our business in ways we cannot currently anticipate.
If the CFPB, or another regulator, were to issue a consent decree or other similar order against us, this could also directly or indirectly adversely affect our business, financial condition, and results of operations.
If the CFPB, or another regulator, were to issue a consent decree or 42 other similar order against us, this could also directly or indirectly adversely affect our business, financial condition, and results of operations.
Ghamsari and his affiliates of Class B common stock will generally result in those shares converting into shares of Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes.
Ghamsari and his affiliates of Class B common stock generally result in those shares converting into shares of Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes.
However, arbitration can be costly and burdensome, and the use of arbitration and class action waiver provisions subjects us to certain risks to our reputation and brand, as these provisions have been the subject of increasing public scrutiny.
However, arbitration can be costly and burdensome, and the use of arbitration and class action waiver provisions subjects us to certain risks to our reputation and brand, as these provisions have 35 been the subject of increasing public scrutiny.
As of December 31, 2023, Nima Ghamsari, Head of Blend, Co-Founder, and Chair of our board of directors, beneficially owns all of the issued and outstanding shares of our Class B common stock. As of December 31, 2023, the shares beneficially owned by Mr.
As of December 31, 2023, Nima Ghamsari, Head of Blend, Co-Founder, and Chair of our board of directors, beneficially owns all of the issued and outstanding shares of our Class B common stock. As of December 31, 2024, the shares beneficially owned by Mr.
Ghamsari transfers or sells a significant number of shares of Class A common stock, he will continue to control a significant portion of the voting power of our capital stock based on his current ownership. Future transfers by Mr.
Ghamsari transfers or sells a significant number of shares of Class A common stock, he will continue to control a significant portion of the voting power of our capital stock based on his current ownership. Transfers by Mr.
To the extent our solutions are perceived by customers and potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in general technology spending.
To the extent our solutions are perceived by customers and potential customers as costly, or too difficult to deploy or 15 migrate to, our revenue may be disproportionately affected by delays or reductions in general technology spending.
Complying with these requirements and other actual or asserted obligations, and changing our policies and practices may be onerous and costly, and we may not be able to respond quickly or effectively to regulatory, legislative and other developments.
Complying with these requirements and other actual or asserted obligations, and changing our policies and practices may be onerous and costly, and we may not be able to respond quickly or effectively to regulatory, legislative and 39 other developments.
In addition, as we expand the functionality of and services offered through the platform, or if a regulator determines that the services offered through the platform require licensing, we may be required to obtain additional licensing and incur additional costs.
In addition, if we expand the functionality of and services offered through the platform, or if a regulator determines that the services offered through the platform require licensing, we may be required to obtain additional licensing and incur additional costs.
The defense of these claims and any future infringement claims, whether they are with or without merit or are determined in our favor, may result in costly litigation and diversion of technical and management personnel.
The defense of these claims and any future infringement claims, whether they are with or without merit or are determined in our favor, may result in costly 48 litigation and diversion of technical and management personnel.
Even if we are able to complete an acquisition, partnership, or investment, our future success depends in part on our ability to integrate any future acquisitions and manage any investments, businesses, and partnerships effectively, and we can provide no assurance that such acquired businesses, or any investment or strategic transaction that we enter into, will be successfully integrated into our business, generate revenue, or achieve any expected benefits on a timely basis or at all.
Even if we are able to complete an acquisition, partnership, or investment, our future success depends in part on our ability to integrate any future acquisitions and manage any investments, businesses, and entry into partnerships effectively, and we can 21 provide no assurance that such acquired businesses, or any investment or strategic transaction that we enter into, will be successfully integrated into our business, generate revenue, or achieve any expected benefits on a timely basis or at all.
The CCPA also provides a private right of action for certain data breaches that may increase data breach litigation. Additionally, the CPRA was approved by California voters in November 2020, and significantly modifies the CCPA, including expanding California consumers’ rights with respect to certain personal information and creating a new state agency to oversee implementation and enforcement efforts.
The CCPA also provides a private right of action for certain data breaches that may increase data breach litigation. Additionally, the CPRA was approved by California voters in November 2020, and significantly modified the CCPA, including expanding California consumers’ rights with respect to certain personal information and creating a new state agency to oversee implementation and enforcement efforts.
If we are unable to effectively manage our hiring needs or successfully integrate new hires, our efficiency, ability to meet forecasts, and employee morale, productivity, and engagement could suffer, which could adversely affect our business, financial condition, and results of operations. 30 Misconduct and errors by our employees, partners, vendors, and other service providers could adversely affect our business, financial condition, results of operations, and reputation.
If we are unable to effectively manage our hiring needs or successfully integrate new hires, our efficiency, ability to meet forecasts, and employee morale, productivity, and engagement could suffer, which could adversely affect our business, financial condition, and results of operations. 29 Misconduct and errors by our employees, partners, vendors, and other service providers could adversely affect our business, financial condition, results of operations, and reputation.
Any dispute with a customer or third party with respect to such obligations could harm our relationship with that customer or third party, as well as other existing customers and new customers, and adversely affect our business, financial condition and results of operations. 44 We are subject to various U.S. and international anti-corruption laws and other anti-bribery and anti-kickback laws and regulations.
Any dispute with a customer or third party with respect to such obligations could harm our relationship with that customer or third party, as well as other existing customers and new customers, and adversely affect our business, financial condition and results of operations. 43 We are subject to various U.S. and international anti-corruption laws and other anti-bribery and anti-kickback laws and regulations.
Under Section 382 and Section 383 of the Internal Revenue Code of 1986 (as amended, the “Code”), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs and other tax attributes, including research and development tax credits, to offset its post-change income may be limited.
Under Section 382 and Section 383 of the Internal Revenue Code of 1986 (as amended, the “Code”), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs and other tax attributes, including research and development tax credits, to offset its post-change income or taxes may be limited.
The CCPA went into effect on January 1, 2020, and, among other things, requires new disclosures to California consumers and affords such consumers new data privacy rights. The California Attorney General can enforce the CCPA, including seeking an injunction and civil penalties of up to $7,500 per violation.
The CCPA went into effect on January 1, 2020, and, among other things, requires certain disclosures to California consumers and affords such consumers certain data privacy rights. The California Attorney General can enforce the CCPA, including seeking an injunction and civil penalties of up to $7,500 per violation.
In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks that are similar to our trademarks. As of December 31, 2023, we had one issued patent in the United States. Litigation or proceedings before the U.S.
In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks that are similar to our trademarks. As of December 31, 2024, we had one issued patent in the United States. Litigation or proceedings before the U.S.
The California Age-Appropriate Design Code Act (“CAADCA”), which expands the CPRA for businesses with websites that are likely to be accessed by children, was signed into law on September 15, 2022 and goes into effect on July 1, 2024.
The California Age-Appropriate Design Code Act (“CAADCA”), which expands the CPRA for businesses with websites that are likely to be accessed by children, was signed into law on September 15, 2022 and went into effect on July 1, 2024.
In most cases, higher interest rates have led to higher loan rates charged to consumers, which has adversely affected the ability of our customers to generate volume and in turn, the number of transactions enabled through our platform and thus our ability to generate revenue from such transactions. The U.S.
In most cases, higher interest rates have led to higher loan rates charged to consumers, which has adversely affected the ability of our customers to generate volume and in turn, the number of transactions enabled through our platform and thus our ability to generate revenue from such transactions.
No shares of our Class C common stock, which entitle the holder to zero votes per share (except as otherwise required by law), were issued and outstanding as of December 31, 2023 and we have no current plans to issue shares of Class C common stock.
No shares of our Class C common stock, which entitle the holder to zero votes per share (except as otherwise required by law), were issued and outstanding as of December 31, 2024 and we have no current plans to issue shares of Class C common stock.
We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (A) following the fifth anniversary of the completion of our IPO, (B) in which we have total annual revenue of at least $1.07 billion, or (C) in which we are deemed to be a large accelerated filer, with at least $700 million of equity securities 53 held by non-affiliates as of the prior June 30th, and (ii) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.
We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (A) following the fifth anniversary of the completion of our IPO, (B) in which we have total annual revenue of at least $1.07 billion, or (C) in which we are deemed to be a large accelerated filer, with at least $700 million of equity securities held by non-affiliates as of the prior June 30 th , and (ii) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.
In addition, we are currently subject to a variety of, and may in the future become subject to, additional, federal, state, and local laws that are continuously changing, including laws related to: the real estate brokerage, title and settlement services, consumer reporting agency services, and property and casualty insurance industries; mobile- and internet-based businesses; and information security, advertising, privacy, data protection, and consumer protection.
In addition, we are currently subject to a variety of, and may in the future become subject to, additional, federal, state, and local laws that are continuously changing, including laws related to: title and settlement services, consumer reporting agency services, and property and casualty insurance industries; mobile- and internet-based businesses; and information security, advertising, privacy, data protection, and consumer protection.
Any of the foregoing could negatively impact the consumer experience of our platform, the volume of loans enabled through our platform, the delivery of closing services like title and settlement services, and the degree of automation in our application process and on our platform.
Any of the foregoing could negatively impact the consumer experience of our platform, the volume of loans enabled through our platform, the delivery of certain services, including closing services like title and settlement services, and the degree of automation in our application process and on our platform.
Risk Factors Summary The risks and uncertainties to which our business is subject include, but are not limited to, the following: • Our business is substantially dependent on revenue from the financial services industry and is therefore subject to risks impacting the mortgage industry and the larger financial services industry; • Increases in market interest rates have, and will likely continue to, adversely affect our business, financial condition, and results of operations; 13 • Unfavorable conditions in our industry or the global economy or reductions in technology spending could limit our ability to grow our business and adversely affect our financial conditions and results of operations; • We have a history of net losses, and we may not be able to achieve or maintain profitability in the future; • A large percentage of our revenue is concentrated with a small number of key customers, and if our relationships with any of these key customers were to be terminated or the level of business with them significantly reduced over time, our business, financial condition, results of operations, and future prospects would be adversely affected; • If we fail to retain our existing customers or to acquire new customers in a cost-effective manner, or if our customers fail to maintain their utilization of our products and services, our revenue may decrease and our business, financial condition, and results of operations could be adversely affected; • We face intense competition, and if we are unable to compete effectively, our business, financial condition, and results of operations could be adversely affected; • We have previously experienced periods of rapid growth; however, our growth rate has fluctuated and may continue to fluctuate in the future; • We have a limited operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful; • Our business, financial condition, and results of operations depend on our ability to adapt to technological change as well as global trends in the way customers access cloud-based banking software and successfully introduce new and enhanced products, services and business models; • Our results of operations have fluctuated from period to period, which has caused the market price of our Class A common stock to fluctuate; • We operate under a success-based model and often rely on self-reporting of completed transactions by our customers, which can make it difficult to estimate and forecast revenue; • We have in the past, and may in the future, make strategic acquisitions or enter into partnerships, strategic collaborations, joint ventures or licensing agreements and investments, and we face risks related to execution and the integration of such acquisitions or investments and the management of any associated growth; • The impairment of intangible assets, goodwill, and other assets arising from any future acquisitions or investments may have an adverse effect on our business, financial condition, and results of operations; • We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all; • A cyberattack, security breach or incident affecting us or the third parties we rely on or partner with could expose us or our customers and consumers to a risk of loss or misuse of confidential information and have an adverse effect on our reputation, brand, business, financial condition, and results of operations; • We may be subject to claims, lawsuits, government investigations, and other proceedings that may adversely affect our business, financial condition, and results of operations; • Our customers are, and in some cases we are or may be, subject to, and we facilitate compliance with, a variety of federal, state, and local laws, including those related to consumer protection and financial services; • We depend on the interoperability of our platform across third-party applications and services that we do not control; • Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations; • The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment; and • The multi-class structure of our common stock has the effect of concentrating voting power with Nima Ghamsari, Head of Blend, Co-Founder, and Chair of our board of directors, which will severely limit your ability to influence or direct the outcome of matters submitted to our stockholders for approval, including the election of our board of directors, the adoption of amendments to our certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction. 14 Risks Related to Our Business and Operations Our business is substantially dependent on revenue from the financial services industry and, is therefore subject to risks impacting the mortgage industry and the larger financial services industry.
Risk Factors Summary The risks and uncertainties to which our business is subject include, but are not limited to, the following: • Our business is substantially dependent on revenue from the financial services industry and is therefore subject to risks impacting the mortgage industry and the larger financial services industry; • Increases in market interest rates have, and will likely continue to, adversely affect our business, financial condition, and results of operations; • Unfavorable conditions in our industry or the global economy or reductions in technology spending could limit our ability to grow our business and adversely affect our financial conditions and results of operations; • We have a history of net losses, and we may not be able to achieve or maintain profitability in the future; • A large percentage of our revenue is concentrated with a small number of key customers, and if our relationships with any of these key customers were to be terminated or the level of business with them significantly reduced over time, our business, financial condition, results of operations, and future prospects would be adversely affected; • If we fail to retain our existing customers or to acquire new customers in a cost-effective manner, or if our customers fail to maintain their utilization of our products and services, our revenue may decrease and our business, financial condition, and results of operations could be adversely affected; • We face intense competition, and if we are unable to compete effectively, our business, financial condition, and results of operations could be adversely affected; • We have a limited operating history in an evolving industry, and have experienced fluctuating growth rates in recent periods, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful; 13 • Our business, financial condition, and results of operations depend on our ability to adapt to technological change as well as global trends in the way customers access cloud-based banking software and successfully introduce new and enhanced products, services and business models; • Our results of operations have fluctuated from period to period, which has caused the market price of our Class A common stock to fluctuate; • We often rely on self-reporting of completed transactions by our customers due to our primarily success-based model, which can make it difficult to estimate and forecast revenue; • We have in the past, and may in the future, make strategic acquisitions or dispositions or we may enter into partnerships, strategic collaborations, joint ventures or licensing agreements and investments, and we face risks related to execution and the integration of such acquisitions or dispositions or investments and the management of any associated growth; • The impairment of intangible assets, goodwill, and other assets arising from any future acquisitions or investments may have an adverse effect on our business, financial condition, and results of operations; • We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all; • A cyberattack, security breach or incident affecting us or the third parties we rely on or partner with could expose us or our customers and consumers to a risk of loss or misuse of confidential information and have an adverse effect on our reputation, brand, business, financial condition, and results of operations; • We may be subject to claims, lawsuits, government investigations, and other proceedings that may adversely affect our business, financial condition, and results of operations; • Our customers are, and in some cases we are or may be, subject to, and we facilitate compliance with, a variety of federal, state, and local laws, including those related to consumer protection and financial services; • We depend on the interoperability of our platform across third-party applications and services that we do not control; • Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations; • The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment; and • The multi-class structure of our common stock has the effect of concentrating voting power with Nima Ghamsari, Head of Blend, Co-Founder, and Chair of our board of directors, which will severely limit your ability to influence or direct the outcome of matters submitted to our stockholders for approval, including the election of our board of directors, the adoption of amendments to our certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction; • The holders of our Series A Preferred Stock will be entitled to vote on an as-converted to Class A common stock basis and have rights to approve certain actions.
Ghamsari will be able to control matters requiring approval by our stockholders, including the election of members of our board of directors, the adoption of amendments to our Amended and Restated Certificate of Incorporation and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction.
Ghamsari will be able to significantly influence matters requiring approval by our stockholders, including the election of members of our board of directors, the adoption of amendments to our Amended and Restated Certificate of Incorporation and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction.
Ghamsari represented approximately 62% of the total voting power of our outstanding capital stock, which voting power may increase over time as Mr. Ghamsari exercises equity awards and exchanges them for our Class B common stock under the Equity Exchange Agreement. If all such equity awards held by Mr.
Ghamsari represented approximately 35% of the total voting power of our outstanding capital stock, which voting power may increase over time as Mr. Ghamsari exercises equity awards and exchanges them for our Class B common stock under the Equity Exchange Agreement. If all such equity awards 49 held by Mr.
We have registered the term “Blend” in the United States, Canada, the United Kingdom, and the European Union, and as of December 31, 2023, we had pending trademark applications in the United States. We have also registered the term “Title365” in the United States.
We have registered the term “Blend” in the United States, Canada, the United Kingdom, and the European Union, and as of December 31, 2024, we had pending trademark applications in the United States. We have also registered the term “Title365” in the United States.
Each acquisition requires unique approaches to integration due to, among other reasons, the structure of the acquisitions, the integration of technology, the size, locations, and cultural differences among their teams and ours, and has required, and will continue to require, attention from our management team.
Each transaction requires unique approaches to integration due to, among other reasons, the structure of the transaction, the integration of technology, the size, locations, and cultural differences among their teams and ours, and has required, and will continue to require, attention from our management team.
Certain of the metrics presented herein are calculated using internal company data that has not been independently verified, data from third-party attribution partners, or unaudited financial information of companies that we have acquired or partnered with.
Certain of the metrics that we present, including herein are calculated using internal company data that has not been independently verified, data from third-party attribution partners, or unaudited financial information of companies that we have acquired or partnered with.
It is possible that we will not generate taxable income in time to use NOLs before their expiration, or at all.
It is possible that we will not generate taxable income in time to use NOLs or tax credits before their expiration, or at all.
If we fail to meet or exceed such expectations, the market price of our Class A common stock could fall substantially, and we could face costly lawsuits, including securities class action suits. We operate under a success-based business model and often rely on self-reporting of completed transactions by our customers, which can make it difficult to estimate and forecast revenue.
If we fail to meet or exceed such expectations, the market price of our Class A common stock could fall substantially, and we could face costly lawsuits, including securities class action suits. We often rely on self-reporting of completed transactions by our customers due to our primarily success-based model, which can make it difficult to estimate and forecast revenue.
These security risks that we and our partners, vendors, and other service providers face have been heightened by an increase in employees and service providers working remotely. Additionally, these risks may be elevated in connection with geopolitical events such as the current war in Ukraine and the conflict in Israel.
These security risks that we and our partners, vendors, and other service providers face have been heightened by an increase in employees and service providers working remotely. 23 Additionally, these risks may be elevated in connection with geopolitical events such as the current war in Ukraine and the conflict in the Middle East.
Factors that could cause fluctuations in the trading price of our Class A common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders, including sales by or on behalf of Nima Ghamsari, Head of Blend, Co-Founder and Chair of our board of directors, to reduce or satisfy the outstanding amounts under his personal loans as required or permitted under his loan documentation with certain lenders (including as a result of foreclosure), under which he has pledged shares of his Class B common stock to secure certain personal indebtedness, or for any other reason; • changes in our capital structure, including as a result of the Final Conversion Date, which could result in a change of control; • failure of securities analysts to maintain coverage of us or changes in financial estimates by securities analysts who follow our company; • failure to meet our financial estimates or expectations or the financial estimates or expectations of securities analysts or investors; • the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; • announcements by us or our competitors of new services or platform features; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or security breaches or other incidents; • developments or disputes concerning our intellectual property or other proprietary rights; 52 • announced or completed acquisitions of businesses, services, or technologies by us or our competitors; • announced or completed strategic transactions by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management; • failure to continue to be listed on the New York Stock Exchange (“NYSE”); • general economic conditions and slow or negative growth of our markets; and • other events or factors, including those resulting from war, incidents of terrorism, natural disasters, public health concerns or epidemics, such as the COVID-19 pandemic, natural disasters, the war in Ukraine, the conflict in Israel, or responses to these events.
Factors that could cause fluctuations in the trading price of our Class A common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders, including sales by or on behalf of Nima Ghamsari, Head of Blend, Co-Founder and Chair of our board of directors, to reduce or satisfy the outstanding amounts under his personal loans as required or permitted under his loan documentation with certain lenders (including as a result of foreclosure), under which he has pledged shares of his Class A common stock to secure certain personal indebtedness, or for any other reason; • changes in our capital structure, including as a result of the Final Conversion Date, which could result in a change of control; • the amounts and timing of repurchases, if any, under our share repurchase program; • failure of securities analysts to maintain coverage of us or changes in financial estimates by securities analysts who follow our company; • failure to meet our financial estimates or expectations or the financial estimates or expectations of securities analysts or investors; • the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; • announcements by us or our competitors of new services or platform features; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or security breaches or other incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, services, or technologies by us or our competitors; • announced or completed strategic transactions by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management; • failure to continue to be listed on the New York Stock Exchange (“NYSE”); • general economic conditions and slow or negative growth of our markets; and • other events or factors, including those resulting from war, incidents of terrorism, natural disasters, public health concerns or epidemics, such as the COVID-19 pandemic, natural disasters, the war in Ukraine, the conflict in the Middle East, or responses to these events. 51 In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies.
Our ability to obtain or maintain state licenses for the services offered through our platform, including for our property and casualty insurance agency, title insurance agency, and real estate brokerage business, depends on our ability to meet licensing requirements established by the applicable regulatory agency and adopted by each state, subject to variations across states.
Our ability to obtain or maintain state licenses for the services offered through our platform, including for our property and casualty insurance agency and title insurance agency, depends on our ability to meet licensing requirements established by the applicable regulatory agency and adopted by each state, subject to variations across states.
Any of the foregoing could adversely affect our business, financial condition, and results of operations. 48 Risks Related to Our Intellectual Property Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations. Our business depends on our intellectual property, the protection of which is important to the success of our business.
Risks Related to Our Intellectual Property Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations. Our business depends on our intellectual property, the protection of which is important to the success of our business.
Ghamsari (including the Co-Founder and Head of Blend Long-Term Performance Award) had been exercised for cash as of December 31, 2023, Mr. Ghamsari would hold approximately 87% of the voting power of our outstanding capital stock. As a result, for the foreseeable future, Mr.
Ghamsari (including the Co-Founder and Head of Blend Long-Term Performance Award) had been exercised for cash as of December 31, 2024, Mr. Ghamsari would hold approximately 82% of the voting power of our outstanding capital stock. As a result, for the foreseeable future, Mr.
Our customers have the ability to access our platform, including Blend Builder Platform, our configurable platform, under (a) subscription arrangements, in which customers commit to a minimum number of completed transactions at specified prices over the contract term, (b) under usage-based arrangements, in which customers pay in arrears a variable amount for completed transactions at a specified price, (c) a fixed price platform fee, allowing the use of multiple products and services, including those on Blend Builder Platform, or (d) consumption arrangements, in which customers commit to a certain amount of consumption at specified prices and prepay a fixed amount in advance of their consumption.
Our customers have the ability to access our platform under (a) subscription arrangements, in which customers commit to a minimum number of completed transactions at specified prices over the contract term, (b) under usage-based arrangements, in which customers pay in arrears a variable amount for completed transactions at a specified price, (c) a fixed price platform fee, allowing the use of multiple products and services, or (d) consumption arrangements, in which customers commit to a certain amount of consumption at specified prices and prepay a fixed amount in advance of their consumption.
For example, on March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver, and for a period of time, customers of the bank did not have access to their funds and there was uncertainty as to when, if at all, customers would have access to funds in excess of the FDIC insured amounts.
For example, in 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver, and for a period of time, customers of the bank did not have access to their funds and there was uncertainty as to when, if at all, customers would have access to funds in excess of the FDIC insured amounts.
We have previously experienced rapid growth, but in recent periods, our growth rate has declined primarily due to macroeconomic factors, including an unfavorable interest rate environment, decreased housing affordability, and uncertain worldwide political and economic conditions. Our historical revenue growth rate and financial performance may not be indicative of our future performance.
We were founded in 2012 and have previously experienced periods of rapid growth, but due primarily to macroeconomic factors, including an unfavorable interest rate environment, decreased housing affordability, and uncertain worldwide political and economic conditions, our growth rate and revenue have fluctuated in recent periods and our historical revenue growth rate and financial performance may not be indicative of our future performance.
We have in the past, and may in the future, make strategic acquisitions or enter into partnerships, strategic collaborations, joint ventures or licensing agreements and investments, and we face risks related to the execution and integration of such acquisitions, including our acquisition of Title365, or investments and the management of any associated growth.
We have in the past, and may in the future, make strategic acquisitions or dispositions or we may enter into partnerships, strategic collaborations, joint ventures or licensing agreements and investments, and we face risks related to the execution and integration of such acquisitions or dispositions or investments and the management of any associated growth.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe devote significant resources and designate high-level personnel, including our Information Security Officer, who reports to our Head of Finance and Administration, to manage the risk assessment and mitigation process.
Biggest changeWe devote significant resources and designate high-level personnel, including our Information Security Officer, who reports to our Head of Finance and Administration, to manage the risk assessment and mitigation process. 55 As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with our human resources and information technology functional groups.
Our Information Security Officer has over 20 years of expertise within the cybersecurity field, and manages an experienced team with expertise in relevant security practices such as penetration testing, security operations, policy, etc. Our Information Security Officer and our cybersecurity team oversee our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Our Information Security Officer has over 20 years of expertise within the cybersecurity field, and manages an experienced team with expertise in relevant security practices such as penetration testing, security operations, and policy. Our Information Security Officer and our cybersecurity team oversee our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
In the event of a significant cybersecurity incident that is identified by the Company, Blend leadership and the Audit Committee is informed by the Information Security Officer or our manager of security operations to support swift and informed decision-making.
In the event of a significant cybersecurity incident that is identified by the Company, Blend leadership and the Audit Committee are informed by the Information Security Officer or our manager of security operations to support swift and informed decision-making.
Our security operations team triages issues and invokes the incident response plan when necessary. This plan includes provisions for notifications of internal and external parties, including Blend leadership and the Audit Committee as required.
Our security operations team triages issues and invokes the incident response plan when deemed necessary. This plan includes provisions for notifications of internal and external parties, including Blend leadership and the Audit Committee as required.
Blend conducts daily vulnerability assessments, prioritizes remediation, and engages in routine system and application patching as well as other proactive measures, where deemed appropriate, to mitigate reasonably foreseeable risks. Blend maintains an incident response plan that is designed to contain and resolve any suspected security incident identified by the Company. This plan is tested at least annually.
Blend conducts daily vulnerability assessments, prioritizes remediation, and engages in routine system and application patching as well as other proactive measures, where deemed appropriate, to mitigate reasonably foreseeable risks. Blend maintains an incident response plan that is designed to contain and address any suspected security incident identified by the Company. This plan is tested at least annually.
Our Audit Committee provides regular updates to the board of directors on such reports.
Our Audit Committee provides regular updates to the board of directors on such reports. 56
Specific training is required for users of higher-risk systems or individuals associated with specific security processes such as incident response. Our cybersecurity program includes processes for identifying and managing risks from third parties and is integrated into our overall risk management framework.
Personnel at all levels and departments are made aware of our cybersecurity policies through training. Specific training is required for users of higher-risk systems or individuals associated with specific security processes such as incident response. Our cybersecurity program includes processes for identifying and managing risks from third parties and is integrated into our overall risk management framework.
We consult with these service providers as required to verify mitigation approaches, to compare Blend’s security posture against industry peers, and to provide overall feedback for the security program.
These service providers assist us to evaluate risks and identify where our current security program may be improved. We consult with these service providers as required to verify mitigation approaches, to compare Blend’s security posture against industry peers, and to provide overall feedback for the security program.
We re-evaluate each such service provider at least annually and when the role or purpose of a service provider changes, and have processes to require service providers maintaining sensitive data on our behalf to delete such data at the time of termination of the contract.
We re-evaluate each such service provider at least annually and when the role or purpose of a service provider changes, and have processes to require service providers maintaining sensitive data on our behalf to delete such data upon contract termination. We engage assessors or other third-party service providers in connection with our risk assessment and cybersecurity assessment or audit processes.
Additionally, we utilize outside service providers, as well as a bug bounty program, to penetration test our network infrastructure and applications and provide prioritized security vulnerability findings reports that we include as part of our risk assessment processes. Some Blend customers also perform annual security testing on Blend’s infrastructure and applications.
Additionally, we utilize outside service providers, as well as a bug bounty program, to penetration test our network infrastructure and applications and provide prioritized security vulnerability findings reports. Some Blend customers also perform annual security testing on Blend’s infrastructure and applications. Like other technology companies, we have experienced cybersecurity incidents in the past.
Like other technology companies, we have experienced cybersecurity incidents in the past. We have not, however, been materially impacted by any previous cybersecurity incidents.
We have not, however, been materially impacted by any previous cybersecurity incidents.
Our program defines key risk objectives and if cybersecurity risk exceeds defined thresholds, risks are documented and escalated into the enterprise risk program and Blend’s internal audit team.
Our program defines key risk objectives and if cybersecurity risk exceeds defined thresholds, such risks are documented and escalated into the enterprise risk program and Blend’s internal audit team. We contractually obligate third-party service providers with access to our systems or processing sensitive data on our behalf to align with our cybersecurity objectives and adhere to industry best practices.
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As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with our human resources and information technology functional groups. Personnel at all levels and departments are made aware of our cybersecurity policies through training.
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We require all third-party service providers with access to our systems or processing sensitive data on our behalf to align with our cybersecurity objectives and adhere to industry best practices via contractual obligations that are entered into in connection with as a mandated review prior to engaging such service providers.
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We engage assessors or other third-party service providers in connection with our risk assessment and cybersecurity assessment or audit processes. These service providers assist us to evaluate risks and identify where our current security program may be 56 improved.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate headquarters is located in San Francisco, California, where we currently occupy facilities totaling approximately 47,000 square feet under a lease agreement that expires in 2025. We also lease offices in Thousand Oaks, California, Newport Beach, California, Lewisville, Texas, Omaha, Nebraska, Coraopolis, Pennsylvania, and Chennai and Bangalore, India.
Biggest changeITEM 2. PROPERTIES Our corporate headquarters is located in Novato, California under a lease agreement that expires in March 2025. We also lease offices in Newport Beach, California, Lewisville, Texas and Coraopolis, Pennsylvania.
We have supplemented our leased space with temporary or on demand available space in New York City, New York, New Orleans, Louisiana, Little Rock, Arkansas, Las Vegas, Nevada, Montgomery, Alabama, and Mexico City, Mexico. We do not own any real property.
We have supplemented our leased space with temporary or on demand available space in New York City, New York, New Orleans, Louisiana, Little Rock, Arkansas, Las Vegas, Nevada, Montgomery, Alabama, Riverside, California and Mexico City, Mexico. We do not own any real property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not presently party to any litigation that, if determined adversely to us, we believe would be likely to have a material adverse effect on our business, financial condition, results of operations, or cash flows. 57 Future litigation may be necessary, among other things, to defend ourselves or our customers by determining the scope, enforceability, and validity of third-party proprietary rights or to establish our proprietary rights.
Biggest changeWe are not presently party to any litigation that, if determined adversely to us, we believe would be likely to have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 58 PART II
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
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Future litigation may be necessary, among other things, to defend ourselves or our customers by determining the scope, enforceability, and validity of third-party proprietary rights or to establish our proprietary rights.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our Class A common stock has traded on the New York Stock Exchange under the symbol “BLND” since July 16, 2021. Prior to that date, there was no public trading market for our Class A common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Recent Sales of Unregistered Securities None. Market Information for Common Stock Our Class A common stock has traded on the New York Stock Exchange under the symbol “BLND” since July 16, 2021.
The performance graph and table shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act. 59 COMPARISON OF CUMULATIVE TOTAL RETURN SINCE IPO Among Blend Labs, Inc., the Russell 2000 Index and the S&P 1500 Application Software Index.
The performance graph and table shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act. 58 COMPARISON OF CUMULATIVE TOTAL RETURN SINCE IPO Among Blend Labs, Inc., the Russell 2000 Index and the S&P 1500 Application Software Index.
Stock Performance Graph The following graph compares the cumulative total shareholder return from July 16, 2021, the date on which our Class A common stock commenced trading on the New York Stock Exchange, and its relative performance through December 31, 2023 of (i) our Class A common stock, (ii) the Russell 2000 Stock Index (“S&P 500 Index”) and (iii) the Standard and Poor's 1500 Application Software Index (“S&P Application Software”).
Stock Performance Graph The following graph compares the cumulative total shareholder return from July 16, 2021, the date on which our Class A common stock commenced trading on the New York Stock Exchange, and its relative performance through December 31, 2024 of (i) our Class A common stock, (ii) the Russell 2000 Stock Index (“S&P 500 Index”) and (iii) the Standard and Poor's 1500 Application Software Index (“S&P Application Software”).
As of March 1, 2024, there were two stockholders of record of our Class B common stock. All shares of our Class B common stock are beneficially owned by Nima Ghamsari. As of March 1, 2024, there were no holders of our Class C common stock. Dividend Policy We have neither declared nor paid cash dividends on our capital stock.
As of March 1, 2025, there were two stockholders of record of our Class B common stock. All shares of our Class B common stock are beneficially owned by Nima Ghamsari. As of March 1, 2025, there were no holders of our Class C common stock. Dividend Policy We have neither declared nor paid cash dividends on our capital stock.
The number of beneficial owners of our Class A common stock is substantially greater than the number of record holders because a large portion of our Class A common stock is held in street name by brokers and other intermediaries. As of March 1, 2024, there was one record holder of warrants to purchase our Class A common stock.
The number of beneficial owners of our Class A common stock is substantially greater than the number of record holders because a large portion of our Class A common stock is held in street name by brokers and other intermediaries. As of March 1, 2025, there were two record holders of warrants to purchase our Class A common stock.
Our Class B common stock and Class C common stock are neither listed nor traded. Holders of Record As of March 1, 2024, there were 217 stockholders of record of our Class A common stock.
Prior to that date, there was no public trading market for our Class A common stock. Our Class B common stock and Class C common stock are neither listed nor traded. Holders of Record As of March 1, 2025, there were 181 stockholders of record of our Class A common stock.
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Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes the share repurchase activity for the three months ended December 31, 2024: Period Total Number of Shares Purchased (in thousands) (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) (1) October 1-31 — — — 25 November 1-30 — — — 25 December 1-31 — — — 25 (1) On August 6, 2024, our board of directors authorized the repurchase of up to $25.0 million of our Class A common stock.
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Company/Index 7/16/21 9/31/21 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 Blend Labs, Inc. $ 100.00 $ 64.50 $ 35.12 $ 27.27 $ 11.29 $ 10.57 $ 6.89 $ 4.77 $ 4.53 $ 6.56 $ 12.20 Russell 2000 $ 100.00 $ 95.64 $ 97.69 $ 90.34 $ 74.80 $ 73.17 $ 77.72 $ 79.85 $ 84.01 $ 79.70 $ 90.88 S&P 1500 Application Software Index $ 100.00 $ 104.50 $ 107.50 $ 88.45 $ 71.72 $ 66.40 $ 69.80 $ 84.74 $ 93.89 $ 95.34 $ 114.62 ITEM 6. [RESERVED]
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In connection with this authorization, we have entered into Rule 10b5-1 plans. As of December 31, 2024, no repurchases have been made under the program. Refer to Note 11, Stockholders Equity , of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, for additional information.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following tables set forth our results of operations for the periods presented in dollars and as a percentage of our revenue: 66 Year Ended December 31, 2023 2022 2021 (In thousands) Revenue Software platform $ 101,204 $ 113,589 $ 127,239 Professional services 8,345 7,835 6,944 Title 47,297 113,777 100,312 Total revenue 156,846 235,201 234,495 Cost of revenue (1) Software platform 22,025 30,706 30,263 Professional services 11,065 15,504 12,812 Title 42,621 99,340 75,431 Total cost of revenue 75,711 145,550 118,506 Gross profit 81,135 89,651 115,989 Operating expenses: Research and development (1) 81,591 138,094 92,216 Sales and marketing (1) 60,130 85,248 84,077 General and administrative (1) 70,688 139,120 128,802 Amortization of acquired intangible assets — 8,411 8,136 Impairment of intangible assets and goodwill — 449,680 — Restructuring 24,948 15,275 — Total operating expenses 237,357 835,828 313,231 Loss from operations (156,222) (746,177) (197,242) Interest expense (30,811) (24,790) (11,279) Other income (expense), net 7,248 4,916 493 Loss before income taxes (179,785) (766,051) (208,028) Income tax (expense) benefit (94) 2,241 38,886 Net loss $ (179,879) $ (763,810) $ (169,142) (1) Includes stock-based compensation as follows: Year Ended December 31, 2023 2022 2021 (In thousands) Cost of revenue $ 1,132 $ 2,069 $ 753 Research and development 19,046 47,280 13,184 Sales and marketing 7,137 11,725 7,167 General and administrative 18,706 48,628 49,740 Total stock-based compensation $ 46,021 $ 109,702 $ 70,844 67 Year Ended December 31, 2023 2022 2021 (as a % of revenue)* Revenue Software platform 65 % 48 % 54 % Professional services 5 4 3 Title 30 48 43 Total revenue 100 100 100 Cost of revenue Software platform 14 13 13 Professional services 7 7 6 Title 27 42 32 Total cost of revenue 48 62 51 Gross margin 52 38 49 Operating expenses: Research and development 52 59 39 Sales and marketing 38 36 36 General and administrative 45 59 55 Amortization of acquired intangible assets — 4 3 Impairment of intangible assets and goodwill — 191 — Restructuring 16 6 — Total operating expenses 151 355 134 Loss from operations (100) (317) (84) Interest expense (20) (11) (5) Other income (expense), net 5 2 — Loss before income taxes (115) (326) (89) Income tax (expense) benefit — 1 17 Net loss (115) % (325) % (72) % ____________ * Certain percentages may not foot due to rounding 68 Comparison of the Years Ended December 31, 2023 and 2022 Revenue and Cost of Revenue Year Ended December 31, 2023 2022 $ Change % Change (In thousands) Segment revenue: Blend Platform: Mortgage Suite $ 77,574 $ 94,280 $ (16,706) (18 %) Consumer Banking Suite 23,630 19,309 4,321 22 % Professional Services 8,345 7,835 510 7 % Total Blend Platform 109,549 121,424 (11,875) (10 %) Title 47,297 113,777 (66,480) (58 %) Total revenue $ 156,846 $ 235,201 $ (78,355) (33 %) Segment cost of revenue: Blend Platform $ 33,090 $ 46,210 $ (13,120) (28 %) Title 42,621 99,340 (56,719) (57 %) Total cost of revenue $ 75,711 $ 145,550 $ (69,839) (48 %) Segment gross profit and gross margin: Blend Platform $ 76,459 70 % $ 75,214 62 % $ 1,245 2 % Title 4,676 10 % 14,437 13 % (9,761) (68 %) Total gross profit $ 81,135 52 % $ 89,651 38 % $ (8,516) (9 %) Revenue decreased $78.4 million, or 33%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven by a decrease in Title segment revenue of $66.5 million, or 58%, primarily due to the lower volume of title orders, and a decrease in Blend Platform revenue of $11.9 million, or 10%.
Biggest changeWe maintain a full valuation allowance on our net federal and state deferred tax assets as we have concluded that it is not more likely than not that such net deferred tax assets will be realized. 64 Results of Operations The following tables set forth our results of operations for the periods presented in dollars and as a percentage of our revenue: Year Ended December 31, 2024 2023 2022 (In thousands) Revenue Software platform $ 106,914 $ 101,204 $ 113,589 Professional services 8,848 8,345 7,835 Title 46,257 47,297 113,777 Total revenue 162,019 156,846 235,201 Cost of revenue (1) Software platform 23,107 22,025 30,706 Professional services 9,434 11,065 15,504 Title 38,934 42,621 99,340 Total cost of revenue 71,475 75,711 145,550 Gross profit 90,544 81,135 89,651 Operating expenses: Research and development (1) 46,087 81,591 138,094 Sales and marketing (1) 36,049 60,130 85,248 General and administrative (1) 50,557 70,688 139,120 Amortization of acquired intangible assets — — 8,411 Impairment of intangible assets and goodwill — — 449,680 Restructuring 7,471 24,948 15,275 Total operating expenses 140,164 237,357 835,828 Loss from operations (49,620) (156,222) (746,177) Interest expense (6,747) (30,811) (24,790) Other income (expense), net 13,057 7,248 4,916 Loss before income taxes (43,310) (179,785) (766,051) Income tax (expense) benefit (109) (94) 2,241 Net loss $ (43,419) $ (179,879) $ (763,810) (1) Includes stock-based compensation as follows: Year Ended December 31, 2024 2023 2022 (In thousands) Cost of revenue $ 527 $ 1,132 $ 2,069 Research and development (2) 9,870 19,046 47,280 Sales and marketing 3,546 7,137 11,725 General and administrative 14,134 18,706 48,628 Total stock-based compensation $ 28,077 $ 46,021 $ 109,702 ____________ (2) Net of $2.5 million of additions to capitalized internal-use software for the year ended December 31, 2024, and none for the years ended December 31, 2023 and 2022. 65 Year Ended December 31, 2024 2023 2022 (as a % of revenue)* Revenue Software platform 66 % 65 % 48 % Professional services 5 5 4 Title 29 30 48 Total revenue 100 100 100 Cost of revenue Software platform 14 14 13 Professional services 6 7 7 Title 24 27 42 Total cost of revenue 44 48 62 Gross margin 56 52 38 Operating expenses: Research and development 28 52 59 Sales and marketing 22 38 36 General and administrative 32 45 59 Amortization of acquired intangible assets — — 4 Impairment of intangible assets and goodwill — — 191 Restructuring 5 16 6 Total operating expenses 87 151 355 Loss from operations (31) (100) (317) Interest expense (4) (20) (11) Other income (expense), net 8 5 2 Loss before income taxes (27) (115) (326) Income tax (expense) benefit — — 1 Net loss (27) % (115) % (325) % ____________ * Certain percentages may not foot due to rounding. 66 Comparison of the Years Ended December 31, 2024 and 2023 Revenue and Cost of Revenue Year Ended December 31, 2024 2023 $ Change % Change (In thousands) Segment revenue: Blend Platform: Mortgage Suite $ 73,257 $ 77,574 $ (4,317) (6 %) Consumer Banking Suite 33,657 23,630 10,027 42 % Professional Services 8,848 8,345 503 6 % Total Blend Platform 115,762 109,549 6,213 6 % Title 46,257 47,297 (1,040) (2 %) Total revenue $ 162,019 $ 156,846 $ 5,173 3 % Segment cost of revenue: Blend Platform $ 32,541 $ 33,090 $ (549) (2 %) Title 38,934 42,621 (3,687) (9 %) Total cost of revenue $ 71,475 $ 75,711 $ (4,236) (6 %) Segment gross profit and gross margin: Blend Platform $ 83,221 72 % $ 76,459 70 % $ 6,762 9 % Title 7,323 16 % 4,676 10 % 2,647 57 % Total gross profit $ 90,544 56 % $ 81,135 52 % $ 9,409 12 % Revenue increased $5.2 million, or 3%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, driven by an increase in Blend Platform revenue of $6.2 million, or 6%, offset by a decrease in Title segment revenue of $1.0 million, or 2%, which was primarily due to the lower volume of title orders.
Cash Provided by Investing Activities Net cash provided by investing activities during the year ended December 31, 2023 was $127.3 million, which was primarily due to maturities of marketable securities of $310.5 million, sale of marketable securities of $56.0 million, partially offset by $236.1 million used in purchases of marketable securities, an investment via issuance of note receivable of $2.5 million, and property and equipment purchases of $0.6 million.
Net cash provided by investing activities during the year ended December 31, 2023 was $127.3 million, which was primarily due to maturities of marketable securities of $310.5 million, sale of marketable securities of $56.0 million, partially offset by $236.1 million used in purchases of marketable securities, an investment via issuance of note receivable of $2.5 million, and property and equipment purchases of $0.6 million.
Although we believe that our approach to developing estimates of variable consideration is reasonable, actual results could differ, and we may be exposed to increases or decreases in revenue that could be material. 74 Stock-Based Compensation We measure and recognize our stock-based compensation based on estimated fair values for all stock awards, which include stock options, RSUs and PSUs.
Although we believe that our approach to developing estimates of variable consideration is reasonable, actual results could differ, and we may be exposed to increases or decreases in revenue that could be material. Stock-Based Compensation We measure and recognize our stock-based compensation based on estimated fair values for all stock awards, which include stock options, RSUs and PSUs.
On November 27, 2023, we entered into the Second Amendment to the Credit Agreement (the “Second Amendment”), which, among other things, terminated the revolving facility and amended the maturity date of the Term Loan to provide for a springing maturity extension to June 30, 2027, in the event that certain conditions are satisfied.
On November 27, 2023, we entered into the Second Amendment to the Credit Agreement (the “Second Amendment”), which, among other things, terminated the revolving facility and amended the maturity date of the term facility to provide for a springing maturity extension to June 30, 2027, in the event that certain conditions are satisfied.
Completed transaction fees are determined by the number and type of software platform components that are needed to support each product offering. Completed transaction fees are not impacted by the dollar size of transactions; however, we provide volume-based discounts to customers as they complete a higher volume of transactions on our software platform.
Completed transaction fees are 60 determined by the number and type of software platform components that are needed to support each product offering. Completed transaction fees are not impacted by the dollar size of transactions; however, we provide volume-based discounts to customers as they complete a higher volume of transactions on our software platform.
Our products are sold through a direct sales force that continues to manage customer relationships on an ongoing basis post-sale. Customers often complete an initial deployment for one or two products and then add more products over time.
Our products are sold through a direct sales force that continues to manage customer relationships on an ongoing basis post-sale. Customers often complete an initial deployment for one or two products and may then add more products over time.
The assumptions used to determine the fair value of these awards, such as the risk-free interest rate, expected volatility of our stock price, and expected life of the award, represent our estimates, which involve inherent uncertainties and the application of management’s judgment.
The assumptions used to 72 determine the fair value of these awards, such as the risk-free interest rate, expected volatility of our stock price, and expected life of the award, represent our estimates, which involve inherent uncertainties and the application of management’s judgment.
Revenue related to these services is recognized at the closing of the underlying real estate transaction. We also offer title services in connection with a borrower default and with the issuance of home equity lines of credit and home equity loans.
Revenue related to these services is recognized at the closing of the underlying real estate transaction. We also offer title services in connection with a borrower default and with the issuance of 62 home equity lines of credit and home equity loans.
Title In our Title segment, cost of revenue consists of costs of traditional title, escrow and other trustee services, which represent primarily personnel-related expenses of our Title segment as well as title abstractor, notary, and the cost of recording services provided by external vendors.
Title In our Title segment, cost of revenue consists of costs of title, escrow and other trustee services, which represent primarily personnel-related expenses of our Title segment as well as title abstractor, notary, and the cost of recording services provided by external vendors.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. This section of this Annual Report on Form 10-K generally discusses fiscal years 2023 and 2022 items and year-to-year comparisons between fiscal years 2023 and 2022.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. This section of this Annual Report on Form 10-K generally discusses fiscal years 2024 and 2023 items and year-to-year comparisons between fiscal years 2024 and 2023.
Revenue Recognition In our Blend Platform segment, we generate revenue from fees paid by our customers to access our platform, to complete mortgage banking and consumer banking transactions on our software platform, and, to a lesser extent, from professional services.
Revenue Recognition In our Blend Platform segment, we generate revenue from fees paid by our customers to access our platform, to complete mortgage and consumer banking transactions on our software platform, access Blend Builder, and, to a lesser extent, from professional services and premier support.
We have technology, data, and service providers on our software platform, including an extensive marketplace of insurance carriers, real estate agents, and settlement agencies. Our products and marketplaces provide multiple opportunities for us to serve financial services firms and consumers and drive revenue growth.
We have technology, data, and service providers on our software platform, including access to an extensive marketplace of insurance carriers and settlement agencies. Our products and marketplaces provide multiple opportunities for us to serve financial services firms and consumers and drive revenue growth.
The borrowings under the Credit Agreement accrue interest at a floating rate which can be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%.
The borrowings under the Credit Agreement accrued interest at a floating rate which could be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%.
Research and Development Research and development expenses consist primarily of personnel-related expenses, including stock-based compensation expense, associated with our engineering personnel responsible for the design, development, and testing of new products and features, professional and outside services fees, software and hosting costs, and allocated overhead costs. Research and development costs are expensed as incurred.
Research and Development Research and development expenses consist primarily of personnel-related expenses, including stock-based compensation expense, associated with our engineering personnel responsible for the design, development, and testing of new products and features, professional and outside services fees, software and hosting costs, facilities costs, and allocated overhead costs.
Our subscription and consumption arrangements are generally noncancelable, and we may also earn additional overage fees if the number of completed transactions exceeds the contractual amounts. Our usage-based arrangements generally can be terminated at any time by the customer.
Our subscription and prepaid usage-based arrangements are generally noncancelable, and we may also earn additional overage fees if the number of completed transactions exceeds the contractual amounts. Our usage-based arrangements paid in arrears can generally be terminated at any time by the customer.
Liquidity and Capital Resources Since our inception, we have financed our operations primarily through proceeds from the issuance of our stock and warrants and cash generated from the sale of our product offerings, as well as debt financing. As of December 31, 2023, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $136.9 million.
Liquidity and Capital Resources Since our inception, we have financed our operations primarily through proceeds from the issuance of our stock and warrants and cash generated from the sale of our product offerings, as well as debt financing. As of December 31, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $98.5 million.
The acquisition of Title365 has enabled our customers to streamline the title, settlement, and closing process at scale for mortgages, home equity lines of credit, and home equity loans, and we plan to continue to invest in improving and integrating settlement services into those banking products.
The acquisition of Title365 has enabled us to provide our customers with a streamlined title, settlement, and closing process at scale for mortgages, home equity lines of credit, and home equity loans, and we plan to continue to invest in improving and integrating settlement services into those banking products.
Critical Accounting Estimates Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with the U.S. generally accepted accounting principles, or U.S. GAAP.
Critical Accounting Estimates Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with the U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of our consolidated financial statements in accordance with U.S.
We provide the platform, including Blend Builder, our configurable platform, under (a) subscription arrangements, in which customers commit to a minimum number of completed transactions at specified prices over the contract term, (b) usage-based arrangements, in which customers pay in arrears a variable amount for completed transactions at a specified price, (c) a fixed price platform fee, allowing the use of multiple products and services, or (d) consumption-based arrangements, in which customers commit to a certain amount of consumption at specified prices and prepay a fixed amount in advance of their consumption.
We provide the platform, including Blend Builder, under (a) subscription arrangements, in which customers commit to a minimum number of completed transactions at specified prices over the contract term, (b) usage-based arrangements, in which customers pay in arrears a variable amount for completed transactions at a specified price, (c) a fixed price fee, which provides stand-ready access to one or more of our products and services, or (d) consumption-based arrangements, in which customers commit to a certain amount of consumption at specified prices and prepay a fixed amount in advance of their consumption.
See the section titled “ Risk Factors—Risks Related to Our Business—Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations. ” Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2023 2022 2021 (In thousands) Net cash used in operating activities $ (127,621) $ (190,418) $ (127,504) Net cash provided by (used in) investing activities 127,306 99,431 (633,908) Net cash (used in) provided by financing activities (90,958) 2,220 933,573 Effect of exchange rates on cash, cash equivalents and restricted cash (31) (116) (9) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (91,304) $ (88,883) $ 172,152 Cash Used in Operating Activities Our largest source of operating cash is cash collections from our customers, and our primary uses of cash in operations are for employee-related expenditures, sales and marketing expenses, and third-party hosting costs.
See the section titled “ Risk Factors—Risks Related to Our Business—Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations. ” 70 Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2024 2023 2022 (In thousands) Net cash used in operating activities $ (13,044) $ (127,621) $ (190,418) Net cash provided by investing activities 45,395 127,306 99,431 Net cash (used in) provided by financing activities (21,062) (90,958) 2,220 Effect of exchange rates on cash, cash equivalents, and restricted cash (5) (31) (116) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 11,284 $ (91,304) $ (88,883) Cash Used in Operating Activities Our largest source of operating cash is cash collections from our customers, and our primary uses of cash in operations are for employee-related expenditures, sales and marketing expenses, and third-party hosting costs.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K .
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties.
We recognize revenue ratably for our subscription arrangements because the customer receives and consumes the benefits of our platform throughout the contract period. We recognize fees for usage-based and consumption arrangements as the completed transactions are processed using our platform. Over the last several quarters, we have seen a shift towards usage-based arrangements in our customer contracts.
We recognize revenue ratably for our subscription arrangements because the customer receives and consumes the benefits of our platform throughout the contract period. We recognize fees for usage-based arrangements as the completed transactions are processed using our platform. Over the last year, we have seen a shift away from subscription arrangements towards prepaid multi-year usage-based arrangements in our customer contracts.
Our customers have the ability to access our platform under subscription arrangements, in which customers commit to a minimum number of completed transactions at specified prices over the contract term, under usage-based arrangements, in which customers pay in arrears a variable amount for completed transactions at specified prices, or under consumption-based arrangements in which customers commit to a certain amount of consumption at specified prices and prepay a fixed amount in advance of their consumption.
Our customers have the ability to access our platform under subscription arrangements, in which customers commit to a minimum number of completed transactions at specified prices over the contract term, or under usage-based arrangements, in which customers prepay a fixed amount in advance, typically annually or semi-annually, based on their anticipated consumption of specified products at specified prices or pay monthly in arrears a variable amount for completed transactions at specified prices.
We have generated significant losses from operations and negative cash flows from operating activities in the past as reflected in our accumulated deficit of $1,341.6 million as of December 31, 2023.
We have generated significant losses from operations and negative cash flows from operating activities in the past as reflected in our accumulated deficit of $1,385.0 million as of December 31, 2024.
As we drive adoption of our software platform, we expect these commissions and service fees to comprise a larger part of our revenue.
As we drive adoption of our software platform, we expect these license fees to comprise a larger part of our revenue.
General and Administrative General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expense for our finance, accounting, legal and compliance, human resources, and other administrative teams, certain executives, as well as stock-based compensation expense related to the stand-alone stock option award granted to our Co-Founder and Head of Blend in March 2021, and professional fees, including audit, legal and compliance, and recruiting services.
General and Administrative General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expense for our finance, accounting, legal and compliance, human resources, and other administrative teams, certain executives, stock-based compensation expense related to the stand-alone stock option award granted to our Co-Founder and Head of Blend in 2021, professional services fees, including audit, legal and compliance, facilities costs, software and hosting costs, external consulting expenses, and insurance expenses.
Net cash used in operating activities for the years ended December 31, 2023 and 2022 was $127.6 million and $190.4 million, respectively.
Net cash used in operating activities for the years ended December 31, 2024 and 2023 was $13.0 million and $127.6 million, respectively.
Cash (Used in) Provided by Financing Activities Net cash used in financing activities for the year ended December 31, 2023 was $91.0 million, primarily consisting of partial repayment of long-term debt principal of $85.0 million and payment of taxes related to net share settlement of equity awards of $6.2 million. 73 Net cash provided by financing activities for the year ended December 31, 2022 was $2.2 million, primarily reflecting proceeds from the exercises of stock options, net of repurchases, of $2.6 million.
Net cash used in financing activities for the year ended December 31, 2023 was $91.0 million, primarily consisting of partial repayment of long-term debt principal of $85.1 million and payment of taxes related to net share settlement of equity awards of $6.2 million.
These commissions or service fees are generated from consumers and are incremental to what we earn from our financial services firm customers on completed transactions. Our marketplaces are intended to provide greater consumer choice and flexibility and to help financial services firms by providing them with a more complete offering in partnership with Blend.
These license fees are typically generated from third-party providers that pay to access our platform and are incremental to what we earn from our financial services firm customers on completed transactions. Our marketplaces are intended to provide greater consumer choice and flexibility and to help financial services firms by providing them with a more complete offering in partnership with Blend.
Sales and Marketing Sales and marketing expenses decreased $25.1 million, or 29%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Sales and Marketing Sales and marketing expenses decreased $24.1 million, or 40%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Our actual results may differ from these estimates under different assumptions or conditions. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected.
To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected.
The decrease was primarily due to a $12.9 million decrease in personnel related expenses, a $4.6 million decrease in stock-based compensation expense, and a $4.6 million decrease in commissions, attributable to a decrease in headcount, in each case, related to our restructuring actions, and a $1.4 million decrease in advertising and promotion expenses.
The decrease was primarily due to a $11.7 million decrease in personnel related expenses and a $3.6 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $4.4 million decrease in commissions, a $1.4 million decrease in advertising and promotion expenses, a $1.3 million decrease in software and hosting costs, a $0.9 million decrease in trade shows and conference costs and a $0.6 million decrease in facilities costs.
The decrease in cash used in operations reflects a decrease in our net loss adjusted for noncash items, including charges associated with the impairments of goodwill and intangible assets, stock-based compensation, loss on extinguishment of debt, depreciation and amortization, change in deferred taxes, amortization of deferred contract costs, amortization of operating lease right-of-use assets, and amortization of debt discount and issuance costs on our long-term debt, and changes in operating assets and liabilities.
The decrease in cash used in operations reflects our net loss adjusted for noncash items, such as charges associated with stock-based compensation, depreciation and amortization, gain on investment in equity securities, amortization of deferred contract costs, amortization of operating lease right-of-use assets, and amortization of debt discount and issuance costs on our long-term debt, loss on debt extinguishment, gain on sale of insurance business, and changes in operating assets and liabilities.
Operating Expenses We have taken actions to manage our operating expenses and focus our investments on initiatives critical to achieving our broader strategy. We expect to see ongoing improvements to our expenses from these actions in 2024.
Operating Expenses We have taken actions to manage our operating expenses and focus our investments on initiatives critical to achieving our broader strategy. We expect to see our expenses remain relatively flat in 2025 as compared to 2024.
The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
GAAP requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions.
Customers also have the opportunity to secure discounts by agreeing to contractual minimums. We may earn additional overage fees if the number of completed transactions exceeds contractual minimums for customers who elect to enter into subscription or consumption-based agreements in which a minimum number of transactions are completed at specified prices.
Customers also have the opportunity to secure volume-based discounts determined by the size and length of contractual commitments. We may earn additional overage fees if the number of completed transactions exceeds contractual minimums or commitments for customers who elect to enter into subscription or consumption-based agreements, respectively.
Starting in 2023, the cost of revenue in the Blend Platform segment excludes cost of revenue related to our digitally-enabled title solution. 64 Software-related costs of subscribed hosting services and support consist primarily of expenses related to hosting our services, third-party fees related to platform connectivity services, which include verification of income, assets, and employment, software licenses and expenses related to providing support to our customers.
Software-related costs of subscribed hosting services and support consist primarily of expenses related to hosting our services, third-party fees related to platform connectivity services, which include verification of income, assets, and employment, software licenses and expenses related to providing support to our customers.
General and Administrative General and administrative expenses decreased $68.4 million, or 49% for the year ended December 31, 2023 compared to the year ended December 31, 2022.
General and Administrative General and administrative expenses decreased $20.1 million, or 28%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The length of the sales cycle for our products generally declines for the second and subsequent products we sell to a financial services firm, highlighting our high customer satisfaction. 61 We also earn revenue through commissions or service fees when consumers use our integrated marketplaces to select a real estate agent, property and casualty insurance carrier.
The length of the sales cycle for our products generally declines for the second and subsequent products we sell to customers, highlighting our high customer satisfaction. We also earn revenue through a combination of fixed and/or variable license fees when consumers use our Blend Platform integrated marketplaces, such as when they select a property and casualty insurance carrier.
Discussions of fiscal year 2021 items and year-to-year comparisons between fiscal years 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 16, 2023. 60 Overview Blend Labs, Inc. was founded in 2012, with a vision to bring simplicity and transparency to financial services, so everyone can gain access to the capital they need to lead better lives.
Discussions of fiscal year 2022 items and year-to-year comparisons between fiscal years 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 14, 2024.
This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements.
Our actual results may differ materially from those anticipated in these forward-looking statements.
Purchase volume and refinance activity were strong in 2020 and 2021 relative to historical averages over the preceding decade; however, an increase in interest rates due to efforts by the Federal Reserve to manage rising inflation, combined with ongoing supply constraints, resulted in a decline in mortgage origination activity in both 2022 and 2023.
Refinance activity was strong in 2020 and 2021 relative to historical averages over the preceding decade; however, an increase in interest rates due to efforts by the Federal Reserve to manage rising inflation resulted in a decline in refinance transactions volume in both 2022 and 2023, resulting in lower title insurance and other services revenue within the Title segment.
As a large portion of our revenue is driven by mortgage and mortgage related transaction volumes, changes in the mortgage origination volumes have had, and are likely to continue to have, material effects on our business.
As a large portion of our revenue is driven by mortgage and mortgage-related transaction volumes, changes in mortgage origination volumes have had, and are likely to continue to have, material effects on our business. 61 Strategic Initiatives We have taken actions to manage our operating expenses and focus our investments on initiatives critical to achieving our broader strategy.
For the year ended December 31, 2023, other income (expense), net also includes a loss on the partial extinguishment of debt. For the year ended December 31, 2022, other income (expense), net also includes an adjustment to the carrying value of investment in non-marketable equity securities.
For the year ended December 31, 2024, other income (expense), net also includes a gain on sale of insurance business in connection with strategic partnership, an adjustment to the carrying value of investment in non-marketable equity securities, a loss on extinguishment of debt, and a loss on transfer of our subsidiary in India.
Gross profit decreased $8.5 million, or 9% for the year ended December 31, 2023 compared to the year ended December 31, 2022. Gross margin was 52% for the year ended December 31, 2023 compared to 38% for the year ended December 31, 2022.
Gross profit increased $9.4 million, or 12% for the year ended December 31, 2024 compared to the year ended December 31, 2023. Gross margin was 56% for the year ended December 31, 2024 compared to 52% for the year ended December 31, 2023.
We are continuing to evaluate the changes within the mortgage industry and the impact to our segments and their projected operating results. Cost of Revenue Blend Platform In our Blend Platform segment, cost of revenue consists primarily of software-related costs, which include costs of subscribed hosting and support, costs of premier support services, and the costs of delivering professional services.
Cost of Revenue Blend Platform In our Blend Platform segment, cost of revenue consists primarily of software-related costs, which include costs of subscribed hosting and support, costs of premier support services, and the costs of delivering professional services.
Restructuring Restructuring charges relate to our workforce reduction plans and are comprised of cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs. Refer to Note 14, Restructuring , for additional information. Other Income (Expense), Net Other income (expense), net consists primarily of income earned from our investment portfolio.
Restructuring Restructuring charges relate to our workforce reduction plans and facilities restructuring actions. Charges related to workforce reduction plans are comprised of cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs.
The real estate environment, including interest rates and the general economic environment, typically impacts the demand for mortgage and mortgage related products. Recent changes in these areas have impacted our results of operations.
The real estate environment, including interest rates and the general economic environment, typically impacts the demand for mortgage and mortgage related products.
The decrease was primarily due to a $29.9 million decrease in stock-based compensation and a $22.7 million decrease in personnel related expenses attributable to a decrease in headcount, in each case, related to our restructuring actions, as well as a $4.7 million decrease in insurance, a $3.4 million decrease in software and hosting costs, a $1.9 million decrease in professional services, a $1.5 million decrease in expenses related to title and escrow loss reserve, and a $0.8 million decrease in facilities costs.
The decrease was primarily due to a $14.9 million decrease in personnel related expenses and a $6.7 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $12.0 million decrease due to the capitalization of internal-use software development costs, a $1.3 million decrease in software and hosting costs and a $0.4 million decrease in facilities costs.
As of December 31, 2023, we did not have any other relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other purposes.
These funds are not considered assets of ours and, therefore, are not included in our consolidated balance sheet; however, we are contingently liable for the disposition of these funds on behalf of consumers. 71 As of December 31, 2024, we did not have any other relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other purposes.
The remaining tranches were valued using a Monte Carlo simulation model, and will vest upon achievement of performance goals tied to our stock price hurdles with specified expiration dates for each tranche. Recent Accounting Pronouncements Refer to Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
The remaining tranches were valued using a Monte Carlo simulation model, and will vest upon achievement of performance goals tied to our stock price hurdles with specified expiration dates for each tranche.
Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expense, costs of general marketing activities and promotional activities, travel-related expenses, and allocated overhead costs.
Research and development costs are expensed as incurred, unless they qualify as capitalizable internal-use software development costs. 63 Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expense, costs of general marketing activities, advertising and promotional activities, travel-related expenses, facilities costs, and allocated overhead costs.
Cost of revenue decreased $69.8 million, or 48%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven by a decrease of $56.7 million, or 57% within the Title segment, primarily due to the lower volume of title orders, and a decrease in Blend Platform cost of revenue of $13.1 million, or 28%, primarily due to the lower volume of mortgage banking transactions.
Cost of revenue decreased $4.2 million, or 6%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, driven by a decrease of $3.7 million, or 9% within the Title segment, primarily due to a decrease in personnel related expenses, attributable to a decrease in headcount related to our restructuring actions, as well as the lower volume of title orders, and a decrease in Blend Platform cost of revenue of $0.5 million, or 2%, primarily due to the lower volume of mortgage banking transactions.
These conditions have not been met as of December 31, 2023. In connection with the Second Amendment, we opted to prepay the outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million. The Term Loan will mature on June 30, 2026, and the full principal amount is due at maturity.
These conditions were not met as of the termination date of the Credit Agreement. In connection with the Second Amendment, we opted to prepay the outstanding term facility under the Credit Agreement in an aggregate principal amount of $85.0 million.
If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition would be adversely affected.
In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition would be adversely affected.
Revenue is recognized when access to our platform is provisioned to our customers or as transactions are completed, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. To a lesser extent, we generate revenue from professional services related to the deployment of our platform, premier support services, and consulting services.
Arrangements with our customers do not provide the contractual right to take possession of our software at any point in time. Revenue is recognized when access to our platform is provisioned to our customers or as transactions are completed, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
The restructuring charges included cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs. 70 Interest Expense Year Ended December 31, 2023 2022 $ Change % Change (In thousands) Interest expense $ (30,811) $ (24,790) $ (6,021) 24 % Interest expense increased $6.0 million, or 24%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to the increase in interest rate on the Term Loan under the Credit Agreement.
The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs. 68 Interest Expense Year Ended December 31, 2024 2023 $ Change % Change (In thousands) Interest expense $ (6,747) $ (30,811) $ 24,064 (78 %) Interest expense decreased $24.1 million, or 78%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the optional prepayment of the outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million on November 27, 2023 and repayment of all remaining amounts outstanding and payable under the Credit Agreement in an aggregate amount of $146.1 million on April 29, 2024.
Workforce Reduction Plans Since 2022, we have implemented several workforce reduction actions as part of our broader efforts to improve cost efficiency and better align our operating structure with our business activities and the current market. Refer to Note 14, Restructuring, for additional information. 62 In 2023, we executed two workforce reduction initiatives.
As part of our broader efforts to improve cost efficiency and better align our operating structure with our business activities and the current market, since 2022, we implemented several workforce reduction actions and in 2024, we entered into an agreement to fully terminate one of our leases and abandoned another leased facility.
The decrease was primarily due to a $28.2 million decrease in stock-based compensation expense and a $24.2 million decrease in personnel related expenses attributable to a decrease in headcount, in each case, related to our restructuring actions, and a $3.2 million decrease in professional and outside services.
The decrease was primarily due to a $7.0 million decrease in personnel related expenses, a $4.6 million decrease in stock-based compensation expense, primarily attributable to vesting of the second tranche of Head of Blend options in 2023 and a decrease in headcount related to our restructuring actions, a $2.1 million decrease in external consulting expenses, a $1.9 million decrease in insurance expenses, a $1.7 million decrease in professional and outside services costs, a $1.7 million decrease in software and hosting costs and a $0.3 million decrease in facilities costs.
Within Blend Platform revenue, Mortgage Suite revenue decreased $16.7 million, or 18%, primarily due to the lower volume of mortgage banking transactions, particularly refinance transactions, with our customers, partially offset by an increase in revenue from homeowner's insurance and close transactions, Consumer Banking Suite revenue increased $4.3 million, or 22%, primarily due to the increase in home equity, deposit accounts, close and personal loan transactions, and Professional Services revenue increased by $0.5 million, or 7%, primarily due to an increase in professional services associated with the deployment and support of our platform.
Within Blend Platform revenue, Mortgage Suite revenue decreased $4.3 million , or 6%, primarily due to the lower volume of mortgage banking transactions with our customers, the Consumer Banking Suite revenue increased $10.0 million, or 42%, primarily due to an increase in home equity transactions and incremental platform fees, an increase in attach rates of our digital closing solution, higher volume of deposit account openings, offset by lower consumer lending transactions with our customers.
We recently introduced Composable Origination, which gives our customers the ability to easily configure or build custom workflows from a pre-built set of components, all while leveraging existing infrastructure. Financial services firms can experience Composable Origination by building custom solutions using our Blend Builder Platform, or with pre-built solutions such as Instant Home Equity, Deposit Accounts, Credit Cards and more.
Our platform also includes Blend Builder, which gives our customers the ability to easily configure or build custom workflows from a pre-built set of components, all while leveraging existing infrastructure.
Fees are assessed based on completed transactions, such as a funded loan, new account opening, or closing transaction. Completed transaction fees are determined by the number and type of software platform components that are 63 needed to support each product offering.
Components of Results of Operations Revenue Blend Platform In our Blend Platform segment, we generate revenue from fees paid by customers to access our software platform and complete the transactions. Fees are assessed based on completed transactions, such as a funded loan, new account opening, closing transaction or API call.
Restructuring Restructuring expenses increased $9.7 million, or 63% for the year ended December 31, 2023 compared to the year ended December 31, 2022 due to the execution of the 2023 restructuring plans, which were larger than the 2022 restructuring plans.
Restructuring Restructuring expenses decreased $17.5 million, or 70%, for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to the 2023 workforce reduction plans being larger than the 2024 workforce reduction plans.
Net cash provided by investing activities during the year ended December 31, 2022 was $99.4 million, which was primarily due to maturities of marketable securities of $247.0 million, partially offset by $145.5 million used in purchases of marketable securities, and property and equipment purchases of $2.1 million.
Cash Provided by Investing Activities Net cash provided by investing activities during the year ended December 31, 2024 was $45.4 million, which was primarily due to sales of marketable securities of $100.3 million and maturities of marketable securities of $53.2 million, $9.1 million proceeds from sale of insurance business, offset by $102.0 million used in the purchase of marketable securities, an investment via issuance of note receivable of $5.0 million and $9.8 million in additions of property and equipment, primarily related to capitalized internal-use software development costs.
We expect to continue to incur operating losses for the foreseeable future due to the investments that we intend to make in our business and the pressures on revenue growth due to the current macroeconomic environment and, as a result, we may require additional capital resources to grow our business. 71 Credit Agreement In connection with our acquisition of Title365, on June 30, 2021, we entered into a credit agreement that provides for a $225.0 million term facility and a $25.0 million revolving facility.
We may incur operating losses in the future due to the investments that we intend to make in our business and pressures on revenue growth due to the recent macroeconomic environment, and as a result, we may require additional capital resources to grow our business. 69 Share Repurchase Program In August 2024, we announced the authorization of a share repurchase program for the repurchase of shares of our Class A common stock, in an aggregate amount up to $25 million.
Material Cash Requirements Our material cash requirements arising from known contractual and other obligations primarily relate to our obligations under our Credit Agreement, leases for our office locations, and purchase commitments.
Material Cash Requirements After the termination of the Credit Agreement, our material cash requirements arising from known contractual and other obligations primarily relate to lease obligations for our office locations and purchase commitments. We believe that current cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next 12 months.
Other Income (Expense), net Year Ended December 31, 2023 2022 $ Change % Change (In thousands) Other income (expense), net $ 7,248 $ 4,916 $ 2,332 47 % Other income (expense), net increased $2.3 million, or 47%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase of $9.0 million in income from our investment portfolio, partially offset by a $4.0 million loss on extinguishment of debt recognized in 2023 and a $2.9 million gain on investment in equity securities without readily determinable fair value recognized in 2022.
The increase was primarily due to an $9.2 million gain on sale of insurance business in connection with the strategic partnership, a $4.4 million gain on investment on non-marketable equity securities due to an observable price change, offset by a $5.5 million loss on extinguishment of debt recognized in the year ended December 31, 2024 compared to a $4.0 million loss on the partial extinguishment of debt recognized in the year ended December 31, 2023, a $5.9 million decrease in interest income on our investment portfolio due to a smaller investment balance in 2024 as compared to 2023, and a $0.6 million loss on transfer of our subsidiary in India.
We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, and debt.
We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights; additionally, we may repurchase shares of our Class A common stock from time to time under our share repurchase program.
We do not charge for abandoned or rejected applications, even though they cause us to incur costs related to these applications. Arrangements with our customers do not provide the contractual right to take possession of our software at any point in time.
Completed transaction fees are determined by the number and type of software platform components that are needed to support each product offering. We do not charge for abandoned or rejected applications, even though they cause us to incur costs related to these applications.
Prior period amounts have been reclassified to conform to current period presentation. Refer to Note 17, Segments , for additional information. Title In our Title segment, we earn revenue from title search services for title insurance policies, escrow and other closing and settlement services.
Revenue from third-party providers for access to our platform is recognized ratably over the term of the contract. Title In our Title segment, we earn revenue from title search services for title insurance policies, escrow, and other closing and settlement services.
Within the Title segment, gross profit decreased by $9.8 million, or 68%, while gross margin decreased to 10% in 2023 as compared to 13% in 2022 due to continued headwinds in the economic environment. 69 Operating Expenses Year Ended December 31, 2023 2022 $ Change % Change (In thousands) Operating expenses: Research and development $ 81,591 $ 138,094 $ (56,503) (41 %) Sales and marketing 60,130 85,248 (25,118) (29 %) General and administrative 70,688 139,120 (68,432) (49 %) Amortization of acquired intangible assets — 8,411 (8,411) (100 %) Impairment of intangible assets and goodwill — 449,680 (449,680) (100 %) Restructuring 24,948 15,275 9,673 63 % Total operating expenses $ 237,357 $ 835,828 $ (598,471) (72 %) Research and Development Research and development expenses decreased $56.5 million, or 41%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Within the Title segment, gross profit increased by $2.6 million while gross margin increased to 16% for the year ended December 31, 2024 as compared to 10% for the year ended December 31, 2023 due to ongoing cost optimizations, such as rationalization of headcount and facilities footprint. 67 Operating Expenses Year Ended December 31, 2024 2023 $ Change % Change (In thousands) Operating expenses: Research and development $ 46,087 $ 81,591 $ (35,504) (44 %) Sales and marketing 36,049 60,130 (24,081) (40 %) General and administrative 50,557 70,688 (20,131) (28 %) Restructuring 7,471 24,948 (17,477) (70 %) Total operating expenses $ 140,164 $ 237,357 $ (97,193) (41 %) Research and Development Research and development expenses decreased $35.5 million, or 44%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Cash held for these purposes was approximately $3.2 million, net of outstanding checks in transit of $27.8 million, as of December 31, 2023. These funds are not considered assets of ours and, therefore, are not included in our consolidated balance sheet; however, we are contingently liable for the disposition of these funds on behalf of consumers.
Cash held for these purposes was approximately $6.1 million, net of outstanding checks in transit of $33.8 million as of December 31, 2024.
Removed
For the year ended December 31, 2022, we saw a 31.9% decrease in mortgage transactions, particularly refinance transactions, on our software platform compared to the year ended December 31, 2021. For the year ended December 31, 2023, we have seen a further decrease of 34.7% in mortgage transactions compared to the year ended December 31, 2022.
Added
Overview Blend Labs, Inc. was founded in 2012, with a vision to bring simplicity and transparency to financial services, so everyone can gain access to the capital they need to lead better lives.
Removed
We attribute the majority of this decrease to relatively high interest rates, decreased housing affordability, and uncertain worldwide political and economic conditions. Industry forecasters indicate that overall mortgage originations, including refinancing loans, are expected to increase in 2024.
Added
Financial services firms can create custom solutions with Blend Builder, or choose from pre-built solutions for Mortgage and Consumer Banking, including Home Equity, Deposit Accounts, Credit Cards, Personal Lending, Auto Lending and more.
Removed
Credit Agreement Amendment On November 27, 2023, we entered into a Second Amendment to the Credit Agreement, which amends the Credit Agreement to, among other things, (i) terminate the revolving loan commitments under the Credit Agreement and (ii) amend the maturity date of the term loans under the Credit Agreement to provide for a springing maturity extension to June 30, 2027, in the event that certain conditions are satisfied.
Added
Since 2022, increases in interest rates due to efforts by the Federal Reserve to manage rising inflation, combined with ongoing supply constraints, have resulted in a relative decline in mortgage origination activity, followed by a slight increase in 2024 as compared to 2023, based on the estimates of industry forecasters.
Removed
These conditions had not been met as of December 31, 2023. In connection with the Amendment, we optionally prepaid outstanding term loans under the Credit Agreement in an aggregate principal amount of $85.0 million in order to reduce outstanding indebtedness and interest expense under the Credit Agreement.
Added
In 2024, we saw a decrease in total mortgage transactions on our software platform compared to 2023, which can be attributed to normal customer churn amidst continued high interest rates, decreased housing affordability, and uncertain worldwide political and economic conditions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Removed
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks in the ordinary course of our business.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk 73 I tem 8. F inancial Statements and Supplementary Data 73 I tem 9. C hanges in and Disagreements With Accountants on Accounting and Financial Disclosure 123 I tem 9A. C ontrols and Procedures 123 I tem 9B. O ther Information 123 I tem 9C.
Removed
These risks primarily include: Interest Rate Risk We had cash and cash equivalents of $31.0 million and marketable securities and other investments of $106.0 million as of December 31, 2023, which consisted of bank deposits, money market funds, U.S. treasury and agency securities, commercial paper, corporate debt, and asset-backed securities.
Added
D isclosure Regarding Foreign Jurisdictions that Pr event Inspections 125 PART I II 125 I tem 10. D irec tors, Executive Offic ers and Corporate Governance 125 I tem 11. E xecutive Compensation 125 I tem 12. S ecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 125 I tem 13.
Removed
The cash and cash equivalents are held primarily for working capital purposes. Such interest-earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income have not been significant. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk.
Added
C ertain Relat ionships and Related Transactions, and Director Independence 125 I tem 14. P rincipal Accountant Fees and Services 125 PART IV 126 I tem 15. E xhibits and Financial Statement Schedules 126 I tem 16.
Removed
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
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F orm 10-K Summary 128 S ignatures 129 2 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties.
Removed
A hypothetical 100 basis points change in interest rates during any of the periods presented would not have had a material impact on our investments.
Added
Forward-looking statements generally relate to future events or our future financial or operating performance.
Removed
As of December 31, 2023, subsequent to our optional prepayment of outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million, we had $140.0 million of remaining principal outstanding under our Term Loan.
Added
In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions.
Removed
Our borrowings under the Term Loan accrue interest at a floating rate which can be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%. The applicable interest rate was 12.95% as of December 31, 2023.
Added
Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited to, statements about: • changes in economic conditions, especially those affecting the levels of real estate and mortgage activity, such as mortgage interest rates, credit availability, real estate prices, inflation, and consumer confidence; • our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, targeted reduction in operating loss and plans for future operations, expense reductions and costs savings, our ability to determine reserves, and our ability to achieve and maintain future profitability; • our market position, growth opportunities and our ability to successfully execute our business and growth strategy; • the sufficiency of our cash, cash equivalents, and marketable securities to meet our liquidity needs; • our expectations regarding our share repurchase program; • the demand for our products and services; • our ability to increase our transaction volume and to attract and retain customers; • our ability to integrate more marketplaces into our end-to-end consumer journeys; • our ability to develop new products, services, and features and bring them to market in a timely manner; • our ability to make enhancements to our current products; • our ability to compete with existing and new competitors in existing and new markets and offerings; • our ability to maintain the security and availability of our platform; • our expectations regarding the effects of existing and developing laws and regulations, including with respect to taxation, privacy, information security, artificial intelligence, and data protection; • our ability to manage risk associated with our business; • our expectations regarding new and evolving markets; • our ability to develop and protect our brand and reputation; • our expectations and management of future growth; • our expectations concerning relationships with third parties; • our ability to attract and retain employees and key personnel; • our ability to maintain, protect, and enhance our intellectual property; and • the increased expenses associated with being a public company.
Removed
An increase of 100 basis points in the applicable interest rate would increase our annual interest expense by approximately $1.4 million. A decrease of 100 basis points in the applicable interest rate would decrease our annual interest expense by approximately $1.4 million. Inflation Risk Inflationary factors such as increases in overhead costs may adversely affect our operating results.
Added
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Annual Report on Form 10-K. 3 You should not rely upon forward-looking statements as predictions of future events.
Removed
Although we do not believe that inflation has had a material impact on our financial condition or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of operating expenses as a percentage of revenue, if the selling prices of our products do not increase with these increased costs. 75
Added
We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects.
Added
The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Added
Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part. Moreover, we operate in a very competitive and rapidly changing environment.
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New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K.
Added
We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
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The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made.
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We undertake no obligation to update any forward-looking statements made in this Annual Report on Form 10-K to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect new information or the occurrence of unanticipated events, except as required by law.
Added
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
Added
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.
Added
These statements are based upon information available to us as of the date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
Added
These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. 4 PART I

Other BLND 10-K year-over-year comparisons