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What changed in Blend Labs, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Blend Labs, Inc.'s 2022 and 2023 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 2023 report.

+431 added−503 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-16)

Top changes in Blend Labs, Inc.'s 2023 10-K

431 paragraphs added · 503 removed · 356 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

62 edited+8 added−17 removed68 unchanged
Biggest changeOur failure, or the failure by our partners, vendors, service providers, or customers, to comply with applicable laws or regulations or any other obligations relating to privacy, data protection, or information security, or any compromise of security that results in unauthorized access to, or use or release of personal information or other data relating to consumers or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing customers and consumers from using our software platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect our business, financial condition, and results of operations. 12 See the section titled “ Risk Factors—Risks Related to Our Legal and Regulatory Environment—Changes in laws or regulations relating to privacy, information security, data protection or the protection or transfer of personal information, or any actual or perceived failure by us to comply with such laws and regulations or any other obligations relating to privacy, information security, data protection or the protection or transfer of personal information, could adversely affect our business. ” for additional information about our approach to laws and regulations relating to privacy, data protection, and information security.
Biggest changeOur failure, or the failure by our partners, vendors, service providers, or customers, to comply with applicable laws or regulations or any other obligations relating to privacy, data protection, or information security, or any compromise of security that results in unauthorized access to, or use or release of personal information or other data relating to consumers or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing customers and consumers from using our software platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect our business, financial condition, and results of operations.
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, 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.
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 credit; 10 • The Real Estate Settlement Procedures Act, or 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; • 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; • 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; • 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; • Homeowners Protection Act, or HPA, which requires certain disclosures and the cancellation or termination of mortgage insurance once certain equity levels are reached; • Home Mortgage Disclosure Act, or 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, 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; • 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; • 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; 11 • 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; • 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; • 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; • 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.
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.
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. 2 Composable Origination, powered by Blend Builder Platform Product Offerings Blend Builder 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. Composable Origination, powered by Blend Builder Platform Product Offerings Blend Platform powers the mission-critical interface between financial services firms and consumers.
Our growing library of composable product and workflow modules unlock 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.
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.
Customers typically complete an initial deployment of one or two products and then add more products over time, building toward a unified consumer experience that supports multi-product journeys. 1 Blend’s business model is designed to align our growth with our customers’ priorities.
Customers typically complete an initial deployment of one or two products and then add more products over time, building toward a unified consumer experience that supports multi-product journeys. 1 Our business model is designed to align our growth with our customers’ priorities.
The contents of the websites provided above are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. Further, our references to the URLs for these websites are intended to be inactive textual references only. 13
The contents of the websites provided above are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. Further, our references to the URLs for these websites are intended to be inactive textual references only.
The principal competitive factors in our industry include: • product functionality; • consumer experience; • employee user experience; • time to value; • total cost of ownership; • flexibility; • scalability; • ease of integration; • level of customer satisfaction; • ability to innovate rapidly; • brand awareness; and 9 • brand reputation.
The principal competitive factors in our industry include: • product functionality; • consumer experience; • employee user experience; • time to value; • total cost of ownership; • flexibility; • scalability; • ease of integration; • level of customer satisfaction; • ability to innovate rapidly; • brand awareness; and • brand reputation.
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.
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.
Consequently, a broad range of financial providers including banks, credit unions, fintechs, and community and independent mortgage banks have turned to Blend to help them accelerate their digital transformation initiatives and position themselves for future growth. Our Segments We operate our business in two segments: Blend Platform and Title365.
Consequently, a broad range of financial providers including banks, credit unions, fintechs, and community and independent mortgage banks have turned to Blend to help them accelerate their digital transformation initiatives and position themselves for future growth. Our Segments We operate our business in two segments: Blend Platform and Title.
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 realtor 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 real estate agent commissions, home insurance, title insurance, and automobile purchases.
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, insurance carriers, and automobiles for sale online.
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.
The Blend Platform segment also contains 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 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.
In addition to developing products in-house, we anticipate pursuing selective acquisitions and 7 partnerships to accelerate our growth.
In addition to developing products in-house, we anticipate pursuing selective acquisitions and partnerships to accelerate our growth.
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 Twitter 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.
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.
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, bankers, real estate agents, settlement agents, and notaries.
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.
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 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.
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, have resulted in a decline in mortgage origination activity for 2022.
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.
As consumers use our software platform to access financial products, they can also shop for realtors, 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 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.
Competition in the title insurance industry may impact our business and is intense, particularly with respect to price, service, and expertise. Larger commercial mortgage originators also look to the size and financial strength of a title insurance agency.
Competition in the title insurance industry may impact our business and is intense, particularly with respect to price, service, and expertise. Larger residential mortgage originators also look to the size and financial strength of a title insurance provider.
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 experiences across both origination and servicing. • Integrate marketplaces into our end-to-end consumer journeys — we generate commissions as consumers use our integrated marketplaces to select a realtor, 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. 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.
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.
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.
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 partner with realtors 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. • 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. 5 To provide consumers with optimal end-to-end journeys through our software platform, we have created our own property and casualty insurance agency and our own title insurance agency.
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 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.
Financial services firms can experience Composable Origination by building custom solutions using the Blend Builder Platform, or with pre-built solutions such as Instant Home Equity, Deposit Accounts, Credit Cards, and more. In 2022, our products within the Blend Platform segment helped financial services firms process nearly $1.7 trillion in loan applications.
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.
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 continue to invest in research and development to build our software platform and grow our business.
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.
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. 4 Workflow Intelligence Components Our workflow intelligence components manage data collection and automate tasks throughout the loan origination process.
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.
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.
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.
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. 3 • 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. • Realty — facilitates matches between consumers and local real estate agents who can provide guidance throughout the purchase process, and where eligible, the consumer can receive a rebate on the purchase of their home.
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.
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 47 of the top 100 financial services firms in the United States by assets under management and 34 of the top 100 non-bank mortgage lenders by loan volume.
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.
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 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.
We create application flows with branching logic to streamline initial data collection. Wherever possible, our software eliminates the need for document uploads by integrating with authoritative data sources.
Workflow Intelligence Components Our workflow intelligence components manage data collection and automate tasks throughout the loan origination process. We create application flows with branching logic to streamline initial data collection. Wherever possible, our software eliminates the need for document uploads by integrating with authoritative data sources.
As of December 31, 2022, we had one issued patent in the United States and patent applications pending in the United States, European Patent Office, Canada, and Australia. We continue to evaluate our intellectual property portfolio, and may seek patent protection for additional intellectual property developed by us in the future.
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.
To maintain a high level of engagement with our customers, we participate in leading industry conferences and host our own executive summit called Blend Forum, where we discuss the latest innovations shaping the future of financial services.
Our marketing efforts span across brand awareness, content development, digital marketing, demand generation and supporting our direct sales team. To maintain a high level of engagement with our customers, we participate in leading industry conferences and host our own executive summit called Blend Forum, where we discuss the latest innovations shaping the future of financial services.
In 2022, 20 customers each generated more than $1 million in revenue for us in the Blend Platform segment, which represented 57.4% of the Blend Platform segment revenue.
In 2023, in the Blend Platform segment, 20 customers each generated more than $1 million in revenue for us, which represented 60.4% of the Blend Platform segment revenue, and in the Title segment, 7 customers each generated more than $1 million in revenue for us, representing 77.5% of Title segment revenue.
We believe the time, cost, and effort to replicate the breadth of our products and depth of our capabilities is difficult for others to match. 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 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.
Our Solutions Blend Builder Platform for financial services firms is designed to power the end-to-end consumer journey for any banking product. From the moment a consumer starts an application for a loan or a deposit account to the moment they digitally sign their final documents, our software platform streamlines the process.
From the moment a consumer starts an application for a loan or a deposit account to the moment they digitally sign their final documents, our software platform streamlines the process.
Title365 also provides title services in connection with a borrower default and with the issuance of home equity lines of credit and home equity loans. Title365 became our second reportable segment at the time of acquisition. In June 2022, we completed the migration of the largest Title365 customer from traditional title to the software-enabled title solution.
Title365 also provides title services in connection with a borrower default and with the issuance of home equity lines of credit and home equity loans. Title365 became our second reportable segment at the time of acquisition, and was renamed “Title” in 2023.
We often discount our deployment services during implementation to allow customers to engage with our platform and incentivize the customer to expand their investment in our products. 8 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.
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 — we created our own property and casualty insurance agency with licensing in all 50 states to facilitate transactions in our home insurance marketplace, and in 2021 we acquired 90.1% interest in Title365, one of the largest title insurance agencies in the United States, with licenses and partnerships covering all 50 states 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 — we created our own property and casualty insurance agency with licensing in all 50 states and the District of Columbia to facilitate transactions in our home insurance marketplace.
As a large portion of our revenue is driven by mortgage and mortgage related transaction volumes, declines in the mortgage origination volumes have had, and are likely to continue to have, adverse effects on our business.
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 part of these Workforce Reduction Plans, we offered all terminated employees 9 weeks of pay with continued health insurance coverage, two months of COBRA pay, and outplacement services to assist them in finding their next opportunity.
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.
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, circumvented, or challenged.
Each customer is supported by a team of customer success managers, deployment and integration specialists. Most new customer deployments are completed within three to four months, including integrations to back-end systems.
Each customer is supported by a team of customer success managers, deployment and integration specialists. Most new customer deployments are completed within three to four months, including integrations to back-end systems. We often discount our deployment services during implementation to allow customers to engage with our platform and incentivize the customer to expand their investment in our products.
In addition, most financial providers are burdened by antiquated, inflexible systems and use separate technology stacks for different product lines, making it difficult to drive rapid improvements.
However, financial services firms may not have the resources and in-house software expertise to fulfill consumer demands for intuitive, digital, and easy-to-use products. In addition, most financial providers are burdened by antiquated, inflexible systems and use separate technology stacks for different product lines, making it difficult to drive rapid improvements.
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 internal teams are highly incentivized to go beyond the initial sale and to get accounts live and fully adopted on Blend.
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.
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 and underwriters, as well as other regional title insurance companies, underwritten title companies, and independent agency operations at the regional and local level.
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.
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 (the “2022 Workforce Reduction Plans”).
In 2021, we were named as one of America’s Best Workplaces by Inc. Magazine. 12 As of December 31, 2023, we had a total of 881 employees. 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 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 efforts span across brand awareness, content development, digital marketing, demand generation and supporting our direct sales team.
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.
Such regulations include, for example, GLBA, the Children’s Online Privacy Protection Act, the Personal Information Protection and Electronic Documents Act, CAN-SPAM, Canada’s Anti-Spam Law, TCPA, FCRA, the FTC Act, and CCPA. We work to comply with, and to help allow customers to comply with, applicable laws and regulations relating to privacy, data protection and information security.
Such regulations include, for example, GLBA, the Children’s Online Privacy Protection Act, the Personal Information Protection and Electronic Documents Act, CAN-SPAM, Canada’s Anti-Spam Law, TCPA, FCRA, the FTC Act, the CCPA, and regulations of relevant regulatory authorities, including the New York Department of Financial Services.
Although we provide title and settlement services to large commercial customers and mortgage originators, there are many other title insurance agencies that have substantially greater gross revenue than we do and, if affiliated with a title insurance underwriter, could have significantly greater capital.
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.
Our software simplifies complex origination processes that can include hundreds of tasks and require interactions with dozens of external technology, data, and services providers.
However, we cannot provide assurances about the timing of this anticipated acceleration in digital technology given the macroeconomic environment and its impact on our customers. Our software simplifies complex origination processes that can include hundreds of tasks and require interactions with dozens of external technology, data, and services providers.
We use a “land and expand” approach to growing customer relationships, typically completing an initial deployment for one or two products and then adding more products 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.
To create incentives for acquiring new customers and growing existing relationships, compensation is based on a combination of closing new deals and growing transaction volume through our software platform. We use a “land and expand” approach to growing customer relationships, typically completing an initial deployment for one or two products and then adding more products over time.
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. 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.
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.
In performing title search services, Title365 serves as an agent to place and bind title insurance policies with third-party underwriters.
Together we enable our customers to accelerate the title, settlement, and closing process at scale for mortgages, home equity lines of credit, and home equity loans. In performing title search services, Title365 serves as an agent to place and bind title insurance policies with third-party underwriters.
This helps underpin our strategy of building trust and providing a strong experience to customers.
We work to comply with, and to help allow customers to comply with, applicable laws and regulations relating to privacy, data protection and information security. This helps underpin our strategy of building trust and providing a strong experience to customers.
Additionally, we generate revenue through commissions or service fees when consumers use our marketplaces to select a real estate agent, property and casualty insurance carrier, title insurance underwriter, or settlement services provider. In June 2021, Blend acquired a 90.1% ownership of Title365, an underwritten title insurance agency engaged in selling title insurance policies and escrow services throughout the United States.
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.
Research & Development Our software platform operates as the interface that connects consumers, financial services firms, and third-party service providers such as realtors, 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.
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.
Additionally, we have registered the term “Blend” in the United States, the United Kingdom, and the European Union, and as of December 31, 2022, we had pending trademark applications in the United States. Furthermore, we have and will continue to evaluate, maintain, and register terms and logos that we use, or plan to use, as part of our business.
Furthermore, we have and will continue to evaluate, maintain, and register terms and logos that we use, or plan to use, as part of our business. We also have registered domain names that we use in, or are related to our business, most importantly www.blend.com.
As of December 31, 2022, our product portfolio consisted of eight primary software products and three marketplace offerings, and 72% of our customers were using less than four products or marketplaces, which gives us an opportunity to expand these relationships. • Continue to invest in new product offerings — we see numerous opportunities to expand our product suite both horizontally and vertically over time in ways that help us increase the volume of transactions we power and increase our revenue per banking transaction.
By attracting new customers, growing our relationships with existing customers, and helping customers identify additional opportunities for platform deployment, our revenue will grow as we serve additional transaction volume on our platform. • Continue to invest in new product offerings and increase the value we deliver per banking transaction — we see numerous opportunities to expand our product suite both horizontally and vertically over time in ways that help us increase the volume and type of transactions we power and increase our revenue per banking transaction.
In 2022, we have seen a 3.9% decrease in total reported banking transactions and a 31.9% decrease in mortgage transactions, particularly refinance transactions, on our software platform compared to 2021. We attribute the majority of this decrease to rapidly rising interest rates, decreased housing affordability, and uncertain worldwide political and economic conditions.
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.
Our products are sold through a direct sales force that continues to manage customer relationships on an ongoing basis post-sale. To create incentives for acquiring new customers and growing existing relationships, compensation is based on a combination of closing new deals and growing transaction volume through our software platform.
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.
Consistent with this strategy, on June 30, 2021, we acquired a 90.1% interest in Title365, a leading title insurance agency, from Mr. Cooper Group Inc., or Mr.
To provide consumers with optimal end-to-end journeys through our software platform, we have created our own property and casualty insurance agency, our own title insurance agency, and in June 2021, we acquired a 90.1% interest in Title365, a leading title insurance agency.
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Consumers expect modern banking experiences to be as simple as other online shopping experiences, and Blend enables financial providers to quickly deliver modern experiences that are easy to access and use. However, financial services firms may not have the resources and in-house software expertise to fulfill consumer demands for intuitive, digital, and easy-to-use products.
Added
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.
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Integrating Title365 with our software platform has enabled financial services firms to automate title commitments and streamline communication with consumers and settlement teams. Together we enable our customers to accelerate the title, settlement, and closing process at scale for mortgages, home equity lines of credit, and home equity loans.
Added
Title The Title segment comprises a suite of title products and services, such as instant title and other title search options, insurance solutions, closing and settlement services, including mobile signing and e-sign capabilities, and various post-closing solutions, such as disbursement and recording handling.
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This solution automates the flow of the title orders from the customer’s loan origination software and passes the orders through the Blend Platform. In connection with the migration we changed the composition of our reporting segments and the Blend Platform segment now includes our software-enabled title component and Title365 consists of the traditional title business.
Added
In June 2021, Blend acquired a 90.1% interest in Title365, an underwritten title insurance agency engaged in selling title insurance policies and escrow services throughout the United States, from Mr. Cooper Group Inc. (“Mr. Cooper”). Integrating Title365 with our software platform has enabled financial services firms to automate title commitments and streamline communication with consumers and settlement teams.
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Overall industry origination volumes, as reported by the Mortgage Bankers Association (“MBA”), have decreased by 56% over the same period.
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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.
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Due to deteriorating economic and market conditions, including a decline in our market capitalization and current and projected declines in the operating results of the Title365 segment, in 2022 we recorded a full impairment of goodwill and customer relationship intangible assets acquired in the Title365 business combination.
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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.
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In addition, we have developed a suite of products that we offer to facilitate the homeownership journey for consumers that are integrated into the end-to-end digital mortgage experience delivered by our Mortgage products.
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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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Cooper, Title365 allows us to marry operational scale with technology to provide a better user experience for loan teams and consumers by enabling financial services firms to automate title commitments and streamline communication with consumers and settlement teams.
Added
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.
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By attracting new customers, growing our relationships with existing customers, and helping customers identify additional opportunities for platform deployment, our revenue will grow as our transaction volume increases.
Added
See the section titled “ Risk Factors—Risks Related to Our Legal and Regulatory Environment—Changes in laws or regulations relating to privacy, information security, data protection or the protection or transfer of personal information, or any actual or perceived failure by us to comply with such laws and regulations or any other obligations relating to privacy, information security, data protection or the protection or transfer of personal information, could adversely affect our business. ” for additional information about our approach to laws and regulations relating to privacy, data protection, and information security.
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Within the top 100 large insured US chartered commercial banks as published by Federal Reserve only 39 are currently our customers in the Blend Platform segment, providing a large, untapped opportunity for Blend in addition to broadening our presence with existing customers.
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As of December 31, 2022, in the Blend Platform segment, we had 346 customers, including 39 of the top 100 financial services firms in the United States by assets under management and 24 of the top 100 non-bank mortgage lenders in the United States by loan volume.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk 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 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; • 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; 14 • 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; • We have previously identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations; • 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.
Biggest changeRisk 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.
Consumers on our platform may also provide sensitive information to other third parties through their use of our platform, and consumers could mistakenly attribute any misuse of such information by other third parties to us. Further, breaches and incidents experienced by other companies may also be leveraged against us.
Consumers on our platform may also provide sensitive information to third parties through their use of our platform, and consumers could mistakenly attribute any misuse of such information by third parties to us. Further, breaches and incidents experienced by other companies may be leveraged against us.
In the past, we have experienced periods of rapid growth in our customers, and our operations, and we expect to experience growth in the future. We have also experienced significant growth in employee headcount for several years in the past both at our San Francisco headquarters and through remote work arrangements.
In the past, we have experienced periods of rapid growth in our customers, and our operations, and we expect to experience growth in the future. We also experienced significant growth in employee headcount for several years in the past both at our San Francisco headquarters and through remote work arrangements.
In addition to the laws, regulations, and rules that apply to our customers, and that we facilitate compliance with, we, in our capacity as a service provider to financial services firms and as a provider of marketplace services directly to consumers, and our partners, vendors, and other service providers, may be deemed to be subject to certain laws, regulations, and rules through our relationships with our customers including RESPA, FCRA, FTC Act, GLBA, FHA, TCPA, CAN-SPAM Act, TSR, ESIGN Act, ADA, OFAC, and state-specific laws and regulations, including those that impose requirements related to unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, information security, and conduct in connection with data breaches.
In addition to the laws, regulations, and rules that apply to our customers, and that we facilitate compliance with, we, in our capacity as a service provider to financial services firms and as a provider of marketplace services directly to consumers, and our partners, vendors, and other service providers, may be deemed to be subject to certain laws, regulations, and rules through our relationships with our customers including RESPA, FCRA, FTC Act, GLBA, FHA, TCPA, CAN-SPAM, TSR, ESIGN Act, ADA, OFAC, and state-specific laws and regulations, including those that impose requirements related to unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, information security, and conduct in connection with data breaches.
We face a number of challenges that may affect our ability to sustain our corporate culture, including: • failure to identify, attract, reward, and retain people in our organization who share and further our culture, values, and mission; • the increasing size and geographic diversity of our workforce, including as a result of remote work; • competitive pressures to move in directions that may divert us from our mission, vision, and values; • the continued challenges of a rapidly evolving industry; • the increasing need to develop expertise in new areas of business that affect us; • any negative perception of our response to employee sentiment related to political or social causes or actions of management; • employee concerns regarding workforce reductions we have taken or may need to take in the future; • harm to employee morale due to workforce reductions; • challenges in our business and the macroeconomic environment; and • the integration of new personnel and businesses from acquisitions.
We face a number of challenges that may affect our ability to sustain our corporate culture, including: • failure to identify, attract, reward, and retain people in our organization who share and further our culture, values, and mission; • the geographic diversity of our workforce, including as a result of remote work; • competitive pressures to move in directions that may divert us from our mission, vision, and values; • the continued challenges of a rapidly evolving industry; • the increasing need to develop expertise in new areas of business that affect us; • any negative perception of our response to employee sentiment related to political or social causes or actions of management; • employee concerns regarding workforce reductions we have taken or may need to take in the future; • harm to employee morale due to workforce reductions; • challenges in our business and the macroeconomic environment; and • the integration of new personnel and businesses from acquisitions.
Under these rules, a company in which over 50% of the voting power for the election of directors is held by an individual, a group, or another company is a “controlled company” and may elect not to comply with certain listing standards of the New York Stock Exchange regarding corporate governance, including: • the requirement that a majority of its board of directors consist of independent directors; • the requirement that its nominating/corporate governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and an annual performance evaluation of the committee; • the requirement that its compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, and • annual performance evaluation of the committee, and the rights and responsibilities of the committee relate to any compensation consultant, independent legal counsel, or any other advisor retained by the committee.
Under these rules, a company in which over 50% of the voting power for the election of directors is held by an individual, a group, or another company is a “controlled company” and may elect not to comply with certain listing standards of the New York Stock Exchange regarding corporate governance, including: • the requirement that a majority of its board of directors consist of independent directors; 51 • the requirement that its nominating/corporate governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and an annual performance evaluation of the committee; • the requirement that its compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, and • annual performance evaluation of the committee, and the rights and responsibilities of the committee relate to any compensation consultant, independent legal counsel, or any other advisor retained by the committee.
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 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 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.
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; • 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; 38 • 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, or 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.
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.
While we have taken steps to protect the sensitive and confidential information that we have access to and have implemented multiple overlapping controls to reduce risk of a single control failure, our security measures or those of our partners, vendors, or other service providers could be breached or we could suffer data loss, unavailability, corruption, or unauthorized use or other processing, or unauthorized access to our platform or the systems or networks used in our business.
While we have taken steps to protect the sensitive and confidential information that we have access to and have implemented multiple overlapping controls to reduce risk of a single control failure, our security measures or those of our partners, vendors, or other service providers could be breached or we could suffer data loss, unavailability, corruption, or unauthorized use or other processing, or unauthorized access to or other compromises of our platform or the systems or networks used in our business.
After our acquisition of Title365, we determined that a material weakness existed in our internal controls over financial reporting related to the accounting for the Company’s business combination, including a lack of sufficient precision in the performance of reviews supporting the prospective financial information used in the customer relationship intangible asset valuation and a lack of adequate documentation to provide evidence of operating effectiveness of an associated management review control.
After our acquisition of Title365, we determined that a material weakness existed in our internal controls over financial reporting related to the accounting for the business combination, including a lack of sufficient precision in the performance of reviews supporting the prospective financial information used in the customer relationship intangible asset valuation and a lack of adequate documentation to provide evidence of operating effectiveness of an associated management review control.
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.
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.
We believe that growth of our revenue depends on a number of factors, including our ability to price our products and services effectively so that we are able to attract and retain customers without compromising our profitability, attract new customers, increase our existing customers’ use of our solutions, provide our customers with excellent support, and successfully identify and acquire or invest in businesses, products, or technology that we believe could complement or expand our solutions.
We believe that future growth of our revenue depends on a number of factors, including our ability to price our products and services effectively so that we are able to attract and retain customers without compromising our profitability, attract new customers, increase our existing customers’ use of our solutions, provide our customers with excellent support, and successfully identify and acquire or invest in businesses, products, or technology that we believe could complement or expand our solutions.
Although we have developed systems and processes that are designed to protect the confidential and sensitive information we maintain and our partners, vendors, and other service providers maintain on our behalf, including personal information of our customers, consumers, and employees, protect our systems, prevent data loss, and prevent security breaches and security incidents, these security measures may not have fully protected our systems in the past and cannot guarantee security in the future.
Although we have developed systems and processes that are designed to help protect the confidential and sensitive information we maintain and our partners, vendors, and other service providers maintain on our behalf, including personal information of our customers, consumers, and employees, protect our systems, prevent data loss, and prevent security breaches and security incidents, these security measures may not have fully protected our systems in the past and cannot guarantee security in the future.
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.
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.
If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, financial condition, and results of operations could be adversely affected. 16 We have a history of net losses, and we may not be able to achieve or maintain profitability in the future.
If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, financial condition, and results of operations could be adversely affected. We have a history of net losses, and we may not be able to achieve or maintain profitability in the future.
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 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 otherwise 16 terminate their relationship with us or lose market share, our business, financial condition, and results of operations would be adversely affected.
We do not believe that such transfer to, or the addition of, new cloud infrastructure service providers would cause substantial harm to our business, financial condition, and results of operations over the longer term. 49 We depend on the interoperability of our platform across third-party applications and services that we do not control.
We do not believe that such transfer to, or the addition of, new cloud infrastructure service providers would cause substantial harm to our business, financial condition, and results of operations over the longer term. We depend on the interoperability of our platform across third-party applications and services that we do not control.
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.
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 have in the past and plan to continue to expand and diversify our operations with strategic acquisitions or partnerships, strategic collaborations, joint ventures, or licensing arrangements and investments in and with companies, businesses, personnel, and technologies in the future. For example, on June 30, 2021, we completed our acquisition of Title365.
We have in the past and plan to continue to expand and diversify our operations with strategic acquisitions or partnerships, strategic collaborations, joint ventures, or licensing arrangements and investments in and with companies, businesses, 21 personnel, and technologies in the future. For example, on June 30, 2021, we completed our acquisition of Title365.
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.
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.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an emerging growth company as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).
However, our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an emerging growth company as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).
As our business grows, we may become subject to privacy, data protection, and information security laws from other jurisdictions outside of the United States, potentially including the General Data Protection Regulation, or the GDPR. The GDPR governs the collection, use, disclosure, transfer or other processing of personal data of European persons.
As our business grows, we may become subject to privacy, data protection, and information security laws from jurisdictions outside of the United States, potentially including the General Data Protection Regulation (“GDPR”). The GDPR governs the collection, use, disclosure, transfer or other processing of personal data of European persons.
Our revenue growth rate may decline in future periods as the size of our business grows and as we achieve higher market adoption rates, or for a number of other possible reasons, including macroeconomic conditions, reduced demand for our products and services, insufficient growth in the number of financial services firms that utilize our products and services or the lack of expansion of products and services within our existing customer base, transaction volume and mix, particularly with our significant customers, increased competition, a decrease in the growth or reduction in size of our overall market, unintended consequences from the Workforce Reduction Plans or related initiatives that impact our business, or if we fail for any reason to capitalize on growth opportunities and the maturation of our business, among others.
Our revenue growth rate may decline in future periods as the size of our business grows and as we achieve higher market adoption rates, or for a number of other possible reasons, including macroeconomic conditions, reduced demand for our products and services, insufficient growth in the number of financial services firms that utilize our products and services or the lack of expansion of products and services within our existing customer base, transaction volume and mix, particularly with our significant customers, increased competition, a decrease in the growth or reduction in size of our overall market, unintended consequences from our workforce reductions or related initiatives that impact our business, or if we fail for any reason to capitalize on growth opportunities and the maturation of our business, among others.
Should one or more of the financial institutions at which deposits are maintained fail, there is no guarantee as to the extent that we would recover the funds deposited, whether through Federal Deposit Insurance Corporation coverage or otherwise, or the timing of any recovery.
Should one or more of the financial institutions at which our deposits are maintained fail, there is no guarantee as to the extent that we would recover the funds deposited, whether through Federal Deposit Insurance Corporation coverage or otherwise, or the timing of any recovery.
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 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.
In the event of a liquidation, our lender would be repaid all outstanding principal and interest prior to the distribution of assets to unsecured creditors, and the holders of our Class A common stock would receive a portion of any liquidation proceeds only if all of our creditors, including our lenders, were first repaid in full.
In the event of a liquidation, our lender would be repaid all 23 outstanding principal and interest prior to the distribution of assets to unsecured creditors, and the holders of our Class A common stock would receive a portion of any liquidation proceeds only if all of our creditors, including our lenders, were first repaid in full.
We have taken steps to ensure this vulnerability 25 has been patched in our systems, but we cannot guarantee that all vulnerabilities have been patched in every system upon which we are dependent or that additional vulnerabilities of Log4j or other software upon which we rely will not be discovered.
We have taken steps to ensure this vulnerability has been patched in our systems, but we cannot guarantee that all vulnerabilities have been patched in every system upon which we are dependent or that additional vulnerabilities of Log4j or other software upon which we rely will not be discovered.
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.
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.
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; • 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; • 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.
Our failure, or the failure by our partners, vendors, service providers, or customers, to comply with applicable laws or regulations, applicable policies or documentation, or any other actual or asserted obligations relating to privacy, data protection, or information security, or any compromise of security that results in unauthorized access to, or use, release, disclosure, or other processing of personal information or other data relating to consumers or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing customers and consumers from using our platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect our business, financial condition, and results of operations.
Our failure, or the failure by our partners, vendors, service providers, or customers, to comply with applicable laws or regulations, policies, documentation, contractual obligations, or any other actual or asserted obligations relating to privacy, data protection, or information security, or any compromise of security that results in unauthorized access to, or use, release, disclosure, or other processing of data relating to consumers or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing customers and consumers from using our platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect our business, financial condition, and results of operations.
To the extent our financial services customers or potential customers fail or experience downturns due to challenges in the general macroeconomic environment or adverse conditions in the financial or credit markets, these firms may decrease the amount of money they spend with us, or stop spending with us entirely.
To the extent our financial services customers or potential customers fail or experience further downturns due to challenges in the general macroeconomic environment or adverse conditions in the financial or credit markets, these firms may decrease the amount of money they spend with us, or stop spending with us entirely.
System failures in the future could result in significant losses of revenue. Moreover, we have in the past provided credits to customers per contractual obligations and/or voluntarily made payments to 28 customers to compensate them for the system failure or similar event, and we may provide similar such credits in the future.
System failures in the future could result in significant losses of revenue. Moreover, we have in the past provided credits to customers per contractual obligations and/or voluntarily made payments to customers to compensate them for the system failure or similar event, and we may provide similar such credits in the future.
The CFPB may also request reports concerning our organization, business conduct, markets and activities and conduct on- 44 site examinations of our business on a periodic basis if the CFPB were to determine, through its complaint system, that we were engaging in activities that pose risks to consumers.
The CFPB may also request reports concerning our organization, business conduct, markets and activities and conduct on-site examinations of our business on a periodic basis if the CFPB were to determine, through its complaint system, that we were engaging in activities that pose risks to consumers.
The information technology systems and infrastructure used in our business may be vulnerable to cyberattacks or security breaches, and third parties may be able to access data, including personal information of our customers, consumers, or employees, or other sensitive and proprietary data, accessible through those systems.
The information technology systems and infrastructure used in our business may be vulnerable to cyberattacks or security breaches or incidents, and third parties may be able to access data, including personal information of our customers, consumers, or employees, or other sensitive and proprietary data, accessible through those systems.
Treasury Department related to the administration and enforcement of sanctions against foreign jurisdictions and persons that threaten U.S. foreign policy and national security goals, primarily to prevent targeted jurisdictions and persons from accessing the U.S. financial system; and 39 • other state-specific and local laws and regulations.
Treasury Department related to the administration and enforcement of sanctions against foreign jurisdictions and persons that threaten U.S. foreign policy and national security goals, primarily to prevent targeted jurisdictions and persons from accessing the U.S. financial system; and • other state-specific and local laws and 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.
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.
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, or the Voting Threshold 55 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.
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.
We must continue to innovate and develop new products and features to meet changing customer and consumer needs and attract and retain talented software developers. 20 Our business depends significantly on revenue from large and mid-sized financial services firms.
We must continue to innovate and develop new products and features to meet changing customer and consumer needs and attract and retain talented software developers. Our business depends significantly on revenue from large and mid-sized financial services firms.
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.
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.
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.
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.
Because the shares of Class C common stock 52 have no voting rights (except as required by law), the issuance of such shares will not result in further voting dilution, which would prolong the voting control of Mr. Ghamsari. Further, the issuance of such shares of Class C common stock to Mr.
Because the shares of Class C common stock have no voting rights (except as required by law), the issuance of such shares will not result in further voting dilution, which would prolong the voting control of Mr. Ghamsari. Further, the issuance of such shares of Class C common stock to Mr.
Our collection, use, receipt, and other processing of data in our business subjects us to numerous state, federal, and foreign laws and regulations, addressing privacy, information security, data protection, and the collection, storing, sharing, use, transfer, disclosure, protection, and processing of certain types of data.
Our collection, use, receipt, and other processing of data in our business subjects us to numerous state, federal, and foreign laws and regulations, addressing privacy, information security, data protection, and the collection, storing, sharing, use, transfer, disclosure, protection, and processing of certain data.
If we are not able to retain our existing customers or acquire new customers in a cost-effective manner, or if our customers fail to maintain their utilization of our products and services, we will not be able to continue to grow our business.
If we are not able to retain our existing customers or acquire new customers in a cost-effective manner, or if our customers fail to maintain their utilization of our products and services, we will not be able to maintain or grow our business.
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.
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.
Compliance with these rules and regulations has increased and will continue to increase our legal and financial compliance costs, and increase demand on our systems, particularly after we are no longer an emerging 36 growth company.
Compliance with these rules and regulations has increased and will continue to increase our legal and financial compliance costs, and increase demand on our systems, particularly after we are no longer an emerging growth company.
In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon (i) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the first date following the completion of our initial public offering, or IPO, on which the number of shares of our capital stock, including Class A common stock, Class B common stock, and Class C common stock, and any shares of capital stock underlying equity securities or other convertible instruments, held by Mr.
In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon (i) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the first date following the completion of our initial public offering (“IPO”), on which the number of shares of our capital stock, including Class A common stock, Class B common stock, and Class C common stock, and any shares of capital stock underlying equity securities or other convertible instruments, held by Mr.
We also have arrangements in place with certain of our partners, vendors, and other service providers that require us to share certain of the information we maintain and otherwise process, including consumer information, with them.
We also have arrangements in place with certain of our partners, vendors, and other service providers that require us to share certain information we maintain and otherwise process, including consumer information, with them.
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; • 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; 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.
In addition, the GDPR provides for heightened scrutiny of transfers of personal data from the European Economic Area, or EEA, to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws, and imposes substantial fines for breaches and violations (up to the greater of €20 million or 4% of an enterprise’s consolidated annual worldwide gross revenue).
In addition, the GDPR provides for heightened scrutiny of transfers of personal data from the European Economic Area (“EEA”) to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws, and imposes substantial fines for breaches and violations (up to the greater of €20 million or 4% of an enterprise’s consolidated annual worldwide gross revenue).
If we are unable to effectively combat the increasing number and sophistication of fraudulent activities by third parties using our platform, we may suffer losses, which may be substantial, and lose the confidence of our customers, and government agencies and our business, financial condition, and results of operations may be adversely affected. 33 The title industry has been experiencing an increasing number of fraudulent activities by third parties, and those fraudulent activities are becoming increasingly sophisticated.
If we are unable to effectively combat the increasing number and sophistication of fraudulent activities by third parties using our platform, we may suffer losses, which may be substantial, and lose the confidence of our customers, and government agencies and our business, financial condition, and results of operations may be adversely affected. 32 The title industry has been experiencing an increasing number of fraudulent activities by third parties, and those fraudulent activities are becoming increasingly sophisticated.
If we fail to retain any of our larger customers or a substantial number of our smaller customers, if we do not acquire new customers, if we do not continually expand revenue and volume from customers on our platform, or if we do not attract and retain a diverse mix of customers, our business, financial condition, results of operations, and future prospects could be adversely affected. 18 We face intense competition, and if we are unable to compete effectively, our business, financial condition, and results of operations could be adversely affected.
If we fail to retain any of our larger customers or a substantial number of our smaller customers, if we do not acquire new customers, if we do not continually expand revenue and volume from customers on our platform, or if we do not attract and retain a diverse mix of customers, our business, financial condition, results of operations, and future prospects could be adversely affected. 17 We face intense competition, and if we are unable to compete effectively, our business, financial condition, and results of operations could be adversely affected.
Our master agreement with AWS will remain in effect until terminated by AWS or us. We have a three-year agreement with AWS, expiring on June 30, 2023, that may only be terminated by us or AWS for cause upon a material breach of the agreement, subject to the terminating party providing prior written notice and a 30-day cure period.
Our master agreement with AWS will remain in effect until terminated by AWS or us. We have a three-year agreement with AWS, expiring on June 30, 2026, that may only be terminated by us or AWS for cause upon a material breach of the agreement, subject to the terminating party providing prior written notice and a 30-day cure period.
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. 45 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. 44 We are subject to various U.S. and international anti-corruption laws and other anti-bribery and anti-kickback laws and regulations.
In addition, consumers on our platform could have vulnerabilities on their own devices that are entirely unrelated to our systems and platform but could mistakenly attribute their own vulnerabilities to us.
In addition, consumers on our platform could have vulnerabilities on their own devices that are unrelated to our systems and platform but could mistakenly attribute their own vulnerabilities to us.
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. 34 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. 33 We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
For example, due to a continued decline in economic and market conditions, including a decline in our market capitalization, and current and projected declines in the operating results of the Title365 reporting unit, we determined that factors existed which triggered a goodwill impairment review under U.S. GAAP as of June 30, 2022.
For example, due to a continued decline in economic and market conditions, including a decline in our market capitalization, and current and projected declines in the operating results of the Title reporting unit, we determined that factors existed which triggered a goodwill impairment review under U.S. GAAP as of June 30, 2022.
Certain elements of our operations (including elements of our information technology infrastructure) rely on third parties, and as a result, we manage numerous third-party service providers that may have access to our computer networks and sensitive or confidential information. In addition, many of those third parties may subcontract or outsource some of their responsibilities to other third parties.
Certain elements of our operations (including elements of our information technology infrastructure) rely on third parties, and as a result, we use numerous third-party service providers that may have access to our computer networks and sensitive or confidential information. In addition, many of those third parties may subcontract or outsource some of their responsibilities to other third parties.
GAAP is subject to interpretation by the Financial Accounting Standards Board, or FASB, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions completed before the announcement of a change.
GAAP is subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions completed before the announcement of a change.
As compared to our competitors who operate on a wider geographic scale or whose business is less concentrated in California and Texas, any adverse changes in the regulatory environment affecting title insurance and real estate settlement in California and Texas, which could include reductions in the maximum rates permitted to be charged, inadequate rate increases, or more fundamental changes in the design or implementation of the California and Texas title insurance regulatory framework, may expose us to more significant risks and our business, financial condition, and result of operations could be adversely affected.
As compared to our competitors who operate on a wider geographic scale or whose business is less concentrated in these states, any adverse changes in the regulatory environment affecting title insurance and real estate settlement in Texas, California and Florida, which could include reductions in the maximum rates permitted to be charged, inadequate rate increases, or more fundamental changes in the design or implementation of the Texas, California and Florida title insurance regulatory framework, may expose us to more significant risks and our business, financial condition, and result of operations could be adversely affected.
Under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, or 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 may be limited.
The CFPB, which commenced operations in July 2011, has broad authority to create and modify regulations under federal consumer financial protection laws and regulations, such as TILA and Regulation Z, ECOA and Regulation B, FCRA and Regulation V, the EFTA and Regulation E, among other regulations, and to enforce compliance with those laws.
The CFPB, which commenced operations in July 2011, has broad authority to create and modify regulations under federal consumer financial protection laws and regulations, such as TILA and Regulation Z, TISA and Regulation DD, ECOA and Regulation B, FCRA and Regulation V, the EFTA and Regulation E, among other regulations, and to enforce compliance with those laws.
Despite our efforts to comply with applicable laws, regulations, and other obligations relating to privacy, data protection, and information security, it is possible that our interpretations of the law, practices, or platform could be inconsistent with, or fail or be alleged to fail to meet all requirements of, such laws, regulations, or obligations.
Despite our efforts to comply with applicable laws, regulations, and other obligations relating to privacy, data protection, and information security, it is possible that our interpretations of the law, practices, or platform could be inconsistent with, or fail or be alleged to fail to meet all requirements of, such laws, regulations, or actual or asserted obligations.
Additionally, other than our usage-based agreements pursuant to which customers pay for a variable amount of completed transactions, our subscription agreements are generally non-cancellable during the contract term. Our usage-based arrangements generally can be terminated at any time by the customer.
Additionally, other than our usage-based agreements pursuant to which customers pay for a variable amount of completed transactions, our subscription and consumption agreements are generally non-cancellable during the contract term. Our usage-based arrangements generally can be terminated at any time by the customer.
Any real or perceived inaccuracies in our metrics and other figures could adversely affect our reputation and our business. 32 Our marketing efforts to help grow our business may not be effective. Promoting awareness of our business is important to our ability to grow our business and to attract new customers and consumers and can be costly.
Any real or perceived inaccuracies in our metrics and other figures could adversely affect our reputation and our business. 31 Our marketing efforts to help grow our business may not be effective. Promoting awareness of our business is important to our ability to grow our business and to attract new customers and consumers and can be costly.
Ghamsari represented approximately 65% 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 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.
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 goes into effect on July 1, 2024.
Competition in the title insurance industry may adversely affect our business, financial condition, and results of operations. Competition in the title insurance industry is intense, particularly with respect to price, service, and expertise. Larger commercial mortgage originators also look at the size and financial strength of a title insurance agency.
Competition in the title insurance industry may adversely affect our business, financial condition, and results of operations. Competition in the title insurance industry is intense, particularly with respect to price, service, and expertise. Larger residential mortgage originators also look at the size and financial strength of a title insurance agency.
Ghamsari (including the Co-Founder and Head of Blend Long-Term Performance Award) had been exercised for cash as of December 31, 2022, 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, 2023, Mr. Ghamsari would hold approximately 87% of the voting power of our outstanding capital stock. As a result, for the foreseeable future, Mr.
GAAP”); • 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 • 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. 23 In particular, the ongoing integration of Title365 into our existing operations has resulted in greater than anticipated costs and management attention.
GAAP”); • 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.
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, 2022 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, 2023 and we have no current plans to issue shares of Class C common stock.
If any of these new or improved controls and systems does not perform as expected, we may continue to experience material weaknesses in our controls. 35 Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
If any of these new or improved controls and systems does not perform as expected, we may continue to experience material weaknesses in our controls. 34 Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
We currently host our platform and support our operations using data centers provided by Amazon Web Services, or AWS, a third-party provider of cloud infrastructure services. We do not have control over the operations of the facilities of AWS that we use.
We currently host our platform and support our operations using data centers provided by Amazon Web Services (“AWS”), a third-party provider of cloud infrastructure services. We do not have control over the operations of the facilities of AWS that we use.
We may earn additional overage fees if the number of completed transactions exceeds contractual minimums for customers who elect to enter into subscription agreements in which a minimum number of transactions are completed at specified prices.
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 agreements in which a minimum number of transactions are completed at specified prices.
In addition, it is possible that the integration process has resulted in and could in the future result in the loss of key employees, errors or delays in the implementation of shared services, the disruption of our ongoing business, or inconsistencies in standards, controls, procedures, and policies that may adversely affect our ability to maintain relationships with other employees and customers or to achieve the anticipated benefits of our acquisition of Title365.
In addition, the integration process has resulted in and could in the future result in the loss of key employees, errors or delays in the implementation of shared services, the disruption of our ongoing business, or inconsistencies in standards, controls, procedures, and policies that may adversely affect our ability to maintain relationships with other employees and customers or to achieve the anticipated benefits of our acquisition of Title365.
In addition, to the extent residential real estate transaction volume in California or Texas changes significantly, whether due to changes in real estate values that differ from the overall U.S. real estate market, changes in the local economy relative to the U.S. economy, or natural disasters that disproportionately impact residential real estate activity in California or Texas, we could experience lower revenues and growth than historically observed or projected.
In addition, to the extent residential real estate transaction volume in Texas, California or Florida changes significantly, whether due to changes in real estate values that differ from the overall U.S. real estate market, changes in the local economy relative to the U.S. economy, or natural disasters that disproportionately impact residential real estate activity in these states, we could experience lower revenues and growth than historically observed or projected.
As of December 31, 2022, 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, 2022, 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, 2023, the shares beneficially owned by Mr.
Additionally, on August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law, with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income, effective for tax years beginning after December 31, 2022, and a 1% excise tax on share repurchases occurring after December 31, 2022.
Additionally, on August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”), was signed into law, with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income, effective for tax years beginning after December 31, 2022, and a 1% excise tax on share repurchases occurring after December 31, 2022.
Additionally, we may consider adopting various employee compensation programs from time to time. The adoption of various employee compensation programs could result in us paying a greater percentage of our employees’ compensation in the form of cash or equity.
Additionally, we may consider adopting various employee compensation programs from time to time. The adoption of various employee compensation programs could result in us paying a greater percentage of our employees’ compensation in the form of cash.
If we do not successfully develop, protect, and enhance our reputation and brand, our business, financial condition, and results of operations could be adversely affected. 27 If we fail to manage our growth effectively, our reputation, business, financial condition, and results of operations could be adversely affected.
If we do not successfully develop, protect, and enhance our reputation and brand, our business, financial condition, and results of operations could be adversely affected. If we fail to manage our operations effectively, our reputation, business, and financial condition, could be adversely affected.
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 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 economic impact of the COVID-19 pandemic and the war in Ukraine; • 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; 21 • 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 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.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have supplemented our leased space with temporary or on demand available space in New York City, New York, Maitland, Florida, Salt Lake City, Utah, New Orleans, Louisiana, Little Rock, Arkansas, Las Vegas, Nevada and Montgomery, Alabama. We do not own any real property.
Biggest changeWe 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.

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.
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.
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. 57 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. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 58 PART II
Removed
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

6 edited+1 added−7 removed4 unchanged
Biggest changeSecurities 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 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022. 58 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, 2022 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”).
Biggest changeStock 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”).
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 3, 2023, 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, 2024, there was one record holder of warrants to purchase our Class A common stock.
As of March 3, 2023, 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 3, 2023, 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, 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.
Company/Index 7/16/21 9/31/21 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 Blend Labs, Inc. $ 100.00 $ 64.50 $ 35.12 $ 27.27 $ 11.29 $ 10.57 $ 6.89 Russell 2000 $ 100.00 $ 95.64 $ 97.69 $ 90.34 $ 74.80 $ 73.17 $ 77.72 S&P 1500 Application Software Index $ 100.00 $ 104.50 $ 107.50 $ 88.45 $ 71.72 $ 66.40 $ 69.80 ITEM 6. [RESERVED] 59
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]
Our Class B common stock and Class C common stock are neither listed nor traded. Holders of Record As of March 3, 2023, there were 260 stockholders of record of 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.
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 the Company’s filings under the Securities Act or the Exchange Act.
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.
Removed
Use of Proceeds On July 20, 2021, we completed our IPO, with a subsequent partial exercise of the underwriters’ option to purchase additional shares. We issued and sold an aggregate of 22,468,111 shares of Class A common stock, par value $0.00001, at an offering price of $18.00 per share.
Added
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.
Removed
We received aggregate net proceeds of $366.7 million, after deducting underwriters' discounts and commissions of $27.3 million and offering expenses of $10.4 million. We intend to use the net proceeds we received from our IPO for general corporate purposes, including working capital, operating expenses, and capital expenditures.
Removed
We may use a portion of such net proceeds to repay outstanding indebtedness under our credit facility. Additionally, we may use a portion of such net proceeds to acquire or invest in businesses, products, services, or technologies. However, we do not have agreements or commitments for any material acquisitions or investments at this time.
Removed
The representatives of the underwriters of our IPO were Goldman Sachs & Co. LLC and Allen & Company LLC.
Removed
No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries and to non-employee directors pursuant to director offer letters and our outside director compensation policy.
Removed
There has been no material change in the planned use of the IPO proceeds as described in our prospectus dated July 15, 2021, as filed with the SEC pursuant to Rule 424(b) under the Securities Act (File No. 333-257223).
Removed
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE IPO Among Blend Labs, Inc., the Russell 2000 Index and the S&P 1500 Application Software Index.

Item 7. Management's Discussion & Analysis

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

83 edited+21 added−80 removed42 unchanged
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: 67 Year Ended December 31, 2022 2021 2020 (In thousands) Revenue $ 235,201 $ 234,495 $ 96,029 Cost of revenue (1) 145,550 118,506 34,289 Gross profit 89,651 115,989 61,740 Operating expenses: Research and development (1) 138,094 92,216 55,503 Sales and marketing (1) 85,248 84,077 51,420 General and administrative (1) 139,120 128,802 30,108 Amortization of acquired intangible assets 8,411 8,136 — Impairment of intangible assets and goodwill 449,680 — — Restructuring 15,275 — — Total operating expenses 835,828 313,231 137,031 Loss from operations (746,177) (197,242) (75,291) Interest expense (24,790) (11,279) — Other income (expense), net 4,916 493 700 Loss before income taxes (766,051) (208,028) (74,591) Income tax benefit (expense) 2,241 38,886 (26) Net loss $ (763,810) $ (169,142) $ (74,617) (1) Includes stock-based compensation as follows: Year Ended December 31, 2022 2021 2020 (In thousands) Cost of revenue $ 2,069 $ 753 $ 79 Research and development 47,280 13,184 4,250 Sales and marketing 11,725 7,167 3,675 General and administrative 48,628 49,740 2,120 Total stock-based compensation $ 109,702 $ 70,844 $ 10,124 Year Ended December 31, 2022 2021 2020 (as a % of revenue)* Revenue 100 % 100 % 100 % Cost of revenue 62 51 36 Gross margin 38 49 64 Operating expenses: Research and development 59 39 58 Sales and marketing 36 36 54 General and administrative 59 55 31 Amortization of acquired intangible assets 4 3 — Impairment of intangible assets and goodwill 191 — — Restructuring 6 — — Total operating expenses 355 134 143 Loss from operations (317) (84) (78) Interest expense (11) (5) — Other income (expense), net 2 — 1 Loss before income taxes (326) (89) (78) Income tax benefit (expense) 1 17 — Net loss (325) % (72) % (78) % ____________ * Certain percentages may not foot due to rounding 68 Comparison of the Years Ended December 31, 2022 and 2021 Revenue and Cost of Revenue Year Ended December 31, 2022 2021 $ Change % Change (In thousands) Segment revenue: Blend Platform: Mortgage Banking $ 83,391 $ 108,264 $ (24,873) (23 %) Consumer Banking and Marketplace 44,227 23,120 21,107 91 % Professional Services 4,396 4,178 218 5 % Total Blend Platform 132,014 135,562 (3,548) (3 %) Title365 103,187 98,933 4,254 4 % Total revenue $ 235,201 $ 234,495 $ 706 — % Segment cost of revenue: Blend Platform $ 61,924 $ 49,917 $ 12,007 24 % Title365 83,626 68,589 15,037 22 % Total cost of revenue $ 145,550 $ 118,506 $ 27,044 23 % Segment gross profit: Blend Platform $ 70,090 $ 85,645 $ (15,555) (18 %) Title365 19,561 30,344 (10,783) (36 %) Total gross profit $ 89,651 $ 115,989 $ (26,338) (23 %) Revenue increased $0.7 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to an increase of $4.3 million, or 4%, in revenue from Title365 offset by a decrease in Blend Platform revenue of $3.5 million, or 3%.
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%.
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 a 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 home equity lines of credit and home equity loans.
Cash Provided by (Used in) Investing Activities 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.
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.
Operating Expenses 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, and allocated overhead costs. Research and development costs are expensed as incurred.
We believe that of our significant accounting policies, which are described further in 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 following accounting estimates involve a greater degree of judgment and complexity.
We believe that of our significant accounting policies, which are described further in 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 following accounting estimates involve a greater degree of judgment and complexity.
Blend Platform - Number of Transactions Our success in the Blend Platform segment depends in part on increasing the volume of mortgage and consumer banking transactions that take place on our software platform. This occurs as we add new customers and complete more transactions with existing customers, including when our existing customers adopt additional products.
Blend Platform - Mortgage Banking Transactions Our success in the Blend Platform segment depends in part on increasing the volume of mortgage and consumer banking transactions that take place on our software platform. This occurs as we add new customers and complete more transactions with existing customers, including when our existing customers adopt additional products.
In the Blend Platform segment, our customers have the ability to access our platform under subscription arrangements or under usage-based arrangements. We recognize fees for subscription arrangements ratably over the non-cancelable contract term and for usage-based arrangements as the completed transactions are processed using our platform.
In the Blend Platform segment, our customers have the ability to access our platform under subscription arrangements, consumption arrangements, or usage-based arrangements. We recognize fees for subscription arrangements ratably over the non-cancelable contract term and for consumption and usage-based arrangements as the completed transactions are processed using our platform.
Title365 In our Title365 segment, cost of revenue consists of costs of traditional title, escrow and other trustee services, which represent primarily personnel-related expenses of our Title365 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 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.
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. 75 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. 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.
Costs of professional services consist primarily of personnel-related expenses, including stock-based compensation expense, expenses associated with delivering implementation and other services, travel expenses, and allocated overhead costs. For each application submission, we incur third-party costs as described above, including costs for incomplete transactions for which we do not charge fees to our customers.
Costs of premier support and professional services consist primarily of personnel-related expenses, including stock-based compensation expense, expenses associated with delivering implementation and other services, travel expenses, and allocated overhead costs. For each application submission, we incur third-party costs as described above, including costs for incomplete transactions for which we do not charge fees to our customers.
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 2022 and 2021 items and year-to-year comparisons between fiscal years 2022 and 2021.
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.
Other than our usage-based arrangements pursuant to which customers pay for a variable amount of completed transactions, our subscription agreements are generally non-cancelable during the contract term. Our usage-based arrangements generally can be terminated at any time by the customer.
Other than our usage-based arrangements pursuant to which customers pay for a variable amount of completed transactions, our subscription and consumption-based agreements are generally non-cancelable during the contract term. Our usage-based arrangements generally can be terminated at any time by the customer.
We believe this increasing attachment will increase our revenue. Title365 - Closed Orders In our Title365 segment, closed orders represent the number of orders for title insurance or escrow services that were successfully fulfilled in each period with the issuance of a title insurance policy or provision of escrow services.
We believe this increasing attachment will increase our revenue. Title - Originations Closed Orders In our Title segment, originations closed orders represent the number of originations orders for title insurance or escrow services that were successfully fulfilled in each period with the issuance of a title insurance policy or provision of escrow services.
As of December 31, 2022, 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.
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.
The real estate environment, including interest rates and the general economic environment, typically impact 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. Recent changes in these areas have impacted our results of operations.
In our Title365 segment, we generate revenue from traditional title insurance services, where we earn fees for placing and binding title insurance policies with third-party underwriters, and from escrow and other trustee services where we earn fees from managing the closing of real estate transactions.
In our Title segment, we generate revenue from digitally-enabled and traditional title insurance services, where we earn fees for placing and binding title insurance policies with third-party underwriters, and from escrow and other trustee services where we earn fees from managing the closing of real estate transactions.
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 agreements in which a minimum number of transactions are 60 completed at specified prices.
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.
Income Taxes Provision for income taxes consists primarily of U.S. state income taxes and adjustments to the valuation allowance. We 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.
Provision for Income Taxes Provision for income taxes consists primarily of U.S. state and foreign income taxes. We 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.
We have technology, data, and service providers on our software platform, including an extensive marketplace of insurance carriers, realtors, 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 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.
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, 2022 2021 2020 (In thousands) Net cash used in operating activities $ (190,418) $ (127,504) $ (65,013) Net cash provided by (used in) investing activities 99,431 (633,908) (7,917) Net cash provided by financing activities 2,220 933,573 90,756 Effect of exchange rates on cash, cash equivalents and restricted cash (116) (9) — Net (decrease) increase in cash, cash equivalents, and restricted cash $ (88,883) $ 172,152 $ 17,826 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. ” 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.
As a large portion of our revenue is driven by mortgage and mortgage related transaction volumes, declines in the mortgage origination volumes have had, and are likely to continue to have, adverse effects on our business.
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.
We recognize stock-based compensation expense for stock options and RSUs that vest only based upon the satisfaction of a service condition on a straight-line basis over the requisite service period, which is generally the vesting period. We account for forfeitures as they occur.
We recognize stock-based compensation expense for stock options and RSUs that vest only based upon the satisfaction of a service condition on a straight-line basis over the requisite service period, which is generally the vesting period.
The term facility was funded on July 1, 2021 and was fully drawn upon to provide, in part, the acquisition consideration being paid in connection with the purchase of a 90.1% interest in Title365. The revolving facility is currently available and undrawn.
The term facility was funded on July 1, 2021 and was fully drawn upon to provide, in part, the acquisition consideration being paid in connection with the purchase of a 90.1% interest in Title365.
Net cash used in operating activities for the years ended December 31, 2022 and 2021 was $190.4 million and $127.5 million, respectively.
Net cash used in operating activities for the years ended December 31, 2023 and 2022 was $127.6 million and $190.4 million, respectively.
The increase in cash used in operations reflects an increase in our net loss adjusted for noncash items, including charges associated with the impairments of goodwill and intangible assets, stock-based compensation, depreciation and amortization, change in deferred taxes, amortization of deferred contract costs, amortization of operating lease right-of-use assets, gain on investment in equity securities, 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 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.
Cash held for these purposes was approximately $5.0 million net of outstanding checks in transit of $42.8 million as of December 31, 2022. 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 $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.
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 pay in arrears a variable amount for completed transactions at specified prices.
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.
Marketable securities are comprised of U.S. treasury and agency securities, commercial paper, and corporate debt securities. Most of our cash and cash equivalents are held in the United States.
Cash and cash equivalents are comprised of bank deposits and money market funds. Marketable securities are comprised of U.S. treasury and agency securities, commercial paper, and corporate debt securities. Most of our cash and cash equivalents are held in the United States.
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, have resulted in a decline in mortgage origination activity for 2022 and could bring further reductions in future periods.
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.
Our customers have the ability to access our platform, including Blend Builder Platform, our configurable platform, under subscription arrangements in which customers commit to (a) 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, or (c) a fixed price platform fee, allowing the use of multiple products and services.
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 are continuing to evaluate the rapid changes within the mortgage industry and the impact to our segments and their projected operating results. 65 Cost of Revenue Blend Platform In our Blend Platform segment, cost of revenue consists primarily of costs of subscribed hosting, support, and professional services.
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.
We incurred approximately $15.3 million in charges in connection with these plans, consisting of cash expenditures for severance payments, employee benefits, payroll taxes and related facilitation costs for the year ended December 31, 2022.
We incurred approximately $24.9 million in charges in connection with these plans for the year ended December 31, 2023, consisting primarily of cash expenditures for compensation, severance, and transition payments, employee benefits, payroll taxes and related facilitation costs.
This discussion contains forward-looking statements that are based upon current plans, expectations, and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements.
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 subscription 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. We recognize revenue ratably for our subscription arrangements because the customer receives and consumes the benefits of our platform throughout the contract period.
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 implementation of the plans and related initiatives is subject to risks and uncertainties, including the possibility that there are impediments to our ability to execute the plans or related initiatives as currently contemplated, the actual charges in implementing the plans or related initiatives are higher than anticipated, there are changes to the assumptions on which the estimated charges associated with the plans or related initiatives are based, we are unable to achieve our projected cost savings in connection with the plans or related initiatives, or there are unintended consequences from the Plans or related initiatives that impact our business.
Our implementation of any workforce reduction plans is subject to risks and uncertainties, including the possibility that the actual charges in implementing the plans or related initiatives are higher than anticipated, we are unable to achieve our projected cost savings in connection with any workforce reduction plans or related initiatives, or there are unintended consequences from any workforce reduction plans or related initiatives that impact our business.
The effective interest rate on our Term Loan was approximately 13.43% and 10.20% at December 31, 2022 and 2021, respectively.
The effective interest rate on the Term Loan was approximately 14.57% and 13.43% at December 31, 2023 and 2022, respectively.
Sales commissions that are incremental costs of acquiring a contract with a customer as well as associated payroll taxes, are deferred and amortized on a straight-line basis over the estimated period of benefit, which we have determined to be three years.
Sales commissions that are incremental costs of acquiring a contract with a customer as well as associated payroll taxes, are deferred and amortized on a straight-line basis over the estimated period of benefit. Sales commissions that are not incremental costs of acquiring a contract with a customer are expensed in the period incurred.
For the year ended December 31, 2022, we have seen a 3.9% decrease in total reported banking transactions and 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, 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.
Other Income (Expense), net Year Ended December 31, 2022 2021 $ Change % Change (In thousands) Other income (expense), net $ 4,916 $ 493 4,423 897 % Other income (expense), net increased $4.4 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to an increase of $2.0 million in interest income from our investment portfolio and a $2.9 million gain on investment in equity securities without readily determinable fair value.
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.
Costs of subscribed hosting services and support revenue 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.
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.
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, or our software-enabled title and settlement services entity, which excludes traditional title revenue from Title365.
We also earn revenue through commissions or service fees when consumers use our Blend Platform integrated marketplaces to select a property and casualty insurance carrier, or real estate agent.
Discussions of fiscal year 2021 items and year-to-year comparisons between fiscal years 2021 and 2020 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, 2021, which was filed with the SEC on March 31, 2022.
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.
Net cash used in investing activities during the year ended December 31, 2021 was $633.9 million, which was primarily due to $400.0 million cash used in connection with our acquisition of Title365, $351.6 million used in purchases of marketable securities, partially offset by maturities of marketable securities of $125.1 million, an investment via issuance of note receivable of $3.0 million, and an investment in non-marketable equity securities of $2.5 million.
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.
Impairment of intangible assets and goodwill Impairment of intangible assets and goodwill increased $449.7 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, due to the impairment charges recorded in connection with the interim quantitative impairment reviews of the intangible assets and goodwill within the Title365 reporting unit performed as of June 30, 2022 and September 30, 2022. 70 Restructuring Restructuring expenses increased $15.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 due to the execution of the 2022 Workforce Reduction Plans.
Impairment of intangible assets and goodwill Impairment of intangible assets and goodwill decreased $449.7 million, or 100% for the year ended December 31, 2023 compared to the year ended December 31, 2022, due to the impairment charges recorded in connection with the interim quantitative impairment reviews of the intangible assets and goodwill within the Title365 reporting unit performed in 2022.
Title365 In our Title365 segment, we earn revenue from title search services for title insurance policies, escrow and other closing and settlement services. In performing title search services, we act as an agent to place and bind title insurance policies with third-party underwriters that ultimately provide the title insurance policy to our customers.
In performing title search services, we act as an agent to place and bind title insurance policies with third-party underwriters that ultimately provide the title insurance policy to our customers. Revenue related to title insurance is recognized net of the amount of consideration paid to the third-party insurance underwriters.
We expect that rising mortgage interest rates in the near term will continue to drive down transaction volume, especially refinance transactions volume, which will adversely affect both Blend Platform and Title365 revenue.
Refer to Note 17, Segments , for additional information. We expect mortgage interest rates to remain relatively high in the near term, which will continue to drive down transaction volume, especially refinance transactions volume, adversely affecting both Blend Platform and Title revenue.
The eliminated positions represent annualized compensation expenses of approximately $43.4 million. We may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur as a result of or in connection with the implementation of any of the Workforce Reduction Plans described above.
We may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur as a result of or in connection with the implementation of our workforce reduction plans and we may undertake additional workforce reductions.
Amortization of acquired intangible assets Amortization of acquired intangible assets relates to customer relationships acquired in connection with the Title365 business combination, which are amortized over the estimated useful life on a straight-line basis.
In addition, general and administrative expenses include expenses related to the integration of Title365, which we expect to continue to decrease over time. 65 Amortization of acquired intangible assets and impairment of goodwill and acquired intangible assets Amortization of acquired intangible assets relates to customer relationships acquired in connection with the Title365 business combination, which were amortized over the estimated useful life on a straight-line basis.
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. 66 Following our IPO, which was completed in July 2021, we have incurred, and expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to publicly listed companies and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC.
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.
While we believe that the Blend Platform segment will continue to deliver positive growth overall, we expect that the title insurance and other services revenue within the Title365 segment will face significant headwinds to growth, and a decline due to the ongoing mortgage industry origination volume decline as described above within Recent Developments .
While we believe that the Blend Platform segment will deliver positive growth in the long-term, we expect that the title insurance and other services revenue within the Title segment will continue to face significant headwinds to growth until mortgage origination volumes increase.
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. 71 We have generated significant losses from operations and negative cash flows from operating activities in the past as reflected in our accumulated deficit of $1,162.9 million as of December 31, 2022.
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.
The decrease in Blend Platform sales and marketing costs was primarily due to a $1.5 million decrease in commissions, a $2.1 million decrease in personnel and related expenses attributable to decreased sales and marketing headcount, and a $1.6 million decrease in advertising and promotion expenses, partially offset by a $4.5 million increase in stock-based compensation expense.
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.
For the year ended December 31, 2022 we recognized an income tax benefit of $2.2 million, consisting of a $2.9 million deferred tax benefit resulting from a partial release of the valuation allowance due to changes in U.S. tax law requiring capitalization and amortization of research and development costs for tax purposes and a current tax expense of $0.6 million consisting of state and foreign income taxes.
Income Taxes Year Ended December 31, 2023 2022 $ Change % Change (In thousands) Income tax (expense) benefit $ (94) $ 2,241 $ (2,335) (104 %) Income taxes increased $2.3 million, or 104%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an adjustment to the valuation allowance resulting from changes in U.S. tax law requiring capitalization and amortization of research and development costs for tax purposes recorded in 2022.
Workforce Reduction Plans We have implemented certain workforce actions as part of our broader efforts to improve cost efficiency and better align our operating structure with our business activities.
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.
We recognize fees for usage-based 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. Revenue from usage-based arrangements represented 51%, 29% and 12% of our Blend Platform segment revenue for the years ended December 31, 2022, 2021 and 2020, respectively.
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 expect to continue to incur operating losses for the foreseeable future due to the investments that we intend to make in our business and decline in revenue due to the macroeconomic environment and, as a result, we may require additional capital resources to grow our business.
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.
Accordingly, these are the estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Revenue Recognition In our Blend Platform segment, we generate revenue from fees paid by our customers to access our platform, from our software-enabled title solution, and, to a lesser extent, from professional services.
Accordingly, these are the estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.
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.
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.
Fees are assessed based on completed transactions, such as a funded loan, new account opening, or closing transaction.
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.
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 Business Combinations On June 30, 2021, we completed our acquisition of 90.1% ownership of Title365. We account for acquisitions in accordance with ASC 805, Business Combinations.
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.
The Black-Scholes option pricing model requires the input of highly subjective assumptions, such as the fair value of the underlying common stock for pre-IPO awards. The assumptions used to determine the fair value of the option awards represent our estimates, which involve inherent uncertainties and the application of management’s judgment.
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 following table sets forth our key business metrics: Year Ended December 31, 2022 2021 2020 (In thousands) Blend Platform banking transactions: Mortgage banking transactions (1) 1,234 1,812 1,316 Consumer banking transactions (1) 821 326 87 Total Blend Platform banking transactions 2,055 2,138 1,403 Title365 closed orders (traditional title) (2) 46 80 N/A (1) Includes estimated transactions for funded loans not yet reported for the fourth quarter 2022.
The following table sets forth our key business metrics: Year Ended December 31, 2023 2022 2021 (In thousands) Mortgage banking transactions (1) 805 1,234 1,812 Title originations closed orders 15 58 80 (1) Includes estimated transactions for funded loans not yet reported for the quarter ended December 31, 2023 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.
Sales and Marketing Sales and marketing expenses increased $1.2 million, or 1%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. Excluding an increase of $2.1 million due to costs associated with the operations of Title365, sales and marketing expenses decreased $0.9 million.
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.
Starting in the third quarter of 2022, the revenue in the Blend Platform segment includes revenue from our software-enabled title solution.
Starting in 2023, the cost of revenue in the Title segment includes cost of revenue related to our digitally-enabled title solution.
We believe the area we apply the most critical judgment in recognition of our stock-based compensation relates to the valuation of stock option awards. We use the Black-Scholes-Merton option pricing model to determine the grant date fair value of the stock options granted.
We use the Black-Scholes-Merton option pricing model to determine the grant date fair value of the stock options and the Monte Carlo simulation to determine the grant date fair value of the PSUs.
Based on the results of our two interim impairment analyses, we recorded an impairment charge of $162.5 million for the year ended December 31, 2022, representing a full write off of the customer relationships carrying amount.
In connection with the impairment reviews, we also recorded an impairment charge against the goodwill, representing the full write off of the carrying amount in the year ended December 31, 2022.
As of December 31, 2022, our principal contractual cash obligations consisted of the following: Total Next 12 Months Beyond 12 Months (In thousands) Term Loan - principal $ 225,000 $ — $ 225,000 Term Loan - interest (1) 93,273 26,660 66,613 Term Loan - exit fee 4,500 — 4,500 Operating lease obligations 17,789 5,074 12,715 Purchase commitments 14,692 6,225 8,467 Total $ 355,254 $ 37,959 $ 317,295 (1) Interest on Term Loan is based on rates effective and amounts borrowed as of December 31, 2022.
As of December 31, 2023, our principal contractual cash obligations consisted of the following: Total Next 12 Months Beyond 12 Months (In thousands) Term Loan - principal $ 140,000 $ — $ 140,000 Term Loan - interest (1) 45,923 18,430 27,494 Term Loan - exit fee 4,500 — 4,500 Operating lease obligations 13,011 5,106 7,905 Purchase commitments 20,728 9,835 10,893 Total $ 224,162 $ 33,371 $ 190,792 (1) Interest on Term Loan is based on rates effective and amounts borrowed as of December 31, 2023.
The charges incurred in connection with such workforce actions amounted to approximately $15.3 million for the year ended December 31, 2022, and consisted primarily of cash expenditures for compensation and severance payments, employee benefits, payroll taxes and related facilitation costs. In January 2023, we committed to the January Plan, which was in addition to the 2022 Workforce Reduction Plans.
We incurred approximately $24.9 million in charges in connection with these plans for the year ended December 31, 2023, consisting primarily of cash expenditures for compensation, severance, and transition payments, employee benefits, payroll taxes and related facilitation costs. 72 We believe that current cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next 12 months.
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 for an amount that reflects the consideration we expect to be entitled to in exchange for those services.
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.
We attribute the majority of this decrease to rapidly rising interest rates, decreased housing affordability, and uncertain worldwide political and economic conditions. Overall industry origination volumes, as reported by the MBA, have decreased by 56% over the same period.
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.
Since the contractual rate for our Term Loan is variable, actual cash payments may differ from the estimates provided.
Since the contractual rate for our Term Loan is variable, actual cash payments may differ from the estimates provided. In 2023,we executed two workforce reduction initiatives. In January 2023, we committed to a workforce reduction plan (the “January Plan”), which eliminated approximately 340 positions, or 28% of our then-current workforce.
Additionally, as our existing platform components mature, we will need to successfully integrate new products on our platform, including by achieving interoperability between such new products and our existing products, as well as upgrading the decisioning, verification, and automation components of our existing platform in order to continue to help our customers adapt quickly to constantly changing market conditions all of which requires significant investment. 63 Key Business Metrics In addition to the measures presented in our consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Key Business Metrics In addition to the measures presented in our consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
General and Administrative General and administrative expenses increased $10.3 million, or 8% for the year ended December 31, 2022 compared to the year ended December 31, 2021. Excluding an increase of $23.0 million due to costs associated with the operations of Title365, general and administrative expenses decreased $12.7 million.
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.
Completed transaction fees are determined by the number and type of software platform components that are needed to support each product offering. 64 We do not charge for abandoned or rejected applications, even though they cause us to incur costs related to these applications.
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.
Revenue for default title services and home equity services is recognized at the time of delivery of the title report. In June 2022, we completed the migration of our largest Title365 customer from traditional title to our software-enabled title solution.
Revenue for default title services and home equity services is recognized at the time of delivery of the title report. Starting in 2023, the revenue in the Title segment includes revenue from our digitally-enabled title solution, which was previously reported as part of the Blend Platform segment. Prior period amounts have been reclassified to conform to current period presentation.
Cash Provided by Financing Activities 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. 73 Net cash provided by financing activities for the year ended December 31, 2021 was $933.6 million, reflecting net proceeds from our initial public offering of $366.8 million, net proceeds from debt financing of $218.8 million, net proceeds from issuance of Series G convertible preferred stock of $309.7 million, proceeds from the exercise of convertible preferred stock warrants of $10.2 million, proceeds from the exercises of stock options of $25.2 million, and proceeds from the repayment of an employee promissory note of $2.9 million.
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.
In the second half of 2022, Title365 revenue decreased by $66.6 million as compared to the second half of 2021, which was primarily due to a $56.4 million decrease driven by the lower volume of title orders and a $10.2 million decrease due to the migration of the software-enabled title solution to the Blend Platform segment.
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.
In connection with the migration, during the third quarter of 2022, we changed the composition of our reporting segments to align with a change in how our Chief Operating Decision Maker (“CODM”) reviews financial information in order to allocate resources and assess performance. As a result of this change, the Blend Platform segment now includes the software-enabled title component.
Starting in 2023, the Title segment includes the digitally-enabled title component. This change reflects a corresponding change in how our CODM reviews financial information in order to allocate resources and assess performance. Refer to Note 17, Segments , for additional information.
Amortization of acquired intangible assets Amortization of acquired intangible assets remained consistent for the year ended December 31, 2022 compared to the year ended December 31, 2021. Amortization expense for the year ended December 31, 2021 represents amortization of Title365 customer relationships intangible asset from the acquisition date of June 30, 2021.
Amortization of acquired intangible assets Amortization of acquired intangible assets decreased $8.4 million, or 100% for the year ended December 31, 2023 compared to the year ended December 31, 2022, due to the full write off of the customer relationship intangible assets from the Title365 acquisition resulting from an impairment charge recognized in 2022.
The charges related to these plans, under which we eliminated approximately 440 positions, comprised of cash expenditures for compensation and severance payments, employee benefits, payroll taxes and related facilitation costs in the year ended December 31, 2022.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−2 removed3 unchanged
Biggest changeAn increase of 100 basis points in the applicable interest rate would increase our annual interest expense by approximately $2.3 million. A decrease of 100 basis points in the applicable interest rate would decrease our annual interest expense by approximately $2.3 million.
Biggest changeAn 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.
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. 76
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
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 11.69% as of December 31, 2022.
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.
These risks primarily include: Interest Rate Risk We had cash and cash equivalents of $124.2 million and marketable securities and other investments of $229.9 million as of December 31, 2022, which consisted of bank deposits, money market funds, U.S. treasury and agency securities, commercial paper, and corporate debt securities.
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.
A hypothetical 100 basis points in interest rates during any of the periods presented would not have had a material impact on our investments. As of December 31, 2022, we had $225.0 million of principal outstanding under our Term Loan.
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.
Removed
Prior to October 18, 2022, our Term Loan carried a floating rate of interest linked to the London Inter-bank Offered Rate, or LIBOR. In October 2022, we entered into the Amendment, which replaced the reference rate from LIBOR to the Secured Overnight Financing Rate, or SOFR as a result of the expected cessation of LIBOR.
Added
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.
Removed
We do not expect a materially adverse change to our financial condition or liquidity as a result of the change from LIBOR to SOFR. Inflation Risk Inflationary factors such as increases in overhead costs may adversely affect our operating results.

Other BLND 10-K year-over-year comparisons