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美國
證券交易委員會
華盛頓特區20549
形式 10-Q
(Mark一）
☒
根據1934年《證券交易法》第13或15（d）條的季度報告
截至季度 2024年9月30日
或
☐根據1934年《證券交易所法》第13或15（d）條提交的過渡報告
過渡期從 到
委員會檔案編號 001-40599

BLND LABS，Inc.
（章程中規定的註冊人的確切名稱）
德拉瓦45-5211045
（州或其他司法管轄區
成立或組織）
（國稅局僱主
識別號）
紅杉大道7250號, Suite 300
諾瓦托, 加州 94945
(650) 550-4810
（註冊人主要行政辦公室的地址，包括郵政編碼和電話號碼，包括地區代碼）


根據該法第12（b）條登記的證券：
每個班級的標題交易符號註冊的每個交易所的名稱
A類普通股，每股面值0.00001美金BLND紐約證券交易所
通過勾選標記標明登記人是否（1）在過去12個月內（或在登記人被要求提交此類報告的較短期限內）提交了1934年證券交易法第13或15（d）條要求提交的所有報告，以及（2）在過去90天內一直遵守此類提交要求。 是的 ☒ 沒有預設
通過勾選來驗證註冊人是否已在過去12個月內（或在註冊人被要求提交此類文件的較短期限內）以電子方式提交了根據S-t法規第405條（本章第232.405條）要求提交的所有交互數據文件。 是的 ☒ 沒有預設
通過勾選標記來確定註冊人是大型加速申報人、加速申報人、非加速申報人、小型報告公司還是新興成長型公司。請參閱《交易法》第120條第2條中「大型加速申報人」、「加速申報人」、「小型報告公司」和「新興成長型公司」的定義。
大型加速文件夾☐加速編報公司☒
非加速歸檔☐小型上市公司☐
新興成長型公司☒
如果是新興成長型公司，請通過勾選標記表明註冊人是否選擇不利用延長的過渡期來遵守根據《交易法》第13（a）條規定的任何新的或修訂的財務會計準則。 ☐
通過勾選標記確認註冊人是否是空殼公司（定義見《交易法》第120條第2款）：是 沒有 ☒
截至2024年10月31日，已有 252,182,833 註冊人已發行的A類普通股股份， 3,747,235 註冊人已發行的b類普通股股份，以及 沒有 註冊人已發行的C類普通股的股份。


目錄
頁面


關於前瞻性陳述的特別注釋
本10-Q表格季度報告包含經修訂的1933年證券法（「證券法」）第27 A條和經修訂的1934年證券交易法（「交易法」）第21 E條含義內的前瞻性陳述，這些陳述涉及重大風險和不確定性。前瞻性陳述通常與未來事件或我們未來的財務或運營運績有關。在某些情況下，您可以識別前瞻性陳述，因為它們包含「可能」、「將」、「應該」、「預期」、「計劃」、「預期」、「可能」、「將」、「意圖」、「目標」、「項目」、「考慮」、「相信」、「估計」、「預測」、「預測」、「潛在」或「繼續」或這些詞語或涉及我們的期望、戰略、計劃或意圖的其他類似術語或表達的負面影響。本10-Q表格季度報告中包含的前瞻性陳述包括但不限於有關以下方面的陳述：
•經濟狀況的變化，特別是影響房地產和抵押貸款活動水平的變化，例如抵押貸款利率、信貸可用性、房地產價格、通貨膨脹和消費者信心;
•我們未來的財務表現，包括我們對收入、收入成本、運營費用的預期、運營虧損的目標減少和未來運營計劃、費用削減和成本節約、我們確定儲備金的能力以及我們實現和維持未來盈利能力的能力;
•我們的市場地位、增長機會以及我們成功執行業務和增長戰略的能力;
•我們的現金、現金等值物和有價證券是否足以滿足我們的流動性需求;
•我們對股票回購計劃的期望;
•對我們的產品和服務的需求;
•我們增加交易量以及吸引和留住客戶的能力;
•我們有能力將更多市場整合到我們的端到端消費者旅程中;
•我們開發新產品、服務和功能並及時將其推向市場的能力;
•我們對當前產品進行增強的能力;
•我們在現有和新市場和產品中與現有和新競爭對手競爭的能力;
•我們成功收購和整合公司和資產的能力，包括我們將Title 365與我們的運營整合的能力;
•我們維護平台安全性和可用性的能力;
•我們對現有和正在制定的法律和法規的影響的期望，包括稅收、隱私、信息安全、人工智慧和數據保護;
•我們管理與業務相關風險的能力;
•我們對新市場和不斷發展的市場的期望;
•我們發展和保護我們品牌和聲譽的能力;
•我們對未來增長的期望和管理;
•我們對與第三方關係的期望;
•我們吸引和留住員工和關鍵人員的能力;
•我們維護、保護和增強智慧財產權的能力;以及
•與上市公司相關的費用增加。

我們警告您，上述列表可能不包含本季度報告中10-Q表格中做出的所有前瞻性陳述。


你不應該依賴前瞻性陳述作為對未來事件的預測。本季度報告中包含的前瞻性陳述主要基於我們目前對未來事件和趨勢的預期和預測，我們認為這些事件和趨勢可能會影響我們的業務、財務狀況、運營結果和前景。這些前瞻性陳述中描述的事件的結果受風險、不確定性和其他因素的影響，包括標題為「風險因素」以及本季度報告10-Q表中的其他部分。我們的風險因素並不保證截至本報告之日不存在這種情況，也不應被解釋為肯定地說，這種風險或情況沒有全部或部分發生。此外，我們的運營環境競爭激烈，變化迅速。新的風險和不確定性不時出現，我們無法預測所有可能對本10-Q表格季度報告中包含的前瞻性陳述產生影響的風險和不確定性。我們不能向您保證前瞻性表述中反映的結果、事件和情況將會實現或發生，實際結果、事件或情況可能與前瞻性表述中所描述的大不相同。

我們或任何其他人均不對任何這些前瞻性陳述的準確性和完整性承擔責任。此外，本季度報告中10-Q表格中的前瞻性陳述僅與截至陳述日期的事件有關。我們沒有義務更新本10-Q表格季度報告中的任何前瞻性陳述，以反映本10-Q表格季度報告日期之後的事件或情況，或者反映新信息或非預期事件的發生，法律要求的除外。我們可能無法真正實現前瞻性陳述中披露的計劃、意圖或預期，您不應過度依賴我們的前瞻性陳述。我們的前瞻性陳述並不反映我們未來可能進行的任何收購、合併、處置、合資企業或投資的潛在影響。

此外，「我們相信」的聲明和類似聲明反映了我們對相關主題的信念和觀點。這些聲明基於截至本季度報告10-Q表格日期我們可獲得的信息，雖然我們相信此類信息構成了此類聲明的合理基礎，但此類信息可能是有限的或不完整的，並且我們的聲明不應被解讀爲表明我們已經對所有潛在可用的相關信息進行了詳盡的調查或審查。這些陳述本質上是不確定的，警告投資者不要過度依賴這些陳述。


第一部分-財務信息
項目1.財務報表
Blend Labs，Inc.
簡明綜合資產負債表
(以千爲單位，每股除外)
(未經審計)
2024年9月30日2023年12月31日
資產
流動資產：
現金及現金等價物$55,041 $30,962 
有價證券和其他投資61,744 105,960 
貿易和其他應收賬款，扣除信用損失撥備美元76 和$149，分別
15,894 18,345 
預付費用和其他流動資產13,722 14,569 
流動資產總額146,401 169,836 
財產和設備，淨額9,723 3,945 
經營性租賃使用權資產1,715 8,565 
無形資產，淨額2,085 2,108 
遞延合同成本2,063 2,453 
受限現金，非流動現金7,294 7,291 
其他非流動資產16,848 11,867 
總資產$186,129 $206,065 
負債、可贖回權益和股東權益
流動負債：
應付帳款$1,863 $2,170 
遞延收入19,857 8,984 
應計補償6,046 5,562 
其他流動負債17,478 14,858 
流動負債總額45,244 31,574 
非流動經營租賃負債955 6,982 
其他非流動負債1,292 2,228 
債務，非流動，淨值— 138,334 
總負債47,491 179,118 
承諾和或有事項（注8）
可贖回的非控股權益50,747 46,190 
A系列可贖回可轉換優先股，面值美元0.00001 每股： 200,000 截至2024年9月30日和2023年12月31日授權的股份， 150 和 0 分別截至2024年9月30日和2023年12月31日已發行和發行的股份（注10）
137,493 — 
股東權益：
A類、B類和C類普通股，面值$0.00001 每股： 3,000,000 （A類 1,800,000、b類 600,000、C類 600,000）截至2024年9月30日和2023年12月31日授權的股份; 255,881 （A類 252,134、b類 3,747、C類 0)和249,910 （A類 240,262、b類 9,648、C類 0）分別截至2024年9月30日和2023年12月31日已發行和發行的股份
2 2 
額外實收資本1,333,781 1,321,944 
累計其他綜合損失765 441 
累計赤字(1,384,150)(1,341,630)
股東權益總額(49,602)(19,243)
負債總額、可贖回權益和股東權益$186,129 $206,065 
請參閱簡明合併財務報表隨附的註釋
1


Blend Labs，Inc.
簡明合併經營和全面收益報表(虧損)
(以千爲單位，每股除外)
(未經審計)
截至9月30日的三個月，截至9月30日的9個月，
2024202320242023
收入
軟件平台
$31,066 $26,505 $79,277 $77,590 
專業服務2,038 2,137 6,363 6,087 
標題12,080 11,949 34,971 37,065 
總收入45,184 40,591 120,611 120,742 
收入成本
軟件平台
6,294 5,675 17,143 16,964 
專業服務2,310 2,937 7,614 8,448 
標題10,584 9,916 30,039 33,921 
收入總成本19,188 18,528 54,796 59,333 
毛利25,996 22,063 65,815 61,409 
運營費用：
研發10,127 18,826 37,226 67,174 
銷售和營銷9,883 14,494 29,468 48,190 
一般和行政13,140 15,819 39,599 56,146 
重組6,165 9,122 7,355 24,254 
總運營支出39,315 58,261 113,648 195,764 
運營虧損(13,319)(36,198)(47,833)(134,355)
利息開支— (8,210)(6,747)(23,726)
其他收入(費用)，淨額10,710 2,632 11,952 8,746 
所得稅前虧損(2,609)(41,776)(42,628)(149,335)
所得稅費用(18)(44)(83)(168)
淨虧損(2,627)(41,820)(42,711)(149,503)
減去：可歸因於非控股權益的淨虧損182 60 191 1,095 
Blend Labs，Inc.應占淨虧損(2,445)(41,760)(42,520)(148,408)
減：可贖回非控制性權益與贖回價值的相加(1,760)(1,452)(4,748)(5,100)
減：A系列可贖回可轉換優先股的贖回價值(4,048)— (6,709)— 
Blend Labs，Inc.應占淨虧損普通股股東$(8,253)$(43,212)$(53,977)$(153,508)
Blend Labs，Inc.應占每股淨虧損普通股股東：
基本及攤薄$(0.03)$(0.18)$(0.21)$(0.63)
用於計算每股淨虧損的加權平均股數：
基本及攤薄254,910 246,410 252,977 244,057 
綜合損失：
淨虧損$(2,627)$(41,820)$(42,711)$(149,503)
有價證券的未實現收益
448 181 302 229 
外幣兌換收益
13 106 22 77 
綜合損失(2,166)(41,533)(42,387)(149,197)
減去：非控股權益可歸因於全面虧損
182 60 191 1,095 
Blend Labs，Inc.應占綜合虧損$(1,984)$(41,473)$(42,196)$(148,102)
請參閱簡明合併財務報表隨附的註釋
2

Blend Labs，Inc.
可贖回非控制性權益、A系列可贖回可轉換優先股和股東權益的簡明合併報表
(單位：千)
(未經審計)
截至2024年9月30日的三個月和九個月
可贖回的非控股權益A系列可贖回可轉換優先股 普通股其他內容
已繳費
資本		累計
其他
全面
收入		累計
赤字		總
股東的
股權
股份量股份量
截至2023年12月31日的餘額 $46,190 — $— 249,910 $2 $1,321,944 $441 $(1,341,630)$(19,243)
在行使股票期權時發行普通股，扣除回購— — — 410 — 619 — — 619 
早期行使的股票期權的歸屬
— — — — — 184 — — 184 
有限制股份單位的歸屬
— — — 3,257 — — — — — 
與股權獎勵淨額結算相關的被扣留股份— — — (1,258)— (3,806)— — (3,806)
基於股票的薪酬— — — — — 8,707 — — 8,707 
有價證券投資未實現損失— — — — — — (104)— (104)
外幣折算收益— — — — — — 9 — 9 
可贖回非控制性權益計入贖回價值1,461 — — — — (1,461)— — (1,461)
淨收益(虧損)5 — — — — — — (20,668)(20,668)
截至2024年3月31日的餘額 $47,656 — $— 252,319 $2 $1,326,187 $346 $(1,362,298)$(35,763)
在行使股票期權時發行普通股，扣除回購— — — 62 — 95 — — 95 
提前行使的股票期權的歸屬— — — — — 172 — — 172 
有限制股份單位的歸屬— — — 2,887 — — — — — 
與股權獎勵淨股份結算有關的扣留股份— — — (1,061)— (3,213)— — (3,213)
基於股票的薪酬— — — — — 7,764 — — 7,764 
有價證券投資未實現損失— — — — — — (42)— (42)
可贖回非控制性權益計入贖回價值1,527 — — — — (1,527)— — (1,527)
發行A系列可贖回可轉換優先股，扣除發行成本— 150 130,784 — — — — — — 
發行與A系列可贖回可轉換優先股相關的令狀— — — — — 9,111 — — 9,111 
A系列可贖回可轉換優先股達到贖回價值— — 2,661 — — (2,661)— — (2,661)
淨虧損(14)— — — — — — (19,407)(19,407)
截至2024年6月30日的餘額 $49,169 150 $133,445 254,207 $2 $1,335,928 $304 $(1,381,705)$(45,471)
在行使股票期權時發行普通股，扣除回購— — — 65 — 155 — — 155 
早期行使的股票期權的歸屬
— — — — — 7 — — 7 
有限制股份單位的歸屬
— — — 2,617 — — — — — 
與股權獎勵淨額結算相關的被扣留股份— — — (1,008)— (3,984)— — (3,984)
基於股票的薪酬— — — — — 7,483 — — 7,483 
有價證券投資未實現收益— — — — — — 448 — 448 
外幣折算收益— — — — — — 13 — 13 
可贖回非控制性權益計入贖回價值1,760 — — — — (1,760)— — (1,760)
A系列可贖回可轉換優先股達到贖回價值— — 4,048 — — (4,048)— — (4,048)
淨虧損(182)— — — — — — (2,445)(2,445)
截至2024年9月30日的餘額 $50,747 150 $137,493 255,881 $2 $1,333,781 $765 $(1,384,150)$(49,602)
請參閱簡明合併財務報表隨附的註釋
3

Blend Labs，Inc.
可贖回非控制性權益、A系列可贖回可轉換優先股和股東權益的簡明合併報表（續）
(單位：千)
(未經審計)
截至2023年9月30日的三個月和九個月
可贖回的非控股權益普通股其他內容
已繳費
資本		累計
其他
全面
收入(虧損)		累計
赤字		總
股東的
股權
股份量
截至2022年12月31日的餘額 $40,749 240,931 $2 $1,286,815 $(708)$(1,162,937)$123,172 
在行使股票期權時發行普通股，扣除回購— 17 — 134 — — 134 
早期行使的股票期權的歸屬
— — — 758 — — 758 
有限制股份單位的歸屬
— 4,228 — — — — — 
與股權獎勵淨額結算相關的被扣留股份— (1,568)— (2,440)— — (2,440)
基於股票的薪酬— — — 16,392 — — 16,392 
有價證券投資未實現損失— — — — 821 — 821 
外幣折算收益— — — — (18)— (18)
可贖回非控制性權益計入贖回價值2,056 — — (2,056)— — (2,056)
淨虧損(777)— — — — (65,417)(65,417)
截至2023年3月31日的餘額 $42,028 243,608 $2 $1,299,603 $95 $(1,228,354)$71,346 
早期行使的股票期權的歸屬— — — 256 — — 256 
有限制股份單位的歸屬— 3,304 — — — — — 
與股權獎勵淨股份結算有關的扣留股份— (1,137)— (1,092)— — (1,092)
基於股票的薪酬— — — 14,364 — — 14,364 
有價證券投資未實現損失— — — — (773)— (773)
外幣兌換收益— — — — (11)— (11)
可贖回非控制性權益計入贖回價值1,592 — — (1,592)— — (1,592)
淨虧損(258)— — — — (41,231)(41,231)
截至2023年6月30日的餘額 $43,362 245,775 $2 $1,311,539 $(689)$(1,269,585)$41,267 
在行使股票期權時發行普通股，扣除回購
— 32 — 3 — — 3 
提前行使的股票期權的歸屬
— — — 230 — — 230 
有限制股份單位的歸屬
— 3,242 — — — — — 
與股權獎勵淨額結算相關的被扣留股份— (1,103)— (1,325)— — (1,325)
基於股票的薪酬— — — 9,042 — — 9,042 
有價證券投資未實現收益— — — — 181 — 181 
外幣折算收益— — — — 106 — 106 
可贖回非控制性權益計入贖回價值1,452 — — (1,452)— — (1,452)
淨虧損(60)— — — — (41,760)(41,760)
截至2023年9月30日的餘額 $44,754 247,946 $2 $1,318,037 $(402)$(1,311,345)$6,292 
請參閱簡明合併財務報表隨附的註釋

4

Blend Labs，Inc.
現金流量表簡明合併報表
(單位：千)
(未經審計)
截至9月30日的9個月，
20242023
經營活動
淨虧損$(42,711)$(149,503)
對淨虧損與經營活動中使用的現金淨額進行的調整：
基於股票的薪酬22,01339,798
折舊及攤銷1,8031,856
遞延合同費用的攤銷7792,427
攤銷債務貼現和發行成本6902,279
經營性租賃使用權資產攤銷2,3342,450
與放棄租賃相關的使用權資產加速攤銷2,992—
股權證券投資收益(4,417)—
債務清償損失5,476—
保險業務出售收益(9,213)—
其他(685)(4,657)
經營資產和負債變化：
貿易和其他應收款2,3943,029
預付費用和其他資產，流動和非流動(203)(1,496)
遞延合同成本，非流動390(542)
應付帳款(621)861
遞延收入10,8731,361
應計補償446(192)
經營租賃負債(3,192)(2,944)
其他負債，流動和非流動2,394(1,657)
用於經營活動的現金淨額(8,458)(106,930)
投資活動
購買有價證券(96,422)(203,281)
出售可供出售證券100,327—
有價證券的到期日41,850277,855
財產、設備和內部使用軟件開發成本的增加(7,263)(505)
其他(283)—
出售保險業務收益9,075—
投資活動提供的現金淨額47,28474,069
融資活動
股票期權行使（包括提前行使）的收益，扣除回購86920
與股權獎勵的股份淨額結算有關的已支付稅款(11,003)(4,857)
償還長期債務(144,500)—
發行A系列可贖回可轉換優先股和令狀的淨收益149,375—
支付與A系列可贖回可轉換優先股和令狀相關的發行費用(9,480)—
融資活動所用現金淨額(14,739)(4,837)
匯率對現金、現金等值物和受限制現金的影響(5)(10)
現金、現金等價物和限制性現金淨增加(減少)24,082(37,708)
期初現金、現金等價物和限制性現金38,253129,557
期末現金、現金等價物和限制性現金$62,335$91,849
簡明綜合資產負債表內現金、現金等值物和受限制現金的對賬：
現金及現金等價物$55,041$84,555
受限現金7,2947,294
現金總額、現金等價物和受限現金$62,335$91,849
補充披露現金流量信息：
繳納所得稅的現金$76$48
支付利息的現金$6,150$21,464
補充披露非現金投資和融資活動：
提前行使的股票期權的歸屬$363$1,244
因獲得新的或修改的使用權資產而產生的經營租賃負債$1,151$327
股票補償包含在資本化的內部使用軟件開發成本中$1,941$—
可贖回非控制性權益計入贖回價值$4,748$5,100
A系列可贖回可轉換優先股達到贖回價值$6,709$—
收到與戰略合作伙伴關係和出售保險業務有關的令狀$222$—
與出售保險業務相關的應計交易成本$314$—
資本化的內部使用軟件開發成本包含在應計報酬中$419$—
請參閱簡明合併財務報表隨附的註釋
5
Blend Labs，Inc.
簡明合併財務報表附註
(未經審計)


1. 業務說明和呈報依據
業務說明
Blend Labs，Inc. (the「公司」、「Blend」、「我們」、「我們」或「我們的」）於2012年4月17日成立。該公司爲金融服務公司提供基於雲的軟件平台，旨在爲銀行產品的端到端消費者旅程提供動力。該公司的解決方案爲消費者提供了從應用到關閉的快速、簡單和透明的旅程，同時幫助金融服務公司提高生產力、深化客戶關係並提供卓越的消費者體驗。
列報依據和合並原則
隨附的截至2024年9月30日和2023年12月31日的未經審計簡明綜合資產負債表，截至2024年9月30日和2023年9月30日的三個月和九個月的未經審計簡明綜合經營表和全面收益(虧損)表，未經審計的可贖回非控股權益簡明綜合報表，A系列可贖回優先股(「A系列可贖回可轉換優先股」或「A系列優先股」)，截至2024年9月30日和2023年9月30日止三個月和九個月的股東權益，以及截至2024年和2023年9月30日止九個月的未經審計簡明綜合現金流量表，反映所有正常的調整根據美國公認會計原則(「美國公認會計原則」)以及美國證券交易委員會(「美國證券交易委員會」)關於中期財務報告期的適用規則和規定，這些準則具有重複性，被認爲是公平陳述所示期間業績所必需的。因此，某些信息和腳註披露已被濃縮或遺漏，這些信息和腳註披露通常是美國公認會計准則要求完整的財務報表。這些未經審計的簡明綜合財務報表應與公司截至2023年12月31日的年度報告Form 10-k中包含的已審計綜合財務報表及其附註一併閱讀。

隨附的未經審計簡明合併財務報表包括Blend Labs，Inc.的賬目。及其本公司持有控股財務權益的子公司。非控股權益指少數股東在合併子公司的淨收益或虧損以及權益中所佔的份額。所有公司間餘額和交易均已在合併中消除。
預算的使用
根據美國公認會計原則編制簡明綜合財務報表時，管理層須持續作出估計及假設，以影響簡明綜合財務報表及其附註所報告的金額。實際結果可能與這些估計不同。這些估計包括但不限於可變對價的估計、或有事項的評估、用於計算租賃負債的遞增借款利率的確定、基於股票的補償、有價證券的公允價值的確定、A系列優先股和認股權證的公允價值的確定、轉讓資產的公允價值的確定和根據戰略伙伴關係協議承諾的履約義務、應收票據預期信貸損失的評估、遞延稅項資產的估值、已獲得無形資產的估值、可贖回非控制性權益的估值、有形和無形資產的使用壽命的確定以及資本化的內部使用軟件開發成本，對長期資產的減值評估，以及對公允價值不能輕易確定的股權證券的估值。
風險和不確定性
該公司一直並可能繼續受到各種宏觀經濟因素的影響，包括利率環境、住房負擔能力以及世界範圍內的政治和經濟狀況。全球金融市場最近經歷了極端的波動和破壞，包括流動性和信貸供應減少、消費者信心下降、經濟增長下滑、利率上升、通貨膨脹、失業率上升和經濟穩定的不確定性。房地產環境，包括利率和總體經濟環境，通常會影響對抵押貸款和抵押貸款相關產品的需求。最近這些領域的變化影響了公司的經營業績。由於美國聯盟儲備委員會(美聯儲)努力控制不斷上升的通脹，最近利率上升，再加上持續的供應限制，導致2022年和2023年的抵押貸款發放活動下降。對按揭和按揭相關產品的需求繼續對這些因素敏感，美聯儲政策、利率或住房供應的任何重大變化預計都會影響整體按揭活動水準
6
Blend Labs，Inc.
公司簡明綜合財務報表附註
（未經審計）


2024年期間。

該公司的運營主要由現金、現金等值物和投資的可用流動性提供資金。公司自成立以來各時期均出現淨虧損，且其在不斷發展的行業中的經營歷史有限，難以準確預測宏觀經濟或其他外部因素對其業務的影響，並可能增加公司未來無法實現或維持盈利能力的風險，或以其他方式對其經營和財務業績產生不利影響。
2. 主要會計政策概要

公司的重要會計政策在注2中描述， 主要會計政策概要，截至2023年12月31日止年度的10-k表格年度報告中合併財務報表注釋。截至2024年9月30日的三個月和九個月內，這些政策沒有重大變化，但與A系列優先股發行相關的政策除外，如下所述。
現金及現金等價物
該公司將其現金存入高信用質量和聯邦保險機構。任何一家機構的現金都可能超過聯邦保險限額。該公司尚未在此類帳戶中經歷任何損失，並相信信用風險並不重大。公司將購買時原到期日為三個月或以下的所有高流動性投資視為現金等值物。截至2024年9月30日和2023年12月31日，現金及現金等值物包括現金、貨幣市場帳戶以及原到期日少於90天的高流動性投資。由於投資的短期性質，未經審計的簡明綜合資產負債表中報告的現金及現金等值物的公允價值接近公允價值。
受限制現金
該公司已將不可用於其運營的現金歸類為受限制現金。受限制現金主要包括與公司辦公設施租賃安排的保證金相關的信用狀抵押品以及與所有權部門相關的擔保債券抵押品。截至2024年9月30日和2023年12月31日，公司的限制現金為 $7.3 萬，所有這些都被歸類為非當前。
貿易和其他應收帳款和信貸損失準備金
根據會計準則編纂(“ASC”)326“金融工具-信貸損失”，公司報告扣除信貸損失準備後的貿易和其他應收賬款。美國會計準則第326條要求一個實體確認一項準備金，該準備金應反映該實體目前對金融工具有效期內預期發生的信貸損失的估計。本公司對預期信貸損失的估計是根據根據歷史數據計算的預期終身損失率確定的，並根據當前和未來狀況的影響進行了調整，例如未償還應收賬款的年齡、歷史付款模式、客戶履行其付款義務能力的任何已知或預期變化，或對可能影響客戶支付未償還餘額能力的更廣泛經濟狀況的評估。截至2024年9月30日和2023年12月31日，預期信貸損失準備金為美元。0.1百萬美元。對於截至2024年9月30日和2023年9月30日的三個月和九個月，預期信貸損失準備金和預期信貸損失準備金中被註銷的應收賬款的無法收回部分並不重要。
大寫的內部使用軟件
當（i）初步項目階段完成，（ii）管理層已授權爲項目完成提供進一步資金，以及（iii）項目很可能完成並按預期執行時，公司將其平台和產品開發過程中產生的某些成本資本化。這些資本化成本包括人員和相關費用以及對直接與內部使用軟件項目相關並投入時間的員工的股票補償。一旦項目基本完成並且軟件已準備好用於其預期用途，這些成本的資本化就會停止。現有軟件的重大升級和增強所產生的成本也被資本化，而輕微修改以及培訓和維護所產生的成本則在發生時計入費用。資本化的內部使用軟件開發成本在簡明合併中以財產和設備淨額報告
7
Blend Labs，Inc.
簡明合併財務報表附註
(未經審計)


資產負債表。資本化的內部使用軟件開發成本使用直線法在軟件的估計使用壽命內攤銷，因爲直線識別法最接近預期收益的獲得方式。公司不會將其軟件的所有權轉讓、許可或租賃軟件給第三方。
信用風險和重要客戶的集中度
可能使公司面臨集中信用風險的金融工具主要包括現金和現金等值物、受限制現金、有價證券和貿易應收賬款。該公司主要將其現金等值物保存在貨幣市場基金和美國政府或其機構發行或擔保的高流動性投資中。截至2024年9月30日和2023年12月31日，現金及現金等值物爲美元55.0 萬 和 $31.0 分別百萬， 幷包括愛德$2.3 萬 和$1.9 分別百萬， 在外國司法管轄區持有的現金。貿易應收賬款不需要抵押品。

Title 365與保險承保人簽訂了協議，授權公司代表保險承保人簽發所有權保險單。這些保單由兩家產權保險公司承保，約佔 61%和39截至2024年9月30日的九個月內的%，以及 70%和30截至2023年9月30日的九個月內，分別佔該期間賺取的所有權保單費用的%。

以下客戶占公司以下期間收入的10%或以上：

截至9月30日的三個月，截至9月30日的九個月，
客戶
2024202320242023
A1
20%18%17%19%
(1)該客戶在Blend平台和標題部門產生收入

以下客戶占公司貿易應收帳款和未開票應收帳款的10%或以上：
客戶
2024年9月30日2023年12月31日
A10%10%
B
N/A1
13%
C
11%
N/A1
(1)截至呈示日期，該客戶的貿易和未開票應收帳款餘額不超過10%
可贖回非控制性權益
該公司的90.1對Title365的%所有權導致認可9.9%非控股權益，代表少數股東在Title365淨收益和股權中的份額。標題365股東協定包括一項條款，根據該條款，本公司擁有認購期權，以購買9.9%非控股權益，收購價等於(1)$中較大者49.51000萬美元外加按以下利率計算的利息：5.0年複利百分比；或(2)4.4乘以尾隨的12月EBITDA乘以非控股權益所有權百分比(“Title365看漲期權”)。標題365看漲期權開始可行使2收購完成日期後數年。非控股股東還持有迫使公司購買剩餘股份的選擇權9.9%的非控股權益，其價格與標題365看漲期權(“標題365看跌期權”)的計算方式相同。標題365看跌期權是可行使的開始5收購完成日期後數年。標題365看漲期權和標題365看跌期權都沒有到期日。然而，根據Title365股東協定，本公司亦擁有若干附帶權利，可在某些情況下行使，這可能會導致Title365認沽期權失效。由於Title365認沽期權並非完全在本公司的控制範圍內，本公司將該權益分類為未經審核的精簡綜合資產負債表夾層權益部分內的可贖回非控制權益(“RNCI”)。RNCI自購入日期起至Title365認沽期權可行使之日，按利息法增加至贖回價值。於每個資產負債表日，RNCI按按RNCI應佔收益或虧損及其他全面收益或虧損或其增加的贖回價值調整後的初始賬面值中較大者呈報。贖回金額的變動根據留存收益或(如無留存收益)額外實收資本記錄相應的調整。對於每個報告期，整個定期
8
Blend Labs，Inc.
公司簡明綜合財務報表附註
（未經審計）


贖回金額的變化反映在兩級法下每股淨虧損的計算中，類似於股息。截至2024年9月30日和2023年12月31日，Title 365看跌期權的贖回金額就像目前可贖回一樣為 $58.0 萬 和$55.9 分別為百萬。
A系列優先股
2024年4月29日，公司與Haveli Brooks Aggregator，LP（「Haveli」）簽訂投資協議（「投資協議」）並發布 150,000 公司A系列優先股的股份。由於贖回功能不完全由公司控制，A系列優先股被歸類為夾層股權。A系列優先股的最大贖回價值超過 七年 術語，使用有效利率法。在沒有保留收益的情況下，贖回金額的增加會記錄並對額外繳入資本進行相應調整。對於每個報告期，贖回金額的整個周期性變化反映在兩級法下每股淨虧損的計算中，類似於股息，通過減少歸屬於普通股股東的收入（或增加虧損）。

就業法案會計選舉
作為一家新興成長型公司（「EGC」），《快速啟動我們的商業初創公司法案》（「JOBS法案」）允許公司推遲採用適用於上市公司的新的或修訂的會計公告，直到此類公告適用於私營公司（即那些尚未制定經修訂的1933年證券法（「證券法」）的人，宣布有效的登記聲明或不具有根據修訂後的1934年證券交易法（「交易法」）註冊的一類證券）。該公司打算根據《JOBS法案》使用這一延長的過渡期，直到該公司不再被視為EGC。下面討論的通過日期反映了這次選舉。
最近採用的會計準則
2020年8月，FASb發布了ASO No. 2020-06， 具有轉換和其他期權的債務（子主題470-20）以及實體自有股權的衍生品和對沖合同（子主題815-40）.該指南通過刪除ASC 470-20中的現有指南，簡化了可轉換債務工具和可轉換優先股的會計處理，該指南要求實體將受益轉換特徵和現金轉換特徵與主可轉換債務或優先股分開核算。該指南對公司自2024年1月1日開始的年度報告期以及這些年度報告期內的中期報告期有效。ASO 2020-06應全面或修改後的追溯性應用，並允許提前採用。該採納並未對公司合併財務報表產生重大影響。

2022年6月，FASb發布了ASO No. 2022-03， 公允價值計量（主題820）。 此次更新澄清了主題820中在衡量受禁止出售股權證券的合同限制的股權證券公允價值時的指導，並對受合同銷售限制的股權證券引入了新的披露要求，並根據主題820按公允價值計量。該等修訂影響所有擁有按公允價值計量且受合同銷售限制的股本證券投資的實體。該指南對公司自2024年1月1日開始的年度報告期以及這些年度報告期內的中期報告期有效。允許提前收養。該採納並未對公司合併財務報表產生重大影響。
最近發布的會計準則尚未採用
2023年11月，FASb發布了ASO No. 2023-07， 細分報告（主題280）。 此次更新主要通過加強對重大分部費用的披露，改善了所有公共實體的可報告分部披露要求，使投資者能夠制定對決策更有用的財務分析。該指南對公司有效，適用於2023年12月15日之後開始的年度報告期和2024年12月15日之後開始的財年內的中期。允許提前收養。該公司目前正在評估該ASO對其合併財務報表的影響。

2023年12月，FASb發布了ASO No. 2023-09， 所得稅（主題740）。 此次更新要求（1）利率調節中的類別一致和更大程度的信息細分，以及（2）按司法管轄區細分支付的所得稅，提高了所得稅披露的透明度。該指南在2024年12月15日之後開始的年度報告期內對公司有效。對於尚未發布或尚未發布的年度財務報表，允許提前採用
9
Blend Labs，Inc.
公司簡明綜合財務報表附註
（未經審計）


可供發行。該公司目前正在評估該ASO對其合併財務報表的影響。

2024年11月，FASb發佈了ASO No. 2024-03， 利潤表費用分解.此次更新改進了有關公共實體費用的披露，主要是通過在財務報表附註中額外披露有關某些成本和費用的具體信息。該指南對公司於2026年12月15日之後開始的年度報告期和2027年12月15日之後開始的中期報告期有效。這些要求將前瞻性地適用，並可以選擇追溯適用。允許提前收養。該公司目前正在評估該ASO對其合併財務報表的影響。
3. 收入確認和合同成本
收入的分類
下表提供了按服務提供分類的收入信息：

截至9月30日的三個月，截至9月30日的9個月，
2024202320242023
(單位：千)
混合平台：
抵押套房$21,546 $20,306 $55,078 $60,371 
消費者銀行套件9,520 6,199 24,199 17,219 
總體軟件平台31,066 26,505 79,277 77,590 
專業服務2,038 2,137 6,363 6,087 
Total Blend平台33,104 28,642 85,640 83,677 
標題12,080 11,949 34,971 37,065 
總收入$45,184 $40,591 $120,611 $120,742 

合同餘額
下表提供了有關客戶合同的合同資產和合同負債的信息：

合約帳戶
資產負債表行參考
2024年9月30日2023年12月31日
(單位：千)
合同資產-流動預付費用和其他流動資產$3,167 $1,593 
合同負債-當前遞延收入，當期$(19,857)$(8,984)

有幾個不是 截至2024年9月30日和2023年12月31日的長期合同資產或遞延收入。

截至2024年9月30日和2023年9月30日的三個月內，公司確認美金8.6 億和$5.6 分別為各期末計入遞延收入餘額的收入百萬。截至2024年9月30日和2023年9月30日的九個月內，公司確認了美金6.7 億和$7.7 分別為各期末計入遞延收入餘額的收入百萬。

10
Blend Labs，Inc.
公司簡明綜合財務報表附註
（未經審計）


截至2024年9月30日的三個月和九個月內，公司確認收入約為美金1.9 億和$0.3 分別與前期履行的履行義務有關。截至2023年9月30日的三個月和九個月內，公司確認收入約為美金0.2 億和$1.9 分別與前期履行的履行義務有關。前期履行的履行義務減少或確認的收入主要與交易價格的變化有關，包括可變對價估計的變化。
餘下履約責任
截至2024年9月30日，分配給剩餘履行義務的交易價格總額為美金107.4 萬這些剩餘履行義務代表客戶合同中預期未來提供的服務的承諾，但尚未確認為收入。這些承諾的預期收入確認時間在很大程度上取決於公司根據相關合同條款交付的能力以及公司客戶使用服務的時間，這可能會影響公司對公司預計何時確認這些剩餘履行義務收入的估計。該公司預計將在明年將剩餘的約一半績效義務確認為收入 12 個月公司預計大部分非當前剩餘履行義務將在明年確認 13 到 24 個月
遞延合約成本
截至2024年9月30日和2023年12月31日，未攤銷遞延合同成本總額為美金3.2 億和$3.5 分別百萬，其中美金1.1 億和$1.0 百萬美金記錄在預付費用和其他易變現資產和美金中2.1 億和$2.5 截至2024年9月30日和2023年12月31日，未經審計的簡明綜合資產負債表上分別記錄在非流動遞延合同成本中。

延期合同成本攤銷為美金0.3 億和$0.7 截至2024年9月30日和2023年9月30日的三個月分別為百萬美金和美金0.8 億和$2.4 截至2024年9月30日和2023年9月30日止九個月分別為百萬美金，並計入隨附未經審計的簡明綜合經營報表和全面收益（虧損）中的銷售和營銷費用。
11
Blend Labs，Inc.
公司簡明綜合財務報表附註
（未經審計）


4. 投資和公允價值衡量
按主要證券類型劃分的投資的公允價值、未實現損益和公允價值如下：

2024年9月30日
攤銷
成本
毛
未實現收益
公平值
公平值層級
(In數千）
現金等值物：  
貨幣市場基金$10,209 $— $10,209 1級
商業票據17,346 — 17,346 2級
現金等值物總額27,555 — 27,555 
有價證券：
美國國債和機構證券31,074 204 31,278 2級
商業票據17,663 — 17,663 2級
債務證券12,607 196 12,803 2級
有價證券總數
61,344 400 61,744 
受限制現金，非流動：
貨幣市場基金6,961 — 6,961 1級
存單333 — 333 2級
受限制現金總額7,294 — 7,294 
總$96,193 $400 $96,593 

2023年12月31日
攤銷
成本
毛
未實現收益
毛
未實現
損失
公平值
公平值層級
(In數千）
現金等值物： 
 
 
貨幣市場基金$6,804 $— $— $6,804 1級
商業票據14,932 — — 14,932 2級
現金等值物總額21,736 — — 21,736 
有價證券：
美國國債和機構證券33,225 8 (71)33,162 2級
債務證券56,512 187 (127)56,572 2級
資產支持證券16,037 99 — 16,136 2級
共同基金60 — — 60 
1級
有價證券總數105,834 294 (198)105,930 
其他投資：
存單30 — — 30 2級
有價證券和其他投資總額
105,864 294 (198)105,960 
受限制現金，非流動：
貨幣市場基金6,959 — — 6,959 1級
存單332 — — 332 2級
受限制現金總額
7,291 — — 7,291 
總$134,891 $294 $(198)$134,987 

12
Blend Labs，Inc.
公司簡明綜合財務報表附註
（未經審計）


不可用於運營的受限制現金包括美金5.0 與公司辦公室租賃設施相關的備用信用狀抵押品百萬美金，美金1.9 與所有權部分和美金相關的擔保債券的百萬抵押品0.3 截至2024年9月30日和2023年12月31日，加州保險法要求繳納百萬美金法定存款。

有價證券主要包括美國國債和機構證券、商業票據和公司債務證券。公司在購買時將其有價證券分類為可供出售證券，並在每個資產負債表日重新評估該分類。該公司根據投資的性質及其可用於當前業務的可用性將其投資歸類為流動投資。

公司對歸類為公允價值等級第一級的貨幣市場基金投資的公允價值基於涉及相同資產的活躍交易所市場交易的實時報價。公司對分類為公允價值等級第2級的商業票據和有價證券的投資的公允價值基於類似工具的市場報價。該公司的定期存款證本質上是短期的，並按攤銷成本列帳，該攤銷成本接近公允價值;因此，定期存款證被歸類為公允價值等級的第2級。

下表總結了公司有價證券和其他投資的規定期限：

2024年9月30日2023年12月31日
(單位：千)
在一年內到期$38,365 $66,620 
應在一年至兩年後到期23,379 39,340 
有價證券和其他投資總額
$61,744 $105,960 


公司評估未實現虧損頭寸的有價證券，以確定減損是否是由於信貸相關因素或其他因素造成的。公司考慮公允價值低於成本的程度、證券發行人的財務狀況和近期前景，以及公司在足以允許公允價值任何預期收回的時間內保留其對證券投資的意圖和能力。

本公司無意在到期前出售任何該等證券，並相信本公司極有可能在收回成本前無須出售任何該等證券。隨着證券接近到期日，預計公允價值將回升。因此，本公司認爲，未實現虧損一般是由於非信貸相關因素造成的，包括利率和其他市場狀況的變化，因此，本公司截至2024年和2023年9月30日的三個月和九個月的未經審計的簡明綜合經營報表中沒有確認減值費用或信貸損失準備。截至2024年9月30日和2023年12月31日，處於未實現虧損頭寸的投資頭寸數量爲0 和 28，分別爲。截至2024年9月30日，公司擁有不是連續12個月或以上未實現虧損的證券。截至2023年12月31日，公司擁有四證券，總公允價值爲#美元16.0 萬,已連續12個月或更長時間處於未實現虧損狀態。本公司根據特定的識別方法確定出售有價證券的已實現損益。

公司確認其投資組合利息收入爲美元1.5 億和$2.7 截至2024年9月30日和2023年9月30日的三個月分別爲百萬美元和美元4.2 億和$8.8 截至2024年9月30日和2023年9月30日的九個月分別爲百萬美元。與有價證券相關的應計應收利息爲美元0.3 億和$0.9 截至2024年9月30日和2023年12月31日，分別爲百萬，並在未經審計的簡明綜合資產負債表上的預付費用和其他流動資產中呈列。公司不計量應計應收利息的信用損失撥備，並將應收利息覈銷確認爲利息收入的轉回。截至2024年9月30日和2023年9月30日止三個月和九個月內，沒有核銷應計利息。
5. 無形資產
無形資產包括以下內容：
13
Blend Labs，Inc.
簡明合併財務報表附註
(未經審計)



2024年9月30日
加權平均剩餘攤銷總金額累計攤銷賬面淨值
(單位：年)(單位：千)
應攤銷的無形資產：
域名7.0$192 $(107)$85 
無限期-活着的無形資產：
獲得的許可證2,000 — 2,000 
無形資產總額，淨額$2,192 $(107)$2,085 



2023年12月31日
加權平均剩餘攤銷總金額累計攤銷賬面淨值
(單位：年)(單位：千)
應攤銷的無形資產：
域名7.7$210 $(102)$108 
無限期-活着的無形資產：
獲得的許可證2,000 — 2,000 
無形資產總額，淨額$2,210 $(102)$2,108 

截至2024年9月30日和2023年9月30日的三個月和九個月的無形資產攤銷並不重大。
6. 重要資產負債表組成部分
預付費用和其他流動資產
預付費用和其他流動資產包括：
2024年9月30日2023年12月31日
(單位：千)
合同資產$3,167 $1,593 
遞延合同成本1,081 1,015 
預付費軟件3,075 4,319 
預付保險1,547 1,855 
預付費其他1,848 3,438 
錄音費預付1,366 470 
其他流動資產1,638 1,879 
預付費用和其他流動資產總額$13,722 $14,569 

記錄費用預付款指代表客戶在與抵押文件記錄相關的所有權部分預付的金額。這些金額主要在30天內從公司管理的託管帳戶中的資金中收回。
14
Blend Labs，Inc.
簡明合併財務報表附註
(未經審計)


財產和設備，淨額
財產和設備淨額由下列部分組成：
2024年9月30日2023年12月31日
(單位：千)
計算機和軟件$3,506 $6,335 
傢俱和固定裝置149 1,816 
大寫的內部使用軟件9,100 63 
租賃權改進— 4,886 
財產和設備總額(毛額)12,755 13,100 
累計折舊和攤銷(3,032)(9,155)
財產和設備合計(淨額)$9,723 $3,945 

截至2024年9月30日和2023年9月30日的三個月折舊費用爲美元0.5 億和$0.6 分別爲百萬。截至2024年9月30日和2023年9月30日止九個月的折舊費用爲美元1.5 億和$1.9 分別爲百萬。

截至2024年9月30日的三個月和九個月資本化內部使用軟件開發成本攤銷爲美元0.2 萬截至2023年9月30日的三個月和九個月資本化內部使用軟件開發成本攤銷爲 非物質的.
Notes Receivable
In 2021, the Company made a $3.0 million investment in a privately-held company via a convertible promissory note. In 2023, the Company made an additional $2.5 million investment into the issuer via another convertible promissory note. Interest accrues at 2% per annum and outstanding principal and accrued interest is due and payable at the earliest of (i) 60 months from the execution of each note, respectively, (ii) an initial public offering, or (iii) change in control, unless otherwise converted to shares of the issuer. The outstanding principal and unpaid accrued interest on the notes is convertible into 4,500,000 shares of the issuer’s Series Seed Preferred Stock and 2,192,308 shares of the issuer’s Series A Preferred Stock, respectively, at the option of the issuer, upon a change in control, upon the issuer’s initial public offering, or upon a qualified equity financing. The conversion options are not bifurcated from the promissory notes as the options do not meet the net settlement criteria of a derivative instrument due to the options not being readily convertible to cash. The Company also has a call option to merge the issuer with the Company for aggregate consideration of $500.0 million. The value of the call option was determined to be inconsequential.

At each reporting date, the Company evaluates the collectability of the notes receivable in accordance with ASC 326, Financial Instruments—Credit Losses. As of September 30, 2024 and December 31, 2023, the Company determined that no credit loss existed for the convertible promissory notes, and no provision for expected credit losses was recognized. The notes receivable are presented within other non-current assets on the unaudited condensed consolidated balance sheets.
Investments in Non-Marketable Equity Securities
The Company holds an equity investment in a privately-held company in exchange for 103,611 shares of Series Growth 1a Preferred Stock. This investment in the equity securities without readily determinable fair value is measured at cost, less impairment, if any, plus or minus observable price changes in orderly transactions of an identical or similar investment of the same issuer.

As of September 30, 2024, the carrying value of this investment was $9.8 million, inclusive of a cumulative upward adjustment of $7.3 million, of which $4.4 million was recognized during the first quarter of 2024 to reflect observable price changes. As of December 31, 2023, the carrying value of this investment was $5.4 million, inclusive of cumulative upward adjustment of $2.9 million.

The Company determined the adjustment by measuring the security at fair value using the option pricing model (“OPM”) as of the date the observable transaction occurred. Observable transactions, such as the issuance of new equity by an investee, are indicators of investee enterprise value and are used to estimate the fair value of the Company’s investment in the equity
15
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


security. An OPM is utilized to allocate value to the various classes of securities of the investee, including classes owned by the Company. Such information, available to the Company from the investee entity, is supplemented with the Company’s estimates such as volatility, expected time to liquidity and the rights and obligations of the securities the Company holds. The inputs to valuation techniques used to measure fair value of the Company’s non-marketable equity security are classified as Level 3 of the fair value hierarchy due to the use of significant unobservable inputs.

The gain resulting from the adjustment to the carrying value of the non-marketable security is presented within other income (expense) in the unaudited condensed consolidated statements of operations and comprehensive income (loss). There were no impairments for the three and nine months ended September 30, 2024. This investment is presented within other non-current assets on the unaudited condensed consolidated balance sheets.
Cloud Computing Arrangements
The Company capitalizes certain implementation costs incurred during the application development stage under cloud computing arrangements that are service contracts. The carrying value of the capitalized costs was $0.1 million as of September 30, 2024 and December 31, 2023, which is presented within prepaid expenses and other current assets. Amortization of capitalized implementation costs is recognized on a straight-line basis over the term of the associated hosting arrangement when it is ready for its intended use. Costs related to preliminary project activities and post-implementation activities are expensed as incurred.
Other Current Liabilities
Other current liabilities consisted of the following:

September 30, 2024December 31, 2023
(In thousands)
Accrued expenses$3,694 $2,644 
Accrued interest—101
Accrued professional fees2,2331,861
Accrued connectivity fees3,6123,103
Restructuring
1,096—
Accrued litigation contingencies3141,105
Operating lease liabilities, current portion4,3154,379
Other current liabilities
2,214 1,665 
Total other current liabilities$17,478 $14,858 
Other Long-Term Liabilities
Other long-term liabilities consisted of the following:

September 30, 2024December 31, 2023
(In thousands)
Early exercise liability
$— $362 
Payroll tax liabilities294347
Other liabilities998 1,519 
Total other long-term liabilities$1,292 $2,228 

16
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


Title and Escrow Loss Reserve
The Company performs title insurance services and issues title insurance policies as an agent for a third-party title insurance underwriters. The Company may incur a loss if it does not follow the guidelines outlined in the agency agreements. Reserves for estimated future losses on policies issued are established at the time the title insurance revenue is recognized. As of September 30, 2024, title and escrow loss reserves were $1.1 million, of which $0.1 million, is presented within other current liabilities and $1.0 million is presented within other non-current liabilities on the condensed consolidated balance sheets. As of December 31, 2023, title and escrow loss reserves were $1.5 million, of which $0.2 million is presented within other current liabilities and $1.3 million is presented within other non-current liabilities on the condensed consolidated balance sheets.
7. Leases
The Company leases its facilities under non-cancelable operating leases with various expiration dates. Leases may contain escalating payments.

The Company’s total operating lease costs were $2.8 million and $1.7 million for the three months ended September 30, 2024 and 2023, respectively. The Company’s total operating lease costs were $6.2 million and $5.0 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company’s total operating lease costs included variable costs in the amount of $0.6 million for the three months ended September 30, 2024 and 2023, respectively, and $1.7 million and $1.6 million for the nine months ended September 30, 2024 and 2023, respectively. Variable lease costs are primarily comprised of maintenance costs and are determined based on the actual costs incurred during the period. Variable lease payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities.

As of September 30, 2024 and December 31, 2023, the weighted average remaining operating lease term was 1.8 years and 3.1 years. The weighted average discount rate used to estimate operating lease liabilities for leases that existed as of September 30, 2024 and December 31, 2023 was 8.4% and 8.1%, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $2.6 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $5.2 million and $3.7 million for the nine months ended September 30, 2024 and 2023, respectively.

In the three months ended September 30, 2024, the Company restructured two of its facilities and transferred two of its lease agreements, one in connection with the strategic partnership and sale of the insurance business and another in connection with the transfer of the Company's subsidiary in India to a third party. Refer to Note 13, Restructuring, and Note 17, Strategic Partnership and Sale of Insurance Business, for details.

As of September 30, 2024, maturities of operating lease liabilities were as follows:

(In thousands)
Remainder of 2024$1,147 
20253,606 
2026270 
2027225 
2028237 
Thereafter295 
Total lease payments5,780 
Less: imputed interest(511)
Total operating lease liabilities$5,269 
17
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


8. Commitments and Contingencies
Contingencies
From time to time and in the normal course of business, the Company may be subject to various legal matters, such as threatened or pending claims or proceedings. The litigation contingencies, if realized, could have a material negative impact on the Company’s financial condition, results of operations, and cash flows. The Company recognizes a provision for litigation losses when a contingent liability is probable and the amount thereof is estimable. Costs associated with the Company's involvement in legal proceedings are expensed as incurred. Amounts accrued for litigation contingencies are based on the Company’s best estimates, assessments of the likelihood of damages, and the advice of counsel and often result from a series of judgments about future events and uncertainties that rely heavily on estimates and assumptions, therefore the actual settlement amounts could differ from the estimated contingency accrual and result in additional charges or reversals in future periods. The Company had a litigation contingency accrual of approximately $0.3 million and $1.1 million as of September 30, 2024 and December 31, 2023, respectively, which is presented within other current liabilities in the unaudited condensed consolidated balance sheets.

Warranties, Indemnifications, and Contingent Obligations
The Company’s platform, products, and services are generally warranted to perform substantially as described in the associated documentation and to satisfy defined levels of uptime reliability. The service-level agreements that provide for defined levels of uptime reliability and performance permit the customers to receive credits or to terminate their agreements in the event that the Company fails to meet those levels. To date, the Company has not experienced any significant failures to meet defined levels of reliability and performance as a result of those agreements and historically the Company has not incurred any material costs associated with warranties. Accordingly, the Company has not accrued any liabilities related to these agreements in the unaudited condensed consolidated financial statements.

The Company enters into indemnification provisions under (i) its agreements with other companies in the ordinary course of business, typically with business partners, contractors, customers, and landlords and (ii) its agreements with investors. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. These indemnification provisions often include indemnifications relating to representations made by the Company with regard to intellectual property rights. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. Accordingly, the Company has no liabilities recorded for these agreements as of September 30, 2024 or December 31, 2023.

The Company has agreed to indemnify its officers and directors to the fullest extent permitted by its amended and restated bylaws and the General Corporation Law of the State of Delaware for certain events or occurrences arising as a result of the officers or directors serving in such capacity. The coverage applies only to acts that occurred during the tenure of the officer or director and has an unlimited term. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited.

Escrow or Trust Funds
The Company administers escrow and trust deposits held at third-party financial institutions representing funds received under real estate contracts, escrowed funds received under escrow agreements, and undisbursed amounts received for settlement of mortgage and home equity loans. These funds are not considered assets of the Company and, therefore, are not included in the accompanying unaudited condensed consolidated balance sheets; however, the Company remains contingently liable for the disposition of these funds on behalf of its customers. Cash held by the Company for these purposes was approximately $23.2 million, net of outstanding checks in transit of $35.8 million as of September 30, 2024, and approximately $3.2 million, net of outstanding checks in transit of $27.8 million as of December 31, 2023.
9. Debt Financing
Debt consisted of the following:

18
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


September 30, 2024December 31, 2023
(In thousands)
Term Loan - principal$— $140,000 
Term Loan - exit fee— 4,500 
Less: unamortized debt discounts and issuance costs— (6,166)
Total debt$— $138,334 

On June 30, 2021, in connection with the closing of the acquisition of Title365, the Company entered into a credit agreement, as amended from time to time (the “Credit Agreement”), which provided for a $225.0 million senior secured term loan (the “Term Loan”) and a $25.0 million senior secured revolving credit facility (the “Revolving Facility”). The Revolving Facility included $10.0 million sublimit for the issuance of letters of credit. The Revolving Facility also included a swingline sub-facility (the “Swingline Facility”) that accommodated same-day borrowing of base rate loans. The sublimit for the Swingline Facility was $5.0 million.

The Term Loan was fully drawn at closing to provide, in part, the cash consideration paid in connection with the acquisition of Title365. The Term Loan was funded and the cash consideration was transferred on July 1, 2021. The Term Loan maturity date was June 30, 2026, and the full principal amount was due at maturity. No amortization payments were required with respect to the Term Loan.

The borrowings under the Term Loan accrued interest at a floating rate which were, at the Company’s 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 Term SOFR rate applicable to the Term Loan was subject to a floor of 1.00%, and the base rate was subject to a floor of 2.00%. The base rate for any day was a fluctuating rate per annum equal to the highest of (i) the federal funds effective rate in effect on such day, plus 0.50%, (ii) the rate of interest for such day as published in the Wall Street Journal as the “prime rate,” and (iii) the adjusted Term SOFR rate for a one-month interest period, plus 1.00%. Interest was payable in arrears for the elected specified interest period.

Under the Revolving Facility, the Company was required to pay a commitment fee of 0.50% per annum of the unused commitments.

The Company was also required to pay letter of credit fees, customary fronting fees, and other customary documentary fees in connection with the issuance of letters of credit.

The Company incurred approximately $5.7 million of debt issuance costs in connection with the Term Loan, which had been deferred, and the remaining unamortized portion of these costs was presented as a reduction of long-term debt on the condensed consolidated balance sheet as of December 31, 2023.

In connection with the Credit Agreement, the Company issued a Series G preferred stock warrant to purchase 598,431 shares of Class A common stock at an exercise price per share of $13.827822 (the “Series G Warrant"). The terms of the warrant agreement for the Series G Warrant provide the holder with an option to net settle if the fair value of Class A common stock is greater than the exercise price. The net shares to be issued in a cashless exercise will be based on the fair value of the Company’s Class A common stock at the time the Series G Warrant is exercised. As of September 30, 2024, the Series G Warrant has not been exercised. The Series G Warrant will expire 10 years from the issue date. The proceeds from the issuance of debt were allocated between the Term Loan and the Series G Warrant based on their relative fair values, resulting in a debt discount of approximately $6.8 million for the amount allocated to the Series G Warrant and accounted for as paid-in capital.

In October 2022, the Company entered into the First Amendment (the “Amendment”) to the Credit Agreement. The Amendment replaced the reference rate from LIBOR to SOFR as a result of the expected cessation of LIBOR and in accordance with the Credit Agreement.

19
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


On November 27, 2023, the Company entered into the Second Amendment to the Credit Agreement (the “Second Amendment”), which amended the Credit Agreement to, among other things, (i) terminate the Revolving Facility and (ii) amend the maturity date of the Term Loan to provide for a springing maturity extension to June 30, 2027, in the event that certain conditions were satisfied. These conditions had not been met as of the date of the termination of the Credit Agreement. In connection with the Second Amendment, the Company voluntarily prepaid outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million.

For the year ended December 31, 2023, in connection with prepayment made under the Second Amendment, the Company recognized approximately $4.0 million loss, consisting of the proportionate write-off of unamortized debt issuance costs and debt discounts due to the partial extinguishment of the Term Loan and the write off of unamortized portion of debt issuance costs related to the termination of the Revolving Facility.

On April 29, 2024, in connection with the issuance of the Series A Preferred Stock, the Company paid approximately $146.1 million to repay all amounts outstanding and payable under the Credit Agreement, including the exit fee of $4.5 million, and terminated the Credit Agreement.

For the quarter ended June 30, 2024, in connection with the full repayment of amounts outstanding and payable under the Credit Agreement and the termination of the Credit Agreement, the Company recognized approximately a $5.5 million loss consisting of the full write-off of unamortized debt issuance costs and debt discounts due to the full extinguishment of the Term Loan. The loss is presented within other income (expense), net in the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss).

Including the impact of the deferred debt issuance costs and the debt discounts resulting from the exit fee and the Series G Warrant, the effective interest rate on the Term Loan was approximately 14.55% as of April 29, 2024. Debt issuance costs, debt discounts, and the Revolving Facility issuance costs were being amortized as interest expense over the term of the Credit Agreement.

As a result of the failure to execute control agreements for all applicable deposit and investment securities accounts in a timely manner, the Company was out of compliance with certain non-financial covenants as well as the minimum liquidity covenant as of December 31, 2023. Subsequent to December 31, 2023, the Company had remedied the failures. As of the date of termination of the Credit Agreement, the Company was in compliance with these covenants.

The fair value of the Term Loan was approximately $136.5 million as of December 31, 2023, and was classified as Level 2 in the fair value hierarchy. The fair value of the Term Loan was measured by applying the income approach, which discounts the future contractual cash flows using a current risk-adjusted rate available to borrowers with similar credit ratings.
10. Redeemable Preferred Stock
On April 29, 2024, the Company entered into the Investment Agreement with Haveli and issued 150,000 shares of Series A Preferred Stock, for an aggregate purchase price of $150.0 million. The Company incurred $10.1 million of issuance costs. Net proceeds from the transaction in the amount of $139.9 million were used to repay in full the amounts outstanding under the Credit Agreement.

The Series A Preferred Stock has the following rights:

Conversion Rights
Each share of the Series A Preferred Stock is convertible into Class A common stock at the option of the holders thereof at any time at an initial conversion rate of 307.6923 shares of common stock per $1,000 principal amount (equivalent to an initial conversion price of approximately $3.25 per share).

Redemption Rights
The Series A Preferred Stock includes the following redemption provisions:

•At any time following the fifth anniversary of issuance, a majority of the holders of the Series A Preferred Stock have the right to cause the Company to redeem in whole, but not in part the shares of Series A Preferred Stock for cash. The
20
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


per share amount of such redemption will equal the then-current liquidation preference multiplied by (i) 150% if the redemption occurs on or after the fifth anniversary and prior to the sixth anniversary of the Issuance Date, (ii) 175% if the redemption occurs on or after the sixth anniversary and before the seventh anniversary of the Issuance Date, and (iii) 200% if the redemption occurs on or after the seventh anniversary of the Issuance Date.

•At any time following the seventh anniversary of issuance, the Company may redeem in whole, but not in part all of the Series A Preferred Stock in cash for a per share amount equal to the then-current liquidation preference multiplied by 200%.

•Upon notice of a change of control, holders of Series A Preferred Stock may elect to convert the shares into Class A common stock. If the holder does not elect to convert shares, the Company will be required to redeem the Series A Preferred Stock in cash for a price per share equal to the greater of (i) the amount of cash and the fair market value of any other property that the holder would have received on an as-converted basis at the then-current conversion price and (ii) 200% of the then-current liquidation preference.

Dividend Rights
The holders of the Series A Preferred Stock are entitled to receive any dividends paid and distributions made to the holders of the Class A common stock to the same extent in kind and amount of consideration that would be payable on an as-converted basis as of the same record date and payment date of any dividend paid or distribution made to the holders of the Class A common stock. Dividends do not accrue on the Series A Preferred Stock.

Voting & Consent Rights
The holders of the Series A Preferred Stock are entitled to vote, as a single class, with the holders of the Class A common stock and the holders of any other class or series of capital stock of the Company then entitled to vote with the Class A common stock on all matters submitted to a vote of the holders of Class A common stock (and, if applicable, holders of any other class or series of capital stock of the Company). The Company requires the affirmative approval of the holders of a majority of the Series A Preferred Stock then outstanding, voting as a single class, in connection with certain corporate actions or events of the Company that may have a material effect on the value of the Series A Preferred Stock.

Governance Rights
So long as Haveli, together with the other permitted transferees, beneficially owns at least 33% of the shares of Series A Preferred Stock purchased by Haveli in connection with the Investment Agreement on an as-converted basis, Haveli will have the right to designate a director nominee for election to the Company’s board of directors.

Liquidation Preference
The Series A Preferred Stock has a liquidation preference of $1,000 per share and ranks senior to the Class A common stock with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. As of September 30, 2024, the Series A Preferred Stock has a liquidation preference of $150.0 million.

The Series A Preferred Stock is not mandatorily redeemable and as such is not required to be classified as a liability. The Series A Preferred Stock is redeemable at the option of the holder starting with the 5-year anniversary of issuance, or redeemable upon notice of change of control. As the redemption of the Series A Preferred Stock is not solely within the Company’s control, it is classified as mezzanine equity in the unaudited condensed consolidated balance sheets.

As of September 30, 2024, the Series A Preferred Stock has a maximum redemption value of $300.0 million. The carrying value of the Series A Preferred Stock is accreted to its maximum redemption value over the seven year term, using the effective interest method. The increases in the redemption amount are recorded with corresponding adjustments against additional paid-in capital, in the absence of retained earnings. For each reporting period, the entire periodic change in the redemption amount is reflected in the computation of net loss per share under the two-class method as being akin to a dividend, by reducing the income (or increasing the loss) attributable to common stockholders.

21
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


In connection with the issuance of the Series A Preferred Stock, the Company issued a warrant (the “Warrant”) to Haveli to purchase up to 11,111,112 shares of Class A common stock, at a purchase price of $4.50 per share. The number of shares and exercise price are subject to anti-dilution adjustments for splits, dividends, capital reorganizations, reclassifications and similar transactions. The Warrant is exercisable for a period of 24 months from issuance, subject to the expiration or early termination of the applicable waiting period under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended. The Warrant has not been exercised as of September 30, 2024. The net proceeds were allocated to the Series A Preferred Stock and the Warrant based on their relative fair values as of the issuance date, in the amount of $130.8 million and $9.1 million, respectively. The proceeds allocated to Warrant were accounted for as paid-in capital.

The Series A Preferred Stock does not contain any embedded features that are required to be bifurcated.
11. Stockholder’s Equity
The following is a summary of the rights of the holders of the Company’s capital stock:

Common Stock
The Company has three classes of authorized common stock: Class A common stock, Class B common stock, and Class C common stock. The rights of the holders of Class A common stock, Class B common stock, and Class C common stock are identical, except with respect to voting and conversion.

Dividend Rights
Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of the Company’s common stock will be entitled to receive dividends out of funds legally available if the Company’s board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that the Company’s board of directors may determine.

Voting Rights
Holders of the Class A common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders, holders of the Class B common stock are entitled to 40 votes for each share held on all matters submitted to a vote of stockholders, and holders of the Class C common stock are not entitled to vote on any matter that is submitted to a vote of stockholders, except as otherwise required by law. The holders of the Class A common stock and Class B common stock will vote together as a single class, unless otherwise required by law. At the completion of the IPO, the Co-Founder and Head of Blend held all of the issued and outstanding shares of the Company’s Class B common stock.

No Preemptive or Similar Rights
The Company’s common stock is not entitled to preemptive rights and is not subject to conversion, redemption, or sinking fund provisions.

Right to Receive Liquidation Distributions
If the Company becomes subject to a liquidation, dissolution, or winding-up, the assets legally available for distribution to the Company’s stockholders would be distributable ratably among the holders of the Company’s common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

Conversion of Class B Common Stock
Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. Shares of Class B common stock will automatically convert into shares of Class A common stock upon sale or transfer except for certain transfers described in the Amended and Restated Certificate of Incorporation, such as certain transfers effected for estate planning or charitable purposes.




22
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


Conversion of Class C Common Stock
After the conversion or exchange of all outstanding shares of the Company’s Class B common stock into shares of Class A common stock, all outstanding shares of Class C common stock will convert automatically into Class A common stock, on a share-for-share basis, on the date or time specified by the holders of a majority of the outstanding shares of Class A common stock, voting as a separate class.
Preferred Stock
Subject to the protective provisions afforded to the holders of the Series A Preferred Stock, the Company’s board of directors has the authority to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by the Company’s stockholders. As of September 30, 2024, the Company had 200,000,000 shares authorized and 150,000 shares of preferred stock issued and outstanding.
Share Repurchase Program
In August 2024, the Company's board of directors authorized the repurchase of up to $25.0 million of the Company’s Class A common stock. Repurchases may be made from time to time through open market repurchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. The repurchase program does not obligate the Company to acquire any particular amount of its Class A common stock, and it may be suspended at any time at the Company’s discretion. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. The share repurchase program has no set expiration date. The Company did not make any share repurchases under the repurchase program during the three months ended September 30, 2024.
12. Stock-Based Compensation
2012 Stock Option Plan
Effective May 1, 2012, the Company adopted the 2012 Stock Plan (the “2012 Plan”). Options granted under the 2012 Plan may be either incentive stock options or nonqualified stock options. Incentive stock options (“ISOs”), within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) may be granted only to employees (including officers and directors). Non-qualified stock options (“NSOs”) may be granted to employees and consultants. The exercise price of ISOs and NSOs shall not be less than 100% of the estimated fair value of the common shares on the date of grant, respectively, as determined by the Company’s board of directors. The exercise price of an ISO granted to a 10% or greater stockholder shall not be less than 110% of the estimated fair value of the common shares on the date of grant. Options generally vest over a period of four years. No further grants may be made under the 2012 Plan.
2021 Equity Incentive Plan
In July 2021, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective on July 14, 2021. The Company’s prior plan, 2012 Plan, was terminated immediately prior to the effectiveness of the 2021 Plan with respect to the grant of future awards.

The 2021 Plan provides for the grant of ISOs, to the Company’s employees and any parent and subsidiary corporations’ employees, and for the grant of NSOs, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), and performance awards to the Company’s employees, directors, and consultants and the Company’s parent and subsidiary corporations’ employees and consultants.

23
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


Subject to the adjustment provisions of and the automatic increase described in the 2021 Plan, a total of 23,000,000 shares of the Company’s Class A common stock were reserved for issuance pursuant to the 2021 Plan, plus 36,101,718 shares of the Company’s Class A common stock reserved for future issuance under the 2012 Plan. Subject to the adjustment provisions of the 2021 Plan, the number of shares available for issuance under the 2021 Plan also includes an annual increase on the first day of each fiscal year beginning on January 1, 2022, equal to the least of (a) 34,500,000 shares of Class A common stock, (b) 5% of the total number of shares of all classes of the Company’s common stock outstanding on the last day of the immediately preceding fiscal year, or (c) such other amount as the Company’s board of directors (or its committee) may determine. Options granted under the 2021 Plan generally vest over periods ranging from one to four years.

A summary of the stock option activity is as follows:
Number of
options
Weighted
average
exercise
price
Weighted
average
remaining
contractual
life
Aggregate
intrinsic
value
(In thousands)(In years)(In thousands)
Balance as of December 31, 202319,946 $4.58 5.62$11,762 
Exercised(538)$1.61 
 
$675 
Canceled and forfeited(1,465)$10.23 
 
 
Balance as of September 30, 202417,943 $4.22 5.19$26,181 
Vested and exercisable as of September 30, 202416,072 $4.25 5.16$23,879 

No options were granted during the three and nine months ended September 30, 2024 and 2023.

The number of options unvested as of September 30, 2024 and December 31, 2023 was 1,871 and 3,172, respectively. The weighted average grant-date fair value of these unvested options was $1.92 and $2.57 per share as of September 30, 2024 and December 31, 2023, respectively.

The total fair value of options vested during the three months ended September 30, 2024 and 2023 was $1.0 million and $2.8 million, respectively. The total fair value of options vested during the nine months ended September 30, 2024 and 2023 was $3.6 million and $9.6 million, respectively.

The aggregate intrinsic value of options exercised during the three and nine months ended September 30, 2024 was $0.1 million and $0.7 million, respectively. The aggregate intrinsic value of options exercised during the three and nine months ended September 30, 2023 was immaterial.

As of September 30, 2024, the total unrecognized stock-based compensation expense for stock options issued under the 2012 Plan and the 2021 Plan was approximately $3.4 million, which is expected to be recognized over a weighted average period of 2 years.
Early Exercise of Common Stock Options
The Company’s board of directors has authorized certain stock option holders to exercise unvested options to purchase shares of Class A common stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s termination of service as a service provider (as defined in the 2012 Plan and the 2021 Plan), at the lower of the fair market value on the date of the repurchase or the original exercise price, until the options are fully vested. The cash proceeds received for unvested shares of Class A common stock are presented within other long-term liabilities in the unaudited condensed consolidated balance sheets.

As of September 30, 2024, no shares of Class A common stock were subject to repurchase. As of December 31, 2023, 123,611 shares of Class A common stock were subject to repurchase, and the cash proceeds related to these shares were $0.4 million.
24
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


Restricted Stock Units
A summary of the Company’s RSU activity and related information is as follows:

Number of RSUs
Weighted
average
grant date fair value per share
(In thousands)
Balance as of December 31, 202320,137 $1.30 
Granted6,604 $2.68 
Vested(8,761)$1.60 
Cancelled and forfeited(1,957)$1.64 
Balance as of September 30, 202416,023 $1.66 

As of September 30, 2024, there was $24.7 million of unrecognized stock-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.2 years. RSUs granted under the 2021 Plan generally vest quarterly over a period of one year from the grant date.

The total fair value of RSUs vested during the three months ended September 30, 2024 and 2023 was $4.3 million and $5.7 million, respectively. The total fair value of RSUs vested during the nine months ended September 30, 2024 and 2023 was $14.0 million and $30.1 million, respectively.
Performance Stock Units
In 2023, the Company’s board of directors granted a total of 5,500,000 restricted stock units with performance vesting conditions (“PSUs”) to certain senior executives. In 2024, a total of 800,000 PSUs were forfeited. The PSUs will vest in four tranches upon continued service and satisfaction of certain market-based performance targets related to the Company’s stock price hurdles. The estimated weighted average grant date fair value of the PSUs was $0.65 per share, which was determined using a Monte Carlo simulation model. The significant assumptions in the Monte Carlo simulation model include the risk-free interest rate, expected volatility of the Company’s stock price, and expected life of the award. The total stock-based compensation expense recognized for PSUs for the three and nine months ended September 30, 2024 was $0.5 million and $1.5 million, respectively. The total stock-based compensation expense recognized for PSUs for the three and nine months ended September 30, 2023 was $0.2 million and $0.3 million, respectively. The total unrecognized compensation expense related to PSUs was $1.4 million as of September 30, 2024, which will be recognized over an estimated weighted average remaining period of 1.6 years.
Non-Plan Co-Founder and Head of Blend Options
In March 2021, the Company’s board of directors granted to its Co-Founder and Head of Blend a stand-alone stock option issued outside of the 2012 Plan covering a maximum of 26,057,181 shares of Class B common stock with an exercise price of $8.58 per share. The award has a 15-year term (subject to earlier termination when shares subject to the award are no longer eligible to vest) and vests upon the satisfaction of a service condition, liquidity event-related performance condition, and performance-based market conditions.

The terms of the award stipulated that if an IPO is completed within 15 months of the date of grant, the first tranche of 1,954,289 shares will vest. The remaining tranches of shares will vest dependent on performance goals tied to the Company’s stock price hurdles with specified expiration dates for each tranche. In July 2021, the first tranche of the Co-Founder and Head of Blend stock option award vested upon completion of the IPO.

The remaining tranches were valued using a Monte Carlo simulation model. The weighted average estimated fair value of the remaining tranches as of the modification date was $3.80 per share based on the following assumptions:
25
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)



Fair value of common stock$18.00
Remaining contractual term (years)14.75
Expected volatility40.00%
Risk-free interest rate1.71%
Expected dividend yield—

The total stock-based compensation expense recognized for this award for each of the three months ended September 30, 2024 and 2023 was $1.5 million. The total stock-based compensation expense recognized for this award for the nine months ended September 30, 2024 and 2023 was $4.4 million and $10.9 million, respectively.

The total unrecognized compensation expense related to the award was $9.6 million as of September 30, 2024, which will be recognized over an estimated weighted average remaining period of 3 years.
Stock-Based Compensation Expense
The Company’s stock-based compensation expense was as follows:

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Cost of revenue$105 $227 $382 $979 
Research and development(1)
2,169 4,090 8,088 17,050 
Sales and marketing862 1,577 2,715 6,291 
General and administrative3,535 3,148 10,828 15,478 
Total$6,671 $9,042 $22,013 $39,798 
____________
(1) Net of $0.8 million and $1.9 million of additions to capitalized internal-use software for the three and nine months ended September 30, 2024, respectively, and none for the three and nine months ended September 30, 2023.
13. Restructuring
Workforce Reduction Plans
In 2023, the Company executed two workforce reduction initiatives. In January 2023, the Company committed to a workforce reduction plan (the “January 2023 Plan”), which eliminated approximately 340 positions, or 28% of the Company’s then-current workforce. In August 2023, the Company committed to an additional workforce reduction plan (the “August 2023 Plan”). The August 2023 Plan eliminated approximately 150 positions, or 19% of the Company’s then-current workforce.
In 2024, the Company continued its workforce reduction initiatives with the elimination of certain additional positions in January (the “January 2024 Plan”) and September (the “September 2024 Plan” and together with the January 2024 Plan, the “workforce reduction plans”). The Company executed these workforce reduction initiatives as part of its broader efforts to improve cost efficiency and better align its operating structure with its business activities, with the focus on streamlining the Company’s title operations as well as its general and administrative functions. The execution of the January 2024 Plan was substantially completed in the second quarter of 2024. The execution of the September 2024 Plan is expected to be substantially completed in the fourth quarter of 2024.
The restructuring charges attributable to the workforce reduction plans amounted to approximately $1.7 million and $2.9 million for the three and nine months ended September 30, 2024, respectively. The restructuring charges attributable to the workforce reduction plans, not including executive transition costs, amounted to approximately $9.1 million and $23.1 million for the three and nine months ended September 30, 2023, respectively. Remaining charges related to the September 2024 plan are not expected to be material.
The restructuring charges for workforce reduction plans consisted primarily of cash expenditures for compensation, severance, and transition payments, employee benefits, payroll taxes and related facilitation costs. The restructuring charges attributable to
26
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


the August 2023 plan also include an accelerated expense of $2.1 million consisting of prepaid cash bonuses issued in the first and second quarter of 2023 to certain employees in lieu of previously committed equity-based awards.
Lease Termination and Abandonment
For the quarter ended September 30, 2024, the Company entered into an agreement to fully terminate one of its leases incurring a net $1.2 million restructuring charge primarily related to the early termination fee, and abandoned another leased facility, incurring a $3.3 million restructuring charge primarily related to accelerated amortization of the right-of-use asset and disposal of the accompanying leasehold improvements. The remaining $3.5 million lease liability related to the abandoned lease facility is presented under Other current liabilities and the Company will continue to make payments under the lease agreement until the end of the lease term on September 30, 2025.
Executive Transition Costs
Effective March 16, 2023, Marc Greenberg stepped down as Head of Finance of the Company, and as the Company’s principal financial officer under Section 16a-1(f) of the Exchange Act. In connection with Mr. Greenberg’s resignation as Head of Finance, the Company entered into a discretionary retention bonus letter with Mr. Greenberg, which provided that the Company would pay Mr. Greenberg a bonus (the “Bonus Payment”) equal to the amount by which the aggregate value of his total compensation is less than $1,458,333 for the period between September 1, 2022 through the March 31, 2023, provided Mr. Greenberg remained continuously employed by the Company through March 31, 2023. The Bonus Payment was made in cash or fully vested shares of Class A Common Stock of Blend of equivalent value, as determined by the Company’s Compensation Committee in its sole discretion. Mr. Greenberg’s last day of employment with Blend was April 3, 2023, and subsequently he received the Bonus Payment in cash in the amount of $0.9 million. In addition to the Bonus Payment, Mr. Greenberg received a severance package, which included 9 weeks of severance and other benefits in accordance with Company practices.

Effective February 1, 2023, Crystal Sumner stepped down as Head of Legal, Compliance, and Risk and Corporate Secretary of the Company. In connection with Ms. Sumner’s departure, the Company entered into a transition agreement with Ms. Sumner, pursuant to which Ms. Sumner received a transition payment equal to 9 weeks of Ms. Sumner’s then-current base salary in accordance with Company practices.

The restructuring charges attributable to the executive transaction costs were $1.1 million for the nine months ended September 30, 2023.
The reconciliation of the restructuring liability balances is as follows:
(In thousands)
Restructuring liability as of December 31, 2022$1,614 
January 2023 Plan charge
14,025 
Executive transition costs1,107 
August 2023 Plan charge (excluding accelerated amortization of prepaid cash bonuses)
7,685 
Settlements(24,331)
Restructuring liability as of December 31, 2023
$100 
January 2024 Plan charge
1,190 
September 2024 Plan charge
1,681 
Settlements(1,875)
Restructuring liability as of September 30, 2024
$1,096 
14. Income Taxes
The provision for income taxes was less than $0.1 million for the three months ended September 30, 2024 and 2023, respectively. The Company recorded a provision for income taxes of $0.1 million and $0.2 million for the nine months ended September 30, 2024 and 2023, respectively. The effective tax rate for the three and nine months ended September 30, 2024 three and nine months ended September 30, 2024 and 2023 was (0.2)%. The effective tax rates differ from the federal statutory rate primarily due to a valuation allowance on the Company’s deferred tax assets.
27
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)



The Company reassessed the ability to realize deferred tax assets by considering the available positive and negative evidence. As of September 30, 2024, the Company concluded that its net deferred tax assets are not more-likely-than-not to be realized and maintained a full valuation allowance against such net deferred tax assets.

As of September 30, 2024, the Company files tax returns in the U.S. federal and various state jurisdictions. Due to the Company’s U.S. net operating loss carryforwards, its income tax returns generally remain subject to examination by federal and most state tax authorities. Beginning in 2022, the Company’s subsidiary in India files income tax returns in India which are subject to examination by local tax authorities. This subsidiary is currently under examination by the tax authorities for the fiscal years ended March 31, 2023 and 2022.
15. Net Loss Per Share
The Company has three classes of authorized common stock for which voting rights differ by class. The Company computes net loss per share using the two-class method required for multiple classes of common stock.

Under the two-class method, net income (loss) attributable to common stockholders for the period is allocated between shares of common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed.

Basic net loss per share is computed by dividing net loss attributable to each class of stockholders by the weighted average number of shares of stock outstanding during the period, adjusted for options early exercised and subject to repurchase.

Diluted loss per share reflects the potential dilution that could occur if securities, including awards issued under the Company’s equity compensation plans or other contracts to issue common stock, were exercised or converted into common stock or resulted in the issuance of common stock (net of any assumed repurchases) that then shared in the earnings of the Company. Diluted net loss per share attributable to the Company is computed by dividing the net loss attributable to the Company by the weighted average number of fully diluted common shares outstanding.

The following table presents the calculation of basic and diluted net loss per share for Class A and Class B common stock. No shares of Class C common stock were issued and outstanding during the periods presented.

Three Months Ended September 30,
20242023
Class A
Common		Class B
Common		Class A
Common		Class B
Common
(In thousands, except per share data)
Numerator:
 
 
 
 
Net loss attributable to Blend Labs, Inc. $(2,404)$(41)$(40,074)$(1,686)
Less: accretion of RNCI to redemption value(1,730)(30)(1,393)(59)
Less: Accretion of Series A Preferred Stock to redemption value
(3,980)(68)— — 
Net loss attributable to Blend Labs, Inc common stockholders$(8,114)$(139)$(41,467)$(1,745)
 
Denominator:
Weighted average common stock outstanding, basic and diluted250,612 4,298 236,464 9,946 
Net loss per share attributable to Blend Labs, Inc.:
Basic and diluted$(0.03)$(0.03)$(0.18)$(0.18)

28
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


Nine Months Ended September 30,
20242023
Class A
Common		Class B
Common		Class A
Common		Class B
Common
(In thousands, except per share data)
Numerator:
Net loss attributable to Blend Labs, Inc. $(41,300)$(1,220)$(142,123)$(6,285)
Less: accretion of RNCI to redemption value(4,612)(136)(4,884)(216)
Less: Accretion of Series A Preferred Stock to redemption value
(6,517)(192)— — 
Net loss attributable to Blend Labs, Inc common stockholders$(52,429)$(1,548)$(147,007)$(6,501)
Denominator:
Weighted average common stock outstanding, basic and diluted245,719 7,258 233,721 10,336 
Net loss per share attributable to Blend Labs, Inc.:
Basic and diluted$(0.21)$(0.21)$(0.63)$(0.63)

The following potential shares of common stock were excluded from the computation of diluted net earnings per share attributable to the Company for the periods presented because including them would have been antidilutive as the Company has reported net loss for each of the periods presented:

As of September 30,
20242023
(In thousands)
Outstanding stock options17,943 22,084 
Early exercised options subject to repurchase— 205 
Non-plan Co-Founder and Head of Blend options26,057 26,057 
Unvested restricted stock units16,023 25,486 
Unvested performance stock awards4,700 4,000 
Common stock warrants11,709 598 
Series A redeemable convertible preferred stock46,154 — 
Total anti-dilutive securities122,586 78,430 
16. Segment Information
The Company’s operating segments are defined in a manner consistent with how the Company manages its operations and how the CODM evaluates the results and allocates the Company’s resources.

Segment gross profit, which is the measure used by the Company’s CODM to evaluate the performance of and allocate resources to its segments, is calculated as segment revenue less segment cost of revenue. The Company does not evaluate performance or allocate resources based on segment assets, and therefore, such information is not presented.

The following table provides information about each reportable segment:

29
Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(in thousands)(in thousands)
Segment revenue:
Software platform$31,066 $26,505 $79,277 $77,590 
Professional services2,038 2,137 6,363 6,087 
Blend Platform segment33,104 28,642 85,640 83,677 
Title segment12,080 11,949 34,971 37,065 
Total revenue$45,184 $40,591 $120,611 $120,742 
Segment gross profit:
Software platform$24,772 $20,830 $62,134 $60,626 
Professional services(272)(800)(1,251)(2,361)
Blend Platform segment24,500 20,030 60,883 58,265 
Title segment1,496 2,033 4,932 3,144 
Total gross profit$25,996 $22,063 $65,815 $61,409 
Operating expenses:
Research and development$10,127 $18,826 $37,226 $67,174 
Sales and marketing9,883 14,494 29,468 48,190 
General and administrative13,140 15,819 39,599 56,146 
Restructuring6,165 9,122 7,355 24,254 
Total operating expenses39,315 58,261 113,648 195,764 
Loss from operations(13,319)(36,198)(47,833)(134,355)
Interest expense— (8,210)(6,747)(23,726)
Other income (expense), net10,710 2,632 11,952 8,746 
Loss before income taxes$(2,609)$(41,776)$(42,628)$(149,335)

17. Strategic Partnership and Sale of Insurance Business
On September 30, 2024, the Company entered into a multi-element transaction which included a strategic partnership agreement as well as the sale of its insurance business. As part of the strategic partnership agreement, the Company granted a five-year term license allowing the partner to integrate its insurance solutions into the Company’s platform for an annual fee plus transaction-based charges. The Company also received $10.1 million in cash proceeds and a warrant to purchase up to 177,516 Class B Units of the partner, at a purchase price of $0.001 per unit (the “Partner Warrant”). The Partner Warrant has a term of ten years and expires on September 30, 2034. The fair value of the Partner Warrant at the time of grant was approximately $0.7 million.

The Company recognized a gain on the sale of insurance business of $9.2 million, net of transaction costs of $0.3 million, which is presented within other income (expense), net in the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2024.

The Company has determined the five-year term license is a performance obligation under ASC 606, Revenue from Contracts with Customers. The Company recognized a deferred revenue liability of $1.0 million related to the performance obligations under the strategic partnership agreement as part of the transaction at closing.
30


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. This discussion contains forward-looking statements that involve risks and uncertainties. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” and other parts of this Form 10-Q and in our Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
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. To realize this vision, we have built a market-leading cloud-based software platform and suite of products for financial services firms that is designed to power the end-to-end consumer journey for any banking product. Our software platform was built in an extensible, modular, and configurable fashion to support continued product expansion. 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.

The development of our business reflects continued product innovation as we continue to attract financial services firms to our software platform and grow with them as they serve consumers. Financial services firms have been shifting for years to a digital-first approach to acquiring consumers, delivering products, and deepening existing consumer relationships. This imperative to compete through digital-first consumer experiences creates a compelling opportunity for Blend. We believe there is a large, untapped opportunity to provide additional product offerings and drive increased transaction volume for financial institutions and consumers using our software platform.

We are continually seeking to enhance the end-to-end banking journeys we power through our software platform. To accelerate the adoption of innovations in our mortgage and home equity products, on June 30, 2021 we acquired 90.1% ownership of Title365, a leading title insurance agency that offers title, escrow and other trustee services.

We recently introduced Composable Origination, which gives our customers the ability to easily configure or build custom workflows from a pre-built set of components, all while leveraging existing infrastructure. Financial services firms can experience Composable Origination by building custom solutions using our Blend Builder Platform, or with pre-built solutions such as Instant Home Equity, Deposit Accounts, Credit Cards and more.

As we navigate through a challenging economic environment, we are focused on customer acquisition, maximizing existing partnerships and product expansion as well as efficient investment and disciplined cost management. We see opportunities for expansion into new markets, including markets outside the United States.
Recent Developments
Industry Trends
The mortgage market is heavily influenced by government policies and overall economic conditions. The real estate environment, including interest rates and the general economic environment, typically impacts the demand for mortgage and mortgage related products. Recent changes in these areas have impacted our results of operations. 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.

Industry forecasters estimate that mortgage origination activity increased in the first nine months of 2024 compared to the same period last year, and predict such increase in activity will continue into the final three months of 2024 and into 2025 compared to the same periods in the prior years, respectively. This increase depends on many factors, such as changes in the Federal Reserve’s policies or pressures in the macroeconomic environment, all of which are uncertain and out of our control. As a large portion of our revenue is driven by mortgage and mortgage related transaction volumes, changes in mortgage origination volumes have had, and are likely to continue to have, material effects on our business.
31


Strategic Partnership and Sale of Insurance Business
On September 30, 2024, we entered into a strategic partnership agreement, whereby we granted a five-year term license allowing the partner to integrate its insurance solutions into our platform for an annual fee plus transaction-based charges. In connection with the partnership agreement, we sold our insurance business to the partner for cash proceeds of $10.1 million and a warrant to purchase up to 177,516 Class B Units of the partner, at a purchase price of $0.001 per unit.
Workforce Reduction Plan
In September 2024, we executed a workforce reduction plan (the “September 2024 Plan”), which eliminated approximately 50 current positions, or 9% of our then-current workforce. The September 2024 Plan further streamlines our title and corporate operations. We incurred approximately $1.7 million in charges in connection with the September 2024 Plan, consisting primarily of cash expenditures for compensation, severance, and transition payments, employee benefits, payroll taxes and related facilitation costs. The execution of the September 2024 Plan is expected to be substantially complete in the fourth quarter of 2024.
Components of Results of Operations
Revenue
Blend Platform
In our Blend Platform segment, we generate revenue from fees paid by customers to access our software platform and complete the transactions. Fees are assessed based on completed transactions, such as a funded loan, new account opening, closing transaction or API call. Completed transaction fees are determined by the number and type of software platform components that are needed to support each product offering. We do not charge for abandoned or rejected applications, even though they cause us to incur costs related to these applications. Arrangements with our customers do not provide the contractual right to take possession of our software at any point in time. Revenue is recognized when access to our platform is provisioned to our customers or as transactions are completed, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. To a lesser extent, we generate revenue from professional services related to the deployment of our platform, premier support services, and consulting services. 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.

Our customers have the ability to access our platform under subscription arrangements, in which customers commit to a minimum number of completed transactions at specified prices over the contract term, or under usage-based arrangements, in which customers prepay a fixed amount in advance, typically annually or semi-annually, based on their anticipated consumption of specified products at specified prices or pay monthly in arrears a variable amount for completed transactions at specified prices. Our subscription and prepaid usage-based arrangements are generally noncancelable, and we may also earn additional overage fees if the number of completed transactions exceeds the contractual amounts. Our usage-based arrangements paid in arrears can generally be terminated at any time by the customer. We recognize revenue ratably for our subscription arrangements because the customer receives and consumes the benefits of our platform throughout the contract period. We recognize fees for usage-based arrangements as the completed transactions are processed using our platform. Over the last year, we have seen a shift away from subscription arrangements towards prepaid multi-year usage-based arrangements in our customer contracts.

Title
In our Title 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. Revenue related to title insurance is recognized net of the amount of consideration paid to the third-party insurance underwriters. Our revenues from escrow, closing, and settlement services are primarily associated with managing the closing of real estate transactions, including the processing of funds on behalf of the transaction participants, gathering and recording the required closing documents, and providing notary and other real estate or title-related activities. Revenue related to these services is recognized at the closing of the underlying real estate transaction. We also offer title services in connection with a borrower default and with the issuance of home equity lines of credit and home equity loans. Revenue for default title services and home equity services is recognized at the time of delivery of the title report.

32


We expect mortgage interest rates will continue to impact the demand for mortgage and mortgage related products, including refinance transactions. In most cases, higher interest rates have led to higher loan rates charged to consumers, which has adversely affected the ability of our customers to generate refinance transaction volumes. Refinance activity was strong in 2020 and 2021 relative to historical averages over the preceding decade; however, an increase in interest rates due to efforts by the Federal Reserve to manage rising inflation resulted in a decline in refinance transactions volume in both 2022 and 2023, resulting in lower title insurance and other services revenue within the Title segment. In September 2024, the Federal Reserve lowered the federal funds rate by 50 basis points, easing monetary policy for the first time in four years. Should the Federal Reserve continue to ease monetary policy and further lower its interest rate target, we expect refinance transaction volumes may increase, which in turn may have a positive impact on Title revenue.
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.

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.

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. The timing of those costs may not be aligned with the revenue recognized. We expect our cost of revenue to continue to increase in dollar amounts as we grow our business and revenue and decrease as a percentage of our revenue over the long term as we achieve greater scale in our business, although the percentage may fluctuate from period to period.
Title
In our Title segment, cost of revenue consists of costs of title, escrow and other trustee services, which represent primarily personnel-related expenses of our Title segment as well as title abstractor, notary, and the cost of recording services provided by external vendors.

Since the cost of revenue for our Title segment is largely variable in nature, we expect that the cost of revenue for this segment will be impacted by the fluctuations in the segment’s revenue and the number of title orders we receive in each period.
Operating Expenses
We have taken actions to manage our operating expenses and focus our investments on initiatives critical to achieving our broader strategy. We expect to see ongoing improvements to our expenses from these actions in the remainder of 2024.

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, unless they qualify as capitalizable internal-use software development costs.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expense, costs of general marketing activities, advertising and promotional activities, travel-related expenses, and allocated overhead costs. 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.
33


General and Administrative
General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expense for our finance, accounting, legal and compliance, human resources, and other administrative teams, certain executives, stock-based compensation expense related to the stand-alone stock option award granted to our Co-Founder and Head of Blend in 2021, professional services fees, including audit, legal and compliance, software and hosting costs, external consulting expenses, and insurance expenses.
Restructuring
Restructuring charges relate to our workforce reduction plans and facilities restructuring actions. Charges related to workforce reduction plans are comprised of cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs. Charges related to facilities restructuring actions are comprised of costs related to early termination of the lease agreement and impairment of the right-of-use asset in connection with the abandonment of the property. Refer to Note 13, Restructuring, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income earned from our investment portfolio. For the nine months ended September 30, 2024, other income (expense), net also includes a gain on sale of insurance business in connection with strategic partnership, an adjustment to the carrying value of investment in non-marketable equity securities, a loss on extinguishment of debt, and a loss on transfer of our subsidiary in India.
Interest Expense
Interest expense relates primarily to debt financing used to fund our acquisition of Title365 and includes interest payable under the terms of the Credit Agreement entered into in connection with the closing of the acquisition of Title365 and amortization of debt discounts and debt issuance costs. In connection with the full repayment of the Term Loan and termination of the Credit Agreement, the final interest payment under the Credit Agreement was fully paid in the quarter ended June 30, 2024.
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.
34


Results of Operations
The following tables set forth our results of operations for the periods presented in dollars and as a percentage of our revenue:

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Revenue
Software platform
$31,066 $26,505 $79,277 $77,590 
Professional services2,038 2,137 6,363 6,087 
Title12,080 11,949 34,971 37,065 
Total revenue45,184 40,591 120,611 120,742 
Cost of revenue(1)
Software platform
6,294 5,675 17,143 16,964 
Professional services2,310 2,937 7,614 8,448 
Title10,584 9,916 30,039 33,921 
Total cost of revenue19,188 18,528 54,796 59,333 
Gross profit25,996 22,063 65,815 61,409 
Operating expenses:
Research and development(1)
10,127 18,826 37,226 67,174 
Sales and marketing(1)
9,883 14,494 29,468 48,190 
General and administrative(1)
13,140 15,819 39,599 56,146 
Restructuring6,165 9,122 7,355 24,254 
Total operating expenses39,315 58,261 113,648 195,764 
Loss from operations(13,319)(36,198)(47,833)(134,355)
Interest expense— (8,210)(6,747)(23,726)
Other income (expense), net10,710 2,632 11,952 8,746 
Loss before income taxes(2,609)(41,776)(42,628)(149,335)
Income tax (expense) benefit(18)(44)(83)(168)
Net loss$(2,627)$(41,820)$(42,711)$(149,503)

(1)Includes stock-based compensation as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Cost of revenue$105 $227 $382 $979 
Research and development(2)
2,169 4,090 8,088 17,050 
Sales and marketing862 1,577 2,715 6,291 
General and administrative3,535 3,148 10,828 15,478 
Total stock-based compensation
$6,671 $9,042 $22,013 $39,798 
____________
(2) Net of $0.8 million and $1.9 million of additions to capitalized internal-use software for the three and nine months ended September 30, 2024, respectively, and none for the three and nine months ended September 30, 2023.
35


Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(as a % of revenue)*
Revenue
Software platform
68 %65 %66 %64 %
Professional services5 5 5 5 
Title27 30 29 31 
Total revenue100 100 100 100 
Cost of revenue
Software platform
14 14 14 14 
Professional services5 7 6 7 
Title23 25 25 28 
Total cost of revenue42 46 45 49 
Gross margin58 54 55 51 
Operating expenses:
Research and development22 47 31 55 
Sales and marketing22 36 24 40 
General and administrative30 39 33 47 
Restructuring14 22 6 20 
Total operating expenses88 144 94 162 
Loss from operations(30)(89)(39)(111)
Interest expense— (20)(6)(20)
Other income (expense), net24 6 10 7 
Loss before income taxes(6)(103)(35)(124)
Income tax (expense) benefit— — — — 
Net loss(6)%(103)%(35)%(124)%
____________
*Certain percentages may not foot due to rounding.
36


Comparison of the Three Months Ended September 30, 2024 and 2023
Revenue and Cost of Revenue

Three Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Segment revenue:
Blend Platform:
Mortgage Suite$21,546 $20,306 $1,240 6 %
Consumer Banking Suite9,520 6,199 3,321 54 %
Professional Services2,038 2,137 (99)(5 %)
Total Blend Platform33,104 28,642 4,462 16 %
Title12,080 11,949 131 1 %
Total revenue$45,184 $40,591 $4,593 11 %
Segment cost of revenue:
Blend Platform$8,604 $8,612 $(8)— %
Title10,584 9,916 668 7 %
Total cost of revenue$19,188 $18,528 $660 4 %
Segment gross profit and gross margin:
Blend Platform$24,500 74 %$20,030 70 %$4,470 22 %
Title1,496 12 %2,033 17 %(537)(26 %)
Total gross profit$25,996 58 %$22,063 54 %$3,933 18 %
Revenue increased $4.6 million, or 11%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, driven by an increase in Blend Platform revenue of $4.5 million, or 16%, and an increase in Title segment revenue of $0.1 million, or 1%. Within Blend Platform revenue, Mortgage Suite revenue increased $1.2 million, or 6%, primarily driven by higher attach rates of our add-on products like close and income verification, and Consumer Banking Suite revenue increased $3.3 million, or 54%, primarily driven by an increase in platform fees, fees from new deployments, and an increase in home equity and close transactions.

Cost of revenue increased $0.7 million, or 4%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily driven by an increase of $0.7 million, or 7% within the Title segment.

Gross profit increased $3.9 million, or 18% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Gross margin was 58% for the three months ended September 30, 2024 compared to 54% for the three months ended September 30, 2023. Within Blend Platform segment, gross profit increased by $4.5 million, while gross margin increased to 74% in the three months ended September 30, 2024, as compared to 70% in the three months ended September 30, 2023, primarily due to higher Blend Platform revenue and flat associated cost of revenue. Within the Title segment, gross profit decreased by $0.5 million, while gross margin decreased to 12% in the three months ended September 30, 2024, as compared to 17% in the three months ended September 30, 2023, primarily due to an increase in cost of revenue from higher vendor and technology costs while revenue remained flat.
37


Operating Expenses
Three Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Operating expenses:
Research and development$10,127 $18,826 $(8,699)(46 %)
Sales and marketing9,883 14,494 (4,611)(32 %)
General and administrative13,140 15,819 (2,679)(17 %)
Restructuring6,165 9,122 (2,957)(32 %)
Total operating expenses$39,315 $58,261 $(18,946)(33 %)
Research and Development
Research and development expenses decreased $8.7 million, or 46%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily due to a $4.2 million capitalization of internal-use software development costs, a $3.0 million decrease in personnel related expenses, and a $1.1 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, and a $0.3 million decrease in software and hosting costs.
Sales and Marketing
Sales and marketing expenses decreased $4.6 million, or 32%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily due to a $2.1 million decrease in personnel related expenses and a $0.7 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $1.4 million decrease in commissions, a $0.3 million decrease in software and hosting costs, and a $0.2 million decrease in advertising and promotion expenses.
General and Administrative
General and administrative expenses decreased $2.7 million, or 17%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily due to a $1.4 million decrease in personnel related expenses attributable to a decrease in headcount related to our restructuring actions, a $0.9 million decrease in external consulting expenses, and a $0.4 million decrease in insurance expenses.
Restructuring
Restructuring expenses decreased $3.0 million, or 32%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to the execution of the August 2023 workforce reduction plan, which was larger than the September 2024 workforce reduction plan, which was partially offset by facilities-related restructuring charges incurred for three months ended September 30, 2024. The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs.
38


Interest Expense
Three Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Interest expense$— $(8,210)$8,210 (100 %)
Interest expense decreased $8.2 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to the optional prepayment of the outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million on November 27, 2023 and repayment of all remaining amounts outstanding and payable under the Credit Agreement in an aggregate amount of $146.1 million on April 29, 2024. The borrowings under the Credit Agreement accrued interest at a floating rate which could be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%. The effective interest rate on our Term Loan was approximately 14.55% as of April 29, 2024, the date of its termination.
Other Income (Expense), net
Three Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Other income (expense), net$10,710 $2,632 $8,078 307 %
Other income (expense), net increased $8.1 million, or 307%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to an $9.2 million gain on sale of insurance business in connection with the strategic partnership recognized in the three months ended September 30, 2024, offset by a $1.3 million decrease in interest income on our investment portfolio due to a smaller invested cash balance in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.
Income Tax Expense
Three Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Income tax expense$(18)$(44)$26 (59 %)
The decrease in income tax expense for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was immaterial.
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Comparison of the Nine Months Ended September 30, 2024 and 2023
Revenue and Cost of Revenue


Nine Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Segment revenue:
Blend Platform:
Mortgage Suite$55,078 $60,371 $(5,293)(9 %)
Consumer Banking Suite24,199 17,219 6,980 41 %
Professional Services6,363 6,087 276 5 %
Total Blend Platform85,640 83,677 1,963 2 %
Title34,971 37,065 (2,094)(6 %)
Total revenue$120,611 $120,742 $(131)— %
Segment cost of revenue:
Blend Platform$24,757 $25,412 $(655)(3 %)
Title30,039 33,921 (3,882)(11 %)
Total cost of revenue$54,796 $59,333 $(4,537)(8 %)
Segment gross profit and gross margin:
Blend Platform$60,883 71 %$58,265 70 %$2,618 4 %
Title4,932 14 %3,144 8 %1,788 57 %
Total gross profit$65,815 55 %$61,409 51 %$4,406 7 %
Revenue remained flat for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven by the offsetting impact of a decrease in Title segment revenue of $2.1 million, or 6%, primarily due to the lower volume of title orders, and an increase in Blend Platform revenue of $2.0 million, or 2%. Within Blend Platform revenue, Mortgage Suite revenue decreased $5.3 million, or 9%, primarily due to the lower volume of mortgage banking transactions with our customers, Consumer Banking Suite revenue increased $7.0 million, or 41%, primarily due to the increase in home equity transactions and incremental platform fees, due to new deployments, and an increase in attach rates of our digital closing solution, and Professional Services revenue increased by $0.3 million, or 5%, primarily due to an increase in professional services associated with the support of our platform.

Cost of revenue decreased $4.5 million, or 8%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven by a decrease of $3.9 million, or 11% within the Title segment, primarily due to a decrease in personnel related expenses, attributable to a decrease in headcount related to our restructuring actions, as well as the lower volume of title orders, and a decrease in Blend Platform cost of revenue of $0.7 million, or 3%, primarily due to the lower volume of mortgage banking transactions.

Gross profit increased $4.4 million, or 7% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Gross margin was 55% for the nine months ended September 30, 2024 compared to 51% for the nine months ended September 30, 2023. Within Blend Platform segment, gross profit increased by $2.6 million, while gross margin increased to 71% in the nine months ended September 30, 2024 as compared to 70% in the nine months ended September 30, 2023. The increase in gross profit was primarily due to lower cost of revenue. Within the Title segment, gross profit increased by $1.8 million while gross margin increased to 14% in the nine months ended September 30, 2024 as compared to 8% in the nine months ended September 30, 2023 due to operating efficiencies and ongoing cost optimizations.
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Operating Expenses
Nine Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Operating expenses:
Research and development$37,226 $67,174 $(29,948)(45 %)
Sales and marketing29,468 48,190 (18,722)(39 %)
General and administrative39,599 56,146 (16,547)(29 %)
Restructuring7,355 24,254 (16,899)(70 %)
Total operating expenses$113,648 $195,764 $(82,116)(42 %)
Research and Development
Research and development expenses decreased $29.9 million, or 45%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily due to a $12.6 million decrease in personnel related expenses and a $7.0 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $9.0 million decrease due to the capitalization of internal-use software development costs and a $1.3 million decrease in software and hosting costs.
Sales and Marketing
Sales and marketing expenses decreased $18.7 million, or 39%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily due to a $9.5 million decrease in personnel related expenses and a $3.6 million decrease in stock-based compensation expense attributable to a decrease in headcount, in each case, related to our restructuring actions, a $2.7 million decrease in commissions, a $1.3 million decrease in advertising and promotion expenses, a $1.0 million decrease in software and hosting costs and a $0.5 million decrease in trade shows and conference costs.
General and Administrative
General and administrative expenses decreased $16.5 million, or 29%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was due to a $4.6 million decrease in stock-based compensation expense, primarily attributable to vesting of the second tranche of Head of Blend options in 2023 and a decrease in headcount related to our restructuring actions, which also contributed to a $5.7 million decrease in personnel related expenses, a $1.9 million decrease in external consulting expenses, a $1.7 million decrease in insurance expenses, a $1.4 million decrease in professional and outside services costs and a $1.4 million decrease in software and hosting costs.
Restructuring
Restructuring expenses decreased $16.9 million, or 70%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to the execution of the January 2023 and August 2023 workforce reduction plans, which were larger than the January 2024 and September 2024 workforce reduction plans. This decrease in workforce-related restructuring expenses was partially offset by an increase in facilities-related restructuring charges incurred for the nine months ended September 30, 2024. The costs related to each workforce reduction plan included cash expenditures for compensation and severance payments, executive transition costs, employee benefits, payroll taxes and related facilitation costs.
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Interest Expense
Nine Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Interest expense$(6,747)$(23,726)$16,979 (72 %)
Interest expense decreased $17.0 million, or 72%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to the optional prepayment of the outstanding Term Loan under the Credit Agreement in an aggregate principal amount of $85.0 million on November 27, 2023 and repayment of all remaining amounts outstanding and payable under the Credit Agreement in an aggregate amount of $146.1 million on April 29, 2024. The borrowings under the Credit Agreement accrued interest at a floating rate which could be, at our option, either (i) an adjusted Term SOFR rate for a specified interest period plus an applicable margin of 7.50% or (ii) a base rate plus an applicable margin of 6.50%. The effective interest rate on our Term Loan was approximately 14.55% as of April 29, 2024, the date of its termination.
Other Income (Expense), net
Nine Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Other income (expense), net$11,952 $8,746 $3,206 37 %
Other income (expense), net increased $3.2 million, or 37%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily due to an $9.2 million gain on sale of insurance business in connection with the strategic partnership, a $4.4 million gain on investment on non-marketable equity securities due to an observable price change, offset by a $5.5 million loss on extinguishment of debt recognized in the nine months ended September 30, 2024, a $4.6 million decrease in interest income on our investment portfolio due to a smaller invested cash balance in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, and a $0.6 million loss on transfer of our subsidiary in India.
Income Tax Expense
Nine Months Ended September 30,
20242023
$ Change
% Change
(In thousands)
Income tax expense$(83)$(168)$85 (51 %)
The decrease in income tax expense for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was immaterial.
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily through proceeds from the issuance of our stock and warrants and cash generated from the sale of our product offerings, as well as debt financing. As of September 30, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $116.8 million. 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.

We have generated significant losses from operations and negative cash flows from operating activities in the past as reflected in our accumulated deficit of $1,384.1 million as of September 30, 2024. We may incur operating losses in the future due to the investments that we intend to make in our business and pressures on revenue growth due to the recent macroeconomic environment, and as a result, we may require additional capital resources to grow our business.

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Share Repurchase Program

In August 2024, we announced the authorization of a share repurchase program for the repurchase of shares of our Class A common stock, in an aggregate amount up to $25 million. Repurchases may be made at out discretion from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements, and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our Class A common stock under this authorization. The share repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares of our Class A common stock. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. During the three and nine months ended September 30, 2024, we did not repurchase any of our Class A common stock under our share repurchase program. As of September 30, 2024, approximately $25 million remained authorized and available under our share repurchase program for future share repurchases. Please refer to Note 11, Stockholder’s Equity, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Preferred Stock Investment
On April 29, 2024, we entered into the Investment Agreement with Haveli and issued 150,000 shares of the Company’s Series A Preferred Stock for an aggregate purchase price of $150.0 million. In connection with the issuance of the Series A Preferred Stock, we issued the Warrant to Haveli to purchase up to 11,111,112 shares of Class A common stock, at a purchase price of $4.50 per share of Class A common stock. The Warrant is exercisable for a period of 24 months from issuance.

Credit Agreement
In connection with our acquisition of Title365, on June 30, 2021, we entered into a credit agreement (as amended from time to time, the “Credit Agreement”) that provided for a $225.0 million term facility and a $25.0 million revolving facility. 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. On November 27, 2023, we entered into the Second Amendment to the Credit Agreement (the “Second Amendment”), which, among other things, terminated the revolving facility and amended the maturity date of the term facility to provide for a springing maturity extension to June 30, 2027, in the event that certain conditions are satisfied. These conditions were not met as of the termination date of the Credit Agreement. In connection with the Second Amendment, we opted to prepay the outstanding term facility under the Credit Agreement in an aggregate principal amount of $85.0 million. In connection with the issuance of the Series A Preferred Stock, on April 29, 2024, we paid approximately $146.1 million to repay all amounts outstanding and payable under the Credit Agreement in full, and terminated the Credit Agreement.
Material Cash Requirements
After the termination of the Credit Agreement, our material cash requirements arising from known contractual and other obligations primarily relate to lease obligations for our office locations and purchase commitments. Other than the changes in our lease obligations described in Note 7, Leases, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there have been no significant changes in our material cash requirements from the contractual obligations described in our Annual Report on Form 10-K for the year ended December 31, 2023.
In September 2024, we continued our workforce reduction initiatives (the “September 2024 Plan”). The September 2024 Plan eliminated approximately 50 current positions, or 9% of our then-current workforce. We incurred approximately $1.7 million in charges in connection with the September 2024 Plan. The execution of the September 2024 Plan is expected to be substantially complete in the fourth quarter of 2024. The eliminated positions represent annualized compensation expenses of approximately $7.9 million.

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We believe that current cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next 12 months. Our future capital requirements, however, will depend on continued growth in our customer base, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced products and features, the continuing market adoption of Blend’s software platform, and the effectiveness of our efforts to improve cost efficiency. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights; additionally, we may repurchase shares of our Class A common stock from time to time under our share repurchase program. In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition would be adversely affected. 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:
Nine Months Ended September 30,
20242023
(In thousands)
Net cash used in operating activities$(8,458)$(106,930)
Net cash provided by investing activities47,284 74,069 
Net cash used in financing activities(14,739)(4,837)
Effect of exchange rates on cash, cash equivalents, and restricted cash(5)(10)
Net increase (decrease) in cash, cash equivalents, and restricted cash$24,082 $(37,708)
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.

Net cash used in operating activities for the nine months ended September 30, 2024 and 2023 was $8.5 million and $106.9 million, respectively. The decrease in cash used in operations reflects our net loss adjusted for noncash items, such as charges associated with stock-based compensation, depreciation and amortization, gain on investment in equity securities, amortization of deferred contract costs, amortization of operating lease right-of-use assets, and amortization of debt discount and issuance costs on our long-term debt, loss on debt extinguishment, gain on sale of insurance business, and changes in operating assets and liabilities. Fluctuations in operating assets and liabilities are affected primarily by changes in trade and other receivables, prepaid expenses and other current assets, accrued compensation, deferred revenue, accounts payable and other liabilities.

Cash Provided by Investing Activities
Net cash provided by investing activities during the nine months ended September 30, 2024 was $47.3 million, which was primarily due to sales of marketable securities of $100.3 million and maturities of marketable securities of $41.9 million, $9.1 million proceeds from sale of insurance business, offset by $96.4 million used in the purchase of marketable securities and $7.3 million in additions of property and equipment, primarily related to capitalized internal-use software development costs.

Net cash provided by investing activities during the nine months ended September 30, 2023 was $74.1 million, which was primarily due to the maturities of marketable securities of $277.9 million, offset by purchases of $203.3 million of marketable securities and $0.5 million in purchases of property and equipment.

Cash Used in Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2024 was $14.7 million, primarily consisting of $144.5 million repayment of long-term debt, $9.5 million payment of issuance costs related to the Series A Preferred Stock and the Warrant, payment of taxes related to net share settlement of equity awards of $11.0 million, offset by $149.4 million proceeds from the issuance of Series A Preferred Stock and the Warrant, and proceeds from the exercises of stock options of $0.9 million.
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Net cash used in financing activities for the nine months ended September 30, 2023 was $4.9 million, primarily consisting of payment of taxes related to net share settlement of equity awards.

Contingent Obligations
We administer escrow and trust deposits held at third-party financial institutions representing funds received under real estate contracts, escrowed funds received under escrow agreements, and/or undisbursed amounts received for settlement of mortgage and home equity loans. Cash held for these purposes was approximately $23.2 million, net of outstanding checks in transit of $35.8 million as of September 30, 2024. These funds are not considered assets of ours and, therefore, are not included in our unaudited condensed consolidated balance sheet; however, we are contingently liable for the disposition of these funds on behalf of consumers.

As of September 30, 2024, we did not have any other relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other purposes.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with the U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of our condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected.

There have been no material changes to our critical accounting estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2023.
Recent Accounting Pronouncements
Refer to Note 2, Summary of Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks in the ordinary course of our business. These risks primarily include:
Interest Rate Risk
We had cash and cash equivalents of $55.0 million and marketable securities and other investments of $61.7 million as of September 30, 2024, which consisted of bank deposits, money market funds, U.S. treasury and agency securities and commercial paper. The cash and cash equivalents are held primarily for working capital purposes. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. Such interest-earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income have not been significant. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. 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. On April 29, 2024, we repaid in full all amounts outstanding and payable under the Term Loan.
Inflation Risk
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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.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures were effective as of September 30, 2024.

Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in legal proceedings or be subject to claims arising in the normal course of business. We 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.

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. The results of any litigation cannot be predicted with certainty, particularly in the areas of unsettled and evolving law in which we operate, and an unfavorable resolution in any legal proceedings could materially affect our future business, financial condition, or results of operations. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
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ITEM 1A. RISK FACTORS
Our business involves significant risks, some of which are described below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our unaudited condensed consolidated financial statements and related notes. Any of the following risks could have an adverse effect on our business, results of operations, financial condition, or prospects, and could cause the trading price of our Class A common stock to decline. Our business, financial condition, results of operations, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. If any of the risks actually occur, our business, financial condition, results of operations, and prospects could be adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment. Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.
Risk Factors Summary
The risks and uncertainties to which our business is subject include, but are not limited to, the following:
•Our business is substantially dependent on revenue from the financial services industry and is therefore subject to risks impacting the mortgage industry and the larger financial services industry;
•Increases in market interest rates have, and will likely continue to, adversely affect our business, financial condition, and results of operations;
•Unfavorable conditions in our industry or the global economy or reductions in technology spending could limit our ability to grow our business and adversely affect our financial conditions and results of operations;
•We have a history of net losses, and we may not be able to achieve or maintain profitability in the future;
•A large percentage of our revenue is concentrated with a small number of key customers, and if our relationships with any of these key customers were to be terminated or the level of business with them significantly reduced over time, our business, financial condition, results of operations, and future prospects would be adversely affected;
•If we fail to retain our existing customers or to acquire new customers in a cost-effective manner, or if our customers fail to maintain their utilization of our products and services, our revenue may decrease and our business, financial condition, and results of operations could be adversely affected;
•We face intense competition, and if we are unable to compete effectively, our business, financial condition, and results of operations could be adversely affected;
•We have 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 dispositions or we may enter into partnerships, strategic collaborations, joint ventures or licensing agreements and investments, and we face
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risks related to execution and the integration of such acquisitions or dispositions, including our acquisition of Title365, or investments and the management of any associated growth;
•The impairment of intangible assets, goodwill, and other assets arising from any future acquisitions or investments may have an adverse effect on our business, financial condition, and results of operations;
•We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all;
•A cyberattack, security breach or incident affecting us or the third parties we rely on or partner with could expose us or our customers and consumers to a risk of loss or misuse of confidential information and have an adverse effect on our reputation, brand, business, financial condition, and results of operations;
•We may be subject to claims, lawsuits, government investigations, and other proceedings that may adversely affect our business, financial condition, and results of operations;
•Our customers are, and in some cases we are or may be, subject to, and we facilitate compliance with, a variety of federal, state, and local laws, including those related to consumer protection and financial services;
•We depend on the interoperability of our platform across third-party applications and services that we do not control;
•Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations;
•The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment; and
•The multi-class structure of our common stock has the effect of concentrating voting power with Nima Ghamsari, Head of Blend, Co-Founder, and Chair of our board of directors, which will severely limit your ability to influence or direct the outcome of matters submitted to our stockholders for approval, including the election of our board of directors, the adoption of amendments to our certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction;
•The holders of our Series A Preferred Stock will be entitled to vote on an as-converted to Class A common stock basis and have rights to approve certain actions. Additionally, Haveli may exercise influence over us through its ability to designate a member of our board of directors;
•The issuance of shares of our Series A Preferred Stock reduces the relative voting power of holders of our Class A common stock, and the conversion of those shares into shares of our Class A common stock would dilute the ownership of Class A common stockholders and may adversely affect the market price of our Class A common stock; and
•Our Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to the rights of, our Class A common stockholders, which could adversely affect our liquidity and financial condition.
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.
A substantial majority of the transactions enabled through our platform and title orders processed relate to mortgage loans and refinances, and our financial prospects depend significantly on the financial services industry ecosystem. Recently, there has been significant volatility and instability among banks and financial institutions. For example, in March 2023 Silicon Valley Bank (“SVB”), Signature Bank, Silvergate Capital Corp. and First Republic Bank have
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each entered receivership and Credit Suisse Group AG was acquired to prevent its failure. These events, and others have resulted in significant uncertainty, including concerns about systemic risks and we cannot predict the impacts on the financial services industry. Certain of our financial services customers have experienced downturns, which may impact the amount they spend with us. 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. In addition, increased competition to financial services firms from challenger banks and technology disruptors as well as decreases in consumer demand in the financial services industry in general could adversely affect the demand for our product and, in turn, the number of customers and their consumers using our platform.
The mortgage market is heavily influenced by government policies and overall economic conditions. The real estate environment, including interest rates and the general economic environment, typically impacts demand for mortgage and mortgage-related products. Increases 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 2022 and a further decline in 2023. Industry forecasters estimate that mortgage origination activity increased in the first nine months of 2024 compared to the same period last year, and predict such increase in activity will continue into the final three months of 2024 and into 2025 compared to the same periods in the prior years, respectively. This increase depends on many factors, such as changes in the Federal Reserve’s policies or pressures in the macroeconomic environment, all of which are uncertain and out of our control. As a large portion of our revenue is driven by mortgage and mortgage-related transaction volumes, changes in mortgage origination volumes have had, and are likely to continue to have, material effects on our business. The number of mortgage loans and refinances has been and may continue to be affected by negative trends in the general economy in the United States and abroad, including conditions resulting from changes in gross domestic product, financial and credit market fluctuations, the potential recessionary environment and macroeconomic uncertainty, increased interest rates, the availability and cost of credit, reductions in business and consumer confidence, stock market volatility, increased unemployment, political turmoil, pandemics, natural catastrophes, warfare, such as the current war in Ukraine and the potential effects of sanctions, the current conflict in the Middle East, and terrorist attacks on the United States, Europe, the Middle East region, the Asia Pacific region or elsewhere, and any such decrease in mortgage origination volumes is likely to have an adverse impact on our business.
Increases in market interest rates have, and will likely continue to, adversely affect our business, financial condition, and results of operations.
Increasing interest rates have adversely impacted the spending levels of consumers and their ability and willingness to borrow money. In most cases, higher interest rates have led to higher loan rates charged to consumers, which has adversely affected the ability of our customers to generate volume and in turn, the number of transactions enabled through our platform and thus our ability to generate revenue from such transactions. The Federal Reserve raised the federal funds rate by an aggregate of 525 basis points from March 2022 until July 2023. As a result of such interest rate increases, consumers and financial services firms were less inclined to borrow money for mortgages, and to refinance existing mortgages, which resulted in less engagement with our platform and/or our services. In September 2024, the Federal Reserve lowered the federal funds rate by 50 basis points, easing monetary policy for the first time in four years. Notwithstanding this recent interest rate decrease, we have experienced in the past, and may continue to experience in the future, a reduction in the volume of transactions enabled through our platform and the value of title orders processed. In addition, while we have cut expenses to align our business to the operating environment, revenue generated from such transactions may decline faster than our ability to reduce expenses, and such declines have and may continue to adversely affect our business, financial condition, and results of operations. Should the Federal Reserve continue to ease monetary policy and further lower its interest rate target, loan rates charged to consumers may decrease, which in turn may have a positive impact on overall mortgage origination activity, but such actions by the Federal Reserve or consumers are speculative and difficult to predict with certainty.
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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 condition and results of operations.
Our results of operations have and are expected to continue to vary based on the impact of changes in our industry or the U.S. economy on us or our customers. Our revenue growth and potential profitability depend on demand for our solutions. Economic uncertainties have and could continue to adversely affect our business and results of operations. Negative conditions in the general economy in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, the potential recessionary environment and macroeconomic uncertainty, increased interest rates, the availability and cost of credit, reductions in business and consumer confidence, stock market volatility, increased unemployment, political turmoil, pandemics, natural catastrophes, warfare, such as the current war in Ukraine and the potential effects of sanctions, the current conflict in the Middle East, and terrorist attacks on the United States, Europe, the Middle East region, the Asia Pacific region or elsewhere, has caused and could further cause a decrease in lending activity and business investments, including spending on technology, and as a result, negatively affect the growth of our business. To the extent our solutions are perceived by customers and potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in general technology spending. Also, competitors, some of whom are larger and more established than we are, may respond to market conditions by lowering prices and attempting to lure away our customers. We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. 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.
We have incurred net losses in each period since our inception in 2012, and we may not be able to achieve or maintain profitability in the future. As of December 31, 2023, we had an accumulated deficit of $1,341.6 million. We expect our losses to continue as we expect to incur significant costs and invest significant additional funds towards sustaining and growing our business and operating as a public company. We have expended and expect to continue to expend substantial financial and other resources on product development, including investments in our product, engineering, and design teams and the development of new products and new functionality for our existing products and our platform; our technology infrastructure, including systems architecture, management tools, scalability, availability, performance, and security, as well as disaster recovery measures; our sales, marketing, and customer success organizations; acquisitions or strategic investments; and general administration, including legal and accounting expenses. These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. In addition, there can be no assurance that we will be able achieve our projected cost savings in connection with any of our previously announced workforce reductions. In the past, we have also incurred impairment charges that have adversely impacted our U.S. GAAP financial results. In addition, failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flows on a consistent basis. In light of increasing interest rates and other factors, the volume of transactions enabled through our platform and, as a result, revenue generated from such transactions, may decline faster than our ability to reduce expenses. Additionally, in an inflationary environment, our costs may increase, and we may not be able to increase the pricing of our products accordingly, which could adversely impact our financial performance. If we are unable to successfully address these risks and challenges as we encounter them, our business, financial condition, and results of operations could be adversely affected.
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.
Historically, a relatively small number of our customers have accounted for a significant portion of our revenue. For 2023, our top five customers in the Blend Platform segment accounted for 31.9% of the segment revenue, and as of December 31, 2023, we had 20 customers in the Blend Platform segment generating more than $1 million in annual revenue, which represented 60.4% of the segment revenue in 2023. Additionally, we rely on certain of our
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customers, including Mr. Cooper, for a significant portion of our title transaction volumes. For example, for 2023, our top five customers in the Title segment accounted for 71.9% of the segment revenue, with Mr. Cooper accounting for 49.8% of the segment revenue. As of December 31, 2023, we had 7 customers in the Title segment generating more than $1 million in annual revenue, which represented 77.5% of the segment revenue in 2023. We have experienced lower than anticipated title transaction volume since the closing of our Title365 acquisition and may experience further reductions in the future. Reductions in title transaction volume from any such customers, or a deterioration in or termination of our relationship with any such customers, would likely have a significant impact on our title business. The concentration of a significant portion of our business and transaction volume with a limited number of customers, or type of customer or industry, exposes us disproportionately to any of those customers choosing to no longer partner with us or choosing to partner with a competitor, to the economic performance or market share of those customers or industry, including as a result of challenger banks or technology disruptors, or to any events, circumstances, or risks affecting such customers or industry. Additionally, because we do not have long-term contractual financial commitments with many of our customers, a material modification in the financial operations of a key customer could affect our transaction volume with that customer and therefore our revenue growth. 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 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.
Our ability to maintain and grow our business will depend in part on our success in maintaining successful relationships with our customers. If any of our customers were to suspend, limit, or cease their operations or otherwise terminate their relationships with us, the number of transactions enabled through our platform could decrease and our revenue and revenue growth rates could be adversely affected. In addition, having a diversified mix of customers is important to mitigate risk associated with changing consumer spending behavior, economic conditions, and other factors that may affect a particular type of financial services firm or industry. While we expect that the revenue from our largest customers will decrease over time as a percentage of our total revenue as we generate more revenue from other customers, we also believe that revenue from our largest customers may continue to account for a significant portion of our revenue, at least in the near term.

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. Our ability to retain and grow our relationships with our customers depends on the willingness of customers to partner with us. The attractiveness of our platform to customers depends upon, among other things: our brand and reputation, the amount of fees that we charge, our ability to sustain our value proposition to our customers, products and services offered by competitors, and our ability to perform under, and maintain, our customer agreements. Many of our customers do not have long-term contractual financial commitments to us and, therefore, many of our customers may reduce or cease their use of our products and services at any time without penalty or termination charges. Additionally, a subset of our customers can generally terminate their agreements with us without cause with limited requirements to provide prior notice. Our customers could decide to stop working with us and cease processing transactions through our platform or enter into exclusive or more favorable relationships with our competitors. Further, any downturn in the financial services industry may cause our customers to reduce their spending on lending technology or to seek to terminate or renegotiate their agreements with us. Our customers have no obligation to renew their subscriptions with us after the expiration of the initial or current subscription term, and our customers, if they choose to renew at all, may renew on pricing or other contract terms that are less favorable to us or otherwise ask to modify their agreement terms in a manner that is cost prohibitive to us. Our renewal rates may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our pricing or our products or their ability to continue their operations or spending levels. In addition, our customers’ regulators may require that they terminate or otherwise limit their business with us, or impose regulatory pressure limiting their ability to do business with us. If any of our customers were to stop working with us, suspend, limit, or cease their operations, do not renew their subscriptions with us on similar pricing terms,
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or otherwise terminate their relationships with us, the number of loans and other transactions enabled through our platform could decrease and our revenue and revenue growth rates could be adversely affected.

Additionally, as the markets for our cloud-based banking software continue to develop, we may be unable to attract new customers based on the same pricing models that we have used historically. Large or influential financial services firms may demand more favorable pricing or other contract terms from us. As a result, we may in the future be required to change our pricing model, reduce our prices, or accept other unfavorable contract terms, any of which could adversely affect our revenue and revenue growth rate.

We could in the future have disagreements or disputes with any of our customers, which could negatively impact or threaten our relationship with them. In our agreements with customers, we make certain representations and warranties and covenants concerning our performance and our compliance with certain laws and regulations applicable to the services to be provided by us to our customers. If those representations and warranties were not accurate when made or if we fail to perform a covenant, we may be liable for any resulting damages, including potentially any losses associated with impacted transactions, and our reputation and ability to continue to attract new customers could be adversely affected. Additionally, our customers may engage in mergers, acquisitions or consolidations with each other, our competitors or with third parties, any of which could be disruptive to our existing and prospective relationships with our customers.

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.
We face intense competition, and if we are unable to compete effectively, our business, financial condition, and results of operations could be adversely affected.
The market in which we operate is intensely competitive and characterized by shifting user preferences, fragmentation, and frequent introductions of new services and offerings. The primary competitors for our software platform include point solution vendors, providers of back office software with proprietary digital capabilities, and systems developed internally at financial services firms. Our current and future competitors may enjoy competitive advantages, such as greater name recognition, longer operating histories, greater category share in certain markets, market-specific knowledge, established relationships with financial services firms, including those with larger market share than our customers, and larger existing user bases in certain markets, more successful marketing capabilities, and substantially greater financial, technical, and other resources than we have. Greater financial resources and product development capabilities may allow these competitors to respond more quickly to new or emerging technologies and changes in financial services firm preferences that may render our platform less attractive or obsolete. Our competitors may also make acquisitions or establish cooperative or other strategic relationships among themselves or with others, introduce new offerings with competitive price and performance characteristics or undertake more aggressive marketing campaigns than ours. Additionally, many of our competitors are well capitalized and offer discounted services, lower pricing, incentives, discounts and promotions, and innovative platforms and offerings, which may be more attractive than those that we offer. Further, our customers may decide to develop their own solutions that compete with ours.

As we and our competitors introduce new offerings and invest more in digital capabilities, and as existing offerings evolve, we expect to become subject to additional competition. Our competitors may adopt certain of our platform features or may adopt innovations that our customers value more highly than ours, which would render our platform less attractive and reduce our ability to differentiate our platform. Increased competition could result in, among other things, a reduction of the revenue we generate from the use of our platform from reduced demand or pricing pressures, the number of customers, the frequency of use of our platform, and our margins. For all of these reasons, we may not be able to compete successfully. If we lose existing customers, fail to attract new customers, or are forced to make pricing concessions as a result of increased competition, our business, financial condition, and results of operations could be adversely affected.
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We have previously experienced periods of rapid growth; however, our growth rate has fluctuated and may continue to fluctuate in the future.
We have previously experienced rapid growth, but in recent periods, our growth rate has declined primarily due to macroeconomic factors, including an unfavorable interest rate environment, decreased housing affordability, and uncertain worldwide political and economic conditions. Our historical revenue growth rate and financial performance may not be indicative of our future performance. For the years ended December 31, 2023, 2022 and 2021, our Blend Platform segment revenue was $109.5 million, $121.4 million, and $134.2 million, respectively, representing a 10% year-over-year decline in each of these periods. 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. However, we are also impacted by macroeconomic factors over which we have no control, which have adversely impacted our business in recent periods.

You should not rely on our revenue or key business metrics for any previous quarterly or annual period as any indication of our financial or operating performance in future periods. In particular, our revenue growth rate has declined in prior periods, and we expect it to fluctuate over future periods. 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 that impact our business, or if we fail for any reason to capitalize on growth opportunities and the maturation of our business, among others. We also expect to continue to make investments in the development and expansion of our business, which may not result in increased revenue or growth. If our revenue growth rate declines, investors’ perceptions of our business and the trading price of our Class A common stock could be adversely affected.
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.
We were founded in 2012 and have previously experienced periods of rapid growth, but due primarily to macroeconomic factors, including an unfavorable interest rate environment, decreased housing affordability, and uncertain worldwide political and economic conditions, our growth rate and revenue declined in recent periods. Our limited operating history may make it difficult to make accurate predictions about our future performance. Assessing our business and future prospects may also be difficult because of the risks and difficulties we face. 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;
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•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.

If we fail to address the risks and difficulties that we face, including those associated with the challenges listed above as well as those described elsewhere in this “Risk Factors” section, our business, financial condition, and results of operations could be adversely affected. Further, because we have limited historical financial data and operate in a rapidly evolving market, any predictions about our future revenue and expenses may not be as accurate as they would be if we had a longer operating history or operated in a more predictable market. We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories in rapidly changing industries. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition, and results of operations could be adversely affected.
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. We believe that the pace of innovation will continue to accelerate as customers increasingly base their technology investments on a broad range of factors, including products and markets addressed, performance and scale, consumer experience, data governance, and regulatory compliance. 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. 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 upgrade 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. If we are not able to develop and clearly demonstrate the value of new products, upgraded components, or services to our customers, or effectively utilize our customers’ data to provide them with value, our ability to retain and acquire customers could be adversely affected. If competitors
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introduce new offerings embodying new technologies, or if new industry standards and practices emerge, our existing technology, services, and website may become obsolete. Our future success could depend on our ability to respond to technological advances and emerging industry standards and practices in a cost-effective and timely manner.

We have scaled our business rapidly and significant new platform features and services have in the past resulted in, and in the future may continue to result in, operational challenges affecting our business. Developing and launching enhancements to our platform and new products and services on our platform may involve significant technical risks and upfront capital investments that may not generate return on investment. We may use new technologies ineffectively, or we may fail to adapt to emerging industry standards. If we face material delays in introducing new or enhanced platform features, products, and services or if our recently introduced offerings do not perform in accordance with our expectations, the customers and consumers that utilize our platform may forego the use of our services in favor of those of our competitors, and our business, financial condition, and results of operations could be adversely affected.
Our results of operations have fluctuated from period to period, which has caused the market price of our Class A common stock to fluctuate.
Our results of operations have historically varied from period to period, and we expect that our results of operations will continue to vary significantly from quarter to quarter and year to year because of a variety of factors, many of which are outside of our control and difficult to predict. As a result, you should not rely upon our historical results of operations as indicators of future performance. Numerous factors can influence our results of operations, including:
•our ability to attract and retain customers in a cost-effective manner;
•our ability to maintain or increase loan volumes, transactions processed, platform utilization, and title orders closed, and improve loan mix;
•our ability to successfully expand in existing markets and successfully enter new markets;
•changes in financial services firm behavior with respect to cloud-based software products and solutions;
•the amount and timing of operating expenses related to maintaining and expanding our business, operations, and infrastructure, including acquiring new and maintaining existing customers;
•our restructuring actions and the timing of incurring expenses and cash expenditures related to such actions;
•our ability to successfully identify, negotiate, execute, and integrate strategic acquisitions or partnerships;
•the mix of revenue we generate from our products and our marketplace;
•the timing and success of new products and services;
•the impact of worldwide economic conditions, including economic slowdowns, changes in market interest rates, recessions, housing affordability, and tightening of credit markets, including due to the war in Ukraine and the conflict in the Middle East;
•the seasonality of our business;
•our ability to maintain an adequate rate of growth and effectively manage that growth;
•our ability to keep pace with technology changes in our industry;
•the success of our sales and marketing efforts;
•the effects of negative publicity on our business, reputation, or brand;
•our ability to protect, maintain, and enforce our intellectual property;
•costs associated with defending claims, including intellectual property infringement claims, and related judgments or settlements;
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•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.

The variability and unpredictability of our results of operations could result in our failure to meet our expectations or those of analysts that cover us or investors with respect to revenue or other results of operations for a particular period. If we fail to meet or exceed such expectations, the market price of our Class A common stock could fall substantially, and we could face costly lawsuits, including securities class action suits.
We operate under a success-based business model and often rely on self-reporting of completed transactions by our customers, which can make it difficult to estimate and forecast revenue.
We offer our digital lending platform and products to financial institutions through software-as-a-service agreements where fees are assessed for each completed transaction, such as a funded loan, new account opening, closing transaction or API call. For those products that involve a loan or deposit account application we do not charge for abandoned applications or rejected applications, even though they cause us to incur costs. Our customers have the ability to access our platform, including Blend Builder Platform, our configurable platform, under (a) subscription arrangements, in which customers commit to a minimum number of completed transactions at specified prices over the contract term, (b) under usage-based arrangements, in which customers pay in arrears a variable amount for completed transactions at a specified price, (c) a fixed price platform fee, allowing the use of multiple products and services, including those on Blend Builder Platform, or (d) consumption arrangements, in which customers commit to a certain amount of consumption at specified prices and prepay a fixed amount in advance of their consumption. 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. 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. 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.

We use and often rely on the reporting of completed transactions by our customers when invoicing them for usage and overage fees in connection with our arrangements. If the reporting of completed transactions by our customers is not timely or accurate, it may impact our ability to estimate revenue, which may impact the accuracy of our actual and forecasted revenue recognized from our customers. If we incorrectly forecast revenue from our customers and the amount of revenue is less than projections we provide to investors, the price of our Class A common stock could decline substantially and our business, financial condition, and results of operations could be adversely affected.
We have in the past, and may in the future, make strategic acquisitions or dispositions or we may enter into partnerships, strategic collaborations, joint ventures or licensing agreements and investments, and we face risks related to the execution and integration of such acquisitions or dispositions, including our acquisition of Title365, or investments and the management of any associated growth.
We have in the past, and may in the future, expand, diversify or streamline our operations with strategic acquisitions or dispositions or entry into partnerships, strategic collaborations, joint ventures, or licensing arrangements and investments in and with companies, businesses, personnel, and technologies in the future. For example, on
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June 30, 2021, we completed our acquisition of Title365. Each transaction requires unique approaches to integration due to, among other reasons, the structure of the transaction, the integration of technology, the size, locations, and cultural differences among their teams and ours, and has required, and will continue to require, attention from our management team. Such transactions may also require additional management resources to integrate more significant and often more complex businesses into our company.

We may be unable to identify or complete prospective acquisitions or dispositions or partnerships, strategic collaborations, joint ventures or licensing arrangements and investments for many reasons, including, competition for acquisition targets, our inability or unwillingness to pay for targets with high valuations, the absence of a market for certain strategic transactions we may want to pursue or our inability to identify suitable targets, or our inability to finance an acquisition. Antitrust or other regulatory requirements may also delay or prevent an acquisition or require us to make changes to our business to be able to consummate the acquisition. Further, any issuances of equity as part of the consideration for the target will dilute our existing stockholders.

Even if we are able to complete an acquisition, partnership, or investment, our future success depends in part on our ability to integrate any future acquisitions and manage any investments, businesses, and entry into partnerships effectively, and we can provide no assurance that such acquired businesses, or any investment or strategic transaction that we enter into, will be successfully integrated into our business, generate revenue, or achieve any expected benefits on a timely basis or at all.

Any future acquisitions, or similar strategic transactions involve numerous risks, any of which could harm our business and negatively affect our financial condition and results of operations, including:
•diversion of management’s attention, including oversight over acquired or disposed businesses;
•difficulty in accurately forecasting and accounting for the financial impact of any such transaction, including accounting charges, write-offs of deferred revenue under purchase accounting, and integrating and reporting results for acquired companies that have not historically followed U.S. generally accepted accounting principles;
•maintaining employee morale and retaining key employees;
•integration of operations, systems, technologies, products, and personnel of each acquired company or strategic partner, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration;
•implementation of internal controls, procedures, and policies, in particular, with respect to the effectiveness of internal controls, cyber and information security practices, incident response plans, and business continuity and disaster recovery plans, compliance with privacy, data protection, information security, and other regulations, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s or strategic partner’s operations;
•implementation of restructuring actions and cost reduction initiatives to streamline operations and improve cost efficiencies;
•our acquisitions, partnerships or investments may not achieve the planned objectives or return on investment and we may incur impairment charges for acquired intangible assets, goodwill or investments;
•we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration;
•significant costs incurred in connection with acquisition transactions, such as professional service fees;
•the risk that any additional stock-based compensation issued or assumed in connection with an acquisition or strategic transaction may dilute our current stockholders, which may in turn impact our stock price and results of operations;
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•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.

In particular, failure to realize the full extent of the anticipated benefits of our acquisition of Title365 has and could continue to have an adverse effect on our revenue, level of expenses, and results of operations.

If we fail to address the foregoing risks or other problems encountered in connection with past or future acquisitions, dispositions, investments or other strategic collaborations, or if we are unable to successfully integrate and manage our acquisitions and investments, or if we are unable to successfully complete other strategic initiatives or such initiatives do not meet our strategic objectives, we may not realize the expected benefits of such strategic initiatives or we may become exposed to additional liabilities, and our business, financial condition, and results of operations could be adversely affected.
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.
When we acquire or invest in a business, a substantial portion of the purchase price of the acquisition may be allocated to goodwill and other indefinite-lived intangible assets. Under U.S. GAAP, we review goodwill and other indefinite-lived intangible assets for impairment annually, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of goodwill or an indefinite-lived asset below its carrying value. An adverse change in market conditions or operating results, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge to our goodwill or intangible assets. Moreover, we may not be able to achieve our business targets for any future acquisitions or investments, which could result in us incurring additional goodwill and other intangible assets impairment charges. Further declines in our market capitalization increase the risk that we may be required to perform another impairment analysis, which could result in an impairment of up to the entire balance of our goodwill and other intangible assets. Any such impairment charge or write-off 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.
We are increasingly dependent on information technology systems and infrastructure to operate our business. In the ordinary course of our business, we collect, receive, use, transmit, store, and otherwise process large amounts of sensitive information, including personal information, credit information, and other sensitive and confidential information of consumers. It is critical that we do so in a manner designed to maintain the confidentiality, integrity, and availability of such sensitive information. Additionally, in the ordinary course of our business, we collect, store, transmit, and otherwise process large amounts of confidential business information, including intellectual property,
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proprietary corporate and business information, and other confidential information. 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. 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. Our information technology systems, including the functions of third parties that are involved with or have access to those systems, are large and complex, with many points of entry and access. Our systems and those of our third-party service providers are potentially vulnerable to and may be subject to unintentional, inadvertent, or malicious, internal and external cyberattacks and other means of compromising the security, integrity, or availability of systems and data, including hacking, intrusions, malware, ransomware and other malicious code, social engineering attacks, phishing and spearphishing attempts, fraudulent inducement, electronic fraud (including attempts to misrepresent personal or financial or information to obtain loans or other financial products), wire fraud attempts to overload our servers with distributed denial-of-service attacks, employee theft, error, or malfeasance, unauthorized access by third parties (including foreign governments or state actors with significant financial and technological resources) or internal actors, or other attacks, and other types of disruptions, exposure, and security breaches and incidents. Any vulnerabilities can be exploited from inadvertent or intentional actions of our employees, partners, vendors, service providers, customers, or by malicious third parties. While we take steps to ensure any such vulnerabilities are 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 other software upon which we rely will not be discovered. Additionally, to the extent manual processes are involved in the handling of sensitive information, such sensitive information could be inadvertently misdirected despite our training and quality assurance precautions. 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.

Cybersecurity risks for the financial services industry have increased significantly in recent years due to new technologies, increasing reliance on technology, and increasing sophistication of organized crime, hackers, and other actors. Cyberattacks are increasing in frequency, levels of persistence, sophistication and intensity, and techniques used to obtain unauthorized access or to sabotage systems change frequently and may not be known until they are launched against a target. We and our partners, vendors, and other service providers may be unable to anticipate or prevent these attacks, react in a timely manner, or implement adequate preventive measures, and we may face delays in our detection or remediation of, or other responses to, security breaches and other privacy- and security-related incidents. These security risks that we and our partners, vendors, and other service providers face have been heightened by an increase in employees and service providers working remotely. Additionally, these risks may be elevated in connection with geopolitical events such as the current war in Ukraine and the conflict in the Middle East.

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. 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. For example, credential stuffing and business email compromise attacks are becoming increasingly common and sophisticated actors can mask their attacks, making them increasingly difficult to identify and prevent. Certain efforts may be state-sponsored or supported by significant financial and technological resources, making them even more difficult to detect, remediate, and otherwise respond to.

There also have been and may continue to be significant supply chain attacks, and we cannot guarantee that our or our partners’, vendors’, or service providers’ systems and networks have not been breached or that they do not contain exploitable defects or bugs that could result in a breach of or incident impacting, or a disruption to our systems and networks or the systems and networks of third parties that support us and our services. In addition, laws, regulations, government guidance, and industry standards and practices in the United States and elsewhere are
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rapidly evolving to combat these threats. We may face increased compliance burdens regarding such requirements with regulators and customers regarding our products and services and will incur additional costs for oversight and monitoring of our own supply chain.

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. We also have incorporated, and may continue to incorporate, artificial intelligence (“AI”) technologies into our platform and otherwise in our business, which may increase cybersecurity risks. Further, AI technologies may be used in connection with certain cybersecurity attacks, resulting in heightened risks of security breaches and incidents. 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. Employee and service provider error, malfeasance, or other errors in the storage, use, or transmission of any of these types of data could result in an actual or perceived privacy or security breach or other security incident. Although we have policies and technologies restricting access to the personal information we store, these policies and technologies may not be effective in all cases. Further, we must expend significant resources to build and maintain our privacy and data security systems; however, if we do not provide adequate funding or prioritize programs and strategic initiatives related to privacy and cybersecurity, we may be more vulnerable to breaches or attacks. 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. Further, any such event, or the perception it has occurred, may harm our reputation, brand, and competitive position, damage our relationships with our customers, subject us to adverse media coverage, or result in claims, regulatory investigations, and proceedings and significant legal, regulatory, and financial exposure, including ongoing monitoring by regulators, and any such incidents or any perception that our security measures are inadequate could lead to loss of customer confidence in, or decreased use of, our platform, any of which could adversely affect our business, financial condition, and results of operations. Any actual or perceived breach of privacy or security, or other security incident, impacting any entities with which we share or disclose data (including, for example, our partners, vendors, or other service providers) could have similar effects. We also expect to incur significant costs in an effort to detect and prevent privacy and security breaches and other security incidents, and we may face increased costs and requirements to expend substantial resources in the event of an actual or perceived privacy or security breach or other incident.

Additionally, defending against claims or litigation based on any privacy or security breach or other security incident, regardless of their merit, could be costly and divert management’s attention. We cannot ensure that any provisions in our agreements with customers, contracts with service providers and other contracts relating to limitations of liability, including those in connection with a privacy or security breach or other security incident, would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim. We cannot be certain that our insurance coverage will be adequate for data handling or information security costs or liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our reputation, brand, business, financial condition, and results of operations.
The success of our business depends on a trustworthy reputation and strong brand and any failure to maintain, protect, and enhance our brand would hurt our ability to retain or expand our base of customers and our ability to increase their level of engagement.
We believe maintaining a trustworthy reputation and strong brand is critical to our success and our ability to attract customers to our platform and maintain good relations with regulators. Our reputation, brand, and ability to build trust with existing and new customers may be adversely affected by complaints and negative publicity about us, our
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platform, partners, and customers that utilize our platform or our competitors’ platforms, even if factually incorrect or based on isolated incidents. Negative perception of our platform or company may harm our reputation and brand, including as a result of:
•perceptions of cloud-based software and our industry and our company, including the quality, security, and reliability of our cloud-based software platform;
•the overall user experience of our platform;
•changes to our platform;
•a failure to provide a range of options sought by customers or consumers;
•our ability to effectively manage and resolve customer and consumer complaints;
•fraudulent, illegal, negligent, reckless, or otherwise inappropriate behavior by users or third parties;
•actual or perceived disruptions to, failures of, or defects, bugs, vulnerabilities, or errors in our platform or similar incidents, such as privacy or security breaches or other security incidents, site outages, payment disruptions, or other incidents that impact or may be perceived to impact the reliability of our services, including services provided by third parties we rely on;
•litigation over, or investigations by regulators into, our platform;
•customers’ or consumers’ lack of awareness of, or compliance with, our policies;
•a failure to comply with legal, tax, privacy, data protection, information security, or regulatory requirements;
•changes to our practices with respect to collection and use of customer and consumer data;
•a failure to enforce our policies in a manner that users perceive as effective, fair, and transparent;
•a failure to operate our business in a way that is consistent with our values and mission;
•inadequate or unsatisfactory support experiences for our customers;
•perceptions about our liquidity or financial strength;
•illegal or otherwise inappropriate behavior by our management team or other employees or contractors; or
•a failure to register and prevent misappropriation of our trademarks.

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.
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. Our growth has placed, and may continue to place, substantial demands on management and our operational and financial infrastructure. However, we have undertaken several restructuring actions to better align our financial model and our business, and we may need to take additional restructuring actions in the future to align our business with the market. Steps we take to manage our business operations, including reductions in operating expense and restructurings may adversely impact our business. Steps we take to manage our business operations and future growth may adversely affect our reputation and brand, our ability to recruit, retain and motivate highly skilled personnel.

We have made, and intend to continue to make in the future, substantial investments in our technology, customer service, risk, sales and marketing infrastructure. Our ability to manage our growth and business operations effectively and to integrate new employees, technologies, and acquisitions into our existing business will require us
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to continue to expand our operational and financial infrastructure and to continue to effectively integrate, develop, and motivate employees, while maintaining the beneficial aspects of our culture. Continued growth could challenge our ability to develop and improve our information technology infrastructure and our operational, financial, and management controls, enhance our reporting systems and procedures, recruit, train, and retain highly skilled personnel and maintain user satisfaction. Additionally, if we do not manage the growth of our business and operations effectively, the quality of our platform and the efficiency of our operations could suffer, which could adversely affect our reputation, business, financial condition, and results of operations. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our financial statements and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and could cause a decline in the price of our Class A common stock. We will need to continue to improve our operational and financial infrastructure in order to manage our business effectively and accurately report our results of operations.
Systems failures and resulting interruptions in the availability of our website or platform, or other delays or slow response times from our website or platform, could adversely affect our business, financial condition, and results of operations.
We currently serve our customers and consumers on our platform from third-party data center hosting facilities. It is critical to our success that our customers (including their customers) and consumers be able to access our platform at all times, and that the performance of our platform is responsive and rapid. Our systems, or those of third parties upon which we rely, may experience service interruptions, outages, failures, or degradation or other performance problems because of hardware and software defects or malfunctions, distributed denial-of-service and other cyberattacks, infrastructure changes, human error, earthquakes, hurricanes, floods, fires, other natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer viruses, ransomware, malware, or other events. Our systems also may be subject to break-ins, sabotage, theft, and intentional acts of vandalism, including by our own employees. Some of our systems are not fully redundant and our disaster recovery planning may not be sufficient for all eventualities. These eventualities could cause information, including information relating to our customers and consumers, to be lost, corrupted, altered, or delayed. Our business interruption insurance may not be sufficient to cover all of our losses that may result from interruptions in our service as a result of systems failures and similar events. Additionally, in some cases, partners, vendors, and other service providers run their own platforms that we access, and we are, therefore, vulnerable to their service interruptions. In the event that our data center arrangements are terminated, or if there are any lapses of service or damage to a center, we could experience lengthy interruptions in our service as well as delays and additional expenses in arranging new facilities and services.

We have experienced and will likely continue to experience system failures and other events or conditions from time to time that interrupt the availability or reduce or affect the speed or functionality of our platform. 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. 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. In addition, the affected customer or consumer could seek monetary recourse from us for its losses and such claims, even if unsuccessful, would likely be time-consuming and costly for us to address. Further, in some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. A prolonged interruption in the availability or reduction in the availability, speed, or other functionality of our platform could adversely affect our business and reputation and could result in the loss of customers.

Further, we have service level agreements with our customers that require us to meet uptime requirements, and in some cases, system performance or latency standards. In the event that we fail to meet those requirements, whether
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because of system failures, slow platform performance, or otherwise, our customers may request credits from us, which could adversely impact our revenue and results of operations in a period where we provide such credits.
If we are unable to successfully implement AI to our platform, core solutions, or applications, our business could be harmed.
We have incorporated and may continue to incorporate additional AI technology into our platform and otherwise within our business, and AI technology may become more important to our operations or to our future growth over time. We expect to rely on AI to help drive future growth in our business, but there can be no assurance that we will realize the desired or anticipated benefits from AI technology or at all. Some of our customers, especially those in highly regulated industries, may be reluctant or unwilling to adopt products using AI technology. Accordingly, adoption of AI features in our products and marketing could reduce or delay customer adoption. We may also fail to properly implement or market our use of AI technology. Our competitors or other third parties may incorporate AI technology into their products, offerings, and solutions more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.

Additionally, our use of AI technology may expose us to additional claims, demands, and proceedings by private parties and regulatory authorities and subject us to legal liability as well as brand and reputational harm. For example, if the outputs that our AI technology assists in producing are or are alleged to be deficient, inaccurate, or biased, or if such outputs or their development or deployment, including the collection, use, or other processing of data used to train or create such AI technology, are held or alleged to infringe upon or to have misappropriated third-party intellectual property rights or to violate applicable laws, regulations, or other actual or asserted legal obligations to which we are or may become subject, our business, operating results, financial condition, and growth prospects could be adversely affected.

The legal, regulatory, and policy environments around AI technology are also evolving rapidly, and we may become subject to new and evolving legal and other obligations. For example, in the European Union, the European Council and Parliament reached political agreement in December 2023 on the Artificial Intelligence Act (“AI Act”), which the European Parliament approved on March 13, 2024. The AI Act will impose substantial obligations related to the sale and use of AI-related systems. Numerous U.S. states also have proposed, and in certain cases enacted, legislation addressing aspects of the development, use and commercialization of AI-related systems. These and other developments may require us to make significant changes to our use of AI technology, including by limiting or restricting our use of AI technology, and which may require us to make significant changes to our policies and practices, which may necessitate expenditure of significant time, expense, and other resources, the use of AI technology also presents emerging ethical issues that could harm our reputation and business if our use of AI technology becomes controversial.
Our sales cycle can be unpredictable, time-consuming, and costly.
Our sales process involves educating prospective and existing customers about the benefits and technical capabilities of our products and services. Prospective customers often undertake a prolonged evaluation process, which typically involves not only our products and services, but also those of our competitors. In addition to a prolonged evaluation process, macroeconomic conditions including rising interest rates and declining demand for mortgage, mortgage-related and consumer banking products may also impact our sales cycle. Our sales cycles are typically lengthy, generally ranging from six to nine months for smaller financial services firms and ranging from twelve to eighteen months or more for larger financial services firms. We may spend substantial time, effort, and money on our sales and marketing efforts without any assurance that our efforts will produce any sales. Events affecting our customers’ businesses may occur during the sales cycle that could affect the size or timing of a purchase, contributing to more unpredictability in our business and results of operations. As a result of these factors, we may face greater costs, longer sales cycles, and less predictability in the future, which could adversely affect our business, financial condition, and results of operations.
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We may encounter deployment challenges, which could adversely affect our business, financial condition, and results of operations.
We may face unexpected challenges related to the complexity of our customers’ deployment and configuration requirements. Deployment of our software platform may be delayed or expenses may increase when customers have unexpected data, software, or technology challenges, or unanticipated business requirements, which could adversely affect our relationship with our customers and our business, financial condition, and results of operations. In general, our revenue related to deployment and other professional services we provide is recognized on a proportional performance basis, and delays and difficulties in these engagements could result in losses or the recognition of revenue later than expected. Further, because we do not fully control our customers’ deployment schedules, if our customers do not allocate or have the internal resources necessary to meet deployment timelines or if there are otherwise unanticipated deployment delays or difficulties, our ability to take customers live and the overall customer experience could be adversely affected. We rely on existing customers to act as references for prospective customers, and difficulties in deployment and configuration could therefore adversely affect our ability to attract new customers. Any difficulties or delays in the deployment processes could cause customers to delay or forego future purchases of our products and services, which could adversely affect our business, financial condition, and results of operations.
Defects, errors, or vulnerabilities in our applications, backend systems, or other technology systems and those of third-party technology providers could harm our reputation and brand and adversely impact our business, financial condition, and results of operations.
Our platform and system infrastructure rely on software that is highly technical and complex and depend on the ability of such software to store, retrieve, process, and manage high volumes of data. The software on which we rely may contain undetected errors, defects, bugs, or vulnerabilities, some of which may only be discovered after the code has been released. Our practice is to affect frequent releases of software updates, sometimes multiple times per day. Further, as we create new products and services and enhance our existing products and services, we may encounter difficulties in achieving interoperability between our new products and services and our existing products and services. The third-party software that we incorporate into our platform or rely on may also be subject to errors, defects, bugs, or vulnerabilities. Any errors, defects, bugs, or vulnerabilities discovered in our code or from third-party software after release could result in negative publicity, a loss of users, increased regulatory scrutiny, fines or penalties, loss of revenue or liability for damages, and access or other performance issues. Such vulnerabilities could also be exploited by malicious actors and result in exposure of data of users on our platform, or otherwise result in a security breach or other security incident. We may need to expend significant financial and development resources to analyze, correct, eliminate, or work around errors, bugs, or defects or to address, analyze, correct, and eliminate software platform vulnerabilities. Any failure to timely and effectively resolve any such errors, defects, bugs, or vulnerabilities could adversely affect our business, reputation, brand, financial condition, and results of operations.
Any failure to offer high-quality customer support by us or by partners, vendors, and other service providers may adversely affect our relationships with our customers and could adversely affect our reputation, brand, business, financial condition, and results of operations.
Our ability to attract and retain customers is dependent in part on our ability to provide high-quality support. Our customers depend on our customer success organization to resolve any issues relating to our platform and products. As we continue to grow our business and improve our offerings, we will face challenges related to providing high-quality support services at scale. Additionally, to the extent we decide to grow our international business and the number of international users on our platform, our customer success organization will face additional challenges, including those associated with delivering support in languages other than English. Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm our reputation and adversely affect our ability to scale our platform and business, our financial condition, and our results of operations.
We experience significant seasonal fluctuations in our financial results, which could cause our Class A common stock price to fluctuate.
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Our business is highly dependent on consumer borrowing patterns that have an impact on our results of operations. We generally experience changes in consumer activity over the course of the calendar year, although macroeconomic factors, including an unfavorable interest rate environment, decreased housing affordability, and uncertain worldwide political and economic conditions has made, and may continue to make, seasonal fluctuations difficult to detect. Historically, our revenue has been strongest during the second and third quarters of our fiscal year as a result of higher demand for mortgages and other loans during the summer months. Seasonality has and will likely continue to cause fluctuations in our financial results on a quarterly basis. While our growth has obscured this seasonality in our overall financial results, we expect our results of operations to continue to be affected by such seasonality in the future. In addition, other seasonal trends may develop and the existing seasonal trends that we experience may become more pronounced and contribute to fluctuations in our results of operations as we continue to scale and our growth slows. As such, we may not accurately forecast our results of operations. However, we base our spending and investment plans on forecasts and estimates, and we may not be able to adjust our spending quickly enough if our revenue is less than expected, causing our results of operations to fail to meet our expectations or the expectations of investors.

The market for cloud-based banking software is still in relatively early stages of growth and if this market does not continue to grow, grows more slowly than we expect, or fails to grow as large as we expect, our business, financial condition, and results of operations could be adversely affected.
Use of, and reliance on, cloud-based banking software is still at an early stage, and we do not know whether financial services firms will continue to adopt cloud-based banking software in the future, or whether the market will change in ways we do not anticipate. Many financial services firms have invested substantial personnel and financial resources in legacy software, and these institutions may be reluctant, unwilling or unable to convert from their existing systems to our software platform. Furthermore, these financial services firms may be reluctant, unwilling or unable to use cloud-based banking software due to various concerns such as the security of their data and reliability of the delivery model. These concerns or other considerations may cause financial services firms to choose not to adopt cloud-based banking software such as our cloud-based software platform or to adopt them more slowly than we anticipate, either of which would adversely affect our business, financial condition, and results of operations. Our future success also depends on our ability to sell additional products, services, and functionality to our current and prospective customers. As we create new products and services and enhance our existing products and services, these applications and enhancements may not be attractive to customers or we may encounter difficulties in achieving interoperability between our new products and services and our existing products and services. In addition, promoting and selling new and enhanced functionality may require increasingly costly sales and marketing efforts, and if customers choose not to adopt this functionality our business and results of operations could suffer. If financial services firms are unwilling or unable to transition from their legacy systems, or if the demand for our software platform does not meet our expectations, our business, financial condition, and results of operations could be adversely affected.
We depend on our senior management team and our other highly skilled employees to grow and operate our business, and if we are unable to hire, retain, manage, and motivate our employees, or if our new employees do not perform as we anticipate, we may not be able to grow effectively and our business, financial condition, and results of operations could be adversely affected.
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Our future success will depend in part on the continued service of our founders, senior management team, key technical employees, and other highly skilled employees, including Nima Ghamsari, Head of Blend, Co-Founder, and Chair of our board of directors, and on our ability to continue to identify, hire, develop, motivate, and retain talented employees. We may not be able to retain the services of any of our employees or other members of senior management in the future. Also, all of our U.S.-based employees, including our senior management team and Mr. Ghamsari, work for us on an at-will basis, and there is no assurance that any such employee will remain with us. Our competitors may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all, or we may need to offer additional compensation to retain such employees. If we are unable to attract and retain the necessary employees, particularly in critical areas of our business, we may not achieve our strategic goals. Moreover, the implementation of any future workforce reduction plans or related initiatives may have adverse consequences on our employee morale, our culture, and our ability to attract and retain employees. In addition, from time to time, there may be changes in our senior management team that may be disruptive to our business. If our senior management team fails to work together effectively and to execute its plans and strategies, our business, financial condition, and results of operations could be adversely affected.

We face intense competition for highly skilled employees, especially in the San Francisco Bay Area where we have a substantial presence and need for highly skilled employees. To attract and retain top talent, we have offered, and we believe we will need to continue to offer, competitive compensation and benefits packages. Job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. The trading price of our Class A common stock has been volatile and has declined since our Initial Public Offering and may continue to fluctuate in response to various factors. If the perceived value of our equity awards declines for this or other reasons, it may adversely affect our ability to attract and retain highly qualified employees. In addition, due to declines in the trading price of our Class A common stock, in order to offer competitive compensation packages, we have issued, and may have to continue to issue more shares for equity awards to new and existing employees than in previous periods when the trading price of our Class A common stock was higher, which has and may continue to affect our outstanding share count and cause dilution to existing shareholders. Certain of our employees have received significant proceeds from sales of our equity in private transactions and many of our employees may receive significant proceeds from sales of our equity in the public markets, which may reduce their motivation to continue to work for us. We may need to invest significant amounts of cash and equity to attract and retain new employees and expend significant time and resources to identify, recruit, train, and integrate such employees, and we may never realize returns on these investments. If we are unable to effectively manage our hiring needs or successfully integrate new hires, our efficiency, ability to meet forecasts, and employee morale, productivity, and engagement could suffer, which could adversely affect our business, financial condition, and results of operations.
Misconduct and errors by our employees, partners, vendors, and other service providers could adversely affect our business, financial condition, results of operations, and reputation.
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We are exposed to many types of operational risk, including the risk of misconduct and errors by our employees, partners, vendors, and other service providers. Our business depends on our employees, partners, vendors, and other service providers to enable the processing of a large number of increasingly complex transactions, including transactions that involve significant dollar amounts and loan and financial transactions that involve the collection, use, and disclosure of sensitive information, including personal information and confidential business information. We could be adversely affected if transactions were redirected, misappropriated, or otherwise improperly executed, sensitive information, including personal information and confidential business information, was accessible by or disclosed to unintended persons, or an operational breakdown or failure in the processing of other transactions occurred, whether as a result of human error, a purposeful sabotage or a fraudulent manipulation of our operations or systems. In addition, the manner in which we store and use certain personal information and interact with consumers, and the manner in which our customers interact with their customers through our platform is governed by various federal and state laws. It is not always possible to identify and deter misconduct or errors by employees, partners, vendors, or other service providers, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses. Any of these occurrences could result in our diminished ability to operate our business, potential liability to customers and consumers, inability to attract future customers and consumers, reputational damage, regulatory intervention, and financial harm, which could adversely affect our business, financial condition, results of operations, and reputation.
We are committed to expanding our platform and enhancing the user experience, which may not maximize short-term financial results and may yield results that conflict with the market’s expectations, which could result in our stock price being adversely affected.
We are passionate about expanding our platform and continually enhancing the user experience, with a focus on driving long-term engagement through innovation, the expansion of our platform, products, and services, and providing high-quality support, which may not necessarily maximize short-term financial results. We frequently make business decisions that may reduce our short-term financial results if we believe that the decisions are consistent with our goals to improve the user experience, which we believe will improve our financial results over the long term. These decisions may not be consistent with the short-term expectations of our stockholders and may not produce the long-term benefits that we expect, in which case our growth, business, financial condition, and results of operations could be adversely affected.
We rely on assumptions, estimates, and unaudited financial information to calculate certain of our key metrics and other figures presented herein, and real or perceived inaccuracies in such metrics could adversely affect our reputation and our business.
Certain of the metrics that we present, including herein are calculated using internal company data that has not been independently verified, data from third-party attribution partners, or unaudited financial information of companies that we have acquired or partnered with. While these metrics and figures are based on what we believe to be reasonable calculations for the applicable period of measurement, there are inherent challenges in measuring these metrics and figures across our client base and user base. Additionally, certain figures relating to our strategic acquisitions and partnerships are based on unaudited financial information that has been prepared by the management of such companies and has not been independently reviewed or audited. We cannot assure you that such financial information would not be materially different if such information was independently reviewed or audited. We regularly review and have in the past, and may in the future, adjust our processes for calculating our metrics and other figures to improve their accuracy, but these efforts may not prove successful and we may discover material inaccuracies. In addition, our methodology for calculating these metrics may differ from the methodology used by other companies to calculate similar metrics and figures. We may also discover unexpected errors in the data that we are using that resulted from technical or other errors, or we may determine that third party date we relied upon is not accurate or does not accurately reflect our business. If we determine that any of our metrics or figures are not accurate, we may be required to revise or cease reporting such metrics or figures. Any real or perceived inaccuracies in our metrics and other figures could adversely affect our reputation and our business.
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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. We believe that the importance of brand recognition will increase as competition in the consumer lending industry expands. Successful promotion of our brand will depend largely on the effectiveness of marketing efforts and the overall user experience of our customers and consumers on our platform, which factors are outside our control. The marketing channels that we employ may also become more crowded and saturated by other cloud-based software platforms, which may decrease the effectiveness of our marketing campaigns. Our marketing initiatives may become increasingly expensive and generating a meaningful return on these initiatives may be difficult. Even if we successfully increase revenue as a result of our paid marketing efforts, it may not offset the additional marketing expenses we incur. If our marketing efforts to help grow our business are not effective, we expect that our business, financial condition, and results of operations could be adversely affected.
Negative publicity about us, our partners, vendors, and other service providers, or the financial services technology industry, could adversely affect our business, results of operations, financial condition, and future prospects.
Negative publicity about us, our partners or the financial services technology industry, including the transparency, fairness, user experience, quality, and reliability of our platform, our or our partners’ privacy, data protection and information security practices, litigation, regulatory activity, misconduct by our employees, partners, vendors, or other service providers, or others in the financial services technology industry, the experience of consumers with our platform or services, or with our customers, even if inaccurate, could adversely affect our reputation and the confidence in, and the use of, our platform by customers and their consumers, which could harm our reputation and cause a loss of confidence in our platform. Any such reputational harm could further affect the behavior of customers and their consumers, including their willingness to use our platform. As a result, our business, results of operations, financial condition, and future prospects would be materially and adversely affected.
Our company culture has contributed to our success and if we cannot maintain and evolve our culture as we grow, our business could be adversely affected.
We believe that our company culture has been critical to our success. We have invested substantial time and resources in building out our team with an emphasis on our shared beliefs and practices and a commitment to diversity and inclusion.

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.
 
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If we are not able to maintain and evolve our culture, our business, financial condition, and results of operations could be adversely affected.
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.
The title industry has been experiencing an increasing number of fraudulent activities by third parties, and those fraudulent activities are becoming increasingly sophisticated. Although we do not believe that any of this activity is uniquely targeted at our platform or business, this type of fraudulent activity may adversely affect our title business. In addition to any losses that may result from such fraud, which may be substantial, a loss of confidence by our customers, or governmental agencies in our ability to prevent fraudulent activity that is perpetrated through our software platform or business may seriously harm our business and damage its brand. As fraudulent activities become more pervasive and increasingly sophisticated, and fraud detection and prevention measures must become correspondingly more complex to combat them across the various industries in which we operate, we may implement risk control mechanisms that could make it more difficult for legitimate users to obtain access to and use our platform, which could result in lost revenue and adversely affect our business, financial condition, and results of operations. High profile fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negative publicity, and the erosion of trust from our customers and consumers, and our business, financial condition, and results of operations could be adversely affected.
Our presence outside the United States and any future international expansion strategy will subject us to additional costs and risks and our plans may not be successful.
We have certain operations outside of the United States and we are considering expanding our presence internationally. In addition, in connection with our acquisition of Title365, we acquired Title365’s India operations. Operating outside of the United States requires significant management attention to oversee operations over a broad geographic area with varying cultural norms and customs, in addition to placing strain on our finance, analytics, compliance, legal, engineering, and operations teams. We may incur significant operating expenses and may not be successful in our international expansion for a variety of reasons, including:
•recruiting, retaining and managing qualified employees in foreign countries that meet our needs, while maintaining our company culture across all of our offices and locations;
•an inability to attract and retain customers;
•complying with varying laws and regulatory standards, including with respect to financial services, labor and employment, data privacy, data protection, information security, tax, and local regulatory restrictions;
•obtaining any required government approvals, licenses, or other authorizations;
•varying levels of Internet and mobile technology adoption and infrastructure;
•currency exchange restrictions or costs and exchange rate fluctuations;
•operating in jurisdictions that do not protect intellectual property rights in the same manner or to the same extent as the United States;
•public health concerns or emergencies, such as the COVID-19 pandemic and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred, and which may occur, in various parts of the world in which we operate or may operate in the future;
•potential adverse tax consequences; and
•limitations on the repatriation and investment of funds as well as foreign currency exchange restrictions.

Our lack of experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake may not be successful. If we invest substantial time and resources to expand our
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operations internationally and are unable to manage these risks effectively, our business, financial condition, and results of operations could be adversely affected.

In addition, international expansion may increase our risks in complying with various laws and standards, including with respect to anti-corruption, anti-bribery, export controls, and trade and economic sanctions.
We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
Historically, we have financed our operations primarily through equity issuances and cash collections from our customers. In 2021, we also entered into a credit agreement that provides for a term facility and a revolving facility (as amended from time to time, the “Credit Agreement”). The term facility was fully drawn at closing to provide, in part, the consideration being paid in connection with our acquisition of Title365. In 2023, the revolving facility was terminated in connection with an amendment to the Credit Agreement and on April 29, 2024, the Credit Agreement was terminated in connection with the Haveli investment. To support growing our business and to effectively compete, we must have sufficient capital to continue to make significant investments in our platform. We intend to continue to make investments to support the growth of our business and may require additional funds to respond to business challenges, including the need to develop new platform features and services or enhance our existing platform, improve our operating infrastructure, or acquire complementary businesses and technologies. 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. In particular, to the extent the perceived value of our equity awards declines, we may need to pay a greater proportion of compensation in cash. Such employee compensation programs could result in us using a larger amount of our cash reserves for the payment of compensation in future periods. In addition, to the extent we satisfy our tax withholding obligations with respect to equity compensation awards by withholding shares and remitting cash to the relevant tax authorities, we could be required to use significant amounts of cash. Any of these additional uses of cash could cause us to use a greater portion of our cash reserves for compensatory purposes and we may need to raise capital to support our cash position and ensure we have sufficient liquidity for our operations.

Although we currently anticipate that our existing cash, cash equivalents, and marketable securities and cash collections from our customers will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months, we may require additional financing. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity, equity-linked securities, or convertible debt securities, our existing stockholders could suffer significant dilution, and any new securities we issue could have rights, preferences, and privileges superior to those of holders of our Class A common stock.

We evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our development efforts, business plans, and operating performance and the condition of the capital markets at the time we seek financing. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be impaired, and our business, financial condition, and results of operations could be adversely affected.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations of the applicable listing standards of the New York Stock Exchange. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on our systems, processes, and personnel.

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The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting, which includes hiring additional accounting and financial personnel to implement such processes and controls. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight. 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.

Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our Class A common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the New York Stock Exchange. As a public company, we are required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act.

We are required to provide an annual management report. 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”). At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have an adverse effect on our business and results of operations and could cause a decline in the price of our Class A common stock.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our results of operations could be adversely affected.
The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported and disclosed in our consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, stock-based compensation, valuations of acquired intangible assets and redeemable noncontrolling interest, and common stock valuations. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of industry or financial analysts and investors, resulting in a decline in the trading price of our Class A common stock.

Additionally, U.S. 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. It is difficult to predict the impact of
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future changes to accounting principles or our accounting policies, any of which could adversely affect our reported results of operations.
Operating as a public company requires us to incur substantial costs and requires substantial management attention. In addition, key members of our management team have limited experience managing a public company.
As a public company, we have incurred and will continue to incur substantial legal, accounting, and other expenses that we did not incur as a private company. For example, we are subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd–Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the rules and regulations of the SEC, and the listing standards of the New York Stock Exchange. For example, the Exchange Act requires, among other things, we file annual, quarterly, and current reports with respect to our business, financial condition, and results of operations. 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, 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.

Many members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our ongoing operations as a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, and our business, financial condition, and results of operations could be adversely affected.
Our investment portfolio may become impaired by conditions in the financial markets and failures at financial institutions at which we deposit funds or maintain investments could adversely affect us.
We deposit substantial funds in financial institutions and may, from time to time, maintain cash balances at such financial institutions in excess of the Federal Deposit Insurance Corporation (“FDIC”) limit. These funds include amounts in our operating accounts, which are held primarily at three financial institutions and used for our day-to-day business operations. We also hold investments and settled funds in accounts held at financial institutions acting as brokers or custodians. Our investment portfolio generally consists of money market funds, U.S. treasury and agency securities, commercial paper, and corporate debt securities. The investments in our portfolio are subject to our investment policy, which focuses on the preservation of capital, fulfillment or our liquidity needs, and maximization of investment performance within the parameters set forth in our investment policy and subject to market conditions. Our investment policy sets forth credit rating minimums, permissible allocations, and limits our exposure to specific investment types. However, our investments are subject to general credit, liquidity, market, and interest rate risks and in particular, volatility in the global financial markets, including in specific segments of such markets, which can negatively impact the value of our investments and adversely affect our financial condition, cash flows and results of operations. In addition, we deposit certain funds owned by third parties, such as escrow deposits, in financial institutions. Recently, there has been significant volatility and instability among banks and financial institutions. For example, in 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver, and for a period of time, customers of the bank did not have access to their funds and there was uncertainty as to when, if at all, customers would have access to funds in excess of the FDIC insured amounts. 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 FDIC coverage or otherwise, or the timing of any recovery. In the event of any such failure, we also could be held liable for the funds owned by third parties. Further, certain of our investments and settled funds are held at financial institutions. Should one or more of the financial institutions acting as brokers or custodians for our investments and settled funds fail,
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there may be a delay or some uncertainty in our ability to take possession of, or fully recover, all of our investments or settled funds.
Risks Related to Our Legal and Regulatory Environment
We may be subject to claims, lawsuits, government investigations, and other proceedings that may adversely affect our business, financial condition, and results of operations.
We face potential liability, expenses for legal claims, and harm to our business relating to the nature of our business generally, and with the lending and financial services we enable. We, or our partners, vendors, or other service providers, may be subject to claims, lawsuits, arbitration proceedings, government investigations and other legal, regulatory and other administrative proceedings in the ordinary course of business, including those involving compliance with regulatory requirements, personal injury, property damage, worker classification, labor and employment, anti-discrimination, commercial disputes, competition, consumer complaints, intellectual property disputes, and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings as our business grows and as we deploy new services.

In addition, a number of participants in the consumer financial and real estate settlement services industries have been the subject of putative class action lawsuits, state attorney general actions, other state regulatory actions, and federal regulatory enforcement actions, including actions relating to alleged unfair, deceptive, or abusive acts or practices, violations of state licensing and disclosure laws and actions alleging discrimination on the basis of race, ethnicity, gender, or other prohibited bases. 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. Additionally, recent rulings from the Supreme Court, including to overrule their decision in Chevron v. Natural Resources Defense Council, have caused additional uncertainty regarding federal administrative authority. There is no assurance that these regulatory matters or other factors will not, in the future, affect how we conduct our business and, in turn, have an adverse effect on our business, financial condition, and results of operations. In particular, legal proceedings brought under state consumer protection statutes or under several of the various federal consumer financial services statutes may result in a separate fine assessed for each statutory and regulatory violation or substantial damages from class action lawsuits, potentially in excess of the amounts we earned from the underlying activities.

The results of any such claims, lawsuits, arbitration proceedings, government investigations, or other legal or regulatory proceedings cannot be predicted with any degree of certainty. Any claims against us, or our partners, vendors, or other service providers, whether meritorious or not, could be time-consuming, result in costly litigation, be harmful to our reputation, subject us to adverse media coverage, require significant management attention and divert significant resources. Determining reserves for pending litigation is a complex and fact-intensive process that requires significant subjective judgment and speculation. It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect our business, financial condition, and results of operations. These proceedings, including those involving our partners, vendors, and other third parties, could also result in harm to our reputation and brand, sanctions, consent decrees, injunctions or other orders requiring a change in our business practices. Any of these consequences could adversely affect our business, financial condition, and results of operations. Furthermore, under certain circumstances, we have contractual and other legal obligations to indemnify and to incur legal expenses on behalf of our business and partners and current and former directors and officers.

We also include arbitration and class action waiver provisions in our terms of service with many of our consumers. These provisions are intended to streamline the litigation process for all parties involved, as they can in some cases be faster and less costly than litigating disputes in state or federal court. However, arbitration can be costly and burdensome, and the use of arbitration and class action waiver provisions subjects us to certain risks to our
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reputation and brand, as these provisions have been the subject of increasing public scrutiny. In order to minimize these risks to our reputation and brand, we may limit our use of arbitration and class action waiver provisions or be required to do so in a legal or regulatory proceeding, either of which could cause an increase in our litigation costs and exposure.

Further, with the potential for conflicting rules regarding the scope and enforceability of arbitration and class action waivers on a state-by-state basis, as well as between state and federal law, there is a risk that some or all of our arbitration and class action waiver provisions could be subject to challenge or may need to be revised to exempt certain categories of protection. The enforceability of arbitration and class action waiver provisions has often been challenged, particularly recently, and if those challenges are successful, these provisions could be found to be unenforceable, in whole or in part, or specific claims could be required to be exempted. Any judicial decisions, legislation, or other rules or regulations that impair our ability to enter into and enforce our arbitration agreements and class action waivers could significantly increase our exposure to potentially costly lawsuits, our costs to litigate disputes, and the time involved in resolving such disputes, each of which could 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.
Our customers and prospective customers are highly regulated and are generally required to comply with stringent regulations in connection with performing business functions that our products and services address; we facilitate compliance with these regulatory requirements. While we currently operate our business in an effort to ensure our business itself is not subject to extensive regulation, there is a risk that certain regulations could become applicable to us, including as we expand the functionality of and services offered through the platform. In addition, we and our partners, vendors, and other service providers must comply with laws and regulatory regimes that apply to us directly and our partners, vendors, and other service providers indirectly, including through certain of our products, as a technology provider to financial services firms, and in areas such as privacy, information security and data protection, and our contractual relationships with our customers.

In particular, certain laws, regulations, and rules our customers are subject to, and we facilitate compliance with, include the:
•TILA, and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their loans and credit transactions, and require creditors to comply with certain lending practice restrictions as well as the TILA-RESPA Integrated Disclosure rule, or TRID, which imposes specific requirements around the collection of information, charging of fees, and disclosure of specific loan terms and costs upon receipt of an application for credit;
•TISA, and Regulation DD thereunder, which impose disclosure requirements with respect to the terms and conditions of deposit accounts;
•RESPA, and Regulation X, which require certain disclosures to be made to the borrower at application, as to the financial services firm’s good faith estimate of loan origination costs, and at closing with respect to the real estate settlement statement; prohibits giving or accepting any fee, kickback or a thing of value for the referral of real estate settlement services or accepting a portion or split of a settlement fee other than for services actually provided; for affiliated business relationships, prohibits receiving anything other than a legitimate return on ownership, requiring use of an affiliate, and failing to provide a disclosure of the affiliate relationship;
•ECOA, and Regulation B promulgated thereunder, and similar state fair lending laws, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act;
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•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;
•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;
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•the regulations promulgated by OFAC, under the U.S. 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.

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 may also be examined on a periodic basis by various regulatory agencies and may be required to review certain of our partners, vendors, or other service providers. These potential examinations may lead to increased regulatory compliance efforts that are time-consuming and expensive operationally. Matters subject to review and examination by federal and state regulatory agencies and external auditors include our internal information technology controls in connection with our performance of services, the agreements giving rise to these activities, and the design of our platform. Any inability to satisfy these examinations and maintain compliance with applicable regulations could adversely affect our ability to conduct our business, including attracting and maintaining customers.

In addition, we are currently subject to a variety of, and may in the future become subject to, additional, federal, state, and local laws that are continuously changing, including laws related to: title and settlement services, consumer reporting agency services, and property and casualty insurance industries; mobile- and internet-based businesses; and information security, advertising, privacy, data protection, and consumer protection. These laws can be costly to comply with, require significant management attention, and could subject us to claims, government enforcement actions, civil and criminal liability, or other remedies, including revocation of licenses and suspension of business operations.

Furthermore, federal and state officials are discussing various potential changes to laws and regulations that could impact us, including the reform of government-sponsored enterprises such as the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), and additional data privacy laws and regulations, among others. Changes in these areas, generally in the regulatory environment in which we operate and our customers operate, could adversely impact the volume of mortgage originations in the United States and our competitive position and results of operations.

While we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance can be given that our compliance policies and procedures will be effective. Compliance with these requirements is also costly, time-consuming and limits our operational flexibility. Additionally, Congress, the states and regulatory agencies, as well as local municipalities, could further regulate the consumer financial services and adjacent industries in ways that make it more difficult or costly for us to offer our platform and related services. These laws also are often subject to changes that could severely limit the operations of our business model. Further, changes in the regulatory application or judicial interpretation of the laws and regulations applicable to financial services firms also could impact the manner in which we conduct our business.

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The regulatory environment in which financial services firms operate has become increasingly complex, and following the financial crisis that began in 2008, supervisory efforts to apply relevant laws, regulations and policies have become more intense. For example, California has enacted legislation to create a “mini-CFPB,” which could strengthen state consumer protection authority of state regulators over unfair, deceptive, or abusive acts and practices. Nevertheless, if we or our partners, vendors or other service providers are found to not comply with applicable laws, we could become subject to greater scrutiny by federal and state regulatory agencies, or face other sanctions, which may have an adverse effect on our ability to continue to provide our services or make our platform available in particular states, or utilize the services of third-party providers, which may harm our business. In addition, non-compliance could subject us to damages, class action lawsuits, administrative enforcement actions, rescission rights held by investors in securities offerings and civil and criminal liability, all of which would adversely affect our business, financial condition, and results of operations.

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.
We, and our partners, vendors, and other service providers, receive, collect, use, disclose, share, transfer, transmit, store, and otherwise process a large volume of personal information and other sensitive data relating to individuals, such as consumers and our employees. 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. Such regulations include, for example, the GLBA, FCRA, California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (the “CPRA”). These laws, rules, and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in interpretation or enforcement, and may impose conflicting and inconsistent obligations.

For example, in 2021, the Federal Trade Commission (“FTC”) amended the GLBA’s Safeguards Rule, which requires covered financial services firms, which may include some of our customers, to develop, implement, and maintain a comprehensive information security program. The rule provides more prescriptive security controls that financial services firms must implement and oversight by a designated Qualified Individual who must provide annual written reports to the board of directors or equivalent governing body. The FTC further amended the GLBA’s Safeguards Rule in November 2023 to provide for reporting to the FTC certain security incidents in which unencrypted personal information involving 500 or more consumers is acquired without authorization. In addition, the FTC has brought enforcement actions against service providers of financial services firms directly and against financial services firms for failures by service providers to implement appropriate controls to safeguard consumers’ personal information.

The CCPA went into effect on January 1, 2020, and, among other things, requires new disclosures to California consumers and affords such consumers new data privacy rights. The California Attorney General can enforce the CCPA, including seeking an injunction and civil penalties of up to $7,500 per violation. The CCPA also provides a private right of action for certain data breaches that may increase data breach litigation. Additionally, the CPRA was approved by California voters in November 2020, and significantly modifies the CCPA, including expanding California consumers’ rights with respect to certain personal information and creating a new state agency to oversee implementation and enforcement efforts. The CPRA created obligations relating to consumer data beginning on January 1, 2022 and it became effective on January 1, 2023. Numerous states have proposed, and in certain cases enacted, legislation addressing privacy and data security that in many cases are similar to the CCPA and CPRA. For example, Connecticut, Virginia, Colorado, and Utah have enacted legislation similar to the CCPA and CPRA that took effect in 2023; Florida, Montana, Oregon, and Texas have enacted similar legislation that took effect in 2024; Delaware, Iowa, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey, and Tennessee have enacted similar legislation that will take effect in 2025; and Indiana, Kentucky, and Rhode Island have enacted similar legislation that will take effect in 2026. The California Age-Appropriate Design Code Act (“CAADCA”), which expands the CPRA for businesses with websites that are likely to be accessed by children, was signed into law on September 15, 2022 and went into effect on July 1, 2024. The New York governor signed a bill into law in June 2024 that, upon
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becoming effective on June 20, 2025, would, among other things, prohibit covered “operators” from collecting, using, sharing, and selling personal data of individuals under 18 years of age unless it is strictly necessary, as specified in such legislation, or where informed consent is obtained in accordance with specified requirements. This includes, in the case of individuals under 13 years of age, obtaining parental consent in a manner compliant with the Children’s Online Privacy Protection Act (“COPPA”).

The CCPA, CPRA, CAADCA, COPPA, other new and evolving state legislation, and other changes in laws or regulations relating to privacy, data protection, and information security, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of laws or regulations, that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer, or disclosure, could add additional complexity and variations in requirements, restrictions, and legal risks, greatly increase the cost of providing our platform, require significant changes to our operations and additional investment of resources, impact strategies and the availability of previously useful data for processing, or prevent us from providing our platform in jurisdictions in which we currently operate and in which we may operate in the future. Certain other state laws impose similar privacy, data protection, and information security obligations and we also expect that more states may enact new legislation to provide consumers with new privacy rights and increase the privacy, data protection, and information security obligations of entities handling certain personal information of such consumers. In addition, some jurisdictions, such as New York, Massachusetts, and Nevada have enacted more generalized information security laws that apply to certain data that we process. The U.S. federal government also has proposed legislation relating to privacy and data security. We cannot yet fully determine the impact these or future laws, rules, regulations, and industry standards may have on our business or operations. Any such laws, rules, regulations, and industry standards may be inconsistent, subject to differing interpretations, or may conflict, or be alleged to conflict, with our current or future practices. Additionally, our customers may be subject to differing privacy laws, rules, and legislation, or self-regulatory principles, codes, or other obligations, which may cause them to require us to be bound by varying contractual requirements, including certain requirements applicable to other jurisdictions. Adherence to such contractual requirements may impact our collection, use, storage, sharing, disclosure, and processing of various types of information and may mean we become bound by, or voluntarily comply with, self-regulatory or other industry standards, or other actual or asserted obligations, relating to these matters that may further change as laws, rules, and regulations evolve. Complying with these requirements and other actual or asserted obligations, and changing our policies and practices may be onerous and costly, and we may not be able to respond quickly or effectively to regulatory, legislative and other developments. These changes may in turn impair our ability to offer our existing or planned products and services and/or increase our cost of doing business.

Additionally, we have incurred, and may continue to incur, significant expenses in an effort to comply with privacy, data protection, and information security standards and protocols imposed by law, regulation, industry standards, contractual obligations, or other actual or asserted obligations, and may face substantial challenges in our efforts to do so. We may face challenges in addressing their requirements and making necessary changes to our policies and practices and may incur significant costs and expenses in an effort to do so.

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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. Among other things, the GDPR imposes requirements regarding the security of personal data and notification of data processing obligations to competent national data processing authorities, provides for lawful bases on which personal data can be processed, provides for an expansive definition of personal data and requires changes to informed consent practices. 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). The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations. The United Kingdom has implemented legislation that substantially implements the GDPR in the United Kingdom, which legislation provides for penalties for violations of up to the greater of £17.5 million or 4% of an enterprise’s consolidated annual worldwide gross revenue. If we expand our business into the EEA and/or the United Kingdom, we will need to comply with the GDPR and data protection laws of the United Kingdom. This will involve significant resources and expense and may also impair our ability to offer our existing or planned features, products and services and/or increase our cost of doing business.

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. 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. Even if not subject to legal challenge, the perception of privacy, data protection, or information security concerns, whether or not valid, may harm our reputation and brand and adversely affect our business, financial condition, and results of operations.
A heightened regulatory environment in the financial services industry may have an adverse impact on our customers and our business.
Since the enactment of the Dodd-Frank Act, a number of substantial regulations affecting the supervision and operation of the financial services industry within the United States have been adopted, including those that establish the CFPB. The CFPB has issued guidance that applies to, and conducts direct examinations of, “supervised banks and nonbanks” as well as “supervised service providers” like us. In addition, the CFPB regulates consumer financial products and services. Certain of our partners are also subject to regulation by federal and state authorities and, as a result, could pass through some of those compliance obligations to us.

To the extent this oversight or regulation negatively impacts our customers, our business, financial condition, and results of operations could be adversely affected because, among other matters, our customers could have less capacity to purchase products and services from us, could decide to avoid or abandon certain lines of business, or could seek to pass on increased costs to us by re-negotiating their agreements with us. Additional regulation, examination, and oversight of us could require us to modify the manner in which we contract with or provide products and services to our customers, directly or indirectly limit how much we can charge for our products and services, require us to invest additional time and resources to comply with such oversight and regulations, or limit our ability to update our existing products and services, or require us to develop new ones. Any of these events, if realized, could adversely affect our business, financial condition, and results of operations.
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Failure to obtain or maintain state licenses or other regulatory infractions resulting in license revocation could impact our ability to offer products and services.
Our ability to obtain or maintain state licenses for the services offered through our platform, including for our property and casualty insurance agency and title insurance agency, depends on our ability to meet licensing requirements established by the applicable regulatory agency and adopted by each state, subject to variations across states. In addition, as we expand the functionality of and services offered through the platform, or if a regulator determines that the services offered through the platform require licensing, we may be required to obtain additional licensing and incur additional costs. If we are unable to satisfy the applicable licensing requirements of any particular state, we could lose our license to do business in such state, which would result in the temporary or permanent cessation of our operations in that state. Alternatively, if we are unable to satisfy, or if a regulator determines that we have not satisfied, applicable state licensing requirements, we may be subject to additional regulatory oversight, have our license suspended or may incur additional costs or regulatory infractions. Any such events could adversely affect our business, financial condition, and results of operations.
Regulation of title insurance rates and relationships with insurance underwriters could adversely affect our title insurance business.
We are subject to extensive rate regulation by the applicable state agencies in the jurisdictions in which our title insurance business operates. Title insurance rates are regulated differently in various states, with some states requiring us to file and receive approval of rates before such rates become effective and some states promulgating the rates that can be charged. These regulations could hinder our ability to promptly adapt to changing market dynamics through price adjustments, which could adversely affect our business, financial condition, and results of operations, particularly in a rapidly declining market.

Further, we derive a significant portion of our commission revenue from a limited number of insurance underwriters, the loss of which would result in additional expense and loss of market share. If we lose our relationships with insurance underwriters, fail to maintain good relationships with insurance underwriters, become dependent upon a limited number of insurance underwriters, or fail to develop new insurance underwriter relationships, our business, financial condition, and results of operations could be adversely affected.
Our position as an agent utilizing partners, vendors, and other service providers for issuing a significant amount of title and property and casualty insurance policies could adversely affect the frequency and severity of claims.
In our position as a licensed insurance agent, we may perform the search and examination function for policies we issue on behalf of underwriters or we may purchase a search product from another partner, vendor, or service provider. In either case, we are responsible for ensuring that the search and examination is completed. Our relationship with each title and property and casualty insurance underwriter is governed by an agency agreement defining how an insurance policy is issued on their behalf. The agency agreement also sets forth our liability to the underwriter for policy losses attributable to our errors. Periodic audits by our underwriters are also conducted. Despite our efforts to monitor partners, vendors, and other service providers with whom we transact business, there is no guarantee that they will comply with their contractual obligations. Furthermore, we cannot be certain that, due to changes in the regulatory environment and litigation trends, we will not be held liable for errors and omissions by these vendors. 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.
In the United States, each state regulator retains the authority to license insurance agencies in their states, and an insurance agency generally may not operate in a state in which it is not licensed. Accordingly, we are not permitted to sell insurance to residents of states and territories of the United States in which we are not licensed.

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Employees who engage in the solicitation, negotiation, or sale of insurance, or provide certain other insurance services, generally are required to be licensed individually. Insurance, including related laws and regulations, govern whether licensees may share commissions with unlicensed entities and individuals and, in the context of real estate settlement transactions, such payments are also subject to RESPA restrictions as it relates to splitting or sharing settlement service fees. We believe that any payments we make to third parties are in compliance with applicable laws. However, should any regulatory agency take a contrary position and prevail, we will be required to change the manner in which we pay fees to such employees or principals or require entities receiving such payments to become registered or licensed.

Our insurance products are subject to extensive regulation and supervision in the states in which we transact business by the individual state insurance departments. This regulation is generally designed to protect the interests of consumers, and not necessarily the interests of insurers or agents, their shareholders or other investors. For example, state insurance laws are generally prescriptive with respect to the content and timeliness of notices we must provide policyholders. States have also adopted legislation defining and prohibiting unfair methods of competition and unfair or deceptive acts and practices in the business of insurance that may apply to insurance agencies. Noncompliance with any of such state statutes may subject us to regulatory action by the relevant state insurance regulator, and, in certain states, private litigation. In addition, we cannot predict the impact that any new laws, rules or regulations may have on our business and financial results. States also regulate various aspects of the contractual relationships between insurers and independent agents. The California Department of Insurance, the insurance regulatory authority in the State of California, as well as the insurance regulators of other states in which we are licensed to sell insurance may also conduct periodic examinations. The results of these examinations can give rise to regulatory orders requiring remedial, injunctive, or other corrective action.

Although state insurance regulators have primary responsibility for administering and enforcing insurance regulations in the United States, such laws and regulations are further administered and enforced by a number of additional governmental authorities, each of which exercises a degree of interpretive latitude, including state securities administrators, state attorneys general as well as federal agencies including the Federal Reserve, the Federal Insurance Office and the U.S. Department of Justice. Consequently, compliance with any particular regulator’s or enforcement authority’s interpretation of a legal issue may not result in compliance with another’s interpretation of the same issue, particularly when compliance is judged in hindsight.

We may be subject to restrictions, actions and claims relating to the advertising, marketing and sale of insurance, including the suitability of such products and services. Actions and claims may result in the rescission of such sales; consequently, insurance carriers may seek to recoup commissions paid to us, which may lead to legal action against us. The outcome of such restrictions or actions cannot be predicted and such restrictions, claims or actions could have a material adverse effect on our business, financial condition and results of operations.

Additionally, regulations affecting insurance carriers and underwriters with which we place business may affect how we conduct our operations. Insurers are also regulated by state insurance departments for solvency issues and are subject to reserve requirements. We cannot guarantee that all insurance carriers and underwriters with whom we do business comply with regulations instituted by state insurance departments. We may need to expend resources to address questions or concerns regarding our relationships with these insurers and underwriters, diverting management resources away from operating our business, which could adversely affect our business, financial condition, and results of operations.
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The CFPB is a relatively new agency that has sometimes taken expansive views of its authority to regulate consumer financial services, creating uncertainty as to how the agency’s actions or the actions of any other new agency could adversely affect our business, financial condition, and results of operations.
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. The CFPB supervises banks, thrifts, and credit unions with assets over $10 billion and examines certain of our customers. Further, the CFPB is charged with the examination and supervision of certain participants in the consumer financial services market, including larger participants in other areas of financial services. 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. This system could inform future CFPB decisions with respect to its regulatory, enforcement or examination focus. 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.

Although we have committed resources to enhancing our compliance programs, actions by the CFPB (or other regulators) against us, our customers or our competitors could discourage the use of our services or those of our customers, which could result in reputational harm, a loss of customers, or discourage the use of our or their services and adversely affect our business. If the CFPB changes regulations that were adopted in the past by other regulators and transferred to the CFPB by the Dodd-Frank Act, or modifies through supervision or enforcement, past regulatory guidance or interprets existing regulations in a different or stricter manner than they have been interpreted in the past by us, the industry or other regulators, our compliance costs and litigation exposure could increase materially. If the CFPB, or another regulator, were to issue a consent decree or other similar order against us, this could also directly or indirectly adversely affect our business, financial condition, and results of operations.

Our compliance and operational costs and litigation exposure could increase if and when the CFPB amends or finalizes any proposed regulations, including the regulations discussed above or if the CFPB or other regulators enact new regulations, change regulations that were previously adopted, modify, through supervision or enforcement, past regulatory guidance, or interpret existing regulations in a manner different or stricter than have been previously interpreted.
Our business could be adversely impacted by changes in the Internet and mobile device accessibility of consumers, and our software platform’s failure to comply with existing or future laws governing the Internet and mobile devices.
Our business depends on consumers’ access to our platform via the Internet and/or a mobile device. We may operate in jurisdictions that provide limited Internet connectivity, particularly if we expand internationally. Internet access and access to a mobile device are frequently provided by companies with significant market power that could take actions that degrade, disrupt, or increase the cost of consumers’ ability to access our platform. In addition, the Internet infrastructure that we and users of our platform rely on in any particular geographic area may be unable to support the demands placed upon it. Any such failure in Internet or mobile device accessibility, even for a short period of time, could adversely affect our business, financial condition, and results of operations.

Moreover, the application of laws and regulations to online platforms is constantly evolving. Existing and future laws and regulations, or changes thereto, may impede the growth and availability of the Internet and online offerings, require us to change our business practices, or raise compliance costs or other costs of doing business. These laws and regulations, which continue to evolve, cover consumer protection, advertising practices and provision of disclosures, among other things. Any failure, or perceived failure, by us, or our software platform, as applicable, to comply with any of these laws or regulations could result in damage to our reputation and brand a loss in business and proceedings or actions against us by governmental entities or others, which could adversely affect our business, financial condition, and results of operations.
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Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection and other losses.
Our agreements with customers and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by us to property or persons, or other liabilities relating to or arising from our platform, services, or other contractual obligations. Some of these indemnity agreements provide for uncapped liability for which we would be responsible, and some indemnity provisions survive termination or expiration of the applicable agreement. We also cannot be certain that any provisions in these agreements relating to limitations of liability would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim. Large indemnity payments could adversely affect our business, financial condition, and results of operations. Although we carry general liability insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed. We generally contractually limit our liability with respect to such obligations, but we may still incur substantial liability related to such obligations and we may be required to cease use of certain functions of our platform or services as a result of any such claims. 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.
We are subject to various U.S. and international anti-corruption laws and other anti-bribery and anti-kickback laws and regulations.
We are subject to the U.S. Foreign Corrupt Practices Act of 1977 (as amended, the “FCPA”), and other anti-corruption, and anti-bribery laws in the jurisdictions in which we do business, both domestic and abroad. These laws generally prohibit us and our employees from improperly influencing government officials or commercial parties in order to obtain or retain business, direct business to any person, or gain any improper advantage. The FCPA and other applicable anti-bribery and anti-corruption laws also may hold us liable for acts of corruption and bribery committed by our partners, representatives, and agents who are acting on our behalf. We and our partners, representatives, and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of these partners and intermediaries and our employees, representatives, contractors, and agents, even if we do not explicitly authorize such activities. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. While we have policies and procedures to address compliance with such laws, we cannot assure you that our employees and agents will not take actions in violation of our policies or applicable law, for which we may be ultimately held responsible, and our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions.

Any violation of the FCPA or other applicable anti-bribery, and anti-corruption laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, a drop in our stock price, or overall adverse consequences to our business, all of which may have an adverse effect on our reputation, business, financial condition, and results of operations.
Taxing authorities may successfully assert that we have not properly collected or remitted, or in the future should collect or remit, sales and use, gross receipts, value added, or similar taxes or withholding taxes, and may successfully impose additional obligations on us, and any such assessments, obligations, or inaccuracies could adversely affect our business, financial condition, and results of operations.
The application of indirect taxes, such as sales and use tax, value-added tax, goods and services tax, business tax and gross receipts tax, to platform businesses is a complex and evolving issue. Many of the fundamental statutes and regulations that impose these taxes were established before the adoption and growth of the Internet and e-commerce. Significant judgment is required on an ongoing basis to evaluate applicable tax obligations and as a result amounts recorded are estimates and are subject to adjustments. In many cases, the ultimate tax determination is uncertain
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because it is not clear how new and existing statutes might apply to our business. In addition, governments are increasingly looking for ways to increase revenue, which has resulted in discussions about tax reform and other legislative action to increase tax revenue, including through indirect taxes.

We may face various indirect tax audits in various U.S. jurisdictions. In certain jurisdictions, we collect and remit indirect taxes. However, tax authorities may raise questions about or challenge or disagree with our calculation, reporting or collection of taxes and may require us to collect taxes in jurisdictions in which we do not currently do so or to remit additional taxes and interest, and could impose associated penalties and fees. For example, after the U.S. Supreme Court decision in South Dakota v. Wayfair Inc., certain states have adopted, or started to enforce, laws that may require the calculation, collection and remittance of taxes on sales in their jurisdictions, even if we do not have a physical presence in such jurisdictions. A successful assertion by one or more tax authorities requiring us to collect taxes in jurisdictions in which we do not currently do so or to collect additional taxes in a jurisdiction in which we currently collect taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest, could harm our business, financial condition, and results of operations.

As a result of these and other factors, the ultimate amount of tax obligations owed may differ from the amounts recorded in our financial statements and any such difference may adversely impact our results of operations in future periods in which we change our estimates of our tax obligations or in which the ultimate tax outcome is determined.
Changes in, or interpretations of, U.S. and international tax laws and regulations could have a material adverse effect on our business, financial condition and results of operations.
The tax regimes we are subject to or operate under are unsettled and may be subject to significant change. Changes in tax laws or tax rulings, or changes in interpretations of existing laws, could cause us to be subject to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital tax, net worth, property, and goods and services taxes), which in turn could materially affect our financial position and results of operations. Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our products. For example, under provisions enacted in the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), beginning January 1, 2022, all U.S. and non-U.S. based research and experimental expenditures must be capitalized and amortized over five and fifteen years, respectively. 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. While we are not immediately impacted by the IRA provisions, we will need to continue to monitor our business transactions to determine if any provisions under the IRA could impact our business in the future. As we expand the scale of our business activities, any changes in the U.S. and international taxation of such activities may increase our effective tax rate and harm our business, financial condition, and results of operations.
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Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
As of December 31, 2023, we had net operating loss carryforwards, (“NOLs”), for federal and state income tax purposes of approximately $537.3 million and $582.7 million, respectively, available to reduce future taxable income. The federal net operating losses generated before 2018 will begin to expire in 2028. The federal net operating losses generated in and after 2018 may be carried forward indefinitely. The expiration of state NOL carryforwards vary by state and begin to expire in 2025. Further, as of December 31, 2023, we had research and development tax credits carryforwards for federal and state income tax purposes of approximately $21.7 million and $11.8 million, respectively, available to reduce future tax liabilities. Federal research and development tax credits will begin to expire in 2033 and the state research and development tax credits can be carried forward indefinitely. It is possible that we will not generate taxable income in time to use NOLs before their expiration, or at all. 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. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5 percent stockholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Our ability to use NOLs and other tax attributes to reduce future taxable income and liabilities may be subject to annual limitations as a result of ownership changes that may occur in the future (which may be outside our control).

Under the Tax Act, as amended by the CARES Act, NOLs arising in tax years beginning after December 31, 2017 are subject to an 80% of taxable income limitation (as calculated before taking the NOLs into account) for tax years beginning after December 31, 2020. In addition, NOLs arising in tax years 2018, 2019, and 2020 are subject to a five-year carryback and indefinite carryforward, while NOLs arising in tax years beginning after December 31, 2020 also are subject to indefinite carryforward but cannot be carried back. Our NOLs may also be subject to limitations in other jurisdictions. In future years, if and when a net deferred tax asset is recognized related to our NOLs, the changes in the carryforward/carryback periods as well as the new limitation on use of NOLs may significantly impact our valuation allowance assessments for NOLs generated after December 31, 2017.
Risks Related to Our Title365 Business
Our exposure to regulation and residential real estate transaction activity may be greater in Texas, California and Florida, where we source a significant proportion of our premiums.
A large portion of our title segment revenue has historically originated from residential real estate transactions in Texas, California and Florida. 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.

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.
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. Although we provide title settlement services to large commercial and residential customers and mortgage originators, there are other title insurance agencies that have substantially greater capital than we do, especially those affiliated with large
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title insurance underwriters. The size and number of title insurance agencies varies in the geographic areas in which we conduct our title business. Our existing competitors may expand their title insurance business and, although we are not aware of any current initiatives to reduce regulatory barriers to entering our industry, any such reduction could result in new competitors, including financial institutions, entering the title insurance business. From time to time, new entrants enter the marketplace with alternative products to traditional title insurance, although many of these alternative products have been disallowed by title insurance regulators. Further, advances in technologies could, over time, significantly disrupt the traditional business model of financial services and real estate-related companies, including title insurance. These alternative products or disruptive technologies, if permitted by regulators, could adversely affect our business, financial condition, and results of operations.
Our success depends upon the real estate and title insurance industries continuing to adopt new products at their current pace and the continued growth and acceptance of digital products and services as effective enhancements and alternatives to traditional manual products and services.
We provide title and escrow products in part through our platform, which competes with traditional manual counterparts. We believe that the continued growth and acceptance of digital and instant experiences generally will depend, to a large extent, on the continued growth in commercial use of the internet and the continued migration of traditional offline markets and industries online.

The title and escrow process may not migrate to new technologies as quickly as (or at the levels that) we expect, and existing or future federal and state laws may prevent us from offering certain of our title and escrow products. For example, certain states do not allow remote notarization, which may impact our ability to introduce our products in certain markets.

Furthermore, although consumers have a legal right to select their own title insurance provider, as well as all of their settlement service vendors, consumers regularly use the providers recommended by their advisor, which may be their real estate agent, loan officer, or attorney. If consumer awareness of their right to select their own title insurance provider or settlement service vendors and/or if demand for online title and escrow products does not increase, our business, results of operations and financial condition could be adversely affected.

Moreover, if, for any reason, an unfavorable perception develops that digital experiences and/or automation are less efficacious than in-person closings or traditional offline methods of preparing closing disclosures, purchasing title insurance and other services, our business, results of operations and financial condition could be adversely affected.
Risks Related to Our Dependence on Third Parties
We rely on partners, vendors, and other service providers to provide some of the software or data for our platform. If such partners, vendors, and other service providers interfere with the distribution of our platform or with our use of such software, our business could be adversely affected.
We rely upon certain partners, vendors, and other service providers to provide data used in, and software employed by, our platform and services or by customers and consumers using our platform and services, and it is possible that such software or data may not be reliable. From time to time we may in the future have disputes with certain of our partners, vendors, and other service providers. If, in connection with such a dispute, a partner, vendor, or service provider terminates its relationship with us or otherwise limits the provision of their software or data to us, the availability or usage of our platform could be disrupted. If the partners, vendors, and other service providers we rely upon cease to provide access to the software and/or data that we and our customers and consumers use, whether in connection with disputes or otherwise, do not provide access to such software and/or data on terms that we believe to be attractive or reasonable, or do not provide us with the most current version of such software, we may be required to seek comparable software and/or data from other sources, which may be more expensive or inferior, or may not be available at all, any of which would adversely affect our business.
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We primarily rely on Amazon Web Services to deliver our services to users on our platform, and any disruption of or interference with our use of Amazon Web Services could adversely affect our business, financial condition, and results of operations.
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. AWS’ facilities are vulnerable to damage or interruption from natural disasters, cyberattacks, terrorist attacks, power outages, infrastructure changes, human error, disruptions in telecommunications services, fraud, military or political conflicts, computer viruses, ransomware, malware, and similar events or acts of misconduct. Our platform’s continuing and uninterrupted performance is critical to our success. We have experienced, and expect that in the future we will experience interruptions, delays, and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints. In addition, any changes in AWS’ service levels may adversely affect our ability to meet the requirements of users on our platform. Since our platform’s continuing and uninterrupted performance is critical to our success, sustained or repeated system failures would reduce the attractiveness of our platform. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as we expand and the usage of our platform increases. Any negative publicity arising from these disruptions and any of the above circumstances or events may harm our reputation and brand, reduce the availability or usage of our platform, lead to a significant short-term loss of revenue, increase our costs, and impair our ability to attract new users, any of which could adversely affect our business, financial condition, and results of operations.

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. Even though our platform is entirely in the cloud, our plan is to be vendor-agnostic and we believe that we could transition to one or more alternative cloud infrastructure providers on commercially reasonable terms. 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 have built integrations with many technology partners, including leading providers of customer relationship management platforms, loan origination systems, core banking systems, document generation systems, income and asset verification services, and pricing and product engines, and a variety of other service providers. Third-party applications, products, and services are constantly evolving, and we may not be able to maintain or modify our platform to ensure its compatibility with third-party offerings following development changes. In addition, some of our competitors, partners, or other service providers may take actions that disrupt the interoperability of our platform with their own products or services, or exert strong business influence on our ability to, and the terms on which we operate our platform. As our platform evolves, we expect the types and levels of competition we face to increase. Should any of our competitors, partners, or other service providers modify their technologies, standards, or terms of use in a manner that degrades the functionality or performance of our platform or is otherwise unsatisfactory to us or gives preferential treatment to our other competitors’ products or services, our platform, business, financial condition, and results of operations could be adversely affected.
The loss of access to credit, employment, financial and other data from external sources could harm our ability to provide our products and services.
We rely on a wide variety of data sources to provide our services and products, including data collected from applicants and borrowers, credit bureaus, payroll providers, data aggregators, and unaffiliated third parties. If we are unable to access and use data collected from or on behalf of applicants and borrowers, or other third-party data, or our access to such data is limited, our ability to provide our services and enable our customers to verify applicant data would be compromised. Any of the foregoing could negatively impact the consumer experience of our
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platform, the volume of loans enabled through our platform, the delivery of certain services, including closing services like title and settlement services, and the degree of automation in our application process and on our platform.

Further, although we utilize third parties to enable financial services firms to verify the income and employment information provided by certain selected applicants, we cannot guarantee the accuracy of applicant information. Information provided by borrowers may be incomplete, inaccurate, or intentionally false. Any of the foregoing could adversely affect our business, financial condition, and results of operations.
Risks Related to Our Intellectual Property
Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations.
Our business depends on our intellectual property, the protection of which is important to the success of our business. We rely on a combination of trademark, trade secret, copyright, and patent law and contractual restrictions to protect our intellectual property. In addition, we attempt to protect our intellectual property, technology, and confidential information by requiring our employees and consultants who develop intellectual property on our behalf to enter into confidentiality and invention assignment agreements, and third parties we share information with to enter into nondisclosure agreements. These agreements may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property, or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information or technology, or infringement of our intellectual property. Despite our efforts to protect our proprietary rights, unauthorized parties may copy aspects of our platform or other software, technology, and functionality or obtain and use information that we consider proprietary. In addition, unauthorized parties may also attempt, or successfully endeavor, to obtain our intellectual property, confidential information, and trade secrets through various methods, including through cyberattacks, and legal or other methods of protecting this data may be inadequate.

We have registered the term “Blend” in the United States, Canada, the United Kingdom, and the European Union, and as of September 30, 2024, we had pending trademark applications in the United States. We have also registered the term “Title365” in the United States. Additionally, we have registered domain names that we use in, or are related to, our business, most importantly blend.com and title365.com. Competitors have and may continue to adopt service names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks that are similar to our trademarks. As of September 30, 2024, we had one issued patent in the United States. Litigation or proceedings before the U.S. Patent and Trademark Office or other governmental authorities and administrative bodies in the United States and abroad may be necessary in the future to enforce our intellectual property rights and to determine the validity and scope of the proprietary rights of others. Further, we may not timely or successfully apply for a patent or register our trademarks or otherwise secure our intellectual property. Our efforts to protect, maintain, or enforce our proprietary rights may be ineffective and could result in substantial costs and diversion of resources, which could adversely affect our business, financial condition, and results of operations.
Intellectual property infringement assertions by third parties could result in significant costs and adversely affect our business, financial condition, results of operations, and reputation.
We operate in an industry with frequent intellectual property litigation. Other parties may assert that we have infringed their intellectual property rights. We could be required to pay substantial damages or cease using intellectual property or technology that is deemed infringing.

Further, we cannot predict whether assertions of third-party intellectual property rights or claims arising from such assertions would substantially adversely affect our business, financial condition, and results of operations. The defense of these claims and any future infringement claims, whether they are with or without merit or are
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determined in our favor, may result in costly litigation and diversion of technical and management personnel. Further, an adverse outcome of a dispute may require us to pay damages, potentially including treble damages and attorneys’ fees if we are found to have willfully infringed a party’s patent or copyright rights, cease making, licensing, or using products that are alleged to incorporate the intellectual property of others, expend additional development resources to redesign our offerings, and enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies. Royalty or licensing agreements, if required, may be unavailable on terms acceptable to us, or at all. In any event, we may need to license intellectual property which would require us to pay royalties or make one-time payments. Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, the time and resources necessary to resolve them could adversely affect our business, reputation, financial condition, results of operations, and reputation.
Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to provide our platform.
Our platform contains software modules licensed to us by third-party authors under “open source” licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification, or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability of such software may make it easier for others to compromise our platform.

Some open source licenses contain requirements that may, depending on how the licensed software is used or modified, require that we make available source code for modifications or derivative works we create based upon the licensed open source software, authorize further modification and redistribution of that source code, make that source code available at little or no cost, or grant other licenses to our intellectual property. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software under the terms of an open source software license. This could enable our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the release of the affected portions of our source code, we could be required to purchase additional licenses, expend substantial time, and resources to re-engineer some or all of our software or cease use or distribution of some or all of our software until we can adequately address the concerns.

Although we have certain policies and procedures in place to monitor our use of open source software that are designed to avoid subjecting our platform to conditions, those policies and procedures may not be effective to detect or address all such conditions. In addition, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their solutions. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face infringement or other liability, or be required to seek costly licenses from third parties to continue providing our platform on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our platform if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition, and results of operations.
Risks Related to Ownership of Our Class A Common Stock
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 Amended and Restated Certificate of Incorporation
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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.
Our Class A common stock has one vote per share, our Class B common stock has 40 votes per share, and our Class C common stock has no voting rights, except as otherwise required by law. 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 September 30, 2024, the shares beneficially owned by Mr. Ghamsari represented approximately 35% of the total voting power of our outstanding capital stock, which voting power may increase over time as Mr. Ghamsari exercises equity awards and exchanges them for our Class B common stock under the Equity Exchange Agreement. If all such equity awards held by Mr. Ghamsari (including the Co-Founder and Head of Blend Long-Term Performance Award) had been exercised for cash as of September 30, 2024, Mr. Ghamsari would hold approximately 82% of the voting power of our outstanding capital stock. As a result, for the foreseeable future, Mr. Ghamsari will be able to significantly influence matters requiring approval by our stockholders, including the election of members of our board of directors, the adoption of amendments to our Amended and Restated Certificate of Incorporation and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction. Mr. Ghamsari may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interest. 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. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders.

Because of the 40-to-one voting ratio between our Class B and Class A common stock, even if Mr. Ghamsari transfers or sells a significant number of shares of Class A common stock, he will continue to control a significant portion of the voting power of our capital stock based on his current ownership. Transfers by Mr. Ghamsari and his affiliates of Class B common stock generally result in those shares converting into shares of Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes. 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. Ghamsari and his affiliates is less than 35% of the number of shares of Class B common stock held by Mr. Ghamsari and his affiliates as of immediately following the completion of our IPO, which we sometimes refer to herein as the 35% Ownership Threshold; (ii) 12 months after the death or total disability of Mr. Ghamsari, during which 12-month period the shares of our Class B common stock shall be voted as directed by a person designated by Mr. Ghamsari and approved by our board of directors (or if there is no such person, then our secretary then in office); (iii) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the date on which Mr. Ghamsari is terminated for cause (as defined in our Amended and Restated Certificate of Incorporation); (iv) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the date upon which (A) Mr. Ghamsari is no longer providing services to us as an officer or employee and (B) Mr. Ghamsari is no longer a member of our board of directors, either as a result of Mr. Ghamsari’s voluntary resignation or as a result of a request or agreement by Mr. Ghamsari at a meeting of our stockholders for Mr. Ghamsari not to be renominated as a member of our board of directors; or (v) the 50-year anniversary of the completion of our IPO. We refer to the date on which such final conversion of all outstanding shares of Class B common stock pursuant to the terms of our Amended and Restated Certificate of Incorporation occurs as the Final Conversion Date.

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 September 30, 2024 and we have no current plans to issue shares of Class C common stock. These shares will be available to be used in the future to further strategic initiatives, such as financings or acquisitions, or issue future equity awards to our service providers. Over time the issuance of shares
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of Class A common stock will result in voting dilution to all of our stockholders and this dilution could eventually result in Mr. Ghamsari and his affiliates holding a lower percentage of our total outstanding voting power. 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 significant voting influence of Mr. Ghamsari. Further, the issuance of such shares of Class C common stock to Mr. Ghamsari would also delay the final conversion of all of our outstanding Class B common stock because shares of Class C common stock issued to Mr. Ghamsari would be counted when determining whether the 35% Ownership Threshold has been met. As a result, the issuance of shares of Class C common stock could prolong the duration of Mr. Ghamsari’s significant influence on the election of our directors and outcome of most matters submitted to a vote of our stockholders. In addition, we could issue shares of Class C common stock to Mr. Ghamsari and, in that event, he would be able to sell such shares of Class C common stock and achieve liquidity in his holdings without diminishing his voting control. Sales of significant amounts of stock by Mr. Ghamsari or changes in our capital structure, including as a result of the Final Conversion Date, could result in a change of control or cause volatility in our stock price and uncertainty. Any future issuances of shares of Class C common stock will not be subject to approval by our stockholders except as required by the listing standards of the New York Stock Exchange.
The trading price of our Class A common stock has been and may continue to be volatile, and you could lose all or part of your investment.
The trading price of our Class A common stock has been and may continue to be volatile and could be subject to fluctuations or declines in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our Class A common stock since you might be unable to sell your shares at or above the price you paid for such shares. Factors that could cause fluctuations in the trading price of our Class A common stock include the following:
•price and volume fluctuations in the overall stock market from time to time;
•volatility in the trading prices and trading volumes of technology stocks;
•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
•sales of shares of our Class A common stock by us or our stockholders, including sales by or on behalf of Nima Ghamsari, Head of Blend, Co-Founder and Chair of our board of directors, to reduce or satisfy the outstanding amounts under his personal loans as required or permitted under his loan documentation with certain lenders (including as a result of foreclosure), under which he has pledged shares of his Class A common stock and Class B common stock to secure certain personal indebtedness, or for any other reason;
•changes in our capital structure, including as a result of the Final Conversion Date, which could result in a change of control;
•the amounts and timing of repurchases, if any, under our share repurchase program;
•failure of securities analysts to maintain coverage of us or changes in financial estimates by securities analysts who follow our company;
•failure to meet our financial estimates or expectations or the financial estimates or expectations of securities analysts or investors;
•the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections;
•announcements by us or our competitors of new services or platform features;
•the public’s reaction to our press releases, other public announcements, and filings with the SEC;
•rumors and market speculation involving us or other companies in our industry;
•actual or anticipated changes in our results of operations or fluctuations in our results of operations;
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•actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally;
•litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
•actual or perceived privacy or security breaches or other incidents;
•developments or disputes concerning our intellectual property or other proprietary rights;
•announced or completed acquisitions of businesses, services, or technologies by us or our competitors;
•announced or completed strategic transactions by us or our competitors;
•new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
•changes in accounting standards, policies, guidelines, interpretations, or principles;
•any significant change in our management;
•failure to continue to be listed on the New York Stock Exchange (“NYSE”);
•general economic conditions and slow or negative growth of our markets; and
•other events or factors, including those resulting from war, incidents of terrorism, natural disasters, public health concerns or epidemics, such as the COVID-19 pandemic, natural disasters, the war in Ukraine, the conflict in the Middle East, or responses to these events.
 
In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.
We are an emerging growth company, as defined in the JOBS Act, and have the option to utilize certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an emerging growth company. 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.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. While we have not made such an irrevocable election, we have not delayed the adoption of any applicable accounting standards. Further, we may take advantage of some of the other reduced regulatory and reporting requirements that will be available to us so long as we qualify as an emerging growth company.

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Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualify as an emerging growth company, we may elect not to provide you with certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our company. As a result, investor confidence in our company and the market price of our Class A common stock may be adversely affected. Further, we cannot predict if investors will find our Class A common stock less attractive if we will rely on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
Delaware law and provisions in our Amended and Restated Certificate of Incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the market price of our Class A common stock.
Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay, or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, even if a change of control would be beneficial to our existing 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;
•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
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•advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.

These provisions, alone or together, could discourage, delay, or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.
Our amended and restated bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (iii) any action arising pursuant to any provision of the Delaware General Corporation Law, our Amended and Restated Certificate of Incorporation, or our amended and restated bylaws, or (iv) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as defendants.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws also provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. Nothing in our amended and restated bylaws precludes stockholders that assert claims under the Exchange Act from bringing such claims in state or federal court, subject to applicable law.

Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. The enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. For example, in December 2018, the Court of Chancery of the State of Delaware determined that a provision stating that U.S. federal district courts are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable. Although this decision was reversed by the Delaware Supreme Court in March 2020, courts in other states may still find these provisions to be inapplicable or unenforceable. If a court were to find the exclusive forum provisions in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could adversely affect our results of operations.
The holders of our Series A Preferred Stock are entitled to vote on an as-converted to Class A common stock basis and have rights to approve certain actions. Additionally, Haveli may exercise influence over us through their ability to designate a member of our board of directors.
The holders of our Series A Preferred Stock are entitled to vote with the holders of our Class A common stock on all matters submitted for a vote of holders of shares of Class A common stock (voting together with the holders of shares of Class A common stock as a single class) on an as-converted basis.

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Pursuant to the Investment Agreement, Haveli has the right to designate one candidate for nomination for election to our board of directors for so long as Haveli and its permitted transferees maintain minimum aggregate holdings of our stock as described in further detail in the Investment Agreement. Notwithstanding the fact that all of our directors are subject to fiduciary duties to us and to applicable law, the interests of the director designated by Haveli may differ from the interests of our securityholders as a whole or of our other directors.

Additionally, the consent of the holders of a majority of the outstanding shares of Series A Preferred Stock is required in order for us to take certain actions, including issuing securities that are senior to, or equal in priority with, the Series A Preferred Stock, increasing the number of shares available for grant under our equity compensation plans or making grants in excess of specified thresholds, incurring debt, redeeming or paying dividends on our common stock, engaging in certain mergers or acquisitions or divestitures, liquidating or dissolving, engaging in transactions with affiliates, incurring certain expenses in excess of our board-approved budget, and terminating the employment of certain of our officers. As a result, the holders of Series A Preferred Stock may in the future have the ability to influence the outcome of certain matters affecting our governance and capitalization.
The issuance of shares of our Series A Preferred Stock reduces the relative voting power of holders of our Class A common stock, and the conversion of those shares into shares of our Class A common stock would dilute the ownership of Class A common stockholders and may adversely affect the market price of our Class A common stock.
The holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our Class A common stock on all matters submitted to a vote of the holders of our Class A common stock, which reduces the relative voting power of the holders of our Class A common stock. In addition, the conversion of our Series A Preferred Stock into Class A common stock or the exercise of the warrant issued to Haveli to purchase up to 11,111,112 shares of Class A common stock, at a purchase price of $4.50 per share of Class A common stock, would dilute the ownership interest of existing holders of our Class A common stock, and any conversion of the Series A Preferred Stock or exercise of the Warrant would increase the number of shares of our Class A common stock available for public trading, and which may adversely affect prevailing market prices of our Class A common stock.
Our Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to the rights of, our Class A common stockholders, which could adversely affect our liquidity and financial condition.
The holders of our Series A Preferred Stock have the right to receive a payment on account of the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of our business before any payment may be made to holders of any other class or series of capital stock.

The holders of our Series A Preferred Stock also have certain redemption rights, including the right to require us to repurchase all or any portion of the Series A Preferred Stock at any time following the fifth anniversary of the original issuance date and a majority of the holders of the Series A Preferred Stock have the right to cause the Company to redeem, in whole, but not in part, the shares of Series A Preferred Stock at specified prices. In addition, upon prior written notice of certain change of control events, unless the holders elect to convert their shares of the Series A Preferred Stock into shares of Class A common stock, the shares of the Series A Preferred Stock will automatically be redeemed by us.

These repurchase obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes. Our obligations to the holders of our Series A Preferred Stock could also limit our ability to obtain additional financing, which could have an adverse effect on our results of operation and financial condition. The preferential rights could also result in divergent interests between the holders of our Series A Preferred Stock and our other securityholders.
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If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our business or our market, or if they change their recommendation regarding our Class A common stock adversely, the market price and trading volume of our Class A common stock could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors. The analysts’ estimates are based upon their own opinions and are often different from our estimates or expectations. If any of the analysts who cover us change their recommendation regarding our Class A common stock adversely, provide more favorable relative recommendations about our competitors, or publish inaccurate or unfavorable research about our business, the price of our securities would likely decline. If few securities analysts commence coverage of us, or if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets and demand for our securities could decrease, which could cause the price and trading volume of our Class A common stock to decline.
We do not expect to pay dividends in the foreseeable future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not anticipate declaring or paying any cash dividends to holders of our capital stock in the foreseeable future. In addition, our ability to pay cash dividends on our capital stock is likely to be restricted by any current and/or future debt financing arrangement we enter into. Consequently, stockholders must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
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ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table summarizes the share repurchase activity for the three months ended September 30, 2024:

Period
Total Number of Shares Purchased
(in thousands)(1)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands)(1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(in millions)(1)
August 6-31— — — 25 
September 1-30— — — 25 
(1) On August 6, 2024, our board of directors authorized the repurchase of up to $25.0 million of our Class A common stock. In connection with this authorization, we have entered into Rule 10b5-1 plans. As of September 30, 2024, no repurchases have been made under the program. Please refer to Note 11, Stockholders Equity, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On August 12, 2024, Timothy J. Mayopoulos, a member of our board of directors, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 273,374 shares of our Class A common stock, with the exact number of shares to be sold pursuant to Mr. Mayopoulos’s trading arrangement to be determined based on market prices of our Class A common stock. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The duration of the trading arrangement is until May 9, 2025, or earlier if all transactions under the trading arrangement are completed.
On August 22, 2024, Nima Ghamsari, our Head of Blend, Co-Founder, and Chair of our board of directors, terminated his previously reported Rule 10b5-1 trading arrangement previously adopted on June 14, 2024. The terminated trading plan provided for the potential sale of up to an aggregate of 2,400,000 shares of our Class A common stock, plus sales of shares of our Class A common stock issued upon the vesting of restricted stock units intended to generate an aggregate of approximately $450,000. As of the termination date, no shares of our Class A common stock were sold under the trading arrangement.
On September 12, 2024, Brian Kneafsey, our Head of Revenue, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 360,000 shares of our Class A common stock, with the exact number of shares to be sold pursuant to Mr. Kneafsey’s trading arrangement to be determined based on market prices of our Class A common stock. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The duration of the trading arrangement is until June 1, 2025, or earlier if all transactions under the trading arrangement are completed.
No other officers or directors, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the last fiscal quarter.
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ITEM 6. EXHIBITS

EXHIBIT INDEX

Exhibit NumberDescription
10.1+
31.1
31.2
32.1†
101.INSXBRL Instance Document.
101.SCHXBRL Taxonomy Extension Schema Document.
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase Document.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.
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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 has been formatted in Inline XBRL.

_______________

+ Indicates management contract or compensatory plan or arrangement.

† The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Blend Labs, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.



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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


BLEND LABS, INC.
Date:
November 6, 2024
By:
/s/ Nima Ghamsari
Nima Ghamsari
Head of Blend and Co-Founder
(Principal Executive Officer)
Date:
November 6, 2024
By:
/s/ Amir Jafari
Amir Jafari
Head of Finance
(Principal Financial Officer)
100