blend lab Management said it was conservative in managing the company after recording a huge financial loss in the second quarter of 2022.
A California-based mortgage tech company plans to cut costs, including a 25% reduction in its workforce, and will focus on products with a high return on investment. Extreme market downturn.
Blend co-founder Nima Ghamsari said on Monday’s earnings call that “the company will operate cautiously as if origination volumes in the mortgage industry will remain at or near historic lows through 2025. I am doing,” he said.
Blend Labs reported a loss of $478.4 million in the second quarter. first quarterThis result reflects a $392 million impairment of intangible assets and goodwill related to the fair value update of Title365, a company acquired in 2021.
“This business was purchased in a much stronger economic and mortgage refinancing environment. We recognize that,” said Ghamsari. “Title365 has strategic value for Blend and continues to be a leader in the business.”
Blend revenues declined from $71.5 million in the prior quarter to $65.5 million in the April-June period. But mostly he was driven by Title365’s earnings, which increased him 105% year over year.
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Title365’s second quarter revenue was $31.9 million, down from $38.7 million in the previous quarter. This was partially offset by home equity and default products, but reflected lower refis.
For each business line, Blend Platform revenue was $33.6 million, up 5% year over year. However, mortgage income fell 6% to $23.9 million. Consumer Banking, meanwhile, was up 53% to $8.5 million. Professional services revenue remained relatively flat at $1.2 million.
Due to the tough environment in the mortgage business, Blend has cut more than 400 positions and cut about 200 employees in two rounds of layoffs. April In August, there were 220, or 25% of the workforce.
With the job cuts, management expects to have a full impact in 2023 and save $60 million a year, they said in a call.
The company is also reviewing its cost structure related to vendor contracts and expects to save $6 million each quarter, and plans to further improve efficiencies through offshoring. Blend operates in India.
From a revenue perspective, the company prioritizes product lines that can achieve a return on investment in a relatively short period of time. We are also increasing our price per transaction as we continue to add value to our platform.
“Blend plans to reduce its non-GAAP net operating loss by 50% from current levels by the end of 2023,” Mr Ghamsari said.
The company expects full-year 2022 revenue to be between $230 million and $250 million. Forecasts include origination volume in the US mortgage market declining about 41% from its $4 trillion level in 2021. Mortgage Bankers Association (MBA).
Blend’s shares closed at $2.76 on Monday, down 0.28% from the previous close. Aftermarket he increased 14% following the second quarter earnings report.