BLND - NYSE

Hello, everyone. Thank you for joining us and welcome to the Blend Labs Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] I will now hand the call over to Meg Nunnally, Head of Investor Relations. Please go ahead.

Good afternoon and welcome to Blend's financial results conference call for the fourth quarter and full year of 2025. I'm Meg Nunnally, Blend's Head of Investor Relations. Joining me today is Nima Ghamsari, our Co-Founder and Head of Blend; and Jason Ream, our Head of Finance and Administration. Before we start today's call, I'd like to note that we will refer to certain non-GAAP measures, which are reconciled to GAAP measures in today's earnings release and in the appendix of our supplemental slides. Non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, all financial measures we'll discuss today including our profitability, refer to non-GAAP. Also, certain statements made during today's conference call regarding Blend and its operations. In particular, our guidance for the first quarter 2026, other commentary regarding 2026 and our expectations about markets, our strategic investments, product development plans, and operational targets may be considered forward-looking statements under federal securities law. We caution you that forward-looking statements involve substantial risks and uncertainties and a number of factors which are beyond the company's control, could cause actual results, events or circumstances to differ materially from those described in these statements. Please see the risk factors we've identified in our most recent 10-Qs, our upcoming 10-K for the fiscal year 2025 and other SEC filings. We are not undertaking any commitment to update these statements if conditions change, except as required by law. The financial information presented on this call is based on continuing operations and prior periods have been recast to exclude operations that are now discontinued. Furthermore, the financial information presented reflects preliminary estimates and remains subject to completion of the company's financial closing procedures and review by the company's independent registered public accounting firm. Financial results will not be final until Blend files its annual report on Form 10-K for the period. Lastly, we will be providing a copy of our prepared remarks on our website by the conclusion of today's call and an audio replay will also be available soon after the call. I'll now turn the call over to Nima.

Thanks, Meg, and welcome, everyone. I'm pleased to report that Blend finished fiscal year 2025 with a strong fourth quarter, coming in near the high end of our revenue guidance and beating the high end of our non-GAAP operating income guidance. But the headline numbers, $32.4 million in revenue and $5.4 million in non-GAAP operating income tell a more important story. They show that we navigated the cycle successfully to emerge as a fundamentally different company. Our consistent performance is not an accident. It is the direct result of the focus and discipline of the entire Blend team. By maintaining a lean software first cost structure, we have created significant operating leverage. We are generating cash, not spending it. We ended the quarter with 0 debt and over $68 million in cash and securities. We have such conviction in our intrinsic value that we repurchased 5.1 million shares worth $15 million in Q4 alone. And our Board authorized a new program that allows us to repurchase up to another $50 million in stock and we'll continue to strategically execute against this authorization. We are now in a position where we can lean into offense, ensuring that as the market recovers, benefits flow directly to our customers and our bottom line. Let's start by talking about our customer wins and strategic expansions. During the fourth quarter, we signed 10 new deals and expansions. As we look forward towards a potential market recovery, we are seeing a fundamental shift in how financial institutions view their technology stack. And our focus continues to be on winning high-quality logos and deepening our relationship with our existing base. In Q4, we saw notable activity across both mortgage and Consumer Banking suites. Along those lines, deals included 2 new notable new mortgage customers, 1 of which has been a Consumer Banking customer since 2023 and represents a great motion for us, a cross-sell from Consumer Banking into mortgage. Both deals include bundled mortgage and close and should be incrementally accretive to our unit economics. And in Consumer Banking, notable new deals include Rapid home equity cross-sell for a large bank which -- this has been a customer with us since 2020 using our flagship home equity product, but now it allows them to use Rapid workflows in other parts of their process like prequalification. We also signed a new logo with a top 40 credit union with product scope across credit cards, deposit accounts, personal loans and auto loans, highlighting the ability of our Consumer Banking business to bring a new 7-figure per-year logo in addition to selling to our existing mortgage customers. Looking ahead, our overall pipeline remains robust, which is up about 40% year-over-year. And it's not just the volume of the pipeline that excites us with our new focus, it's the composition. We're seeing a structural shift towards bundled deals and that means that we have opportunities that span mortgage, Rapid, Close and Consumer Banking. Momentum we're seeing now is fueled by our customers' desire to build more scalable businesses. Lenders are exhausted by painful hire and fire cycles and by stare and compare and manual work dictated by interest rate volatility and consumer -- state of the consumer. And they're no longer willing to ride the highs and lows of the market by simply adding and removing human labor. They want a technology company that can automate the intractable complexity of lending, which will lead to them having elastic capacity. The ability to handle volume spike seamlessly without adding fixed human overhead. And that turns their businesses into massively efficient businesses that can be 10x efficient as they are today. But the numbers and our customers and our products and our financial results to date, they only tell the story of where we've been to date. So I want to spend a moment on where we're going because this is an area of personal passion for mine. I've been deep in tech since I was a kid. I was building computers and building programs and building games from my childhood. And when we started Blend, we didn't build Blend just to be a slightly better way to do mortgages. That was a great application form and a great way to ability to close the loan digitally. We built it to completely rewire how the financial system operates and how origination is done. And then as we expanded into Consumer Banking, the same approach, we wanted to make those processes as beautiful and as streamlined as they could be. But that's a difficult problem. That's been an intractable problem because technology to solve such complex regulated originations is not a trivial thing to build. And as a result, as I look at that, and I look at the market turmoil recently as investors are grappling with how AI will impact the software industry, which people are calling the SaaSpocalypse. And we're seeing valuations battered as the market worries about AI and how it will commoditize traditional SaaS and destroy seat-based pricing models. I view this completely differently than them. I view this as the greatest filter of our generation. There's a brand-new frontier technology available to us. That's going to bring some transformation. But it's not going to be a generic approaches and generic AI wrappers that win in these highly regulated industries. At Blend, we operate and we have operated deeply within the origination space, the revenue generation funnel of financial institutions of all sizes, some of the small ones and some of the largest ones in the country. For them, we're not just a user interface, we're a trusted secure workflow system of record that reconciles immense complexity across some of the most complicated financial products in the world. And critically, for us, operating at this depth means we continuously are collecting and analyzing and storing data on what's going on in the loan and how it can move along in the process. And that's something the combination of our expertise and our passion around this frontier of technology is something that no competitor can replicate. So I think this is a rich body of structured financial data, including borrower behavior, document processing, underwriting processing, and that sits entirely within how we collect documents, how we process these documents, how we process closings in the Blend flow today. And that compounds over time. That will make our customers smarter, our AI smarter, our platform smarter and stickier for our customers with every single transaction that flows through it. And for our business model, because we monetize the success of our customers, which was always somewhat controversial. People loved seat-based models in the last decade. We've always been a success-based model, and that's a funded loan based model rather than user seats. AI-driven efficiency in a success-based model is exactly what our customers want and what we want and what you, as our investors want. We want to find a way to drive more success for our customers. So if that loan officer closes 5x as many loans, they're more successful and our revenue scales with their success. That's how we've always built this company from the very first day and not their headcount. Growing their head count is not a sign of success, growing their seats is not a sign of success for our customers. The SaaSpocalypse, as they call it, that's happening right now, I think of that as our greatest catalyst. And we're using this moment to stay aggressively on offense in 2 distinct ways. And I always like to start with our customers first. So first, we're going on offense to make the products we deliver to our customers, agent first. And by agent first, what I mean is that the agents are taking a first pass of every single piece of work that's done behind the scenes. And so that means when a new piece of data comes in, a new document comes in, something that's updated on the file, agents take a first pass of underwriting, security, compliance, regulatory checks. All the things that happen manually today behind the scenes that our lenders are required to do. We want the primary way that our customers engage with their customers to be like -- to be this new way where agents are taking a first pass and the humans that live there at our customers are the oversight layer to make sure that agents are doing the right things and checking the right things. And in this industry, which requires absolute precision, security, compliance, Blend has been a trusted and is a trusted enterprise-grade bridge to AI adoption, agentic AI adoption. And while I think really highly of the generative AI models that are out there and the foundation model companies as thoughtful knowledge bases and delivering really great tools around building agents. What Blend has built is to drive the right outcome from the right actions. And that's especially important in a heavily regulated industry, subject to fair lending laws, and our customers can't afford hallucinations and they -- the calculations around things like income and income verification have to be perfect. And they have to know when they have to jump in to oversee what the AI does. They need a system that doesn't just look at documents and make sure they're the right document, but actually understands the documents and reconciles those documents against complex 100-page or 1,000 page guidelines that are imposed on them by the credit risk teams, by regulators and investors. And that's a moat that I don't think generative AI companies really want to cross. I think they want to be the tooling layer. It's so specific to the industry. And so that's where I'm excited. It gives us an opportunity as an existing workflow layer for our customers to really step in. And so just a few days ago, exactly a week ago, in fact, on March 3 we officially launched our flagship product in this space called Blend Autopilot, which is simple. It's an agent that lives alongside every aspect of the Blend origination process as the customer is going through it. And it serves as the product that looks at every data field, every document. Checks it against guidelines, runs calculations, creates additional follow-ups, takes action, if necessary, on that file. Generates artifacts so the customer can see all the work that's being done. And it's familiar with the most technical guidelines out there that some of them are 800, 900 pages long. I'm thrilled to share that we now have 7 large customers who have turned us on or wanting to turn this on in the coming days, and that's just within a week of us launching it. That's in the preview period. And so we're very excited about that. And that came on the backs of -- we have a small group of customers that serve on our Customer Advisory Board, which was last month. And we previewed this for them before our public launch last week. I have to tell you, for me, it was a profound moment because we spent the morning there and there were -- people were talking about the costs in banking and how much manual work there is, how much stare and compare that is -- there is. And then that was in a morning session we had a third-party come in and demonstrate that to them and what's going on in the industry. But then when we demonstrated Autopilot live, showing them that if you had a really smart brain that was taking a first pass at everything that was doing, could instantly detect something coming in from the consumer and where it needs more data and more documents, validating that against guidelines, doing calculations, updating the loan file without human intervention. I mean you could feel the energy in the room shift. For these leaders, it wasn't just another software update, another little feature improvement from Blend. It was a genuine moment of inspiration. Because they wanted to have this elastic capacity where in order to grow their loan volume, let's say, mortgage rates come down, where they're growing their personal loan business or whatever it may be, they didn't want to have to hire hundreds of people. And then if volumes come down, have to go back and fire those people. They wanted to rewire how they do things. And I think this is their first shot at really being able to do that, and it's thanks to some of the generative AI capabilities that we built into our platform. And so traditional, just to give you a little more color on the product. Loan officers or underwriters have manually reviewed documents that come in as an example, and borrowers have to wait a couple of days for that to happen because that's a human process and somebody has to go through all the pages of their documents and all the pages of their loan application file. And then go back to them and do some stare and compare. Go back to them and say, "Hey, I need these 3 or 4 other things." And then there's this back and forth that takes a few weeks, which is why it takes so long to close a mortgage loan, for example. That's something that Blend Autopilot flips entirely on its head. And so there's 4 key things that Blend Autopilot brings for our customers. The first is real-time intelligence. So like I said, everything that Autopilot sees comes in, in real time, it does the checks. And within 15 to 30 seconds, it's going back to the consumer and saying, "Hey, I need this additional thing based on the fact that I saw that your bank account is in a trust." And that could be with out-of-the-box guidelines like Fannie Mae and Freddie Mac or it could be complete custom guidelines. A lot of our customers do home equity lending or auto lending or personal lending. And so we launched with the capability of custom guidelines because we know our customers have their own credit boxes that they have to be able to fit these things into. So the first is that real-time intelligence. The second is contextual workflows. And by that, I mean, the agent is triggered by events in our system that have a lot of context to them. And then as the output, they have the ability to trigger native workflows that already exist within the Blend infrastructure. And that's which has always been part of our core value proposition. We've always wanted to and we have driven a better experience for the consumer, where we aren't going to them when they need to provide an explanation for something and saying, "Hey, write up an explanation, print it, sign it, take a photo of it and upload it." When we need an explanation from them, they enter it in plain text. And so when we have those things that we need from the borrower, just like a human would request that in our system, the agent requested in the same way with that nice workflow that guides the borrower through that. And so it's almost like you're working in a dynamic experience that is aware of everything that's going on in your credit file as a consumer. And so we have made a ways of handling that at Blend already and the agent is aware of that and takes the right actions. That's the second, which is these contextual workflows. The third is the seamless updates that we get allow Autopilot to automatically update application fields. So for example, income calculation is a very complex part of the lending guidelines usually. Because it's just -- it's 1 the things where there's such a variation in how people make money in this country. And just to give you an example, I ran this on my income, which was tax return at W2 with bonus and some other kinds of income and then K-1s and 1099s. And I ran it dozens of times to see the outcome. And it was calculating my income perfectly every time. And so that's the power when you orchestrate the generative AI in the right ways and you orchestrate the agents in the right way and you give them the right context, you can be almost deterministic in the outcomes that you get, which is very important for this industry. And last, the fourth thing I'd say is it's built for compliance. Autopilot is not making credit decisions. It's taking a first pass, which is overseen by a human ultimately. It's not triggered by a human, but it's overseen by a human. And I think that's the future where agents are going to live. And I said that earlier today, but agents are going to take a first pass of all this busy work and humans are going to be there to make final decisions, and that's exactly how Autopilot is built. The borrower data that our customers have. I know they're very -- that's never used to train or improve AI models. So we're not risking our customers' data, which is important in this regulated industry and especially for banks and financial institutions, it's very important that we do that in the right way. So in summary, to say about automating the stare and compare and calculations and guideline work that's plagued this industry for decades. I talked about the $11,000 problem on our last earnings, and this is our approach to help them solve it head on. But I don't want only our customers to have access to an agent first world. As somebody who is very passionate about this and thinks about how agents can do so many things today and they're only getting better. I also want Blend to be an agent first company, where agents are taking a first pass of our work. And so we're reimagining everything internally at Blend. And it started with how we build and to now how we sell, how we manage and support our customers. And that, to me, that doesn't mean just getting our teams access to new tools like Claude Cowork or Gemini or ChatGPT, which, of course, we've done those things. But it means fundamentally changing who does the work, when and who reviews it. And it's the same model that we're building for our customers. The agent gets triggered, it executes something and it goes to the employee to oversee. And I am personally so passionate about this effort. I'm driving this effort myself, and our goal is to be in the top 1% of all companies, not just public companies, but all companies in how we adopt and operate with AI agents at Blend. So what that means for us is that, in practice, our software developers are working with agents to write the code already, but I actually want the agents to take a first pass. So as new tickets are created, new support tickets come in that outline a bug. The agent should take a first pass and saying, "Hey, here was the bug. Here's a pull request of the code that needs to change." But then goes to an agent -- sorry, to a human to do a final review to make sure that fixed the bug in the right way. I want the agents to be doing the grunt work and passing that work onto our software engineers to make sure that it's solved. And that means that we're able to handle things like new things -- new -- building new things or fixing things 24/7. And that's the same with go-to-market. If there's an upcoming business for you, I want the agents to take a first pass or if there's internal back office teams, IT support our revenue teams, I want -- I just want to get agents working for them as well. Surfacing output and letting people, the humans that we have focused on judgment and final decisions and reviewing the work the agents do. And for me and for Blend broadly, I think, this means we'll be able to move a lot faster and we'll be a lot more efficient. We'll be able to handle growth in our company without having to have tons of new capacity because agents scale really well and we'll use that to grow our margins. But more importantly, in all of that, because it lets us move faster, we'll be able to do a lot more for this industry. When agents are handling all this work behind the scenes. We're no longer bottlenecked with the same multi-day or multiweek cycle that exists for our customers that we have internally with some of the things we have to do. Something comes in, the first pass is done within minutes and we become a leaner and more agile organization and one that I hope can simply outpace anybody in our space. And so to wrap up, I don't think Blend is -- the market recovery and all those things that I said in the beginning, those are fully in the rear window. We have spent the last 2 years doing the hard work of clearing away debt, simplifying our business and building a foundation for sustainable growth. And I'm not even thinking about those. Now I'm thinking about how do we build an agent first world, both for ourselves and for our customers. And so we have a profitable, scalable platform that is ready to win in any environment. And whether rates stay flat or they come down and we see big improvements in volume, we are in pole position to serve our customers and drive massive value for our shareholders. So with that, I'll turn it over to Jason to walk through the financials.

Thank you, Nima and thanks to everyone else on the call. I am pleased to report that we delivered another quarter of solid financial performance to close out 2025. This quarter's results once again demonstrate the resilience of our core business and the significant operating leverage we have created through disciplined cost management. Total revenue in the fourth quarter of 2025 was $32.4 million, which was just slightly below the high end of our guidance range and was up 7% year-over-year. This performance was helped by a return to growth in our Mortgage Suite, which generated $18.8 million in revenue, up 3% year-over-year. Stabilizing churn and stronger-than-expected macro bolstered our mortgage revenue results, and Blend's funded loan growth was solid, growing 11% in Q4, and our economic value for funded loan came in at $83 in the fourth quarter, within the guidance range that we gave on our last call. Consumer Banking Suite revenue for the fourth quarter was $11.5 million, representing 21% year-over-year growth. The sequential decline of 10% from the third quarter was driven primarily by the churn of 1 large customer that we talked about last quarter as well as seasonality in home equity, but partially offset by new deployments. Shifting back to the consolidated results. Our total gross profit was $24.5 million. After excluding stock-based compensation and the amortization of capitalized software development costs, our non-GAAP gross profit was $25.8 million, and our non-GAAP gross margin was 80%, up from 78% last quarter. Non-GAAP operating expenses were $20.3 million or down 4% quarter-over-quarter. Non-GAAP operating income was $5.4 million, above the high end of our guidance range and representing a non-GAAP operating margin of 17%. And free cash flow for the quarter was positive $1.3 million. For the full year of 2025, we generated total free cash flow of positive $2.8 million. Our balance sheet remains strong. We ended the year with $68.3 million in cash, cash equivalents and marketable securities and with 0 debt. During the fourth quarter, we continued to execute our share repurchase program. We repurchased 5.1 million shares worth approximately $16 million, concluding our $25 million repurchase authorization. This last repurchase, like the new $50 million authorization that we are announcing today is driven by and reflects our confidence in the long-term value of the business and our commitment to disciplined capital allocation. Before I turn to our guidance for the first quarter, I'd like to talk about how we're thinking about the business right now and what that means for how our results might play out over the coming quarters. First, our mortgage business returned to year-over-year growth in the fourth quarter. And based on the stability of our customer base, new deployments that are ramping up in 2026 and a positive mortgage market outlook, we expect to see that trend continue. We will remain cautious in our optimism until rates really come down and mortgage volume, particularly refi really picks up. But we have seen early signs of improvement and are ready to take advantage of a market uptick. Second, we remain optimistic about our Consumer Banking business. But as we've told you before, we are still concentrated at the higher end of the market for Consumer Banking and both wins and losses can create lumpiness in our results. To give you some specifics, 2025, in which we saw Consumer Banking growth 35% year-over-year, was bolstered by a large customer that went late -- that went live, late in 2024, contributing about $5 million to growth in 2025 and which is now at a steady state. Conversely, we talked last quarter about the roll-off of a large customer that was acquired. This customer contributed approximately $2.4 million of Consumer Banking revenue in 2025 largely through home equity loans, and we do not expect any Consumer Banking revenue from this customer in 2026. Net-net, you should think about Consumer Banking starting off with a little under $11 million of revenue in Q1 and then having similar seasonality in 2026 as it did in 2025. We'll remain conservative in our outlook for the Consumer Banking business, given the shape of the customer base, but we do see a lot of opportunity going forward, and we're excited about what is to come. Third, as you know, we have been very diligent regarding our costs, both in terms of trimming unnecessary spend, as well as being judicious about any spend that we add. We will continue that mindset going forward. And in fact, I expect that over time, we will get even more effectiveness and efficiency from the leverage of AI in our internal processes. An effort that Nima talked about and that is already prevalent across the company, not just in software engineering. As you model Q1, please note that our early adoption of ASU 2025-06, significantly changes how we report software R&D expense. Because we are now capitalizing less software development costs, you will see a divergence between the growth of our reported expense and the growth of our actual cash outlay for R&D. Specifically, for the first quarter of 2026, we expect non-GAAP R&D expense to be approximately $7 million, which represents a 20% year-over-year increase. However, our underlying cash R&D expense before capitalization and amortization is actually expected to decline by roughly 15% in that same period. While this creates a year-over-year headwind in our reported leverage for Q1, we expect this gap to narrow as the year progresses, and we lap prior period comps. You should view this Q1 $7 million figure as the new baseline run rate for your models and ignore the seasonal patterns in our R&D expense that you saw last year as those were influenced by our prior capitalization policy. Now turning to our expectations for the first quarter. We expect total revenue for the first quarter to be between $28.5 million and $30 million, which represents approximately 6% to 12% growth over the first quarter of 25%. Underneath those headline numbers, we are expecting Mortgage Suite revenue to grow at or above the high end of that range, but for Consumer Banking growth to be more muted based on the factors I discussed earlier. We expect Mortgage Suite revenue growth to be driven by solid growth in mortgage volumes, where we expect the market in Q1 to be between 1.1 million and 1.2 million units. This growth should be partially offset by lower year-over-year economic value per funded loan, which we expect to be in the range of $84 to $85 in Q1 with the decline primarily due to the transition of certain products to a partner model. Turning to profitability. We expect first quarter total non-GAAP operating income to be between $2 million to $3 million. This range implies a non-GAAP operating margin at the midpoint of just under 10%. Seasonality typically pushes down operating margins in the first quarter of the year, but the accounting changes I discussed earlier also had a material impact, especially as you compare year-over-year trends. Before we turn the call over for questions, I did want to add through our assessment of internal control over financial reporting, we identified a material weakness in our revenue process for the year ended December 31, 2025. While the material weakness was confirmed in the fourth quarter, we're also disclosing immaterial out-of-period adjustments related to the first quarter -- first 3 quarters of 2025. Revised figures are available in the appendix of our supplemental slides on our website, and will also be detailed in our upcoming 10-K filing. In conclusion, I want to say that we are incredibly excited about a number of aspects of our business in terms of what we can deliver to customers through some of the innovative product initiatives that Nima talked about. In terms of our execution as we focus on what matters and we leverage AI to get more done than we ever have before. In terms of our mortgage revenue returning to year-over-year growth last quarter. And in terms of a market that looks like it might show some real improvement for the first time in several years. We hope that you all are as excited about the journey as we are. And now let's take your questions.

[Operator Instructions] Your first question comes from Dylan Becker of William Blair.

Appreciate the question here. And Nima, I appreciate all the comments around kind of the strategic positioning with vertical AI. If we're to think about Autopilot, I know you kind of said the existing process today costs about $11,000. I guess how much of that is directly kind of targetable with your current Agentic capabilities? And as we think about kind of your -- those capabilities evolving over time, how much value do you think you can kind of extract away against that? And what does that mean for kind of long-term EV PFL economics in your mind as we kind of obviously look to kind of attack or chip away at that kind of relatively exorbitant cost in the process there?

Yes. Great question. Thanks, Dylan. My approach on this one is going to be to under promise and over deliver on the economics. Just to share sort of some context though, which is the cost of $11,000, about $4,000 is, I'll call it, operational cost, and then there's a decent amount of commissions and marketing costs that are also in there. And so I think there's a material amount of manual effort that goes into these. And so if we can make the humans in the process, 2x efficient, 3x efficient, I think there's a very good market opportunity for us, which is why we're attacking this so swiftly. And the team that's working on this, just to give you a little bit of perspective is we're moving day-to-day. Like every week, our customers are going to see material new updates to this and new capabilities because it's an area that we're passionate about and we think can really move the needle for them. We've always been here for our customers, and I think this is sort of the -- our magnum opus if you will. And so I think for me, while I want to under promise and over deliver, I'll leave you with 1 anecdote, which is I was talking to 1 of our customers who does similar things, maybe a little bit less scope than what our product does today. And I was like, how should we charge for this long term. And short term, we have this preview period, which we gave to our customers. And he said, "Well, just so you know, I do this with an outside vendor and I pay them a lot more than I pay you per loan by a decent margin just to do a part of the process that you do." And so I think the opportunity is there. It's on us to execute. And so let us go execute, and we'll come back to you every few months with updates.

That's helpful. Appreciate the anecdote. And I do think that's your point. The fact of kind of elevated customer momentum and activity despite it being in preview for less than a week does speak to that value proposition. Maybe, Jason, for you, it's pretty impressive what you guys have been able to do on the expense side and appreciate the color on kind of some of the moving accounting parts there. But as we kind of think about the potential recovery taking place, around the volume dynamic. I guess, could you remind us what to maybe expect from kind of like the potential for incremental operating leverage? How we should think about cost growth relative to potential revenue growth in that scenario? Just kind of any way to think about the operating leverage as you kind of think about and sit there looking at the model.

Yes. Dylan, good question. Obviously, we haven't guided to the rest of the year, so I can't give you that sort of guidance. But I think implicit in our Q1 guide is sort of a rebased lining and I think you can think about that as our starting point. Obviously, we do have some variable costs in our cost of revenue that will scale with revenue. But on the operating side, it's really a question of where we choose to invest and where we are able to get efficiencies. And I think you can think about Q1 as the starting point for that.

Your next question comes from Ryan Tomasello of KBW.

Everyone, sorry, am I coming through?

Yes.

Sorry about that. Regarding the 2 new mortgage customers, I believe you cited that you won in the quarter. Can you just provide some color there on whether those were competitive takeaways? And if so, what you think were the drivers of those wins?

I think the driver of those wins is that we made a commitment to our customers that we would invest through the cycle. And we would keep innovating and we've innovated on our mortgage product. We've innovated on our consumer products. We've innovated on our closing product and now we're building an agentic suite that can live across all those things. And they see that. I mean it's not easy to rely on partners in this industry because it is such a cyclical industry and we made the commitment early on. And we're going to keep growing. And obviously, we have our own things that we've had to deal with the last few years, but I think people have seen that. There's our commitment and my commitment is there, and we're going to make sure that they're successful. And I think that that's ultimately what leads to customers believing in us and wanting to work with us.

Great. And then on the new Rapid products that you've rolled out over the last few quarters, can you just talk about the level of uptake you've been seeing there if that's tracking in line with what you were expecting? And then on the pricing side, the type of uplift you're seeing from earlier adopters of the Rapid products.

Yes, great question. And one of the -- we mentioned one of the ones in the -- that signed with us in Q4. And it's a pretty material uptick in pricing from their EV PFL. It's not live yet. As an example, it's a fairly large bank. But the way I think of Rapid, and it has been something that our customers do really want, and they want it for 2 reasons. So the 2 areas that we serve with Rapid are home equity and mortgage refinances. With home equity, it's definitely something that our customers care about and they want to be able to serve the $315,000 in equity that their consumers have and drive savings to them on their debt if they need to consolidate debt. And so it's something where we have a flagship home equity product, and this is just more of a personalized real-time offer with a real-time pre-approval that is sort of a beautiful tailor experience to that specific consumer. And so I was on a call earlier today with a very large customer, 1 of the top 10 home equity lenders in the country who's going live here in a few months. And this is going to be table stakes for them going forward. And being able to serve a high conversion experience at that top of the funnel and then pairing that with Autopilot, which is going to lead to a lower cost of operation because of lower variable costs because they'll be able to have these things happen in real time as the consumer is going through, self-fulfillment, if you will. I mean that's sort of the dream combination. And so the uptake has been good. I mean it is a big shift for them. I'd say business-wise, that's a much bigger change management exercise in some ways than the Autopilot product because it's sort of doing work in the background versus changing your entire up funnel. But yes, the uptake has been good. And again, let's let those results continue to play out, and we'll try to under promise and over deliver there as well.

[Operator Instructions] Your next question comes from the line of Griffin MacMaster of Wells Fargo.

I just wanted to ask on the top of funnel, and it's great to kind of see that Consumer Banking customer also kind of looking at you guys for mortgage solutions. Just wanted to ask you around if there's any way to think about how many customers across the base or your kind of overall landscape could be target customers for all of these products? And then kind of along with that, with the recent hires as new Chief Revenue Officer, if there's any changes around the go-to-market and kind of how to think about this going forward?

Yes. Maybe I'll start with the second question, yes, we're excited to welcome Matt on board. And one of the key shifts we're making there is having a dedicated client sales team that's focused on our existing clients for the exact reason that you asked your question, I think. And helping our customers, existing customers, both adopt more products that are free as well as new products that can grow value for them and we charge for. And so that's a dedicated new motion that we have, which we're very excited about, and it will help those people be a lot more focused on the existing customer base and then a separate new client sales motion. That will help us go and get more and more of these great logos that we have added to our roster. And I think that's a nice change for us. And then to answer to your first question around what's the target market for all of these things. It's interesting. I think when I look at what's actually in place and practice in the industry today, these extremely low friction conversion funnels tied to a very automated, self-fulfillment process are basically in place nowhere. I mean some of the technology wasn't there until 6 months ago. And on the low conversion funnel, some of the data sources that were required to drive that level of low friction weren't really prevalent until about 1 year, 1.5 years ago. And so I think the timing is good for us in the market to be able to serve that. And then I'd say maybe most importantly, the thing I'm most excited about across all of these things, especially for that customer you mentioned, that's using us for all the -- actually all the non-home lending products that we won a top 40 credit union. What I really want to do and what they're excited about is help them make their members, members for life. And so a lot of this is not dependent on the why that consumer comes in the door? Why that member comes in the door with them? In the sense that a member can come in thinking they want 1 thing from you. Thinking, "Hey, I just want a new credit card." And you're like, "Hey, did you know that we can -- you have a ton of equity in your home, and we can save you a $1,000 a month if you consolidate these other credit cards and things -- and personal loans that you have into a home equity line." And so this idea of serving the best thing up for the person at that moment in time. It's something that I'm excited about long term for our customers. To be clear, we haven't executed on that yet. That's something that we're excited to start working on at some point soon. But that's where we can have not just individual product lines in these consumer and mortgage and home equity, but have it be a holistic solution for our customers and their consumers and members that are coming in the door. And so -- and almost all of our customers, even the IMBs that work with us now offer multiple products. They'll offer a home equity and a cash out refi, for example, for somebody who wants cash. And some of them want to start offering things like personal loans. And so I think that this industry is in need of having unified technology across these things alongside the agentic experiences that I mentioned earlier. And so again, I think, we're just scratching the surface. We obviously have a lot of work to do. And the fact that we're moving a lot faster as a company is great promise towards that. But I realize that we have to show the outcome, show the ultimate outcome to you all before we can really claim victory.

Your next question comes from the line of Aaron Kimson of Citizens.

Great. The OpenAI and Better partnership made headlines late last week, and I think the most interesting part of that announcement is -- there's a bit of a pivot there for Better, which is historically focused on originating loans. And now the company is talking about doing more of what you do, using technology to help accelerate the mortgage process for banks and credit unions and IMBs. Do you view that partnership as a validation of your business model? And can you help us think about why in an agentic world, it may make sense for banks, credit unions and IMBs to try and take back some of the mortgage market share they've ceded since the GFC?

Yes. I mean I view -- I think that kind of highlights 2 things. One is that there is a big opportunity in this space. And I know that team very well. I think very highly of them. And it's just different. Building software is different than building technology. It's something I explain to our customers a lot. Building technology is one thing, but building software that's integrated and actually delivers your end workflow is just different. And so I do view it as a big validation of our space. And I view it as something that I'm hopeful -- I mean, I think, I talked about this in 1 of our calls, maybe I don't know, a few years ago. But about 10 years ago, Rocket Mortgage came out and said, "We're going to make it so you can push a button and get a mortgage." And I think that really catalyzed the industry and feeling like, hey, the sky is the limit for us. We don't have to do things the old way. And that was a big catalyst for Blend. So I view this all these things that are happening with AI and some of their competitors doing things with AI and maybe some of their potential partners doing things with AI, as I think it's going to drive up awareness and that's a good thing. That's a good thing for the industry. The industry is actually, I would say, one of the most surprising things I know we said we've been live for a week with this Autopilot product, but the fact that we had 7 people turn it on without us even -- actually without us even really knowing except for the 2 that e-mailed us because they had -- they wanted help turning it on. A year and half -- and a lot of those were banks and some of those are very large banks. And 1.5 years ago, if you had told me that large banks would adopt AI, I would have said, yes, I think they will, too. I think it's just going to take a long time to convince them and a long time to make sure they understand that it's trustworthy. And now I'd say that the momentum and the appetite and the desire to do something great is not just limited to tech companies. People are trying to feel and see what's possible. And so obviously, I have different thoughts on what's possible. And I think the approach is something where humans are the central drivers in doing the first pass of the work. I mentioned that in my prepared remarks. I don't think that's the right future. I don't think that's a future you want to drive towards. I think the future we want to drive towards is a lot of this work is done in a first pass by these agents that are really, really smart and winning international math competitions. That just need the right context and the right instructions, and they can do things that before a human even has to look at it, to prepare it in a nice package way for a human. And so that's our approach. It's a little different than the approach of the rest of the market. I think that background agent, background worker approach has only really been possible for a few months and something that we're betting heavily on it because we think it's the highest leverage way for this industry to adopt agentic AI.

Okay. I appreciate that perspective. And then as a follow-up, Autopilot is the first agent for Blend intelligent origination, how should investors think about the cadence for additional agents to be rolled out? And what type of consumer loans would you be most excited for next?

Well, we're going to make Autopilot available for all product types. It currently works for mortgage and home equity and custom overlays or custom guidelines or overlays, which could be used for other product lines as well. But we don't think of that capability, which is call it a real-time underwriter -- pre underwriter that's looking at all this work. But there's other things that I think it could -- you'll see coming from us and some of that might be an agent around analytics. So instead of having to go to dashboards, the agent should be pushing you the insights as a customer of ours. What loans that -- how did your -- for the loans that had Autopilot. Just use Autopilot as an example, for loans that are Autopilot on, are they closing faster? Is doing all that background work helping you? And so we're building out some agents there. We're building agents around the closing process where the QC is very important. Making sure that every single signature line and initial and everything is perfect to make sure that our customers don't have any issues at the closing table. But we really want to build, I would say, with all that being said, we really want to build on Autopilot and grow that out as a capability because it is something that we're just scratching the surface on, and I think can be something that can manage a lot of the things that humans are required to trudge through today.

[Operator Instructions] Your next question comes from the line of Seth Gilbert of UBS. I will invite Pallav Saini, your next speaker to ask a question. Pallav Saini of Canaccord Genuity.

Nima, you mentioned in the prepared remarks that the pipeline is up 40% year-over-year and that you're seeing a shift towards bundled deals, which is great. Roughly what percentage of the pipeline would you say is leaning towards bundled deals right now for you?

It's a good question. I don't know the exact percentage of customers. I don't know, Jason, if you have that off the top of your head?

I don't have that in front of me, but I would say, directionally, that's sort of a key driver of momentum is customers that are interested in multiple products from us, either multiple products within the Mortgage Suite, but more and more customers are interested in the fact that we can deliver mortgage and Consumer Banking products, all with similar feel, similar capabilities and integration.

Got it. And any commentary on your market share in Q4? And how do you see it evolving in 2026?

Yes. We only release our actual market share as we calculate it once a year when the HMDA data is released in the fall. What I'll remind you is that we talked about last quarter, 1 large customer that was going to be with us from a contractual standpoint for some period of time, but we expect that volume to be rolling off. And when the volume rolls off, we no longer count the volume in our market share. And we mentioned that, that customer will probably have a circa 100 bps headwind for us. And we talked last year about, I think, we ended the year at 17% market share. So if you put that headwind on top of there, is the right way -- probably the right way for you to think about it, building from there.

Your final question comes from the line of Seth Gilbert of UBS.

Maybe just first, a quick one on the revenue restatement. It looks like it was just in the neighborhood of about $15,000. So I just wanted to make sure I got that right, fairly immaterial. And is there anything else you wanted to add on about the restatement?

Revision, first of all. But yes, no, we essentially just reallocated some of the revenue between different quarters in 2025.

Got it. Okay. That's helpful. And then maybe on the RPO side, you signed 10 new deals expansion. I think you mentioned one big annual 7-figure customer as well. By our model, you have around $100 million in the short-term RPO. So I was just curious if you can talk about when we should maybe expect some of this to fall off into revenue more materially?

Yes. Look, I'll say that it's always great to have RPO in the sense that it is committed and it will turn into revenue at some point. I do want to caution you that in our business, especially on the mortgage side where we're primarily based on funded loans, as Nima talked about, success-based pricing. RPO isn't really a great gauge for you. But other than that, yes, the short-term RPO, obviously, will roll off within the next year.

Got it. And then maybe just a quick follow-up. On Blend Autopilot, it sounds like the pricing is still being mapped out. But can you talk about applicability? Is it applicable to your entire base of mortgage customers? Or are there certain customers you think who will never use AI for cost, security, other reasons?

Yes, I'd say 1.5 years ago, Seth, if you'd ask me who's going to use it. I would say there's going to be fast movers and slow movers. And I think -- now -- I mean applicability in terms of the work, the human work of stare and compare and back and forth and reading guidelines and doing calculations, I think that exists no matter what kind of customer of ours you are. So applicability is pretty broad. Do I think we'll get 100% adoption? No, of course not. But I do think that our customers are much more eager around AI. I think something is in the air this year. 2026 has been sort of a statement year for AI and people are seeing what it can do on their desktops and Microsoft made a big announcement today around their Copilot -- yesterday about their Copilot Cowork and Anthropic has been making headlines around that. And so people are starting to see what it can do when they're driving with AI and it opens their eyes to the possibility of, "Hey, couldn't it do that in the background while I'm sleeping." And so yes. I mean I haven't yet heard a customer in all of our discussions. I'll just tell one more anecdote, I was giving an early preview to a customer who came to our customer advisory board, they wanted their longer -- their larger teams. This is one of the very, very large bank. And they wanted their larger team to look at the product because they were really excited about it. And the first question I asked on the call was, can somebody find me all the reasons why we couldn't possibly do this so we can work through these issues because we really need this. And so the mindset has shifted from, hey, like let's look at this, let's consider it to, hey, we really need this capability because everyone's been through this cycle of staffing up, staffing down, having undercapacity when volumes are high and having overcapacity when volumes are low. And nobody likes doing that extremely, I shouldn't say nobody. It's not the favorite activity of most people to do that extremely tedious, manually checking that the names on 2 different documents match letter for letter. That the guidelines tell you exactly how to calculate and your calculation is exactly right. And so it's not something that is prized work, but it's real work that has to get done, and that's whether it's a car loan or a personal loan or a mortgage or a home equity loan or line. And that's work that actually, AI is really, really good at. And so I view this as something that they've all been waiting for in some ways. They've probably been waiting for, for a long time, a lot long. They probably wanted us to deliver this 10 years ago. It just wasn't -- because there's so much complexity and so much unstructured content in this industry, it's something that non-generative ML or other AI approaches. It's just something we that wasn't that -- it wasn't good enough to do that a couple of years or 3 years or 4 years ago. And now the capability is there. And so the fact that we're launching this, and we're the first as far as I know, to launch these background agents to serve this industry. I mean that's something that was -- that's been our position from day 1. We want to be driving the frontier. We don't want to be copying the frontier. And the frontier is going to keep growing. And so as long as we're driving the frontier, I feel really good about our business.