Blend Labs (BLND) Plunges 16.39% on Earnings Miss and Mortgage Sector Woes

The share price fell to its lowest level since August 2024 today, with an intraday decline of 16.39%.

Blend Labs (BLND) reported Q3 2025 earnings on November 6, revealing a break-even quarterly EPS that missed the Zacks Consensus Estimate by -100%, despite revenue of $32.86 million outperforming estimates by 1.42%. The stock dropped 7.14% during regular trading and an additional 1.02% after hours, reflecting investor concerns over its ability to sustain growth. While the consumer banking segment grew 34% year-over-year, driven by AI-driven innovations, the mortgage suite’s revenue fell 18% YoY, pressured by high loan origination costs and declining market share. The company’s HMDA market share in mortgage originations dropped to 18.6% in 2024 from 21.7% in 2023, with further challenges expected as it transitions from the Mr. Cooper contract.

Blend highlighted strategic initiatives to offset mortgage sector headwinds, including AI integration into its *Blend Intelligent Origination* platform and expansion of high-conversion-rate products like *Rapid Home Equity* and *RapidRefi*. Non-GAAP gross margin improved to 78% in Q3 2025, supported by cost discipline and higher-margin partnerships. The firm also repurchased $5 million worth of shares and maintained $82.3 million in cash reserves. However, management acknowledged a 100-basis-point headwind in 2026 due to mortgage industry challenges and expressed optimism only if rates decline to mid-to-low 5% levels by then. With Q4 revenue guidance set at $31.0–$32.5 million, the stock’s near-term trajectory hinges on the success of AI-driven efficiency gains and its ability to stabilize mortgage operations amid a competitive landscape.