Blend's Q1 2025: Unpacking Key Contradictions in Consumer Banking Growth, Partnerships, and Investment Strategies

Consumer banking growth and RPO performance, partnership strategy and revenue contribution, investment strategy and allocation, customer retention and volume recovery, investment strategy and priorities are the key contradictions discussed in Blend's latest 2025Q1 earnings call.



Shift to Software-First Model:
- Blend Labs announced an exclusive process with a leading title and mortgage services provider, indicating a strategic shift towards becoming a software-first company.
- This move aims to create ongoing software revenue streams and embed software solutions directly into the Blend platform, aligning with a macro recovery scenario.

Strong Financial Performance and Revenue Growth:
- The company reported platform revenue of $26.8 million in Q1 2025, exceeding the midpoint of guidance and marking the third consecutive quarter of year-over-year growth.
- Growth was driven by the company's strategic simplification, strong sales momentum, and the launch of new product lines like Rapid Refi and Rapid Home Equity.

Improved Operating Efficiency and Gross Margin:
- Blend's platform gross margin increased to 73% in Q1 2025, up from 68% in the same quarter the previous year.
- Efficiencies in operating expenses, which decreased by $9 million year-over-year, contributed significantly to this improvement.

Cash Flow and Financial Positioning:
- Blend achieved positive free cash flow of $15.5 million in Q1 2025, the highest in the company's history.
- This was attributed to strategic collection of cash from deals signed in late 2024 and a strong focus on increasing Remaining Performance Obligations (RPO).

Customer and Revenue Expansion:
- The company signed 11 new expanded deals in Q1, nearly 3x more than the same period last year.
- This expansion is driven by strong customer acquisition, particularly from top 5 mortgage servicers and top 10 mortgage originators, as well as successful product launches like Rapid Refi and Rapid Home Equity.