Blend Labs, Inc

Blend Labs, Inc (NYSE: BLND) operates as a digital origination platform serving banks, credit unions, and mortgage lenders. The company has developed a cloud-based software platform along with a suite of products designed for financial services institutions.

Positive Growth Aspects

• Sustained Revenue Growth and Profitability Momentum: Blend achieved its fourth consecutive quarter of year-over-year revenue growth, with Q2 revenue rising 10% to USD 31.5 million. The company’s software platform revenue grew 11%, primarily supported by a 43% surge in Consumer Banking Suite revenue. This growth underscores Blend’s successful strategy of diversifying beyond its mortgage-centric base and capitalizing on broader digital banking adoption. Importantly, this revenue momentum reflects resilience in a challenging mortgage market. The company also made meaningful progress on profitability. GAAP loss from operations narrowed sharply to USD 4.6 million, from USD 13.1 million a year earlier. On a non-GAAP basis, Blend reported an operating profit of USD 4.7 million, versus a USD 5.5 million loss in the prior year. This turnaround demonstrates Blend’s growing operational efficiency, supported by better margins and disciplined expense management.
• Expanding Customer Base and Deal Momentum: Q2 marked a significant acceleration in sales activity, with 23 new or expanded customer deals, more than double Q1 levels. This expansion included three independent mortgage banks as new customers, signaling that Blend continues to successfully penetrate its target verticals despite ongoing industry headwinds. The increasing deal velocity highlights Blend’s effectiveness in positioning itself as a multi-product platform partner, leveraging its ecosystem to both win new business and deepen relationships with existing clients. This momentum provides visibility into sustainable recurring revenue and further validates the platform model.
• Record Remaining Performance Obligations (RPO) and Strategic Simplification: Blend ended the quarter with a record RPO of USD 190.4 million, strengthened by a USD 50 million renewal and expansion announced in May. This backlog signals solid forward demand and a strong base of committed revenues, which enhances predictability in future performance. Additionally, the company advanced its Simplify Blend strategy by divesting Title365 to Covius. This move transitions title services into a higher-margin partnership model, improving Blend’s focus on core strengths while reducing operational complexity. Such streamlining not only boosts margins but also supports a leaner, platform-centric business model aligned with long-term profitability goals.

Growth Challenges

• Mortgage Suite Revenue Pressure: While the Consumer Banking Suite delivered robust growth, Mortgage Suite revenue declined 3% year-over-year to USD 18.0 million. This drop underscores Blend’s exposure to the cyclical mortgage market, which remains subdued due to macroeconomic conditions and muted housing activity. Despite diversification, mortgages still account for a substantial share of Blend’s revenue base, meaning that prolonged softness in mortgage origination volumes could constrain overall top-line expansion. Management’s outlook for Q3 and Q4 acknowledges this risk, with mortgage volumes expected to improve modestly in Q3 but decline seasonally in Q4.
• Cash Burn and Negative Free Cash Flow: Although Blend holds a healthy liquidity position of USD 93.3 million with no debt, cash generation remains a concern. The company reported cash used in operating activities of USD 5.3 million in Q2, worse than USD 3.3 million in the prior year. Similarly, free cash flow was negative USD 9.0 million, compared to negative USD 5.1 million in Q2 2024. This widening cash burn highlights ongoing pressure on Blend’s ability to translate operating improvements into actual cash inflows. Sustained negative free cash flow, if unaddressed, could eventually erode liquidity reserves and necessitate external financing in the future, particularly if macro conditions remain challenging.
• Margin Trade-offs and Seasonality Risks: While overall gross margins improved, GAAP software platform gross margin declined slightly to 78% from 79% last year, pointing to potential pricing or cost pressures in the segment. Though professional services margins improved significantly year-over-year, that business remains structurally lower-margin compared to the core software platform. Moreover, Blend’s guidance acknowledges expected seasonal declines in Q4 mortgage volumes, which could weigh on revenue momentum and profit consistency. Combined with macroeconomic uncertainties—such as mortgage rates, housing demand, and customer financial health—these factors introduce volatility to an otherwise improving trajectory.

Technical Observation (on the daily chart):

BLND has staged a strong breakout, rising above its 21- and 50-day moving averages with heavy volume, signaling renewed bullish momentum. The stock closed at USD 4.37, approaching near-term resistance around USD 4.50–USD 4.75. However, the RSI at 70 indicates overbought conditions, suggesting the possibility of short-term consolidation before further upside.

Blend Labs’ Q2 FY25 results present a mixed picture: the company delivered its fourth straight quarter of revenue growth, expanded its customer base with strong deal momentum, achieved record RPO, and turned profitable on a non-GAAP basis, signaling improving operational efficiency. At the same time, reliance on the mortgage market weighed on Mortgage Suite revenue, cash burn and negative free cash flow worsened, and margin pressures alongside seasonal mortgage volume risks highlight ongoing financial and market challenges. Overall, while Blend’s strategic simplification and platform strength support a constructive long-term outlook, near-term performance remains exposed to macro and liquidity headwinds.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to Blend Labs, Inc (NYSE: BLND) at the closing market price of USD 4.37 as of September 08,2025. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is September 08,2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.