Blend Labs, Inc. Q2 FY2022 Earnings Call

Good afternoon, and welcome to Blend's Second Quarter 2022 Earnings Conference Call. My name is Crystal Sumner, Head of Legal Compliance and Risk for the company. With me today are Nima Ghamsari, Co-Founder and Head of Blend; Tim Mayopoulos, President; and Marc Greenberg, Head of Finance. After Nima and Marc deliver their prepared remarks, the team will take questions. You can find the supplemental slides on our Investor Relations web page at investor.blend.com. During the call, we will refer to certain non-GAAP measures, which are reconciled to GAAP results in today's earnings release and in the appendix to our supplemental slides. Non-GAAP measures are not intended to be a substitute for GAAP results. Also, certain statements made during today's conference call regarding Blend and its operations may be considered forward-looking statements under federal securities laws. The company cautions you that forward-looking statements involve substantial risks and uncertainties and a number of factors, many of 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-K, 10-Q and other SEC filings. We are not undertaking any commitment to update these statements if conditions change, except as required by law. I'll now turn the call over to Nima.

Thank you, Crystal, and good afternoon, everyone. Thank you for joining us. I'll cover three things today: First, I'll highlight our Q2 results and business trends, which are reinforcing Blend's underlying growth thesis; second, outline our plan for realigning our cost structure and positioning Blend for future profitability; and third, I'll speak to key trends in our business, and how we'll continue to win going forward. Starting with Q2 results. We continue to see strong top-line performance with revenue at $65.5 million for the quarter. We grew our Blend Platform revenue by approximately 5% year-over-year against a 37% mortgage market volume decline in the same period. We're continuing to increase our share of funded loan volume even during the current market reset. Additionally, within our Consumer Banking and Marketplace segment, we saw revenue grow by over 50% this quarter as opposed to the same period last year and we have seen an increase in the number of banking transactions every quarter since we launched. On the title front, we are making progress by migrating customers from traditional title to our software-enabled Blend Title solution. Notably, we went live with Mr. Cooper and our Blend Title solution this quarter. I want to quickly call out the impairment charge recognized on Title365 in our results today. While this is a non-cash charge, it is clearly a significant number. This business was purchased during a much more robust economic and mortgage refinance environment. In light of current market challenges, we performed an assessment of goodwill and intangible assets within the Title365 reporting unit and have recognized an impairment charge. Title365 has strategic value to Blend and remains a leader in its business, having title on the Blend Platform enables us to deliver vertically integrated mortgage and home equity solutions. Title365 is filling that role in accelerating our path to this objective. Overall, our second quarter revenue and metrics represent continued progress against transforming this industry; I want to be clear that I'm very confident in Blend's long-term opportunity as a result of this progress. That being said, we know there are many things we can do better as a business, starting with our cost structure. As we said last time, we have undertaken a comprehensive view of our P&L in light of the change in market conditions. Today, we'll share our plans, our targets for cost alignment and what the long-term operating model for the company will look like. The headlines are: first, we are operating the company prudently as if mortgage industry unit volumes will remain at or near historic lows through 2025. Despite this, we expect to achieve positive free cash flow during that time. Second, along the way, we plan to reduce our non-GAAP net operating loss by 50% from current levels by the end of 2023. And third, we believe we're going to achieve these goals with our current capital base, which includes $475 million in liquidity at quarter end, inclusive of our $25 million undrawn line of credit while reserving options to manage our capital structure opportunistically going forward. Our plans include specific targeted ranges for gross margin and for the primary components of operating expenses. I'll let Marc walk through those details shortly. But first, I'd like to give an overview of the key initiatives we're undertaking. Our first and most immediate lever is our cost of labor. Since April, we have eliminated over 400 positions or 25% of our workforce, including the elimination of backfills. We should see the full impact of these actions by Q1 2023. In aggregate, both actions are expected to reduce our annualized expenses by approximately $60 million. We will continue to monitor and adjust this cost base as market conditions warrant. We have also significantly limited hiring, focusing on the most important positions for the company. Our second lever is offshoring. Through our acquisition of Title365, we've expanded our geographic reach to India, home to two full-scale operational hubs that currently support our title business. We believe our India operations provide a foundation that can support the entirety of Blend and work is already underway to streamline our corporate support functions and shift work where we historically relied on third-party vendors. Third, we are taking decisive steps to achieve near-term cost efficiencies in non-personnel spending across our products and corporate functions. These steps include consolidating third-party vendor spend across tools, services and partnerships as well as driving down deployment costs and shortening deployment windows through bundling, moves which can drive efficiencies for both Blend and our customers. Our fourth lever and one of the primary long-term ones is product prioritization and increased rigor around return on investment. We are prioritizing product lines that we believe can deliver ROI on a relatively short time horizon. We are emphasizing solutions that are high value to our customers and that reflect our assessment of customer needs and demands over the next 12 months. We will be disciplined in measuring success and flexible in allocating capital as return potential dictates. While I fully anticipate this initiative will make us more disciplined in our R&D programs, I also want to be clear that we will continue to invest in sustaining and adding value to our key products to ensure we are growing and deepening our customer relationships for the long term. Our goal across all of these cost reduction efforts and investment initiatives is to make Blend stronger for the long term to not only sustain us during this tough period, but well into the margin rebound. The benefits of the changes we are making will not arrive in a linear fashion, but we commit to keeping you posted on progress towards the headline goals I shared earlier. In addition to our cost structure plan, we are focused on top-line growth. Our growth is inextricably linked to that of our customers, and I think about our growth drivers parallel to the customer journey with Blend as we deploy, deepen and broaden our suite of products. In Q2, we reported gross revenue retention of 99%, roughly in line with 98% in Q1, and market-adjusted net revenue retention of 164%, up from 159% in Q1. Additionally, we have a healthy pipeline of customers who have signed but have yet to deploy. So there are built-in revenue opportunities that we have good visibility on. Our differentiated mortgage product allows us to win customers in this tight margin environment. One recent example is PNC Bank, one of the largest diversified financial institutions in the U.S., which went live with our mortgage solution in Q2 in under six months from signing and work is underway to launch our closed product as well. In addition, because we continue to add value to our platform on a regular basis, we are able to responsibly raise prices with our customers. We're seeing consistent quarterly uplifts in pricing per transaction. Specifically, we've seen more than half of our renewals in Q2 at higher rates because of the value we continue to add to our platform on a regular basis, which adds value to our customer base. Within our Consumer Banking and Marketplace segment, we grew revenue 53% year-over-year in Q2 and remain on pace with our plans to double this business in 2022 as compared to 2021. We are seeing customers start with mortgage but stay for end-to-end platform solution. At the end of the second quarter, 71% of customers use multiple Blend solutions, reflecting an increase from 59% in the prior year. Notably, our income verification and closed solutions are in high demand, and we're seeing significant growth in our home equity product category as that market heats up. Putting this all together, we are making progress, and we are strengthening Blend for the long term. However, 2022 forecasted mortgage industry volumes have come down materially since we released our initial guidance in March. Despite that, we've only brought down our Blend Platform outlook modestly, reflecting both our outperformance relative to industry declines and the growth we are seeing in our home equity offering. Overall, this guidance change for Blend Platform is offset by a like-for-like increase in Title revenue in light of better-than-expected performance on that side due to home equity and default business. Marc will provide more details on our guidance update in a few minutes. To summarize, we remain optimistic in our ability to execute and delivered another solid revenue quarter as we continue to grow market share. We plan to continue to optimize our cost structure, streamline our support functions, and prioritize products that generate near-term ROI such that we can generate free cash flow under a prolonged market reset. And we are positioning ourselves as a category creator as we continue to drive innovation through our software solutions for digital banking. I want to end by saying that at Blend, we're playing to win and we're playing to win big. We are not playing to avoid losing. There's a once-in-a-lifetime industry transformation happening right now. Most banking products are still analog, and processed in a manual way by humans; they lack a modern software stack that works across the bank to deepen relationships with our customers at a lower cost. We believe the lenders and banks who adopt our technology will come out the other side winners. That's our role in the industry as the trusted partner to hundreds of financial institutions across the country. And so we're going to continue to play to win. Thanks. And now let me turn it over to Marc.

Thanks, Nima, and good afternoon, everyone. I'll walk through our financial results and provide context in the following order: First, I'll start with a recap including how we're performing in this mortgage cycle. Second, I'll provide more color on our recent plan and future efforts to reduce our cost structure as part of our broader capital management strategy. And last, I'll provide context around our guidance revision and how we expect to see trends unfolding for the rest of the year. Then we'll open up for questions. Let's start with the highlights from Q2. Our results reflect continued outperformance in mortgage banking relative to the industry and solid growth in our consumer banking and marketplace offerings, offset by declines in the legacy title business. Total revenues for the quarter were $65.5 million. Blend Platform segment revenue was $33.6 million, notably up about 5% year-on-year despite a 37% decline in mortgage originations volume in the same period. Title365 segment revenue was $31.9 million. Shifting to Consumer Banking and Marketplace. We achieved revenue of $8.5 million this quarter, up from $5.6 million or 53% as compared to the prior year period. Year-on-year, total consumer banking transactions grew by approximately 138,000 to approximately 215,000 in Q2, supporting, in particular, the increase we observed in our home equity revenue as compared to the prior quarter. Closing up the revenue discussion, we recognized $1.2 million in professional services revenue. Moving to gross profit. Q2 non-GAAP gross profit was approximately $25.8 million, up from $19.9 million in the prior year period. Current period non-GAAP gross profit includes $20.6 million attributable to Blend Platform and $5.2 million to Title365. Products like Blend Income, Blend Close and Blend Title are lower margin than some of our other product lines. And as those products ramp up, but before they get to scale, our aggregate margins will be diluted. We expect our medium-term non-GAAP Blend Platform gross margins to be in the low 60% range. Non-GAAP operating expenses for the second quarter totaled $65.3 million compared with $46.2 million in the prior year, which is primarily attributed to increased costs associated with Title365. Keep in mind when comparing year-over-year that last year's Q2 was our final quarter without many expenses associated with operating as a public company. As you can see in our financial supplement, our non-GAAP loss from operations was $39.5 million versus $26.3 million in the prior year. This quarter, we also recognized approximately $392 million non-cash charge to reflect impairment of Title365 goodwill and intangible assets, driven by a decline in the fair value of the Title365 reporting unit. Now turning to our balance sheet. Our cash, cash equivalents, and marketable securities on June 30 totaled $450 million. Our $25 million revolving line of credit remains undrawn. We believe we have ample runway and liquidity in light of the cost reduction efforts we've outlined today, noting that our $225 million term loan does not come due until 2026. Further, as Nima noted, we have additional cost levers to pull depending on the depth and severity of the mortgage banking downturn, and we will be opportunistic when it comes to improving our capital position. As Nima highlighted at the top of the call, we're introducing a number of operating improvement initiatives with clear objectives that define our path to positive free cash flow and ultimately, profitability. That plan has started with our two announced workforce reductions, the second in August, which included approximately 220 positions, which when taken together with our actions in April, affected over 400 positions and roughly 25% of our pre-reduction workforce. Layering in the April reduction, these eliminated positions represent annualized compensation expenses of over $60 million. While the majority of the reductions were in Title365, where our needs are reduced both due to anticipated lower refi volumes near term and our migration of legacy Title365 customers to Blend Title, we also undertook significant reductions in parts of our general and administrative operations. We expect cost savings associated with these risks to materialize starting in Q1 2023. As Nima mentioned, we're also undertaking a transition of business processes and corporate support to India, and that work is already underway. As we expand our capabilities in India, we'll be able to share more detail on future calls. What I can share today, however, is the progress we've been making on reducing our vendor expenses. We are reducing our vendor spend by at least $6 million per quarter in 2023. We're achieving this through the continued maturation of processes and G&A, commercial operations, and cloud operations. We're also moving some work in-house and shifting it offshore. We're reducing the number of vendors we have and simplifying where we can, and we're undertaking more robust negotiations with those we decided to retain. When complete, we believe the steps we're taking will significantly impact our current model as we move towards profitability. As we execute towards profitability in the medium term, this is directionally where we expect costs as a percent of revenue to land. We expect G&A expense to be reduced a further 20% in 2023 with a medium-term operating goal to get G&A to the low teens as a percentage of annual revenue. We're also targeting sales and marketing expenses to land in the 20s as a percent of revenue in the medium term, though there is a wider range of outcomes here, depending on the pace of opportunity for revenue growth, noting that commission sales fall into this bucket. And finally, we expect R&D expense to be in the high teens to low 20s on our road to profitability. I want to emphasize what Nima said earlier, and that is, we are operating the company to achieve positive free cash flow under the assumption that mortgage industry unit volumes will remain at or near historic lows through 2025. We're in the early stages of executing on this plan, so the composition within our operating expense lines may shift over time and may not be linear. I also want to touch on gross margins, especially in challenging and uncertain markets like this; our product offers customers a cost-competitive advantage to in-house development that is best-in-class. As our product matures and we continuously enhance our offering, our incremental value has outpaced the price we charge. In addition to applying discipline and increasing scale to drive our cost to deliver even lower, we are taking steps to ensure our pricing reflects the full cycle value we offer to our customers. As Nima mentioned, we've seen more than half of our renewals in Q2 at higher rates. We expect this trend to persist. As a result, we're targeting medium-term Blend Platform gross margin in the mid-60% range. This may seem below some of the current targets of our software peers. However, our platform gross margin will be determined by shifting mix across our growing product suite. We have some very high gross margin products and some that will carry lower margins, like income verification. These products are strategically important and a reliable source of significant incremental gross profit dollars at scale. Of course, cost reduction is only half of the margin equation. As Nima highlighted, we continue to see growth drivers that reinforce market share gains within mortgage, ongoing revenue diversification led by consumer banking and marketplace, and the opportunity to responsibly increase prices as we deliver greater value to our customers. To summarize, we're taking immediate steps to reduce and manage our personnel spend, we're taking immediate steps to reduce and manage our third-party vendor spend. We are planning further efficiencies through offshoring, and we are taking concrete steps to prioritize profitable revenue growth. Nima shared a goal of exiting 2023 with our non-GAAP net operating loss reduced to 50% of current levels. This is how we plan to achieve it. I'll wrap up now with 2022 guidance and our near-term outlook. In light of prevailing market conditions, we have adjusted our 2022 revenue guidance for the Blend Platform down by $5 million, while raising the 2022 revenue guidance for the Title365 segment up by $5 million. We are affirming our full-year guidance range of between $230 million and $250 million in consolidated revenue in 2022 with between $135 million and $145 million in the Blend Platform segment. On the Title365 side, we're raising our guidance range of $90 million to $100 million to $95 million to $105 million, largely attributed to the outperformance of our default and home equity products within that segment, which is expected to offset the decline in origination Title volume. While this inflationary environment and market reset presents challenges, we remain focused on things that are within our control. This includes meaningfully reducing our cash burn through aligning our operating structure with current market volume, streamlining processes, increasing our operational efficiency across the company, and adopting a capital-efficient growth model for the near term. This also means narrowing the scope of our strategic priorities while continuing to grow penetration of our platform in the market. Wrapping up, the first half of 2022 has been a challenging one for the industry, but we remain optimistic about our cost revenue and growth drivers that are within our control. With that, I'd like to thank you for joining us. Crystal, we are now ready for questions.

Maybe just to start with one on the Blend Title transition to the Title business over the core Blend platform. You talked about that starting in mid-2022. It seems like that's kind of early in terms of progression, but we're seeing a little bit of outperformance on the Title365 side. So just any update on the expected transition to the core Blend Title platform and the updated timeline there?

So the outperformance on the Title365 side is really because they have built-in counter-cyclical offsets, right? They have the default business as well as the home equity business. So that's where you're seeing the outperformance on the Title365 side. Otherwise, Mr. Cooper's transition is going great. They've been a wonderful partner for us, and we're ready for the increase in volume in the second half of the year.

I was wondering if you could just give us a little bit more flavor on the demand environment of new logos. We kind of continue to see banks do a lot of digital transformation, but I wanted to get an updated view from you on the pulse on the mortgage side.

Yes, sure. Thanks for the question. On the mortgage side, we mentioned one new logo in PNC, but both our mortgage side and the add-ons for the mortgage pipeline remain strong, specifically add-ons around close and verification of income. And the reason those remain strong is because efficiency really matters in a time of market margin compression. And so we're seeing intense focus from our customers around implementing digital technology and implementing more digital technology than they had before. And so actually, we feel good about our mortgage side, and we'll continue to invest there going forward.

I guess just digesting all of the operating targets correctly, maybe you can say if there's a consolidated top-line revenue growth target that's associated with having a net operating loss and breakeven over that 2025 time horizon, whether or not that's by segment or just on a consolidated basis, I think that would be helpful just for us to understand the bridge between both the OpEx as well as the top-line modeling here.

Thank you, Ryan. We are using the MBA forecast as our benchmark for mortgage volumes, which is more conservative than Fannie Mae's. We have decided to adopt the MBA forecast moving forward. The market is quite volatile, but all our growth metrics are improving. At this time, we won’t provide specific revenue guidance; we will focus on the remainder of the year and update you as much as possible.

I was wondering if you could talk a bit about how you're thinking about multiyear conditions for the mortgage industry with respect to new mortgages versus refis and what factors you're playing on monitoring to see any signal of a rebound in demand. And then just a follow-up, what type of visibility do you have in terms of share gains based on your current pipeline?

Yes, it's challenging to forecast mortgage volumes beyond 2023. We have a solid forecast for 2023 but less certainty for 2024 and beyond. Therefore, we are taking a cautious approach for the upcoming years, expecting it to remain flat at near all-time lows. We are managing our business with the mindset that even if volumes stay flat, we can still achieve positive cash flow and profitability. We are closely monitoring interest rates and the performance of new home purchases, as there are various dynamics in the market. Ultimately, our primary focus is on factors within our control, particularly growing our market share. Regarding market share, we analyze total market volume and identify optimal targets. We recently signed agreements with several clients, including PNC, which have helped us grow our volume base, alongside previous customer rollouts. This is why we are outperforming in the mortgage segment; while the overall market is down 37% year-over-year, our decline is significantly less. In consumer banking, we are also doing well in areas like home equity and personal loans, further diversifying our revenue. This strategy not only expands our revenue base but also increases our total addressable market and provides some counter-cyclical measures, reducing our vulnerability to interest rate changes that could negatively affect revenue.

Yes. I have a two-part question. The first part is for Marc regarding mortgage transactions. In the first quarter, it was $376,000. Can you provide the actual mortgage transactions for Q2? The second part of my question is for either Marc or Nima. It's encouraging to hear that there is a robust pipeline for new mortgage and consumer banking customers. Have you adjusted your assumptions due to the macroeconomic environment regarding the timing of these rollouts, or are the rollout schedules still holding steady?

So in terms of mortgage banking transactions, in Page 15 of the supplement, we outlined is 348,000 mortgage banking transactions, 215,000 consumer banking transactions. So yes, we went from 380,000 to 348,000 in Q2, and those numbers we do update as we get more information from our customers. And then the second part of the question, sorry, Terry, can you give us that second part again?

Not materially. We have been planning some of these rollouts to our customers for a while, and they have staffed up for them. The pipeline for new business is also healthy, especially around things like home equity and income. On both of those fronts, we feel pretty good. This is reflected in our guidance, as Marc mentioned when discussing the changes we made, but we are not materially altering our guidance despite the market declining significantly. Additionally, when we rollout with customers today compared to two years ago, we often introduce multiple solutions at once. For instance, we have a top 20 bank launching our mortgage solution later this year, and they will be using multiple solutions right from day one. This is a different approach from what we've done previously and allows us to deliver value faster, which is beneficial for us and our consumers.

I mean you mentioned the industry volume declines. We can see it in just the mortgage banking transactions disclosed, yet you're able to hold on to the combined revenue target for the year here still. So just wanted to spend a moment on the offset. So is this a function of having taken a conservative lens around mortgage since the start of the year? Is the growth you're seeing on the consumer banking transaction side providing enough of an offset? What are you seeing that helps you hold on to the outlook here? And anything you can add around just what's assumed for the rest of the year and if there's any cushion if the macro were to continue to worsen. I think it's just very useful context.

You bet. Thanks, Michael. There were some slightly unexpected improvements in the Title365 business, particularly in default and home equity, which performed better than we anticipated. We have been able to responsibly raise prices across our customer base during renewals, which aligns well with the value we are providing. So that's contributing to some offset. I wouldn't describe our guidance as having a cushion, but I think it's a prudent approach.

I just wanted to drill down into Title365 and the migration there. I guess following up on earlier questions. Can you talk about the margin uplift you expect when migrating 365 clients to the Blend Title product? Maybe remind us how that product is priced relative to the legacy products. And I guess, wrapping that up, just the timeline for fully winding down the legacy Title365 revenues? And what percentage you would expect to ultimately capture on the Blend Title products.

Sure, we're in the early stages of transitioning to software-enabled Title. There is no change in pricing, and we are not providing guidance on the eventual margins. We believe this is a comprehensive product that benefits both consumers and lenders. It is an integrated product that delivers more value, especially in the instant home equity area we have discussed with the integrated Title solution. At this point, there isn't much more I can say about margins on the title side. We are still in the early days here.

Just maybe one on the marketplace opportunity here. Obviously, Consumer Banking and marketplaces where you're seeing a lot of growth. And you mentioned a couple of components of that on the consumer banking side. Any update on, I guess, the marketplace ecosystem generally? And then any plans to monetize that going forward?

The consumer banking marketplace encompasses all non-mortgage consumer banking transactions, including personal loans, home equity, credit cards, and deposit accounts. These elements contribute to the overall financial picture. It also involves property and casualty insurance, which has been scaling up over the past couple of years. Moving forward, it is likely to include software-enabled title services. This diversification has been a positive offset for our revenue and many of those areas tend to be counter-cyclical to the underlying mortgage transactions. Is that what you were asking about, Matt?

Yes. I was more focused on aspects like homeowners insurance and similar products that you’re integrating into the consumer journey, and the ability to monetize that segment of the journey. There are numerous opportunities to establish marketplaces within that process, which has been discussed in detail before. So, I am emphasizing that part of the overall journey, where we can incorporate these elements and generate revenue from those ecosystems as part of the wider consumer experience.

Yes. The areas that are currently being monetized the most are homeowners insurance and property and casualty insurance. This is already integrated into our flow and is utilized by several of our clients. We also have multiple partnerships in place as this component is the most advanced. Next is Title, which we are transitioning to another marketplace. I don't have specifics regarding the valuation side yet, but we are in discussions with various partners concerning automated valuations or appraisals. Additionally, there are other elements we've mentioned that could enhance identity and fraud prevention, potentially adding value to the homeownership journey or the wider consumer financial experience. We will continue to pursue these opportunities as they arise. I want to reiterate my earlier comments about ROI for our products. We are being very strategic about focusing on initiatives that can deliver significant value to our customers and consumers within a short timeframe. Therefore, we are concentrating our efforts on these priorities before expanding into too many new areas that could distract from our company’s focus.

Marc, I have a question for you. I believe you're discussing a $60 million reduction in compensation expenses due to various actions. I hope that's correct. This seems to be a timing issue since some of this will take time to reflect in the model. Could you provide any general insights on how the loss profile might compare between Q3 and Q4, particularly in relation to the $39 million loss we observed in Q2?

Thanks, Terry. Yes, some of those costs were not fully annualized, and we experienced significant growth in the latter half of 2021. Regarding the net loss, I would not anticipate a substantially different net loss in Q3 and Q4 compared to Q1 and Q2. It's important to note that we're facing some challenges on the revenue side that we are working to counterbalance. Overall, while costs will decrease slightly, we are also dealing with a decline in volume, especially concerning refinancing at Title365.

Yes, this is a good question. It goes back again to our ROI. We're making sure we figure out the products that mean the most to our customers and consumers. So we're going to be constantly adding new financial products. I want to make one side note, which is our investment in Blend Builder, which we've talked about quite a bit. It's our low-code, drag-and-drop platform to make it possible to create these new products with fewer R&D resources, which makes the ROI equation that much more appealing for us to be able to deliver those things. So expect to see some announcements for us in the coming months as we respond to changes in the environment. There are some new products that make a lot of sense given the new market environment and all the vertically integrated capabilities we have. And so stay tuned on that, we'll come out to market with some things here in the next few months. Yes. I hope I touched on this earlier, but I want to emphasize that managing profitability and managing growth separately are relatively straightforward. However, achieving a balance between the two is extremely challenging. This is the difficult aspect we've been focusing on, and you've heard a bit about the areas where we're reducing efforts, including certain product lines and internal corporate support. You’re seeing plans aimed at increasing profitability through these cutbacks, and we will continue these efforts while also driving high ROI products for our customers in the short and medium term. Together, these strategies will provide the necessary resources to sustain growth without excessively depleting the vital capital we aim to preserve for the long term. Well, we certainly pay close attention to our competitors. We're a very paranoid company in the sense that we're constantly looking at what's going on in the market. That being said, I think nothing has materially changed in the competitive environment during the last few quarters. And just to reiterate what some of the competitive environment looks like. At the top end of the market, our primary alternative to Blend is an internal build. At the medium and lower end of the market, it's typically point solutions that we compete against. In both cases, Blend is sort of a premium offering that can work across products, and we'll continue to invest in that to continue to win and grow market share, which we've done historically, and we've shown even in this quarter that we've been able to do. We have seen consolidation, we have seen some consolidation both in terms of our customers merging together, which is ultimately good for Blend as it becomes a more concentrated industry with customers that rely on us across the bank or lender. And we've also seen some point solutions out in the market become part of larger platforms. And I actually expect both of those trends to continue. We'll pay attention. We'll continue to be paranoid and react where necessary accordingly. But overall, I will say that there is nothing that has materially changed in the competitive landscape for us in the last few quarters. Yes. This may relate to what Terry from Truist mentioned about whether companies are delaying implementations and rollouts or seizing new buying opportunities. I believe that many software companies facing delayed rollouts or negotiations are offering platforms that are nice to have rather than essential, meaning organizations can operate without a new data warehouse or BI reporting tool. While I am not dismissing their importance, if those rollouts are postponed for a few quarters, it does not significantly impact revenue. On the other hand, Blend is not a non-essential solution. We work closely with our customers to modernize their customer acquisition and service efforts, helping them provide better banking experiences at a lower cost. Our customers aim to avoid unnecessary spending, and we help reduce their costs rather than increasing them. Additionally, I believe our customers will continue to invest during the downturn, as some of our largest lenders and banks tend to take a long-term perspective. I am encouraged that our customers are proactive and aim to win. They want to use Blend as the platform that enables them to deliver modern banking experiences, and they are looking to be even more successful in the next cycle compared to the last. Since we drive ROI for them, they often choose to invest in our solutions. I can share that we are exceeding quotas in key areas like verification of income and home equity, which are crucial for us. So far in Q3, we are performing strongly in these business lines, and we will continue to invest in products that provide ROI for our customers.

Being that was our last question. This conference has now concluded. Thank you all for your participation, and you may now disconnect your lines.