Good afternoon, and welcome to Blend's Third Quarter 2023 Earnings Conference Call. My name is Winnie Ling, and I'm Head of Legal for the company. Joining us today are Nima Ghamsari, Co-Founder and Head of Blend; and Amir Jafari our Head of Finance and Administration. After Nima and Amir deliver their prepared remarks, we will open up the call for questions moderated by our Investor Relations Lead, Bryan Michaleski. 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, in particular, its guidance for the fourth quarter and fiscal year 2023 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-Qs, 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, Winnie, and good afternoon everyone. Many of you joined us for our inaugural Investor Day in September, during which we shared a deeper look into our growth trajectory and the significant upside that exists as we continue scaling our Builder Platform to more customers and into more markets. As we stand today, we have a market-leading platform, an incredibly loyal and resilient customer base, and an efficient business model that we believe has set our company up for success now and in the long-term. For today's discussion, I want to emphasize how we've leveraged this foundation in our third quarter to better serve our customers and to do so with greater efficiency. Starting with our third quarter highlights, I'm pleased to share that we achieved another strong quarter amidst a very challenging environment. We delivered $40.6 million in total company revenue, well within the narrowed guidance range we provided at our Investor Day. We credit this to double-digit year-over-year revenue growth in Consumer Banking as we continue deployments and ramp-ups on our Builder Platform. In fact, as of Q3, over one-third of our customers are now live or in active deployment with Builder enabled consumer banking products. In addition to these active deployments, we expanded our pipeline to 60 opportunities, up from the 40 we reported last quarter, representing opportunities in both our mortgage suite and our consumer banking suite. On the mortgage side specifically, our business once again outperformed the broader origination market declines driven by the continued utilization growth of our mortgage product add-ons, including verification of income and our closing product. In Q3 alone, we deployed a dozen revenue-generating mortgage products or feature enhancements, which we expect to continue to benefit the economic value we receive per loan. Our continued market outperformance in the loan origination market underscores the impact of Blend's technology in improving efficiency and cost savings across the entire mortgage process. And this also remains a key focus for us. On top of that, we've made significant strides in enhancing our operating efficiency this quarter. We saw strong resilience in our non-GAAP gross margins even amidst the declining mortgage market and achieved another quarter of sequential reduction in our cash spend. Balancing our growth while making our business more efficient has been a crucial undertaking for us and it's something that we will continue to focus heavily on over the next year. With Builder now as our primary internal development tool, we believe we are in a much stronger position to continue the pace of innovation with greater speed, scale, and efficiency. All of this represents continued execution on both the revenue and operating loss targets. As we stated at the beginning of the year, we are more focused than ever on delivering to our customers and doing so in a profitable way for our business. With that, we are paying attention to the interest rate environment. We've seen the 10-year treasury yield at 5% for the first time in over a decade and that has had a real impact on our customers and on us in the short-term. Despite that, we are optimistic that we're executing well within the areas of our control. What that means is, we'll continue to focus on growing our customer base, our consumer banking business, and expanding the value we receive for mortgage funding and maintaining the high quality of service for all of our customers. Altogether, these actions will ensure we are best positioned in the short-term and add incremental leverage to our business as market conditions improve. We remain on track to achieve our profitability goals for next year as well as the medium-term outlook that we shared with you during our Investor Day. Now, shifting gears to talk about our mortgage suite of services. It's evident that the mortgage industry is navigating significant challenges, which is continuing to create heightened cost sensitivity and especially among non-depository institutions. As a response to these challenges, we're taking action to support this segment of the market, specifically the independent mortgage banks, who are more cost-conscious than ever with a streamlined version of our mortgage product called IMB Essentials. We believe IMB Essentials is calibrated to exactly what the independent mortgage banks need most in today's market. It allows these IMBs to get started with Blend at a low cost, with many of the critical benefits of Blend, and for us is a low lift, out-of-the-box offering that is quick for our team to deploy. As the market recovers, these new customer relationships represent an opportunity to expand our offering into more advanced feature sets and more add-ons which will drive incremental value for them, something that we've already proven and have a strong track record of executing on. We're encouraged by the early traction we are already seeing in several active conversations on this offering with new prospects. One important thing to note is that the cost pressures on the market are what is driving the adoption and utilization of our product add-ons like close and income, which drive tangible efficiencies and savings for our customers. Since this time last year, our add-on products have increased the economic value received per loan by $5, and our total value received per loan has increased by $9. This places us well on track to reach the over $90 per loan by next year, which we shared with you as a target during our Investor Day. We also remain focused on enhancing our existing products that deliver lenders even more value and a more seamless experience at the time when they need it the most. For example, we recently expanded our Blend Income product with MyPay, which adds more support for borrowers and military income. By focusing on this, the largest U.S. employers' payroll data source on our income waterfall, we've meaningfully improved coverage for all our customers. Investing in add-on products is a strategy we'll continue with. These are low lift, low upfront opportunities for our customers that don't require signing a net new customer undertaking a very complicated deployment. It's just about helping our existing customers get the full benefit of our feature set that result in tangible improvements in ROI and revenue capture per transaction. On the topic of ROI, MarketWise Advisors conducted another annual independent study across more than 100 customers of Blend, and it showed a tangible and increasing contribution to that ROI. Blend's mortgage products increased transaction speed by over 44% in 2023, driving a significant increase in loan closing rates. Overall, the study showed that using our technology resulted in the average impact of $914 per loan, a $274 increase over the 2022 levels, amidst ongoing compression in customer margins. These savings are driving benefits to our customers at the time they really needed the most. But we're not just focused on the challenges now; we're also building for the future and staying on offense for our customer base. One example of that is we've recently begun building and testing Blend Copilot, which is our AI-powered assistant that allows loan officers to be more efficient and offer a far more personalized touch for their prospective borrowers. I'm thrilled with the early interest we've been seeing on that. We have over 50 customers and prospects who signed up for the waiting list for our first release of the capability, and we're continuing to explore with them over time. So to recap, we'll continue to stand by our customers during this time by delivering leading products that have a tangible return on investment and that help our customers continue to outperform the market average in the mortgage industry. Shifting gears a bit. In addition to mortgage, we're also focused on growing adoption of our Builder-enabled consumer banking products, which, as I mentioned earlier, is generating double-digit consumer banking revenue growth for Blend this quarter. This is quickly becoming the biggest revenue opportunity for us next year as we see interest continue to build. As a result, we believe that the revenue growth will accelerate from here. As we mentioned at Investor Day, thanks to our Builder Platform, we are now able to get customers deployed live much faster than before. Many of our new engagements this quarter have been able to kick off within a couple of weeks. As an example of this, we just recently signed a new credit union and are already tracking towards an early January launch. This timeline represents a meaningful acceleration to what we could accomplish even a year ago and is something our customers really love about Blend. We're encouraged by the urgency our customers have to deploy this value-accretive solution quickly within their business. On top of that, our Consumer Banking solutions are showing significant uplift and efficiency for our customers. We recently expanded our relationship with our regional credit unions, taking a unified product experience that has not only simplified their support structure but also driven increased conversion rates, accelerated onboarding, and enhanced their overall banking experience. This collaboration has led to substantial improvements, notably reducing manual processing time for deposit accounts from 11 days down to just seven minutes. Additionally, mortgage applications that took two weeks are now completed in under an hour. So overall, the team has been able to save over 9,000 manual hours of processing time already, facilitated by dynamic real-time integrations, and a great experience ultimately allowing their team to redirect their efforts towards assisting members rather than processing applications. It's clear that our customers are increasingly recognizing the value of Blend's Platform and Blend Builder as the single foundation for their entire ecosystem, enabling them to leverage the speed, flexibility, and data across business lines to deliver the highly personalized experiences and recommendations faster and better than they have been able to before. As we convert more and more of our customers to Blend Builder, they're well-positioned with our technology to grow their business and their deposit bases, increasing revenue and profitability as a result, which is so important to us to be able to support that kind of success. That's the core of our builder-driven growth strategy, which will continue to be a focus area for us going forward. Before passing it over to Amir, I want to briefly touch on something that's very important to us right now, which is the progress we've made on our path to profitability and our cost management efforts. I'm pleased to share that we're ahead of our cost-saving targets that we set out last year. Back then, we told you that we expected to reduce our non-GAAP net operating losses to $20 million per quarter by the end of 2023. We've now reported two quarters below this target, reducing our non-GAAP net operating loss to negative $15.9 million in the most recent quarter, well within our narrow guidance range. I also want to call out our Title business, which in Q3 returned to the high teens gross margin. This is an encouraging signal because we found the right operating model even amidst a historically low macroeconomic environment for this business. While there will be likely headwinds ahead of us as 10-year treasury yields continue to rise or 30-year rates continue to stay high, we feel comfortable that we can continue to operate this business with positive non-GAAP gross margins going forward. I'm really encouraged by the progress we're making on the ambitious non-GAAP net income targets we set last year. We established this momentum and we will continue to trend in the right direction as we leverage Builder across more customers. This will enable us to speed up the pace of innovation, which means more value to our customers and ultimately more revenue capture for us. While the market conditions are sending signals that industry volumes may remain lower in the short term, we are confident in our strategy, and it is well-suited for the current environment and will make us well-positioned for when the industry conditions ultimately normalize. In closing, we remain on offense and we'll continue to deliver the best possible experience in a cost-competitive way for our customers. Now, let me turn it over to Amir to talk to our key numbers for Q3 and our guidance for next quarter.

Thank you, Nima, and good afternoon everyone. I'm pleased to be joining you today to discuss our financial results for the third quarter. Our third quarter marks another period of strong execution against a challenging economic backdrop and an important waypoint toward our ultimate goal of non-GAAP operating profitability by next year. Before I jump into the results, let me just remind you that, unless otherwise stated, all results are non-GAAP. Total company revenues in the third quarter were $40.6 million, ahead of the midpoint of our original guidance and in line with our updated outlook from our Investor Day in late September. We reported platform revenue of $28.6 million, which also fell within our revised guidance range. Our mortgage banking suite revenue declined by 11% year-over-year to $20.3 million despite the origination environment declining 14% over the same period as measured by the Mortgage Bankers Association. This continues a trend of seven consecutive quarters of outperformance against broader market declines. Our mortgage suite economic value per funded loan rose to $86 from $77 in the same period last year, representing continued growth in utilization of our value-accretive add-on products. As a reminder, we first disclosed the economic value for funded loan at our Investor Day in September, representing the contractual rates for mortgage and add-on products multiplied by the number of loans funded or transactions completed by our customers in the period divided by the total number of loans funded by customers in that same period. We continue to believe the progress on this front is an encouraging sign our customers are realizing the benefit of ROI-positive enhancements to their mortgage origination process via Blend and are growing their adoption of these at an incredibly rapid pace. We saw a slight shift in our market share. We attribute this to the industry conditions driving elevated levels of consolidation as well as some customers exiting their mortgage businesses entirely. As Nima mentioned, we believe our IMD Essentials product is well-calibrated to the most immediate needs of our customer base today and are encouraged by the levels of early interest here. We continue to believe that technology is a key differentiator for mortgage customers even more so as the industry leans into efficiency while volumes remain depressed. I also want to remind you that in our three-year outlook we outlined in September our base and conservative scenarios consider a market share in the low 20s. We still believe this is a conservative outlook even factoring the near-term headwinds we've seen within certain segments of our customer base. Turning to Consumer Banking, our Consumer Banking suite revenue totaled $6.2 million in Q3, an increase of 18% as compared to the prior-year period. This growth reflects new deployments and ramp-ups across our Builder-powered consumer suite of offerings over the past year, as well as the contribution from incremental platform fees. We believe we're in the early innings of the upside unlocked by the Builder platform. We expect to see this growth accelerate even further as we continue to work through our slate of Consumer Banking deployments and convert more of our sales pipeline. We expect this to translate into a mid-30s compounded annual growth outlook over the next three years, which we first shared with you at our Investor Day. We also generated $2.1 million in professional services revenue, up 18% from last year due to fees associated with our ongoing slate of Consumer Banking deployments. We reported Title revenue of $11.9 million near the high end of our original guidance and in line with our expectations amidst a challenging environment. Moving on to gross profit. Total company non-GAAP gross profit was $22.3 million, which was 3% above the same period last year despite a 27% decline in our total revenue. Our non-GAAP platform gross margin showed continued improvement, reaching 71% compared with 68% a year prior. For software, we reported non-GAAP software gross margins of 79%, up from 76% from the same period last year. Our gross margin expansion reflects the benefits of increased higher margin consumer banking suite revenues as well as the vendor optimizations we've implemented within our mortgage suite. We continue to be optimistic regarding our gross margin performance and affirm our belief that 80% represents an achievable target for non-GAAP software gross margins next year. Our professional services business margins experienced some headwinds this quarter relating to the timing of certain project milestones. I want to call out that we are evolving our professional services model away from a fixed-scope structure for new contracts and are instead moving towards time and materials pricing. As more effort is directed towards Consumer Banking deployments and new pricing is increasingly adopted for key renewals, we expect our Professional Services margins to stabilize and generate consistent positive contributions. Our non-GAAP Title margins improved to 17% for the third quarter, increasing meaningfully year-over-year from 5% in the third quarter this time last year and improving six percentage points quarter-over-quarter. This improvement reflects the ongoing cost optimization programs we've undertaken and highlights our ability to align the cost to deliver this service within the current economic climate. We've made substantial progress aligning our cost base and generating higher positive non-GAAP gross margin from our Title business, but this market remains incredibly dynamic. The next two quarters represent seasonally low levels of activity for our Title business, compounded by elevated 30-year fixed rates. While our approach to align our cost base remains unchanged, uncertainty regarding the level of refinancing activity in the next two quarters could place modest pressures on these margins. We have earmarked the margins we reported this quarter as a benchmark for next year. Non-GAAP operating costs for the third quarter totaled $38.2 million compared with $58.7 million in the previous year. This improvement reflects the full realization of the January 2023 cost initiatives and two months of the platform realignment savings program we introduced during the last quarter. We remain on track to nearly half our annual non-GAAP operating expenses in 2024 compared to 2022 levels. Our non-GAAP loss from operations was $15.9 million in Q3, at the lower end of our revised range, and representing the sixth consecutive quarter of improvement as we progress along our goal of achieving operating non-GAAP profitability next year. The improvement in our non-GAAP operating loss met our expectations, benefiting from resilient revenue in our mortgage business, sustained higher margins, and the adoption of greater financial leverage through continued improvement in our operating efficiency. We remain on track to achieve our goal of generating positive non-GAAP operating profit by the fourth quarter next year. While we continue to take efficiency actions that we believe could accelerate this earlier in the year, the timing will ultimately remain dependent on the level of origination activity, which is uncertain. With that, we remain committed to this goal and have identified areas to adapt our operating model to achieve profitability, should the market environment deteriorate further. We saw strong renewals and new customer signings that incorporate committed fees. This translated into growth in our remaining performance obligations this quarter, which reached $58.9 million in the third quarter. Evidence of this is that nearly half of our forecasted mortgage and home equity volume that was eligible for renewal in the third quarter was pre-purchased under contract, a majority of which were multi-year contracts with annual in advance payment terms. When compared to our PayGo model, which is built a month in arrears, this has a meaningful pull-forward benefit to our cash profile and is accelerating our free cash flow generation while adding incremental contract length. We expect to see continued expansion in our RPO as we execute more renewals under our subscription model and as we enter into platform deals with longer and larger commitments. This is particularly relevant in Q4, which has historically been our most active quarter for our sales team. Q3 marked another quarter of improvement in our cash burn, as measured by our free cash flow metric, which was less than half of the levels we incurred this time last year. Our actions to operate with efficiency in combination with our resilient top line and improved margins are having a real impact as we inflect towards positive cash generation. Now turning to the balance sheet. Our cash, cash equivalents, and marketable securities, inclusive of restricted cash, totaled $252 million as of the end of the third quarter. As I mentioned during our Investor Day, we are confident we have taken the appropriate measures to ensure our business remains well capitalized and that we have sufficient liquidity based on the current projections and in this macro environment. Lastly, let me move on to our outlook for the final quarter of this year. As a reminder, at our Investor Day, we shared that we expected 2023 Platform revenue to be between $110 million and $114 million. After incorporating our third quarter results, this implies a fourth quarter platform outlook of between $26.3 million and $30.3 million. The industry we operate in remains highly dynamic. Mortgage rates are cresting two-decade highs and prospective borrowers are seemingly willing to wait longer for prices to improve. It's still too early for us to predict how this will impact our Q4 volumes, but we are focused on continuing to execute on the areas that we can control. We are continuing to see good traction in our add-on products delivering more value per loan, which is insulating our results somewhat from these headwinds. Similarly, our Consumer Banking revenue growth is pacing well within our expectations. Given the uncertainty within the macro environment, we are widening our fourth quarter platform outlook slightly and expect our revenue to be between $25 million and $30 million. Similarly, our Title outlook is being revised slightly to be between $9.5 million and $10.5 million. This sums up to a revised total company outlook of $34.5 million and $40.5 million. We expect our total non-GAAP operating loss to be between $17 million and $14 million in the fourth quarter, well below the $20 million target we set out last year and achieving this in one of our seasonally lowest quarters for industry volume. The midpoint of this outlook represents a nearly 65% improvement when compared to our fourth quarter operating loss in 2022, highlighting the progress we've made this year along our path to profitability. This operating results guide remains within the implied guidance that we shared at our Investor Day. We believe we have built the business and operating model to respond swiftly to the market fluctuations and we will continue to adapt as conditions evolve. I want to reiterate that we remain confident in the longer-term targets we've shared with you and are encouraged by the strong set of opportunities we have in front of us. As we continue to execute, we are building resiliency in our model against the short-term fluctuations in the market and adding further diversification in our business that will serve as countercyclical offsets in the future. This is paramount to our strategy within our second phase and we look forward to continuing to update you on the progress here.

Thanks, Amir. We're exiting this quarter focused on maximizing the value we deliver to our customers and optimizing our business to be a lasting partner for them for the future. I am incredibly proud of the progress we've made on our 2023 priorities and the execution towards our profitability goals. We're even more excited about the opportunities ahead of us and I look forward to sharing the evolution of these priorities with you all early next year. As a preview, you can expect to see the same effort on capital stewardship, innovation, and operating leverage that you saw from us this year to continue to stay in focus in 2024. While the outlook for origination mortgages may be uncertain, we continue to build our business to excel throughout any macroeconomic cycle and we'll continue to optimize our model to allow us to emerge through the cycle as a stronger organization. With that, thank you again for joining. Bryan, we are now ready for questions.

Thank you, Nima and Amir for your comments. We will now begin the Q&A segment of the call. Our first question comes from David Unger from Wells Fargo. David, please go ahead.

Hi. Can you hear me?

We can hear you.

Okay. Thanks. Appreciate the time today guys. So as we look ahead to 2024, I just wanted to think through a couple of things. First, I wanted to focus on headcount planning, seeing some great progress in terms of OpEx savings. Particularly, I just had to learn about the go-to-market team and the focus there in terms of cross-selling strategy, etc. I'll start that question. Thank you.

Yeah. David is that a question about headcount or does our overall strategy and where we're focusing next year on the main market side?

Headcount planning, I know we've seen sales across the different lines, but the go-to-market team has been doing a great job and I'm particularly interested in that strategy in sales and marketing.

Yeah. It's a good question. Just to step back a little bit, in vertical software companies like Blend, almost all of our success has been gotten by other successes. The first job of the go-to-market team is actually to ensure the success of existing customers because those customers end up becoming the references for other banks and lenders to sign up with Blend. Whenever you release a new solution like Blend Income or Blend Close or consumer banking product, they become the first ones to want to sign up for it. So first and foremost, go-to-market is always around how do we make sure our customers are getting a lot of return on investment, are really successful and we have a great relationship with them. Then it's looking for opportunities to help grow and improve their business. It could be the next product from Blend that we're offering or could be market feedback they're giving to us. We've kind of designed our go-to-market team around making existing customers extremely successful, turning those into case studies, and turning those into upselling growth. I think that's the same formula we're going to do for the next number of years. As long as we have more product growth ahead of us, which we think we do, that's the same approach going forward, and 2024 will be no exception.

Okay. Great. Thanks. And then obviously, the mortgage market is challenged. But just looking at the MB forecast, it looks like hopefully this is the trough year. Just wondering the pipeline trends you're seeing with banking customers looking into next year? Thanks.

Actually, I mentioned that we have 60 opportunities in my prepared remarks that are in flight right now. It does range across the full spectrum of IMBs to mortgage companies to credit unions to banks and homebuilders. I'd say the majority of where people are looking to transform is in the deposits and consumer loan space in the bank. So we're seeing opportunities across the board. That's where we see the most opportunity. Deposit growth is so important for banks and credit unions right now, given the market. That's where we're getting a lot of the primary revenue growth for next year.

Hi, guys. I appreciate you taking the question here. Maybe Nima starting with that. As you're thinking about streamlining on the innovation front, managing the cost structure here, how do you think about going deeper in value versus broadening the capability set? I know Builder likely enables a lot of both. But I’m wondering how you're thinking about the evolution and ensuring kind of product excellence with further revenue diversification across different product lines.

Yes. Going back to what I said to the earlier question, I think making existing customers more successful almost always leads to more revenue for Blend. Going deeper is always the first primary focus because it leads to either deeper add-ons or more revenue per unit on the core product. Because you're happier customers who are getting more return on their investment. We've shown this historically; our revenue per unit because we've gone deeper and deeper has grown materially in the last two or three years. That being said, I think we are looking at – sort of think about it on the cadence of maybe one approximate new product area a year that we'll go and expand into. That will be an expansive area, a new market opportunity for us. It could range from whether it's small business, commercial, these are not specific ones we are working on, to AI products that we're looking at. Just something we're going to look at on a regular basis, the leadership team, and make sure we're focusing on where the market needs the most help in advancing their technology stack.

Hi. Can you hear me now?

Yes. We can.

Sorry about that. Thank you for taking my questions. Firstly, I just wanted to touch up on what you have discussed earlier regarding the potential to consider strategic actions to bolster the balance sheet with respect to the term loan or Title365 put option. Can you please provide any update on your thinking there in terms of the options or potential timing? And then I also have a quick follow-up on platform fees.

Absolutely. We're going to reinforce the message we've shared, Nikhil, which is we continue to emphasize the potential that we have in terms of different actions that we can take. We're going to be opportunistic starting first and foremost with the actions that we're taking across this company to get us on the path to profitability, which actually allows us to have expanded opportunities in front of us. There's nothing for us to, in essence, comment on today on the term loan or on the put option beyond what we've already shared.

Got it. Understood. And then as a follow-up on the platform fees, can you briefly discuss the platform fees you have been implementing across the different platforms? Are there material enough to increase the recurring revenue mix of the business over time? And more broadly, can you also talk about your approach to recurring versus transaction revenue models going forward?

Yes. I think just to give a backdrop of what the platform fees are for with Blend Builder. You still get the same amazing solutions that you could get out of the box previously with Blend. But for people who want to have access to a more powerful platform, you get more APIs, much more flexibility in the flows, get a lot more integration capabilities. It basically allows them to get a lot more from the same product that they would have been getting from us five years ago, because it's such a modern platform. In terms of how material it's going to be to our overall revenue, we haven't shared that broadly but it is a meaningful value to our customers and we charge a fair amount for that value that we provide to our customers. What was the second part of the question, Nikhil? Was it about recurring versus transaction-based revenue? Maybe Amir, you can take that one.

Yes. I think to expand on what Nima said, there’s a balance for us. Remember, as we go into new products and new strategies, not everything can actually follow a perfectly transaction-based approach. This is part of the diversification that we rolled out. For us, again, we have not given specific guidance to the mix as an example. But what we've shared consistent with our Investor Day is that there will be diversification. By the way, you're seeing this play out in our RPO stance and you'll continue to see it, because as you think about consumption versus, in essence, the recurring models, it's high to not just platform but our ability to drive different, in essence, unit economic monetization tied to new product initiatives. You'll see that continue to play out in the near future.

Understood. Thanks for clarifying.

As a reminder, please raise your hand if you have a question for the call. Seeing no further questions, that concludes today's call.