Earnings Call Transcript
Blend Labs, Inc. (BLND)
Earnings Call Transcript - BLND Q1 2022
Crystal Sumner, Head of Legal Compliance and Risk
Good afternoon, and welcome to the Blends' First 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 webpage 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-Q, 10-K 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.
Nima Ghamsari, Co-Founder and Head of Blend
Thank you, Crystal, and hello, everyone. We appreciate you spending time with us today. Blend delivered a solid first quarter in a tough market with revenue ahead of expectations. In many ways, this quarter validates our view of both 2022 and Blend's long-term potential. For this call, I'd like to cover four topics; first, a summary of our Q1 highlights and our general operating environment; second, an update on current market conditions and how this impacts our business; third, how we're executing against our long-term growth thesis; and lastly, an update on how we're thinking about near-term management of the business and capital allocation. After that, Marc will review the quarter in more detail, and then we'll take questions. Tim is also with us for Q&A. Starting with Q1 highlights, we are encouraged by our top line performance, which reinforces our confidence in our 2022 outlook. Revenue of $71.5 million was ahead of the range we gave you at the end of March, and Marc will take you through that in more detail. But the takeaway is that we did better than we expected in both mortgage and in consumer banking. In fact, we delivered 3% growth in Blend Platform segment revenues as compared to Q1 2021, despite Q1 mortgage market volumes being down an estimated 44% year-over-year. Additionally, declines in Title365 were less than anticipated. This was largely due to the timing of interest rate impacts. Refinancing activity has begun to meaningfully decline in Q2. In addition to benefiting from growth in mortgage market share, we continue to cross-sell and increase our wallet share of our existing customer base. At the end of the quarter, about two-thirds of our existing customers subscribe to two or more software products. Consumer Banking and Marketplace revenue, therefore, was up 55% year-over-year, and we are seeing continued adoption of this suite of products. At the end of Q1, 22% of our Blend Platform revenue came from Consumer Bank and Marketplace and approximately one-third of our total customer base now use one or more of these products. So we've exceeded our expectations for the first quarter, and we're continuing to build momentum in the business. Nonetheless, we are mindful that the broader economic environment is going to continue to be challenging. Here's what we've observed since we last spoke to you six weeks ago. Mortgage rates rose quickly in the last two months, as you all know. And for these and other macro reasons, we are now projecting a 41% year-over-year drop in mortgage origination volumes in 2022 versus a 35% outlook in place at the time of our call in March. Given persistently strong housing demand, these declines are disproportionately hitting the refinance market, a decrease that started in earnest in April. While this is a difficult time in our industry, Blend is well positioned to help our customers navigate this reset. It's in moments like this that customers are compelled to focus on efficiency and technology, both to preserve margin and be better positioned to take advantage of the eventual upturn. I'll touch on this more later. At Blend, we're increasingly diversifying our revenue base with Consumer Banking and Marketplace now starting to grow more quickly. And with that as an industry backdrop, let's shift how Blend is operating in this environment and why we think we're in a good position to continue executing on our growth thesis despite the current market volatility. There are two important indicators, one internal and one external that we watch closely to monitor our progress. An important pillar in the Blend growth thesis is our ability to acquire and retain customers. In Q1, we reported gross revenue retention of 98%, roughly in line with our 99% in Q4 and market-adjusted net revenue retention of 159%, up from 147% in Q4. Our unique differentiation is our focus on delivering a full platform solution that accelerates the digital transformation process for our customers. This platform solution, coupled with our business model, positions Blend to build relationships rooted in a shared journey of growth with our customers. Externally, a key leading indicator is our customers' increased investment in digital transformation and automation. Investing during downturns positions companies to gain market share and come out stronger on the other side. For banks and lenders, getting stronger is about investing in improving the customer experience and driving efficiency. Technology is the most effective, scalable way to do that at a lower cost with a clear ROI. Our platform is designed to achieve that goal, allowing customers to significantly improve their profitability and be more competitive. This is especially vital in a downturn when margins tighten. Shifting to how we're executing our long-term growth thesis. We feel very good about the key indicators for long-term growth at Blend. We are focused on the following three growth areas: first, helping our customers be more efficient through fully integrated software; second, delivering the best possible experience for our consumer banking product lines; and third, being the platform that powers the end-to-end value chain in home ownership. Let me talk about these three in more detail. Starting with efficiency. On the heels of the market reset, we've heard from our customers about the need to standardize their process and become more operationally efficient. Margins are very tight. Based on surveys that we've commissioned, customers that run their loans through the Blend Platform realize an average return on investment of 6.5x the dollar they spend, saving almost 12 hours per loan. This means that increased usage of Blend Software drives additional benefits, and is a big reason we're seeing our Platform segment remain strong despite the steep decline in mortgage volumes. On top of that, our investment in products like Blend Fast Track, which will clear loan conditions automatically using technology before a human touches it, will help drive our customers' cost of production down. This creates more value for our customers and thus more revenue for Blend. Many customers have told us that they intend to accelerate investment in automation. When I talk to mortgage executives, the number one topic I hear on a daily basis is driving efficiency in their operations. That enables them to stay competitive, grow market share, and ultimately offer lower-cost products to their customers. Now shifting to Consumer Banking. In our last call, I mentioned the importance of home equity to our customers. The urgency is for the market to address this quickly in an instant, fully automated, technology-first way. But this is just one example of things to come. Having a modern platform powered by Blend Builder, which enables us to adjust when there are shifts in the market and launch new products quickly, positions Blend as the go-to platform for financial providers. Outside of home equity and Blend Builder, we are partnering with Wells Fargo, empowering their next-generation rental payments reward credit card application through a company called Bilt. By delivering a seamless digital experience and streamlined application process for their customers, we processed a significant amount of applications within the first 48 hours, showing the flexibility and scalability of our consumer banking solutions while helping our customers become more efficient through the use of technology. Lastly, we're continuing to invest in being the end-to-end platform that brings together all the components of the home ownership life cycle. This is a win for everyone. Consumers get a single platform that seamlessly ties together components such as income verification, approval, home insurance, title, and closing, and lenders get more efficiency as the system automatically orchestrates these events and manages the data flows. This helps keep their costs down, which is very important in this time. When we add value like this to our customers and consumers, this drives them to be more successful. And given our success-based pricing model, it also drives more revenue to Blend. Providing the end-to-end journey is not just important for the reasons I mentioned. It's also what will be required for lenders to remain competitive now and in the future. Leveraging our software solution gives lenders the ability to have a superior offering while keeping costs down and driving exceptional experience. This is the promise of technology. To summarize, with an industry-leading platform, a growing roster of customers, well positioned for the next upturn and increasing revenue diversity as we bring more customers live on consumer banking and marketplace offerings, we are in an excellent position to drive digital transformation at a time when institutions need it the most. Lastly, I want to talk about our capital management strategy. As we discussed in our last call, we are moving to adjust our cost structure to meet market realities without jeopardizing our primary goal of continued investment in the Blend platform. As a first step in this effort, we reduced our headcount by approximately 10% in April. The reductions were primarily within Title 365, where our needs are significantly lower given current market and certain G&A functions. We expect to begin seeing the cost benefits of this action in the second half of the year. We believe decisions like this will allow us to emerge from the current environment stronger and even better positioned to achieve our vision. Building on the workforce reduction, we are doing a comprehensive review to align our cash consumption and market realities near-term while charting a clear course towards stronger product and operating margins that will lead to Blend having long-term profitability. Our plan will include looking at ways to improve our cost structure, thus improving our product margins, increasing speed of deployments, and better managing our spend internally. We also continue to monitor title volume and adjust our cost structure as market conditions warrant, without jeopardizing our customers' or consumers' experiences. With all that being said, we are taking a long-term view as our role as a preferred technology partner for financial institutions. We are continuing investments in our platform, helping our customers be more efficient, delivering the best possible experience for consumer banking and powering the end-to-end value chain in home ownership. We are executing a disciplined approach to our capital allocation strategy while investing in key growth areas that I highlighted earlier. To that end, we plan to provide an update on our plan next quarter. As our plans are finalized and implemented, I'm confident you'll see a company well-positioned to deliver on its mission to bring simplicity and transparency to financial services and to do so in a way that creates substantial value for shareholders. I know we have a lot of work to do, but we are energized to tackle it. While market conditions are challenging, we believe the current period could be an accelerant for industry transformation. Just as COVID drove faster digital adoption in consumer and enterprise markets, a significant mortgage reset may also drive accelerated investment in digitization as operational efficiency becomes a driver for long-term success. Wrapping up, I want to thank our customers for their engagement with Blend through these tough times for them, and our investors for supporting us as we position the company for long-term growth and value creation. And I especially want to thank everyone at Blend and the team here for their hard work, resilience, and dedication to the mission. I'm grateful for all your efforts and excited for the journey ahead. Thanks, and now I'll turn it over to Marc.
Marc Greenberg, Head of Finance
Thanks, Nima. Hopefully, everyone on the call has had a chance to review our release. I will go through our release in the following three categories: first, I'll provide color on our Q1 performance, including how we are performing in the early part of the current mortgage cycle; second, I'll cover our recent and planned cost management activities as part of our broader capital management strategy; and last, as our release notes and Nima touched on earlier, we reiterated our 2022 revenue outlook today. I'll comment on that as well and how we see trends unfolding for the rest of the year, and then we'll get to your questions. Let's start with the highlights from Q1. Blend reported consolidated revenue of $71.5 million, above our guidance range of $63 million to $66 million provided on our Q4 earnings call. The higher-than-expected result can be attributed primarily to better-than-expected Blend platform performance, both the mortgage and consumer banking marketplace and lower-than-expected year-on-year decline into Title365 revenue for the period. Blend Platform segment revenue was approximately $32.8 million, up about 3% year-on-year against our expectations of a modest decline and Title365 segment revenue was approximately $38.7 million, down almost 13% from the fourth quarter of 2021 against an anticipated 20% decline. It's important to note that at the time of the Q4 earnings call, we had solid funded loan data for the first two months of Q1. Given both significant predicted declines in mortgage lending by Fannie and the MBA and expectations of Fed interest rate actions, we were anticipating a pronounced decline in refinance activity beginning in March. However, that refinancing cliff was pushed out several weeks into Q2, and as such, we saw a sustained volume of refi closings that benefited our Q1 results more than we had initially expected. In addition, our customers purchased mortgage volumes were slightly ahead of our forecast, reflecting the underlying quality of our customer base and the strength and resilience of our market share. To put some further context around mortgage banking performance, our Q1 revenues were down 16% in Q4 compared to an estimated 29% decrease in industry mortgage volumes. Year-on-year, our Q1 mortgage banking revenue was down 7% against a 44% market decline in origination volume. This demonstrates that we are continuing to make progress on our goals to increase our market share, including both new customers and wider adoption with existing customers. As illustrated in our supplemental slides, we estimate our customer share of US mortgage industry volumes increased to just under 25% in the second half of 2021, up from 23.5% in the first half of 2021 and from 16.7% in the second half of 2020. This includes a higher utilized market share north of 15% in the second half of last year, with nearly another 10% of committed but not yet utilized capacity. So we're continuing to make good headway in taking share with substantial TAM still available to us. Q1 included an important new deployment in March and also included ramping up volumes at other select customers. Shifting to Consumer Banking and Marketplace, we achieved revenue of $7.2 million in Q1, up significantly from $4.6 million in the prior year period. We highlighted that total consumer banking transactions grew by more than 100,000 transactions year-on-year to approximately 155,000 in Q1. We saw a significant increase in deposit account, personal loan, and home equity transactions in Q1 2022 relative to Q1 2021. It's also worth noting that home equity revenue increased modestly over the prior year, and this continues to be an area of opportunity given the current lending environment. We're rounding out the revenue discussion, Blend recognized a little over $1 million in professional services revenue, up from approximately $800,000 in the prior year first quarter. As a reminder, professional services revenues are tied to product deployments. These revenues are lower margin and generally non-recurring. Moving to gross profit. Q1 non-GAAP gross profit was approximately $29 million, up from $21 million in the prior year period. Current period non-GAAP gross profit includes a little under $19 million attributable to Blend platform and a bit north of $10 million to Title365. These figures are net of cost of revenue of approximately $43 million, about two-thirds of which relates to the addition of costs associated with Title365, which we did not own in the prior year period. Blend Platform segment cost of revenue increased $3.3 million with early investments in Blend Title and increase in the delivery, hosting, and connectivity expenses. Non-GAAP operating expenses for the first quarter of 2022 were slightly under $69 million compared with slightly under $40 million in the prior year, reflecting higher personnel costs and sales commissions associated with our expanding teams focused on development, marketing and sales of new and existing products as well as the addition of costs from Title365. Keep in mind that our OpEx structure compared with prior year now also includes expenses associated with operating as a public company. In April, as Nima highlighted, we announced a workforce reduction of approximately 200 positions or 10% of our Blend current workforce. The eliminated positions represent annualized compensation expenses of approximately $35.4 million. The reductions were predominantly in Title365, where our need to reduce was due to anticipated lower refi volumes near term and our migration of legacy Title365 customers to Blend Title. We also eliminated other operating expense positions with a focus on certain corporate G&A functions. This savings will incrementally reduce our cash needs beginning in Q2. However, before considering additional cost reduction measures that we plan to implement, our quarterly OpEx run rate is expected to trend in line with Q1 levels. This run rate includes a ramp in headcount-related fixed expenses incurred in late Q3 and Q4 2021 prior to our reduction in the 2022 revenue guidance. We've made our first meaningful step towards aligning our operating structure with a rapidly evolving market environment. We look forward to updating you on our comprehensive review process that Nima highlighted when it is complete. Now turning to our balance sheet. Our cash, cash equivalents, and marketable securities at March 31, 2022, were just under $500 million with total debt outstanding of $225 million on our five-year term loan. Our $25 million revolving line of credit remains undrawn. I'll wrap up now with our outlook. Our full year 2022 revenue guidance provided in our Q4 earnings call is unchanged. That guidance reflects expectations of between $230 million and $250 million in consolidated revenue in 2022 with between $140 million and $150 million in the Blend Platform segment and between $90 million and $100 million in the Title365 segment. Note that the mortgage markets are volatile and uncertain, and if industry forecasts move materially lower, we may need to appropriately adjust our guidance at that time. The Blend Platform segment guidance reflects expected mortgage banking revenue decline in the high single to low double digits with a more pronounced 41% industry volume decline that we share with you today. Meanwhile, and as a reminder, our anticipated 2022 consumer banking and marketplace revenue reflects triple-digit growth from 2021 levels, which includes the transition of revenue from the Title365 segment, as customers transition to the Blend Platform and the Blend Title Solution as well as contributions from other consumer banking and marketplace products. Wrapping up, 2022 is off to a solid start, in a very challenging environment. Our growing market share in mortgage banking is leading to significant outperformance against pronounced industry declines while we're seeing solid consumer banking and marketplace revenue growth as more customers adopt our platform and our new products. We have begun taking meaningful actions to prudently manage our expenses, as we navigate the current downturn while not sacrificing the investments that will enable us to drive and create value from the digital transformation of the financial services industry. Thank you again for joining. Crystal, we're now ready for questions.
Crystal Sumner, Head of Legal Compliance and Risk
Thanks, Marc and Nima for your remarks. We'll now turn to Q&A. Our first question comes from Ryan Tomasello from KBW. Ryan, you may un-mute yourself and ask your question.
Ryan Tomasello, Analyst
Hi. Can you hear me?
Crystal Sumner, Head of Legal Compliance and Risk
We can.
Ryan Tomasello, Analyst
Great. Thanks for taking my question. And nice to see the progress on the cost structure realignment, I was wondering if based on the progress you've seen to date, if you're able to provide an outlook for earnings for the year, but perhaps in terms of non-GAAP operating income as well as cash burn? And then, beyond that, it would also be helpful whether on this call or on the call, if you could provide more defining guardrails on how you view the margin trajectory of the business over the intermediate term and long-term, the margins you expect to be able to support. Thanks.
Marc Greenberg, Head of Finance
Thanks, Ryan. At this point, we're just reaffirming the revenue guidance, and we're anticipating spend in line at this point with what you saw in Q1. And then we'll look to update you later in the year as the plan comes together.
Crystal Sumner, Head of Legal Compliance and Risk
Thanks. Our next question comes from Maddie Schrage. Maddie, please feel free to un-mute yourself and ask your question.
Maddie Schrage, Analyst
Hey guys, sorry. Can you hear me now?
Marc Greenberg, Head of Finance
We got you. Thank you.
Maddie Schrage, Analyst
Awesome. Just quickly, thanks for taking my question. I was wondering how you guys are thinking about the pace of share gains, as we model out the rest of the year? And then, the long-term trajectory of share gain potential? Thanks.
Marc Greenberg, Head of Finance
Maddie, do you mean market share?
Maddie Schrage, Analyst
Yeah.
Marc Greenberg, Head of Finance
The majority of our market share gains this year will come from rollouts to existing customers. I'm pleased to report that in the past two months, we’ve onboarded a couple of significant clients, including a major bank and a large non-bank, along with some smaller clients. We expect to see an increase in market share as these rollouts lead to greater volume on our platform, even with the current market downturn. Our market share growth appears to be somewhat insulated from market volatility at this time.
Crystal Sumner, Head of Legal Compliance and Risk
Next question comes from Joseph Meares from Truist. Joseph, please feel free to un-mute yourself.
Joseph Meares, Analyst
Great. Thanks for taking my question. Last quarter, you noted that the current market environment is leading to thin margins at lenders and the slowing down adoption of new products; just wondering if there's been any change positive or negative in this trend over the last six weeks since you last reported. Thank you.
Marc Greenberg, Head of Finance
What we're finding is that certain product areas and aspects of our offerings that enhance efficiency are attracting significant interest. Blend income stands out because it provides a more affordable method for income verification, which many are currently investing in. Additionally, I've mentioned home equity a few times; there is considerable urgency around this product because homeowners have substantial equity and want access to it at the lowest cost, often utilizing home equity lines of credit. Consequently, we're observing that specific areas are receiving greater attention from our customers due to a pressing need to reduce costs in order to remain competitive or to introduce new products for increasing revenue.
Crystal Sumner, Head of Legal Compliance and Risk
Thanks. Our next question comes from Matt Stotler from William Blair.
Matt Stotler, Analyst
Hey, thank you for taking the question. Maybe just one on the title piece. I think very helpful color around kind of the Q1, Q2 dynamic. In the press release, you mentioned, I guess, beginning the effort in earnest to move Title 365 customers over the core platform. Any color you can provide in terms of the plan there, the strategy to execute on that, the ability to do that? And any visibility into how you'll be able to carry out those migrations into the second half of the year?
Tim Mayopoulos, President
This is Tim. Thanks for the question. We expect that the largest customer of Title 365, that's Mr. Cooper. We’ll go – we expect that they will go live on our Blend side of platform before the end of the second quarter, so before the end of June. And we are working with other customers to make progress on that in the second half of the year. But the single biggest driver of that transition is Mr. Cooper, and we're pleased with the progress that we've been able to make on that this quarter.
Crystal Sumner, Head of Legal Compliance and Risk
Thanks. Our next question comes from Arvind Ramnani from Piper Sandler.
Arvind Ramnani, Analyst
Thank you for taking my question. I wanted to clarify a quick data point. I believe you mentioned a 41% reduction in overall mortgage volumes during this earnings call. How does that compare to the 35% you discussed in the previous earnings call?
Marc Greenberg, Head of Finance
Yes, that's correct. Previously, we anticipated that volumes would decrease by 35% in 2022 compared to 2021, meaning we expected to achieve 65% of the units. Now our projection has adjusted to about 59%, indicating a 41% decline. This represents a significant decrease in our overall volume forecast for the market, and we attribute this primarily to Fannie Mae and our MD&A, but we are still confident in our guidance as we feel positive about these numbers.
Crystal Sumner, Head of Legal Compliance and Risk
We'll take another question from Ryan Tomasello from KBW.
Ryan Tomasello, Analyst
Hey, thanks for taking the follow-up. I guess just circling back on the embedded title solution. Can you talk about how that product will be priced in terms of refi or purchase? Is my understanding that initially you'll be focusing. We see more refis low hanging fruit there. And I guess the types of attach rates you think are achievable for that product over the next few years and maybe helping to guide some of our modeling into 2023 and thanks.
Tim Mayopoulos, President
Sure. So you're right. I think we look at refi as the more immediately available opportunity for us versus purchasing in the title space, although obviously, refi volume is coming down this year. And in terms of pricing, we expect that we will keep the pricing consistent with what it has been at Title365 in the past. And in terms of attach rates, I think it's too early for us to be able to give you any clear estimates around that. But we feel good about the amount of volume that we'll be able to capture clearly with the biggest customer, Mr. Cooper, and we'll see where that takes us. Let me just add one quick additional point there. Another area, another product line that needs at least a title property report is home equity. And so it fits nicely into our instant home equity focus around helping our customers offer that product digitally as well. So it's another area that we're looking at.
Crystal Sumner, Head of Legal Compliance and Risk
Next question comes from David Unger from Wells Fargo.
Unidentified Analyst, Analyst
Hi, thanks. Okay. We got to talk about that. Marc, so I know given the challenges in the industry and chief valuations broadly, it's a very tough question, but $500 million on balance sheet in terms of cash. Just thinking about the upswing future, philosophically, how should we think about M&A going forward? Thank you.
Marc Greenberg, Head of Finance
When you mention upswing, are you referring to our stock price? Apologies for missing that.
Unidentified Analyst, Analyst
Hopefully, an eventual recovery in the mortgage market?
Marc Greenberg, Head of Finance
Yes. In some ways, during this downswing, I believe we're showing growth, or our declines are not as significant as those in the market. This reflects our customer selection, and we are pleased with that. It also relates to the additional products we've integrated, such as income and close already, and what's being planned in homeowner insurance and elsewhere. Our focus remains on delivering value. We are committed to enhancing the investments that benefit our lenders, and we hope the stock market will take care of itself. We are not alone in this situation as a public company. Our employees are very mission-oriented, and we are concentrating on staying focused and connected to our customers.
Crystal Sumner, Head of Legal Compliance and Risk
Next question comes from Joe Vafi from Canaccord.
Joe Vafi, Analyst
Hi guys. Thanks for taking the question. I was just wondering, in the current environment, what you see right now in terms of bank behavior, it sounds like they're kind of still moving forward with new technology initiatives, just kind of the most updated real-time, I guess, update on how banks are thinking about rolling out new technology here. Thanks.
Marc Greenberg, Head of Finance
I appreciate that you specifically mentioned banks because they behave a bit differently from independent mortgage companies in this context. Currently, banks are making significant investments in technology. I've brought up home equity a couple of times since it has been a major focus for us at Blend, and it's very much top of mind for me and our customers. Beyond that, personal lending is gaining attention from clients, and there is a lot of discussion around new membership or deposit account openings at credit unions and banks. There is considerable energy in these areas, particularly since the mortgage market is down. These institutions provide a diverse range of products, which is crucial during times of high inflation when consumers require more access to capital. This is why banks and credit unions play a vital role. We are confident as the preferred provider, which aligns with our core belief that if we help our customers succeed, they will want to engage with us more. We also see this reflected in our market-adjusted net revenue retention figures.
Crystal Sumner, Head of Legal Compliance and Risk
Thanks. We'll take a second question from Maddie Schrage from KeyBanc.
Maddie Schrage, Analyst
Hey, guys. Thanks for the follow-up. So you mentioned that two-thirds of total customers are using two or more software products. Could you maybe give us a little more information on your more heavily adopted customers? How many products they're using today, and how applicable that might be to the rest of the installed base? Thanks.
Marc Greenberg, Head of Finance
Historically, we've observed that larger institutions typically purchase one or two products at a time, while smaller institutions like credit unions and banks tend to opt for a complete suite of products all at once. This means they might buy mortgages, auto loans, personal loans, deposit accounts, and home equity products together, often including some add-ons like close and income. The purchasing behavior often varies based on the size of the customer. Recently, we announced that our credit card products are now live with Wells Fargo, indicating that we're gaining traction at the higher end of the market with our broader consumer banking offerings. In summary, the purchasing patterns at the top of the market differ from those at the bottom. We've previously shared data on how many customers buy two or more products in their initial purchase, which has increased compared to a few years ago when we offered fewer products. Altogether, these trends are positive, and we are optimistic about reinforcing our long-term strategy for growth with our customer base.
Crystal Sumner, Head of Legal Compliance and Risk
Take another question from Matt Stotler from William Blair.
Matt Stotler, Analyst
Thank you for the follow-up. I have a question regarding Consumer Banking. Based on what we observed in the first quarter and the revised expectations for 2022, there seems to be a slight increase in expectations for consumer banking. I recall you mentioned last quarter that some product rollouts to your customers were delayed. Could you provide more details on what you are experiencing with these rollouts and any new customer banking products? Additionally, are you seeing any independent customer banking wins, or is it mainly an upsell on mortgages? Thank you.
Marc Greenberg, Head of Finance
Certainly. I didn't completely grasp the first part of your question, but regarding the second part, I can say that we have a diverse mortgage customer base that has been successful, which is why they trust us with additional product lines. I mentioned Wells Fargo as an example, but there are others as well. Generally, these new products are often linked to our existing mortgage customers since that's how we initially entered the market, and they typically create a separate sale. We're pleased with this trend. Helping our customers succeed and encouraging them to engage more with us is definitely a positive sign.
Nima Ghamsari, Co-Founder and Head of Blend
I didn't quite understand the first part of your question. Could you please repeat it?
Matt Stotler, Analyst
Yes. The first part of the question just being, it seems like the Consumer Banking segment has performed better than expected in Q1, and it seems like the expectation for the full year is that it is also improving relative to the last time we got an outlook from you guys. So is that largely just the customers from last year that are rolling out and then actually catching up? I know some of those have been delayed. Is there anything new that's being learned in there this year? Just how to think about kind of the driving factors behind that kind of uptick in expectations for that part of the business?
Nima Ghamsari, Co-Founder and Head of Blend
That part of the business is primarily our home equity, our personal loans product, our deposit account products and then income and close. I'd say the majority of the uptick is from personal loans, and that's a function of a few of our customers who do those lending products are doing more volume than we had and maybe more dollars per unit than we had previously anticipated.
Crystal Sumner, Head of Legal Compliance and Risk
Take a follow-up question from Joe Vafi from Canaccord.
Joe Vafi, Analyst
Hey, everyone. I recognize that this year involves balancing cost management with maintaining our roadmap and ongoing initiatives. I understand we will receive a more detailed financial update later in the year. However, could you provide some additional insights on potential reductions in investment spending in the current conditions, particularly regarding areas like customer service, new product initiatives, and sales? Thank you.
Marc Greenberg, Head of Finance
A significant part of our approach is adjusting our operations based on title volumes. When title volumes decrease, our production costs need to decrease accordingly. We are generally adjusting for our position in the cycle and the size of the company. We are being particularly cautious and reviewing the entire organization, focusing on both revenue and costs, with a strong emphasis on ensuring our costs align with the current volumes, especially in relation to refinancing activities.
Crystal Sumner, Head of Legal Compliance and Risk
Our last question comes from a retail investor. Emily asks what is Blend's most important goal and focus for this year. Nima, do you want to take this one?
Nima Ghamsari, Co-Founder and Head of Blend
Sure, I appreciate questions like this as they encourage us to focus on one key aspect. We engage with our customers in various ways, and it's beneficial to pinpoint what's most crucial for us. Reflecting on this, our long-term success hinges significantly on our existing customers increasing their engagement with us. In the mortgage sector, margins are quite tight, and I've made some observations on this in my prepared remarks. Given that margins are constrained for our lenders, it's essential for us to enhance their efficiency. This leads to three important outcomes for us. First, we aim for our clients not just to maintain their market share but to expand it, which in turn fuels our growth. Our market share can grow not only by acquiring new customers but also by helping our current customers succeed and potentially consolidating other mortgage companies, which benefits us as well. Second, this success serves as a foundation for banks or credit unions to explore additional products with us. We've observed this pattern repeatedly, as reflected in our strong net revenue retention rate; our customers choose to deepen their relationship with us because we contribute to their success. Lastly, this approach fosters long-term relationships, ensuring our customers stay with us for decades. I've emphasized to our team the critical importance of ensuring that our current customers thrive, which is a distinctive aspect of our business as a vertical software company. While many of our customers are in the mortgage sector, we also need to ensure the success of those in consumer banking. We're actively focusing on this and dedicating significant time and effort to manage these relationships, especially now that we need to engage closely with our customers during challenging times, unlike when the market was booming when they had less time to interact with us. That's our current focus.
Crystal Sumner, Head of Legal Compliance and Risk
As that was our last question, the conference has now concluded. Thank you all for your participation. You may now disconnect your lines.