Welcome to the Figure Technology Solutions Third Quarter 2025 Earnings Conference Call. Lastly, today's call is being recorded. I would now like to turn the call over to Craig Streem, Investor Relations.

Thank you, Nicky. Good morning, everybody. Welcome to our third quarter 2025 earnings call. This is Craig Streem from the Investor Relations team at Figure. Joining me on today's call are Mike Cagney, Executive Chairman and Co-Founder of Figure; Michael Tannenbaum, our Chief Executive Officer; and Macrina Kgil, our Chief Financial Officer. In today's call, we will refer to certain non-GAAP measures, which are reconciled to GAAP measures in the earnings release we issued yesterday after the market closed and in the appendix to our supplemental slide presentation posted to our website. Non-GAAP measures are not intended to be a substitute for GAAP results. Certain statements made during today's call may contain forward-looking statements, which may vary materially from actual results. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings and set forth on Page 3 of the earnings presentation we've posted in the IR section of our website and in the risk factors we've identified in our third-quarter 10-Q filed earlier today, as well as in other SEC filings. We're not undertaking any commitment to update these statements if conditions change, except as required by law. And a recording of the conversation will be made available on our website following the conclusion of today's call. Following the formal remarks, we will also open the line for questions, and I would encourage you to follow along in the posted earnings presentation as we go through our formal remarks. And with that, I'll turn the call over to Michael Tannenbaum. Michael, please go ahead.

Thanks, Craig, and thanks to all of you who are joining us this morning. Let's begin by turning to Slide 4. As you saw in the earnings press release we issued after the close yesterday, we had a very strong third quarter with great results in all of our key performance metrics. Adjusted EBITDA, the measure that most clearly demonstrates the profitability of our business, reached $86 million in the quarter, an increase of 75% year-over-year, and EBITDA margin reached 55%. Net income for the quarter was nearly $90 million, more than triple last year's quarter. Total consumer loan marketplace volume reached almost $2.5 billion in the third quarter, representing a 70% increase year-over-year. This growth reflects continued expansion across our origination partner network and increased utilization of Figure Connect for liquidity. As more partners leverage the platform to fund and sell loans, we're seeing meaningful gains in both scale and efficiency. A standout example being first lien lending, where adoption has accelerated sharply among both new and existing partners. Firstly, volumes nearly tripled year-over-year, making it one of our fastest-growing products this quarter. Partners are leaning into Figure Connect as a liquidity solution, enabling faster funding, improved execution, and lower costs versus traditional channels. This momentum demonstrates how our marketplace model extends beyond home equity and into the broader consumer ecosystem, capturing a larger share of the housing finance value chain. We also continue to see encouraging progress from new product categories, which together contributed more than $80 million in volume in the third quarter. These include innovative blockchain-based solutions for crypto-backed loans, loans to small and medium businesses, and debt service covenant ratio, or DSCR, loans. Each of these products leverages the same origination and trading infrastructure that powers our core marketplace. This combination of core growth and product innovation reinforces the scalability of the Figure ecosystem. By expanding both vertically within home lending and horizontally across adjacent asset classes, we're creating multiple avenues for growth and ensuring that Figure remains the leading blockchain marketplace for consumer credit origination and liquidity. Now let's turn to Slide 5. Given it's our first earnings call as a public company, I want to share a bit about our evolution and how we have succeeded in delivering against what we see as a generational capital markets opportunity. From the beginning of the company, we've had a relentless focus on innovation and technology, in particular, on the use of blockchain to drive scale, achieve competitive differentiation, and disrupt incumbents. With mortgage and home equity, we identified a greenfield product set where we could improve the product experience and capital market. But our ultimate objective has always been to create a true marketplace that will connect assets with the capital markets in a capital-light manner that generates the sort of margins you see in this quarter's results. Over time, we believe this will translate into lasting shareholder value. On Slide 6, I'll start by going back to 2018 when we became one of the first entities to originate consumer loans on blockchain. In 2020, we did the first securitization of blockchain assets. In 2023, we did the first AAA-rated securitization of blockchain assets, and now our securitizations have AAA ratings from both S&P and Moody's. To date, we've originated over $18 billion in loans on the Provenance blockchain and executed over $60 billion in blockchain transactions. We believe we are, by far, the largest player in the public blockchain real-world asset space, and our lead is growing. We began as a direct-to-consumer lender using our balance sheet to originate loans. We quickly grew into a business-to-business-to-consumer platform and now have nearly 250 third parties, that's up significantly from last quarter, who use our technology to originate blockchain-native assets. Originally, we used our balance sheet to bridge between our partners and the capital markets, but we began to move away from that in June of 2024 with the launch of Figure Connect, where we allow our origination partners to access capital market liquidity directly. Instead of intermediating with our balance sheet, our partners sell directly to the capital markets using our marketplace. This fee-based model is more profitable for us, and additionally, does not require us to use our equity capital. We went from 0 volume in the marketplace in June of 2024 to having it comprise almost half of our total consumer loan marketplace volume in this quarter. Turning to Slide 7. I want to share a bit more about why blockchain is so important to our approach and how it has become the backbone of our entire strategy. We focus on three foundational elements of blockchain: transactional efficiency, liquidity, and lending, and each of these is an essential element contributing to our ability to transform capital markets. Starting with transactional efficiency, we have found that blockchain has enabled us to save roughly 85 basis points in securitization costs by taking advantage of the immutability of putting loan attributes on blockchain, which has allowed us to reduce third-party review costs. Moving to liquidity. We created via standardization a homogeneity in our loans. Every loan originated across our now almost 250 partners is done electronically end-to-end on the blockchain without human involvement in the data. Regardless of the partner, every loan is underwritten the same way, and all performance data is captured transparently. We've seen the value of this approach validated recently, given some of the capital markets issues and fraud highlighted by the Tricolor and First Brands situation. Earlier, I mentioned $60 billion in transactions versus $18 billion in originations, which demonstrates that through Figure Connect, we're turning homogeneity and data integrity into real tradable liquidity. That's a breakthrough for a historically illiquid asset class and is quickly becoming one of Figure's strongest moats. Finally, the last element is what we broadly characterize as lending, specifically how lean perfection and cross-collateralization can provide greater economic efficiency for a variety of products. One way we're applying this directly is through Democratized Prime, where our frictionless, short-term liquidity funding marketplace is delivering financing rates below those achievable in wholesale capital markets. This not only validates DeFi's potential efficiency, but also gives us a roadmap to extend this to other asset classes, something Mike Cagney will discuss later on this call. Turning to Slide 8, you'll see the two core marketplaces that anchor the Figure ecosystem today: our consumer credit marketplace and our digital asset marketplace. These are the primary engines of our business model. The consumer credit marketplace supports our origination partners, which include banks, credit unions, and mortgage companies. Every loan they originate is fully digitally standardized and executed on chain, creating homogeneity and transparency across the ecosystem. Our digital asset marketplace provides a connection point between the capital seekers I just spoke about and capital providers who seek to earn the best possible return. Our digital asset marketplace is a globally regulated exchange built on the same blockchain rails as our consumer credit network. Embedded within this marketplace is Democratized Prime, our decentralized short-term funding market. Democratized Prime connects lenders and borrowers directly, eliminating traditional intermediaries. Importantly, it's not isolated from the rest of the platform. It can also finance the same loans originated by our consumer credit partners. These two marketplaces work together: one generates high-quality, real-world assets, and the other provides the liquidity to fund them. Across both ecosystems, our revenue model is simple. We earn a fee-based take rate on ecosystem volume. On the next slide, you can see the illustration of the life cycle of a loan within the Figure ecosystem and how we capture value at each stage. Let's use a credit union partner as an example. When their customer applies for a loan, a credit union connects directly to Figure's system through an API or web app and sends us just a few key data points. Things like income, property details, and loan amount. Within seconds, our technology determines whether that loan meets prespecified underwriting parameters. If approved, Figure's platform automatically verifies both income and property value by linking to the consumer's bank account and third-party data sources. In nearly all cases, there's no human touch. The resulting data, credit score, income, and property valuation, are written immutably to the blockchain, forming a digital audit trail that dramatically reduces quality control costs as those loans move through the capital markets. Loans are then aggregated and financed either through warehouse lines or increasingly on Democratized Prime before being sold to loan buyers. At sale, Figure earns roughly a 3% ecosystem fee which is deducted from proceeds, meaning our partners are not out of pocket. If the loan is later securitized through our platform, we earn an additional 40 basis points. Separately, we earn a 25 basis point annual servicing fee for as long as the loan remains outstanding, which typically runs about five years. Across this life cycle, automation and blockchain verification translate to meaningful cost savings in origination, diligence, and secondary market execution. All efficiencies that directly strengthen partner economics while creating recurring high-margin revenue for Figure. These improved economics for all parties involved have been a significant contributor to the growth and relationships you'll see on the next slide. Our partner network is one of Figure's most powerful differentiators. Today, that network spans traditional banks and credit unions, more than half of the top 20 independent mortgage banks, and a growing base of fintechs, solar and home improvement companies. As highlighted in our earnings release, this quarter, we onboarded one of the largest mortgage servicers in the United States to our marketplace. These partners rely on our infrastructure to originate and distribute consumer credit products more efficiently, creating a nearly continuous flow of high-quality assets. Because our partners can originate, fund, and sell loans seamlessly, their economics improve and our overall reach continues to expand. As a result, over the past five years, partner-originated volume has grown at roughly a 74% CAGR. This network is a core part of our flywheel, broadening access to borrowers while also increasing liquidity for investors across our platform. Turning to Slide 12, expanding the supply side to meet this demand for credit is an important part of our mission to be a marketplace for these products. We are achieving this through Figure Connect, a purpose-built marketplace that enables buying and selling standardized blockchain-native assets for all counterparties in the transaction. We now have a diverse range of participants on the platform. These are high-grade institutional counterparties such as banks, asset managers, and insurers looking for transparent, data-rich credit exposure that settles faster and more efficiently than anything available in traditional markets. On this same note, in Q3, we added seven new buyers to our securitization program, including a prominent sovereign wealth fund that has become a programmatic buyer, benefiting our broader ecosystem. In short, Figure Connect is transforming what used to be a fragmented and opaque process into an always-on, data-transparent, and institutionally funded marketplace, redefining how real-world assets move throughout the capital markets. Before concluding on Slide 13, I want to also note that in the conversations with investors, we frequently hear we have a high "do versus say ratio." This slide summarizes some of the operational proof points we have been highlighting recently. The first is expanding our consumer loan marketplace to first lien, which is up almost 3x year-over-year and is rapidly proliferating through our partner ecosystem. The second is the progress on our blockchain pillars with our blockchain native equity listing and our growth in our stablecoin yields or YLDS. The third is the ubiquity we have been building for our YLDS stablecoin, including recent expansions into the Sui and Solana ecosystems. We are committed to continued delivery on the growth of our marketplace and our vision of bringing the capital markets on-chain. So before I hand it over to Mike, I want to take a step back and put this quarter in context. What you've heard today: strong financial results, growing partner adoption, and continued product innovation, all reflect the strength of Figure's platform and the durability of our business model. We're executing with discipline, scaling a capital-light marketplace and translating technology investment into measurable financial performance. At the same time, we're still in the early stages of an even larger opportunity, which is transforming the capital markets themselves. The traction we're seeing in Democratized Prime, the expansion of YLDS, and the upcoming equity initiatives underscore how blockchain is driving real change here at Figure. I'm incredibly proud of the progress our team has made and confident in the foundation we've built for sustainable long-term growth. With that, I'll turn it over to Mike Cagney to share his perspective on the broader opportunity ahead and the next phase of innovation at Figure.

Thanks, Michael. I want to start off my remarks today by reminding investors about the enormous opportunity we're executing into at Figure. This quarter was exceptional. We optimized for the long term in our approach to product technology investment and corresponding shareholder value. We're transforming the capital markets with blockchain, and we see the opportunity to build a $100 billion or more market capitalization company in this field. We built our consumer loan marketplace in a series of very deliberate, methodical steps over the past seven years. And as Michael pointed out, that's clearly paying dividends for us today. The early progress you're seeing in YLDS and Democratized Prime is just that: early progress, but we're confident that over time, we will continue to build out these products and many more we've not even revealed yet. On Slide 15, Democratized Prime, our DeFi lending product, is an important part of our future. And in many ways, it’s the most scalable platform, the most natural place for both third-party assets and our ecosystem. Many of you heard me talk about the liability flight from banks to stablecoin, which will in turn drive demand for DeFi as alternative funding sources. We believe Democratized Prime is well-positioned to benefit from that flight. Democratized Prime competes directly with traditional capital allocators that intermediate between sources and uses of capital, directly connecting borrowers and lenders and reduces significant time and cost benefits. We stood up a number of loan marketplaces on Democratized Prime, and importantly, the funding cost there is lower than traditional warehouse lines. We see a significant opportunity to use Democratized Prime to offer warehouse into our existing Figure Connect lending partners, eliminating the 90-day diligence, minimum fees, excessive legal costs that they have to face with the banks in lieu of a lightning-fast, cheaper financing solution. The economic model of Democratized Prime is compelling as it generates incremental pure margins since it operates as a decentralized exchange-like marketplace rather than a balance sheet business. This continues our broader trend of introducing capital-light, higher-margin products that expand the ecosystem's velocity and profitability. Over time, we see Democratized Prime becoming the preferred liquidity venue not only for assets originating within our consumer credit network, but also for blockchain native real-world assets more broadly and a direct extension of the structural efficiencies we've built across the Figure platform. And as we add additional blockchain ecosystem connectivity to YLDS, like you’re seeing with Sui and Solana, we have a natural platform to access to Democratized Prime for their ecosystems. On Slide 16, earlier this week, we announced a partnership with Solana to deploy our yield-bearing stablecoin YLDS on the Solana blockchain, the second major blockchain partnership for YLDS after Sui, and that we've announced since the IPO. This collaboration brings together Solana's speed, throughput, and composability with YLDS's regulatory anchor design and attractive transparent returns. The step also supports our broader strategy at Figure, building modern capital markets infrastructure that bridges traditional finance and decentralized systems. YLDS is not just a token; it's a regulated financial infrastructure asset designed to support fiat movement on-and-off chain and enable a seamless flow of yield and liquidity across our ecosystem and other LLMs. The Solana and Sui deployments extend that capability into one of the most active blockchain developer communities, opening up new rails for innovation, adoption, and scale. Finally, I'm pleased to share one major strategic marker that further accelerates how we are reinventing capital markets as we continue to build out the blockchain ecosystem Michael referred to. Yesterday, we announced that we filed a confidential S-1 for the upcoming launch of a blockchain-native equity share class on the Provenance blockchain. This offering is a nondilutive secondary transaction and represents the first public equity class to exist entirely on blockchain infrastructure. We'll share more about this offering in a call with the analysts and investor community next Tuesday, November 18, after the market closes, at which time we expect our registration statement will be public. This is a watershed moment for Figure, for Provenance blockchain, and for capital markets more broadly, and one we believe will define how asset classes are created, financed, and traded for decades to come. With that, I'll turn it over to Macrina to walk through our financial results for the quarter.

Thanks, Mike. Turning to Slide 18. Let's take a closer look at our financial performance this quarter. As a reminder, at Figure, we focus on three key metrics: volume, revenue, and EBITDA. Starting with volume, our total ecosystem activity continues to grow rapidly. Notably, our consumer loan marketplace volume reached a record level nearing $2.5 billion this quarter. Importantly, volume on Figure Connect made up nearly half of the total consumer loan marketplace volume as we continue on our path to building out our capital-light marketplace with limited balance sheet exposure. Moving to revenue. Adjusted net revenue reached $156 million in the quarter, an increase of 42% from the third quarter of last year. Adjusted net revenue benefited from the higher level of ecosystem volume I just mentioned, partially offset by lower take rates from partner branded volume as we shift more volume away from Figure branded. I would remind you that Figure-branded volume generates a higher growth take rate in revenue with higher operating expenses. Overall, our partner branded volume, especially volume from Figure Connect brings us higher adjusted EBITDA margin. Turning to our profitability. Figure achieved an adjusted EBITDA of $86 million for the quarter, up 75% year-over-year, representing an adjusted EBITDA margin of 55.4% compared to 44.9% in the prior year period. That's over a 10-point improvement in margin, driven by operational efficiency, automation, and the continued shift toward our marketplace. On the expense side, we continue to demonstrate meaningful operating efficiency. Our fixed costs, which include technology and product development as well as G&A functions like finance, legal, and capital markets, have remained stable from pre-IPO levels relative to our revenue growth. The investments in technology that we've made over the last seven years allow us to add new product verticals without significant incremental development costs. Variable costs that move with our volumes have benefited from continued reduction in funding costs in addition to automation and AI applications embedded throughout the business. Variable expenses as a percentage of adjusted net revenue declined from 36% to 28% year-over-year, highlighting the efficiency of our marketplace model and transition away from using our balance sheet. On the next slide, there are trends I want to make sure you are aware of. As we look ahead to the remainder of '25 and early '26, it's important to note the typical seasonality in home equity loan origination volumes that we expect to see in the fourth and first quarters based on historical information from '23 and '24. According to a third-party data source, Q4 and Q1 volumes historically trended below the annual average, lower than the yearly baseline. This pattern is consistent with what we've seen historically as demand for lending tends to moderate heading into the year-end holiday period and through the winter months. We see that consumers typically defer major financial decisions such as home improvements or debt consolidation during the late fall and winter as household budgets shift toward holiday spending and travel. That said, we believe our diversified partner base and capital-light marketplace model position Figure to navigate these dynamics effectively. Before we close, I want to highlight the three long-term financial goals that guide our strategy shown on the next slide. First, adjusted EBITDA margin. We are targeting annual margins above 60%, reflecting the scalability of our model as more activity moves to Figure Connect and as Democratized Prime adoption continues to grow. These initiatives fundamentally reduce the need for balance sheet capital, increase transaction velocity, and drive a higher contribution margin with each incremental dollar of volume and balance. Our progress this year with adjusted EBITDA margin reaching nearly 55% this quarter demonstrates that level is achievable in the longer term. Second, capital light. Figure is moving to a marketplace model, and as partners increasingly originate, fund, and sell loans through our platform, our role becomes that of an infrastructure provider, capturing recurring marketplace economics without tying up capital. The transition to third-party and on-chain funding through Figure Connect and Democratized Prime continues to reduce the use of our own balance sheet while maintaining liquidity and flexibility across the ecosystem. And third, operating efficiency. We've maintained a disciplined cost structure with limited increases in fixed expenses even as revenue and volume have scaled substantially. Our technology investments, particularly in AI and process automation, have reduced variable costs as a percentage of revenue and allowed us to support more partners, more products, and more transaction volume without proportional increases in headcount or spend. We believe we are uniquely positioned as the future of capital markets with an integrated platform that uses blockchain to originate, finance, and trade real-world assets at a fraction of traditional cost. As we continue to grow our partner networks and develop our decentralized finance capabilities, we expect to deliver sustained volume growth, stable and attractive take rates, and expanding operating margins over time. I'd like to thank everyone for joining us today and for your continued interest in Figure. Nicky, we're now available for questions.

Our first question is coming from Dan Dolev with Mizuho.

Amazing quarter. I mean you're really crushing it. You obviously crushed all of our expectations. So maybe a question for you, Michael and Mike, what is either of you most excited about in the business right now? Because there seems to be so many moving parts, and so many great things. I think investors want to know what's the most exciting thing for you guys. And great results again.

Thanks, Dan. I'll start, and then I'll let Mike add what he's most excited about. For me, it's very simple. Our existing and future customers are coming to us rather than us going to them, asking us how they can use our blockchain tech to improve their business, which I think is very exciting. I spend a lot of my time on partner acquisition and growth. When I joined this company, blockchain for most of our partners was very much in the background. I've referred to it kind of similar to cloud technology where it just works. But increasingly, I see that our origination partners want to have conversations about our blockchain ecosystem more directly. They're considering YLDS, our stablecoin, and Demo Prime in addition to our tokenized loans, and they see the connection between these things. So that go-to-market and sort of that dynamic is very exciting. Mike, I would be interested to hear from you.

I am really excited about the press release yesterday that announced our issuance of equity on public blockchain. This represents a significant transformational opportunity to create a new capital market ecosystem. While I can't go into detail today, we will discuss it extensively next Tuesday. I believe this is a major step in showcasing the value proposition that was mentioned earlier regarding transactional efficiency, liquidity, and the capital financing aspects of DeFi in blockchain. We have clearly shown these benefits in the credit asset class, and now we are looking to apply them to other asset classes, with equity being our next focus.

Also congrats on the IPO as well as on the strong results coming out of the gate here. I'd love to just touch on your product roadmap. What's the order of prioritization of your products from here? And then maybe if you could comment on the TAM and profitability of those top few products? And what do you see as being meaningful to results among these new products over the next, let's say, 2 to 3 years?

Thanks, James. That's a good question. I'll start by saying that we have a huge $185 billion plus market opportunity in front of us. We see all consumer credit and asset classes, as Mike just mentioned, beyond consumer credit, as addressable. From the core standpoint of our HELOC product, we're executing into a $35 trillion home equity market. There is just a huge amount of runway in that product. Importantly, though, as you heard us mention in the prepared remarks, we've seen a lot of traction as well in the first lien aspect of the business, which is the largest consumer credit asset class. And so that is something that we're pushing really hard, and we'll continue to do so in the coming quarters. In terms of the blockchain ecosystem pillars, namely Democratized Prime and YLDS, we're also making significant progress and really excited in the coming months to share some ways that we're going to be bringing more liquidity and ubiquity to those products, particularly some of the liquidity you see in other blockchain ecosystems, bringing that into our Demo Prime marketplace. So Mike, I don't know if you want to elaborate on that a bit.

No, I think we're going to continue to invest in Demo Prime. It's a core aspect of what we're trying to deliver on in terms of capital market disruption. Then as I mentioned in Dan's comment or question, the application of equity native chain is really an extension of the existing infrastructure that we have. Obviously, it's an extremely novel transaction, but it's one that's tapping into, again, the transactional efficiency, liquidity, and financing benefits we've demonstrated on the credit side. So we really look at this as just an extension, but an important part of the roadmap.

Yes, I'd like to add that we called it Democratized Prime, which refers to prime brokerage. It really connects all the pieces of our ecosystem, including cross-collateralization across crypto, tokenized loans, and tokenized equity. The name was very intentional, and you'll be hearing more about it in the future. Next?

Could you provide some insights on the Figure Connect outlook? Based on our estimates, 46% of your volume came from Connect this past quarter, which exceeded our expectations. What do you think that could include and over what time frame?

Sure. James, thank you for being on the call. How we think about Connect is we've made progress. We opened up Connect in June of 2024. Within 2025, we are already reaching very close to 50% of Connect volume across our overall consumer loan marketplace volume. We do think that in the mid- to near term, 60% of Connect volume is quite doable, and we're working hard with our partners to get there.

Congrats on the IPO. So you saw really impressive partner growth in the quarter. So I was hoping you could elaborate on that. Can you help us get a better sense for the composition of those new partners in terms of size and the types of loans you'd expect them to be originating? And then how should we think about the time that it's going to take for those new partners to reach what you'd expect to be kind of a realistic run rate from them?

The partner growth was highly impressive, particularly in the small and medium business segment. This segment represents a completely untapped opportunity, and we observed not only favorable conditions due to the government shutdown and the small business administration being closed, but also a growing awareness of our offering's relevance to SMBs. Additionally, we launched a product improvement that allows us to underwrite bank accounts for small and medium businesses. We are continuously onboarding a diverse array of partners of varying sizes. A key factor contributing to our business stability is our ability to onboard partners quickly, sometimes in as little as two weeks, alongside larger enterprises that may require more extensive, year-long sales cycles and implementations, all of which we manage in-house. This quarter, we welcomed a significant servicer, one of the largest in the U.S., an enormous independent mortgage bank, and a partner associated with Robinhood, from which we anticipate generating volume. We are committed to adding a varied mix of partners that differ in size and now also in market focus with the additions in the SMB space.

Congrats on the strong quarter out of the gate. I wanted to ask about Democratized Prime and YLDS. If you could just discuss the strategies you're leaning into to drive adoption there. I think one of the opportunities, it sounds like you've alluded to in the past, is given the ecosystem you have, the possibility of promoting some incentives to existing origination partners as well as the underlying consumer borrowers to jump-start usage of those products. So if you can just elaborate on what the strategy is there?

Sure. I'll start, and I'll let Mike add as he's very close to Democratized Prime. In terms of the marketplace, where we're focused today is on the funding side. We originate, as you can see from the results this quarter, a very large number of tokenized loans each month. Ultimately, we see Democratized Prime as serving not only those loans but third-party loans as well. It's a really massive opportunity. It's, frankly, the most scalable in many ways because of our ability to work and support with third-party assets. Now our focus is on building out the funding side where we want to make sure that there is sufficient liquidity for these assets because when you're building out a marketplace, which is something that Figure has a lot of success in doing, you need to control one side of the marketplace and then add others. We have the asset side down, and we're looking to increase funding. Mike, anything you would add there?

Yes. I think the announcements with Sui and Solana are significant for the direction we’re taking with YLDS. YLDS began as a Provenance security, which lacks the builder community that Sui and Solana possess. Integrating a security into these ecosystems, where there’s a fiat on/off ramp and a yielding stablecoin for payments, cross-border remittances, and collateral, presents a considerable opportunity, and we anticipate substantial growth from that. We’re also making progress with YLDS regarding collateral on exchanges. You can expect some announcements from us as we approach the end of this year, which is a normal progression. We believe YLDS will be a better collateral choice compared to USDC due to its yielding nature. Regarding Democratized Prime, as Michael mentioned, we have the potential to place billions of dollars of assets there. Our current focus is on the funding aspect, and we are addressing this in sync. We cannot invest $1 billion in assets without expecting the necessary capital to follow. Similarly, we cannot bring in $1 billion in capital unless we are ready to utilize the assets effectively. We are concentrating on mirroring what Athena and others have achieved in liquid staking protocols, utilizing an underlying yielding asset, such as a home equity line of credit or lending against that asset, as the yield-generating feature. This differs from Athena’s approach, which relies on the volatility of the spot and forward markets. We see a tremendous opportunity to generate assets through this yielding liquid staking protocol structure, which we believe will significantly enhance the funds in Democratized Prime.

Great. Appreciate all that color. And then in terms of the value proposition of tokenization, you've clearly demonstrated that within the consumer credit asset class thus far. If you're able to give us just your general thoughts on what you see that value proposition being for tokenized equities given the stronger liquidity and transparency in that asset class at least relative to consumer credit. So what are the additional benefits you see being unlocked from tokenization there?

Well, without getting too much into the structure because most of that's going to be covered on next Tuesday's call, and I do encourage everyone to join because I think it's very innovative, and we'll give a lot more detail. But I think one of the focuses, and you've heard both Mike and I talk about this, is a lot of the existing market today is focused on kind of tokenizing but not necessarily adjusting the full blockchain infrastructure behind that tokenization, and what we're about to unveil will be a little bit more fundamental. So that's, I think, hopefully enough to make you interested in joining next Tuesday.

I can add to that a little bit in a more general construct. I think that a lot of our peers are discussing tokenization of equities, and what they're doing is promoting the idea of taking a DTCC security and doing a blockchain representation of that. The value prop they allude to is 24/7 trading. I don't think 24/7 trading is appealing to the broader market. I don't think the market makers want to make a market 24/7. It's a little bit of a red herring in terms of why there's value here. If you go back to the three value props of blockchain that Michael talked through earlier, there's transactional efficiency, and there's some transactional benefit you get with a blockchain native equity. The transfer agent costs, for example, is lower, but it's not enough to move the needle. There's a liquidity benefit at the margin in that you do have 24/7 trading. But again, we're looking to lift FTX out of bankruptcy. They had a U.S. equity perp business that traded 24/7. That business would have been flying, and it was, and it was going sideways. The real value in putting equity on blockchain is the DeFi construct, the ability to cross-collateralize your stock with other assets like Bitcoin, and Figure loans, for example, and build unique borrowing pools through processes like Democratized Prime, where you access leverage in a way that traditional prime brokerage can't service. Even more importantly, the ability to lend that stock out. Rather than the opaque locate market we have today where the prime broker earns the benefit when the security goes on special and pays an extraordinary yield, you have a straight-up limit order book, a limit order book where you put the stock out for loan and you decide what you want to get paid for it. That should drive anyone on the buy side to want to own the blockchain version of that security. There are considerations about liquidity and how do you keep the price in lockstep. Again, Michael alluded, we'll talk to that in depth next Tuesday, particularly how we're doing this for our issuance. I think this is the future of how capital markets, equity capital markets are going to work. Just as we did with lending, where we pioneered it with our own product, we think we'll do the same thing here on equity.

Just a quick one to start. I appreciate the comments on seasonality. Do you think we should expect the quarter-over-quarter cadence in 2025 to reflect what happened in 2024? Or are there any differences that we should be aware of this year? And then same question heading into 2026.

Rob, this is Macrina. So as you saw, our Q3 was outsized growth compared to last year, and we have been trending really well with our IPO and all of the efforts with partners. I do expect some level of seasonality in Q4 and also into Q1, but I do want to balance out that we have been having great success with our partners. We're seeing a lot of interest. So for us, it's more of a balanced approach.

The key point about our operations is that we have created an alternative capital market featuring robust liquidity ratings and tokenization, utilizing blockchain to enhance transparency and ensure data immutability. For instance, we highlighted our partnership with Tricolor this quarter, emphasizing the importance of tracking the true provenance of loans for the development of this capital market. Our approach is distinct from others in the industry. The Home Equity Line of Credit serves as a fundamental aspect of this marketplace. We have constructed this alternative capital market using blockchain as our foundation. Specifically, any changes we make to our technology are seamlessly integrated into the capital market. When we implement automation, as we did with small business bank accounts, it is the synergy between our capital market and technology that generates the significant margins reflected this quarter, as well as the capital-light marketplace and ongoing growth.

I wanted to discuss the outlook for non-HELOC loan growth. I think it was roughly $80 million in the quarter. Can you talk about how you see that progressing as the products expand? Which of the products mentioned in the release was a significant driver of those loans?

We're seeing significant growth in first lien, as we mentioned, 3x year-over-year. That is the primary focus for Figure of the new products that you've heard us mention because of the, frankly, market size and opportunity for our partners to grow. That said, the SMB and crypto-backed loans are also extremely important to the growth story. HELOC loans have also grown around that 3x year-over-year number. We're seeing just the beginning of that marketplace as we expect to pursue the same B2B2C approach that we did in the mortgage market. Today, that's mainly direct to consumer. In SMB, as we add more partners and build that go-to-market engine, we do expect to see significant growth there as well. Yes. The partner growth was really impressive. I think the biggest aspect of partner growth for the quarter was growth in the SMB segment. That's because it's completely greenfield, and we actually saw not only tailwinds because of the government shutdown and the small business administration being closed, but also broad recognition of the opportunity and what we're doing and the applicability into the SMB use case. That was coupled with a product improvement that we released that allowed us to underwrite small and medium business bank accounts. More broadly, we are constantly onboarding a range of partners that vary in size. I think one of the nice things that adds stability to our business is that we bring on people that can get up and running in as fast as two weeks. We bring on enterprise parties that are doing more of a years-long in some cases, sales cycle and implementation, and we have all of that capability in-house. This quarter, you saw us add a major servicer, one of the largest, if not the largest in the United States. We also added an extremely large independent mortgage bank. We also added one of the players that has done a partnership with Robinhood, and we expect to see some volume from there as well. We're continuing to add a diversified group of partners ranging in size and now also end market with the SMB additions.

So a follow-up on Dan's first question. On the first lien growth, is that a first lien HELOC? Or is that a first lien primary? I wanted to get an update on your appetite to expand outside of HELOC because I saw you referenced debt service covenant ratio loans in your prepared remarks. I think that's a pretty small TAM, but I'm wondering what about resident transition loans, auto loans, and also primary first liens, non-HELOCs. Could we see Figure move into some of these other potentially larger TAM segments in the future?

I'll begin by addressing the first lien question. This is a first lien HELOC, which we differentiate because its use case is quite distinct. Typically, when people consider a HELOC, they envision a mortgage in addition to an existing first mortgage, but the first lien HELOC we offer through our partners is designed to pay off current loans, often when the existing rate is higher than the current rates. Essentially, it's a genuine substitute for a cash-out refinance or a rate-and-term refinance, using traditional mortgage terminology. Additionally, about 40% of homeowners fully own their homes without any existing liens, presenting an opportunity for first lien products. We particularly anticipate growth in the small balance first lien space because our origination cost at Figure is $1,000, compared to the industry average of $1,200. For instance, on a $200,000 mortgage, this represents considerable savings, which explains the increasing adoption from our partners. Some partners are even starting to incorporate first lien products without utilizing our HELOC offerings, signifying substantial growth. I do want to correct the record on the TAM of DSCR. That actually is one of the largest, if not the largest components of non-QM. I believe there's over $20 billion annual securitization of DSCR. I will just use this opportunity to remind everyone that the capital market that we're building, and I think the SMB use case represents this the best, is one that transcends any one specific asset class. We really see this as the beginning. Our ambitions are much broader than just mortgage or HELOC. You'll see more next week in the coming quarters, but we're definitely really excited about the business that we're building and its broad reach into the U.S. capital markets. So this actually gets to kind of what I was saying I'm most excited about, and I think it would be good for Mike to expand here as well because there's this broad thesis that we have at Figure, which is that you're going to have liabilities moving into stablecoin, which are tokenized liabilities, and therefore assets themselves will need to be funded with those. For a large bank, actually, what's happening is they're going to want to tokenize their assets to access those liabilities that are tokenized, and Democratized Prime is actually a perfect way to do so. This is part of our broader macro thesis, and it's being borne out in the conversations we're having. I don't know if you'd add anything there, Mike.

I think we got an interesting perspective in late '22 and early '23 when we had some liability flight out of the banking system, and the regionals and the super regionals were especially impacted by that. They were all selling assets at fire sale prices, which led to a cascading series of events that ultimately led to bank failure and the need for the FDIC and the treasury to step in with extraordinary measures to stabilize the market. The treasury is today talking about $2 trillion going to a stablecoin, or $6 trillion going into stablecoin. They're not talking about where that's coming from, which is clearly demand deposits. We're in discussions with a lot of banks, especially regional and super regionals, about this across two factors. One is to Michael's point, the ability to originate blockchain-native assets and access that DeFi ecosystem is just the reallocation of capital pulled out of the demand deposit and put into stablecoin, and then reapplied in DeFi to generate yield. We think there's an enormous opportunity. Low balance first lien is a great use case for us to bring to those banks, and it’s a greenfield opportunity for them and an ability to get a front row seat as to how blockchain works. The second thing we’re doing is around the ability to use yields defensively, where when JPMorgan comes with JP coin and tries to approach those deposits, the bank can offer a yielding alternative where with YLDS, just like any Genius Act coin, we can hold treasuries and bank deposits; we have the ability to hold bank deposits back to that bank. When a regional bank customer buys YLDS and it comes through that regional bank, we can hold that deposit back at the bank's balance sheet, therefore, not keeping the liability within the bank itself. We think both of those are significant opportunities for us, especially as we're getting the Genius Act coming online. You’re starting to see more noise out of Chase. I think Chase is going to make aggressive moves here at the expense of regional and super regionals. I believe we are well-positioned to bring both some defensive and certainly, in certain circumstances, offensive capabilities into those banks with the combination of on-chain asset origination and access to DeFi through Democratized Prime but also YLDS as a defensive measure for or an alternative to a non-yielding stablecoin.

And this concludes today's Figure Technology Solutions Third Quarter 2025 Earnings Conference Call. Please disconnect your lines at this time and have a wonderful day.