All righty. Good afternoon, everyone. Welcome to day two of the Citizens Technology Conference. My name is Aaron Kimson. I cover software here at Citizens. Really excited to have co-founder and head of Blend, Nima Ghamsari, with me on stage today. Nima, how was the walk up the hill this morning? Not too bad. Not too bad. Pretty good. Headquarters right down the hill. It's a very steep hill. Very steep hill. I've been in San Francisco a couple of years and climbed it for the first time in a while yesterday. It's good for the glutes. Absolutely. Let's just jump right into it. There's a ton to talk about here. You specifically talked about seeing competition falter on the earnings call Thursday and 4Q being a turning point there. On the spectrum of competition failing to deliver promised innovation to your largely organically built core, the core mortgage platform is organically built, reaching a tipping point of features and functionality, what are you seeing there? Yeah. I mean, I think it's tempting for companies that want to try to compete with us as the market leader to make promises for things. Every couple of years this happens where some competitor will come up, make really big promises. In this case, it was 2023. Our stock was down. People were worried about the market broadly. First Republic had just failed. We had a lot of debt on our balance sheet. None of those things are relevant at this moment. At the time, it was a really big deal in the market. Our competitors used that in combination with what I would say were not the most savory sales tactics and won some customers from us. Now it's just like I told the team internally at the time, I was like, keep your chin up. Look, we're doing the right things. We're building the best tech. We're delivering on our promises. We're going to be doing this in a decade. They won't be. We're seeing that now. A lot of the deals that we closed in Q4 were not competitive deals. These are large financial institutions who typically do large RFPs with lots of participants. That just wasn't the case. The reason for that, I think, is because we have delivered. We have a reputation of being the best, the highest-end brand in the market. We weathered the storm really well as Blend. We're still here. This happened five years ago, seven years ago. It happened again a couple of years ago, like I mentioned. I'm sure it'll happen again in the future. Our core strength is going to be our technology and our integrity. Those two things have stayed with us the 12 years we've existed. Got it. Let's talk IMBs a little bit. On the earnings call last Thursday, you announced a new organization that you started in Q4, I think, led by Justin Van Hoosen, specifically focusing on IMBs, where it's a little bit different of a market versus banks and credit unions. Can you talk about your history with IMBs, with some of the larger ones, and why now is the right time to get into that market? For those who don't know what IMBs are, they're independent mortgage banks. They're non-depository financial institutions that offer mortgages that they typically sell immediately through the capital markets, Fannie Mae, Freddie Mac, or through aggregators who do various kinds of wholesale lending and correspondent lending. IMBs are a very interesting breed because they're monoline. They're very loan officer-centric. Their salespeople are the people who run the organization. While we've historically done really well in the largest IMBs, I would say that because they sort of are different beasts in how they buy software, how they use even features of our platform because of the unique nature of these organizations, we have not historically gone down market in the IMB segment. I don't mean down market to small customers. I still mean pretty large tickets, $500,000, $750,000 a year tickets. The other thing that was nice about this launch of the IMB segment for us is it's going to make our existing customers get more value out of our product. There's a dedicated team. It allows our bank and credit union segment to focus on the banks and credit unions who speak a different language as well. Our existing customers will be happier. We're going to get more presence in the IMB segment, which is a big part of the mortgage market today that we have not historically played a huge role in. It happens to coincide with when I see our competition failing or at least faltering. That's the majority of their business. We're going to go after it. We think we're the best product for the IMBs as well. We are going to only continue to invest there because we believe in the market. We want every organization that does mortgages to have the best technology. Got it. When we think about the IMB organization from a go-to-market perspective, how do you think that'll differ versus the existing organization going after largely banks and credit unions? Will that be a direct motion? On the smaller end of the IMBs, will there be an indirect component there? It'll all be direct, a nd again, even though we're going smaller than we historically have gone on the IMBs, we're not going to maybe the very long tail of the market. A lot of them, the very long tail of the market is going to use the systems that are built into their loan origination system. These are still pretty big tickets. The sales motion, the nice thing about the IMB market is it's very insular. They all talk to each other. It's the same core DNA that's made us successful in the banks and the credit unions, which is if you make a few of them really, really successful, they talk about you. They recommend you to their friends. They all kind of compete with each other. They all go to the same cocktail parties and the same events. They move around organizations. The tech guy over here goes over there. He's like, hey, I got to bring over Blend. I think us being very focused on it is going to allow us to give them the message that they need to hear and the products that they need to see and feel for them.' Even the pricing and packaging, there might be ways to bundle certain things that serve that market better or build certain integrations that serve that market better that maybe did not make sense for the banks and credit unions. Just having that focus, one thing I love about Blend now is I talk a lot about Simplify Blend. We're getting to be really focused. Everybody at Blend is very focused. That focus just leads to better execution. I think that's a great segue. A big piece of the press releases you put out before, the 3Q call and then the 4Q call and talked about on both calls, has been simplifying Blend. Can you talk about the steps you've taken there? Should investors read anything into not guiding title revenue in 1Q, where that's been something that you've guided in the past? I mean, the goal of Simplify Blend is what we're going back to, the focus point. Where we're best in the world is our core origination software. However, over the last, call it, half a decade, we got into a few other businesses that are either data businesses or more operational businesses. The first example, the first one we got into was homeowners insurance. It's actually a good idea. The only reason you get homeowners insurance is because you get a mortgage, and the mortgage company makes you get one. It's not like these things were totally not. Same with title insurance. The only reason you get title insurance is because you need it to get a mortgage. There's no other reason. Nobody's going around buying title insurance on the side. Organically, it made sense to me. We have such big distribution, huge percent of the market going through our platform that in some ways it makes sense. From a focus and simplicity perspective, it's not our core differentiator in the market. We exited the homeowners insurance business and actually switched it where we moved the operations to a partner. We still get really good economics from that partner. The more volume they do through our platform, the more they pay us. It allows us to leverage the fact that we are so widely deployed to help them grow their customer base. That benefits us as well. They're investing in this. This is their core business. It's going to be really good for them, really good for our customers, and has been already very good for us financially. One of the unsung stories of the Q4 earnings was how profitable we were. Part of that was because we got out of an operational business that was, while it was a good revenue business, for every $10 of revenue we were making, only $2 of profit. Now it's maybe $5 of revenue, and we're making $5 of profit. Those are not real numbers, but just that's an illustrative example. That was a really good example. The next step we took was we got into the income verification business, which is largely a data business and some technology. We announced that we're partnering with Truework on that, whereas similar, they have a wider array of offerings. They're going to drive a lot of value to our customers through our platform. They are going to make our customers more successful, and then make themselves more successful, and then in turn make us successful with pretty good economics for us over time as well. It is another one I am super excited about. Broadly, I think the benefit of simplifying Blend is that we can focus on the things that can truly differentiate Blend and truly differentiate our customers from people who do not adopt the most modern technology. We want to be on the forefront of most of what they do today, which is stare and compare documents. They are reading from one document, keying numbers into a system, comparing it to a number the consumer entered two days earlier, things that AI is really equipped to solve today. AI can just do that for them today. We are a widely deployed software platform with great distribution. We have to help them with this. By not doing those things, there's a resource we can allocate towards things that are truly differentiated for our customer base and will meaningfully impact their bottom lines and hopefully pass on some savings to the consumer as well. Yeah. I think it makes a lot of sense. Switching gears, I want to talk about deposit account opening a little bit. Can you walk us through the history of your deposit account opening product? Is this something you land with or more of an expansion product, an add-on? How do you think about deposit account opening strategically, given that it's probably the single most important piece of real estate for a tech vendor within a bank? If you can solve that issue for a bank, the money stays at the bank. They're happy. They collect the spread. I think we saw some validation there with Alkami's announcement that they're acquiring MANTL on Thursday. Yeah. I don't know what the more valuable real estate is. It might be the digital banking platforms like Q2 and Alkami and those things. That's pretty valuable real estate. It might be the things that grow deposits like MANTL and Blend's deposit account opening solution and others that are in the market. It might be the things that drive a lot of revenue, which is the lending platforms like Blend. They're all valuable in different ways. The reason we got into it was because a lot of where our customers saw opportunity was when somebody was getting a lending product from them, using that to encourage them or, in some cases, offer them benefits to bring over their deposits. Consumers getting a mortgage back in the day with First Republic, a lot of what they would encourage you to do is bring over your bank balances. It was sort of a nice symbiotic relationship between those two lines of business. They wanted it to feel like one experience for the consumer. I think similarly for us, we were kind of dragged into that organically by our customers. I mean that in a good way. I do not mean dragged in a bad way. Dragged in a good way into that organically by our customers. Now it kind of starts in both ways. We still land with mortgage a lot. Now we are starting to land more with, I guess, more often than I would have expected with just the deposit account opening solution, the new membership onboarding solution. I think that is because, to your point, growing deposits for a financial institution that collects deposits is very, very important. Doing that in a frictionless way that takes two minutes and then brings over your money and maybe shows you how you can consolidate your other debt with this or refinance your other debt with this institution is a meaningful way to drive a delightful experience that brings over money and makes that money really sticky. Yeah. That's great to hear that you're able to land with the deposit account opening solution as well, a nd then how large can a financial institution get before it generally handles deposit account opening in-house? I worked at one of the mega banks earlier in my career. And they had a massive team focused on this in Columbus, Ohio. Is that a product that is generally geared towards your smaller customers today? We do have some very large customers using it. I think it sort of depends on how they think about our platform. If you think about our, I was talking to the CTO of one very large financial institution. He said, I used to think about build versus buy. He's like, that's not how his brain works anymore because there's so much, even in just the deposit account opening space. He's like, I think about I'll build the things that I need to build. I'll partner. I just need it all to fit together really well. It needs to feel like one experience. One of the things that we've invested in a lot the past few years is making our Blend Builder platform, which is a much more flexible platform, can integrate with their existing processes and workflow and screens. It's been a meaningful investment for us, but a good one because now it opens the door for these conversations where somebody who used to think build versus buy who's now just trying to think, how do I have the best possible experience? And how do I do it in a way that doesn't sacrifice on UI or something like that? It's now possible to do that and not feel like you're compromising. Got it. Switching gears again. You announced on the Q4 call on Thursday a new agreement with Mr. Cooper, which is a big customer. It extinguishes the put option on a 9.9% stake in the Title365 business he purchased in 2021 and extends your agreement with Mr. Cooper through 2028. Are there any key points you'd want to make there to investors? I mean, I think this was one of the unsung heroes of our earnings call that nobody really paid attention to. I am glad you called it out because they are the largest mortgage servicer in the country. They are a great partner for us. We now have meaningful commitment on both sides with them, alongside them. They are so well positioned to when rates come down, I think they put the stat out in their last earnings. They have something like a million of their 5 million customers who have a mortgage above 6%. If rates hit 5%, do not quote me on that stat. Somebody just go look at their earnings before you quote me on that stat. It is a huge number. When rates go down to five and a half, which they will at some point, maybe it is not tomorrow. Maybe it's not the next day. They will. Everybody that's 6% and above will need to refinance because consumers' finances are not great right now broadly in the economy. It's just like a spring ready to explode. It's a meaningful customer to us. It's a great partner of ours. They're doing some innovative stuff with us even on the title side now, which is really exciting. Yeah, I mean, I think that was one of the unsung heroes. It was like, that's a really important long-term relationship for us. The put option going away, obviously, is also good for us too. Yeah. Definitely on that positive there. I wanted to dig in a little more on the income verification partnership you announced with Truework last week. You have your own income verification product that you built in-house, released in July of 2021. Should we think about this Truework partnership as a sunsetting of your internal income verification product or a partnership where it's kind of combining your functionality with Truework? Yeah. When I do things like this, I try to be minimally disruptive to our customers. Our customers are everything to me. I think of it as you take our core product that we offered there, which is really a partnership with ADP and some layers around it to support the mortgage process, and expanding that functionality to that plus a number of other things that can drive value for our customers in the income verification spectrum. They have other partnerships. They have other capabilities. They're much better at the certain kinds of manual verifications that have to happen in the mortgage process. They're much better at that. Now they've already integrated it. It can directly benefit our customers. For the existing customers who already use Blend Income, they get that same functionality. If they just want to keep using that, they can. It'll just hit Truework's API as opposed to Blend. For the ones who want to take advantage of more functionality, it's great. Actually, it's good economics for us too. We are very happy about that. I'm excited about it; it's early in that partnership. We just announced it. I'm excited to see where that goes. Got it. That was early in my career. I mean, I was on a team at one of the big banks where we were trying to build that income verification product internally, a nd based on just the inflows into your DDA checking savings accounts, it has to be able to. Yeah. Calculating. Yeah. For Fannie and Freddie to buy those mortgages, it has to follow a lot of different rules. It was very complex. Super complex. The upkeep on those businesses for a business like that that is important to our customers but not core to Blend's long-term mission, meaning we want it on our platform, but we don't necessarily want to be responsible for the ongoing innovation and expansion of that product area, we'll probably take more of a partnership approach like we did with Truework. Got it. As we look into other areas like valuation of properties or appraisals or whatever, we're not going to get into the operational aspects of these. We will drive partnerships that drive meaningful financial benefit to us and, of course, value to our customers. Yep. Speaking of Fannie and Freddie, I guess, how do you think about the potential full privatization there, which has been it was in the news more so, I think, last month? What effect would you think that would have on the 30-year mortgage rate and ultimately your business? I mean, realistically, I think the people overseeing the government efforts around that right now have their hands full with other things, at least for the next couple of years. I don't know exactly when that'll happen. My hunch is not immediately. It is far enough in the future that I think the impact is largely hard to predict. There are so many other things that I'm worried about before we get to that. I think it'll be net positive for our business. It is probably pretty far in the future. Got it. I've got some more questions. I will open it up to the audience. If anyone in the audience has questions, we've got about five minutes. I want to make sure everyone gets a chance. I'm just curious. Are you starting to see any customers move over from nCino? Or are you seeing most of your customer base coming from other lending solutions? Just curious how you feel the competitive paradigm's shaping up. I think a bit of both. I mean, the other thing that happened in Q4 was I believe CoreLogic announced this publicly. They sunset their product they had acquired called Roostify. Then all the news around nCino, l ook, I think for us, we keep our head down. We have high integrity. We build the best product. Eventually, I think things work out. I think this is a good example of where things have worked out in our favor in the mortgage space. Yeah, it feels pretty good. I look at this business as very simplified that it's very cyclical. Maybe help me understand what is there to be excited about the business absent positive cyclicality to rates. Sure. I mean, I think there are three. Let's put the cost side and how we've simplified the business from a cost perspective as well aside. I'll talk positive revenue or positive growth drivers. There are three that I'm focused on. The first is the growth in or new logos in mortgage. We signed a top 10 bank that we announced in our earnings. We signed a top 5 credit union in the last quarter. We signed a top 5 mortgage servicer last quarter. Our pipeline is great right now in mortgage. Our pipeline generally is up a lot year over year. I think for us, step one of the equation is keep growing market share in mortgage. We had, like I said, a tough time in 2023. I think we've really turned it around in late 2024 and now in Q1 year. I am very excited about that. The second piece that's related to mortgage is growing the value we create for our customers on a per-unit basis and capturing some percentage of that value back to us. We've grown that pretty materially, actually, over the last few years. I expect that to continue to grow because we have more, whether it's add-on solutions or net new solutions that replace our existing, like disrupting ourselves. We're building an almost completely automated refinance solution so that when rates come down, the consumers who work with our customers can tap a few buttons and get their refinance paperwork and sign it and then get ready for closing. We're going to charge more for that because that creates a lot more conversion for our customers. That takes out operational cost. We did a similar launch for home equity. We found a bunch of operational cost came out of that. Cycle times came down. Meaningfully, it's almost twice the per-funded loan cost that we charge because it creates so much more value. The ROI is there. We'll keep expanding. That's not to mention things like our digital closing product, which is gaining traction, and then general revenue growth as we do renewals and things like that. The second tailwind is the growth in the value per unit that we're capturing because we're creating more value out in the market on the mortgage side. The third piece, our consumer banking business is growing very meaningfully year over year. That's a newer business. It is in a pretty decent percentage of our overall business now and growing very fast because the rest of the consumer bank needs great technology too. We only really got into it a few years ago. I am very bullish on that business. There is a lot of work we can do there to keep innovating, keep our customers, and give them something on one platform. You could previously never get one platform that could help you. You got an auto loan or branch. If that person comes back for a mortgage or wants to open a bank account as part of that, do that online two minutes later. Now you can with Blend. That is why the consumer business is growing really well. I want to keep investing there. Those are kind of the three revenue growth-related tailwinds that I am really excited about. I think we've done a really good job executing operationally on cost, simplifying Blend overall, and getting through what was a tough time with our balance sheet and this put option and all that stuff. I'm just so happy that it's all behind us.