All right. We are going to continue here at the 46th Annual Canaccord Growth Conference. I'm Joe Vafi, Equity Research Analyst here at Canaccord, focused on the fintech industry. We are pleased to have back with us today, Nima Ghamsari, who is the Head of Blend Labs. Blend remains a cutting-edge software company whose platform is used by leading financial institutions to take a lot of the pain out of what has become the tedious process of applying for and getting approved for a mortgage, not only for purchase, but for refi, and in this environment, HELOC. The company's leverage is bank workflow knowhow and technology platform and is offering a broader suite of bank solutions in the market as well. Blend touches, I'd say, over 15% of mortgage volume in the United States with a per transaction revenue model. The interest rate environment remains tough, but Blend is still growing with both new logo wins and a nice tailwind emerging from its AI suite. The last jobs number wasn't so great, so maybe the rate environment, maybe we'll see some changes there. With that intro, thanks for being with us, Nima. Thanks for having me. Great. Maybe take one minute or two minutes and intro Blend to people that may not know your story. Yeah. I mean, the basic story of Blend is we felt that banks and lenders were underserved with technology and that they had a hugely manual process that wasn't very digital. We set out to start the company in 2012. We grew our market share. We got a lot of mortgage logos, some of the biggest banks, biggest credit unions, biggest mortgage lenders in the world. Over the course of that time, as you become close to your customers as a software company, you get other opportunities with them. So we expanded into HELOC, which you mentioned, personal loans, deposit accounts. So now we have sort of the whole consumer suite on our platform, which allows for a digital onboarding for those products for a bank. I can get through my workflows as a consumer to provide my data, provide my documentation, sign my closing documents, everything from initial touchpoint all the way through the money showing up in my bank account. That's great. Maybe we'll just stay at a high level for a minute. Any changes that you're seeing in the macro environment, just yourself, your views on it, and then maybe what some of your customers are thinking about it. Yeah. Last year, our customers came in really optimistic about the macro, and then there were tariffs and things like that that rose rates. This year, same thing, and then there was a war that raised rates. But I'd say the nice thing about 2025 and 2026 for our lenders, which is a positive thing for us too, is that they have really gotten through the tough time of going from 2021 to 2023 when volumes crashed, and that they had to reorient their entire businesses. Now they're investing in the future, and they're investing with us in a lot of ways. They're thinking about the future. They're all interested and realize that agentic AI can help their businesses not have to have humans reviewing every document and data point manually, which I think we can look forward five years and say that won't be happening. Who would buy a loan, which investor would buy a loan that was only proven by humans, that was touched by humans? It just doesn't make sense that in five years, people will still do that. They all believe in that. They all want to work with a partner they can trust, who knows the industry really well, who has a lot of data in that. Actually been working with us on that. Then I'd say, while the macro rates are high, in a weird way, it's actually better for us long term because it's created fewer competitive players coming after us than maybe otherwise. But also we're seeing our customers who are getting prepared for this wave, hopefully that comes this year, but maybe next year, that they're consolidating market share. They're growing their servicing books. They're getting ready for that wave, which is very good for us because I think in a positive uptick in volume environment where our customers have invested a lot in getting their businesses or buying other businesses or investing in AI, I think they're going to gain a lot of share. We're ready. We're waiting for it. We're profitable now, so we don't need it to come, but we obviously want it to come at some point. We just don't know when. Great. A lot of customers kind of gone through their reset, now reevaluating the market. I think your last point, Nima, was interesting. If your customer set's probably in a position to move the ball forward faster than others in the industry relative to a rebound. Does that make sense? Yeah. Our customers, just to put some context, we have somewhere between 200 and 300 customers. It's very focused on the middle and high end of the market, although we do serve community credit unions and community banks and community lenders who serve local communities. But those bigger ones are the ones that have big customer bases, and the smaller ones that serve local communities are very concentrated in those local communities or in very specialized products like veterans loans. We have a customer base who is really well-positioned. It's some of the biggest banks. It's the companies that because it's such a regulated space, I worry less about them getting disrupted than maybe a small mortgage broker or something like that over time. They're excited. They're pushing hard. They're building with us. I think it's made me a lot more optimistic this year than even last year, where I was already pretty optimistic. Great. HELOC market. People are talking about HELOC, not just yourselves, but others in the industry as being a pretty strong pocket now. There's a lot of investment focus there. What are you doing there and how do you frame that opportunity? Well, the nice thing about HELOC is because the consumer has built up so much equity in their homes over the last five, 10 years, they've spent a lot of time making the payments on time and growing that equity, they can tap that, and so, especially if the consumers, you know, y ou just mentioned the jobs report. If the consumer's financial situation gets worse, that will be the most credible way for them to achieve better financial outcomes for themselves, keep their home, do whatever they need to do. It's been a big tailwind from that perspective, then our lenders are using that as a nice hedge against the refi environment. So we have similar market share in mortgage and HELOC. We actually have a lot of market share in HELOC. A lot of the biggest HELOC providers in the country are on Blend. I think it's a nice counterbalance to the refi wave. Not perfect because you kind of need both, I think, in a steady state environment. The other nice thing, it ties really well into Autopilot, which is our product, is that the guidelines there are really straightforward. The lender owns them, Autopilot can just, I think, completely knock those out of the park, where a consumer could show up, have an offer, a pretty firm offer from the lender in a couple of minutes, and the money in their account in a few days. That's great. I do want to get into Copilot in a second. Autopilot. I'm sorry. It's okay. Autopilot. Yes. Yeah. There's that other company with the pilot thing in their AI product, right? Yeah. I just want to touch on your Q2 results because they were just out, some of the highlights there, and then maybe we'll get into Autopilot. Sounds good. Q2 results, I'd say the one-line headline there would be we were above or at the top end of both our net operating income and our revenue. Part of that was just, I think, strength of the business, we have a great customer base. We did talk about smaller customers. We are seeing some smaller customer consolidation. We did see some churn of the smaller customer base. Nothing alarming. Based on our gross retention numbers, we're still sort of best-in-class software company, even with that in mind. We like to be transparent with the world, and maybe it's good to caveat that it's nothing that we're overly alarmed about right now. Then I think where maybe we took some people by surprise in our earnings was talking about where we see the Q4 macro. Coming into this year, Q4 was supposed to be a really good refi quarter. Unfortunately, with rates at 6.7%, 6.8%, 6.9% because of the war, I don't see it being a good refi quarter. We shared Q4 industry volume numbers with the Street in that earnings, and that is what it is. I said this on the call, but we spend time thinking about the macro to make sure we're profitable and continuing to grow despite the macro, but there's only so much we can do. We don't want to orient our entire business around the macro. I think we want to build something that can grow through a macro, which is where Autopilot comes in. But yeah, that's just sort of is what it is. Right. Sure. You are still growing, and the business is sized today to be profitable in this environment. Some things are up to the gods, I guess, right? Yeah. Right. Maybe we talk a little bit more about what is in your control, which is Autopilot and the rollout there, and what it brings to customers, kind of early updates on its penetration and how you see it kind of making its way through customers and maybe through your P&L over time. Yeah, sure. Just a quick overview of Autopilot. It is a product that as the consumer is going through the process, it is underwriting them in real time to investor guidelines, Fannie Mae's guidelines, Freddie Mac's guidelines, or could be custom HELOC guidelines, depending on what the product is, o r even custom lender guidelines that are in consumer. It is a really smart way that we set it up to allow for any guidelines to go in there. So it is set up that it could work with any product. We started building it in January. We were live in beta, or kind of like our pre-pilot in March. By end of March, we were live in production with customers, beta production, just early stage, early access. We gave it to people for free for three months through the end of June. We closed our first deals in Q2 with Autopilot. We are signing for now just to get as much of our customers using it before they see the P&L benefit on their side. We are offering one-year deals with those customers to say, "Hey, we are not going to agree on a long-term price for this now. We are going to go and roll this out to you, sell this to you for a meaningful uplift, but not a 10x uplift." I think we said we signed six deals in Q2. We have a really good pipeline for Q3 of some of the deals with larger banks that take a little bit more time to get through their AI and governance committees with security and information security in particular. As those customers sign and roll on, one thing we said last quarter, which we sort of reiterated this quarter was, we think it's going to lead to 10%-15% incremental growth for us in the medium term in 2027. So incremental on top of other product growth. The reason we think that is because we have so many of our largest customers who are in pipeline with us, so we have some visibility into that. It will take some good execution on our part, but that product is probably the most important thing for the industry that we can do right now. If we can bring their costs down on fulfilling these loans, it's about $11,000 per loan. It's a big deal. Eventually, some of that will go through to consumers, but for now, it's just about how do we make sure our customers come out the other side the most scalable and the most profitable. That's what's on my mind right now. That's great. It is early days. It would be interesting to get some of your feedback from clients on this, putting this AI layer in from a compliance, regulatory, consumer protection, I guess, and that initial feedback and how big customers with the bank mindset are thinking about letting loose AI in their infrastructure, right? Yeah, especially in a place where so much money is changing hands. Yeah. You think about so much money changing hands. A lot of what they've started to do, just like we talk about having our humans be a review and oversight layer of what the AI is doing internally at Blend. It's the same thing that we're sort of convincing our customers of because they're like, "Oh, yeah, that is better. I'd rather have an underwriter oversee 200 files that AI has already underwritten and check the work on 200 files that AI has underwritten rather than 20 files that they could do on their own." Two eyes is better than one in their mind. I'd say the early stats we've seen have been super promising. We had about 50,000 loans go through it in Q2. Just to put it in perspective. Yeah. We'll do a couple hundred thousand loans a quarter on our platform on the mortgage side alone. We had about 50,000 applications, I should say, go through our Autopilot suite. From that early data for those early adopter customers, the not surprising benefit to our customers was cycle time reduction. Yeah. C ost savings, basically. It's a proxy for how much work they have to do on a file. Went down three-ish days already. The more interesting ROI that I saw from our customers was a much higher conversion benefit. About a month and a half ago, one of our customers sent me a screenshot, and it was this sideways thing that showed me their pull-through from a customer being committed to them to actually closing, and it went from 59% to 72%. I was like, "Oh, so you attribute that to Autopilot?" He said, "Yes, absolutely." I said, "Why?" I was like, "That's kind of counterintuitive. Why is Autopilot, which is just helping you process these faster, doing that?" He said, "Well, because we're processing them much faster, so less people are getting poached by competitors, and they're getting less frustrated with us in the process, and there's less time for them to change their mind about their, you know. Yeah. They. Their refinance. Cold feet or whatever, right? Yeah. Maybe, "Oh, I'll do that later. It's too much work." Yeah. The conversion benefits actually have a much bigger P&L impact for the lenders than the cost reductions. The cost save. Yeah. Right. Because the conversion benefit is, there's so much time and money you spend getting these customers to a certain point in the process, that if you have fallout after a rate lock, it is a huge expense to you as a lender. That's all the sunk costs you put into it and lost revenue. Each loan is $14,000-ish in revenue for these lenders. It's a really big deal for them to have high conversion, so we've been really excited about that. This is a product that is so early. It wasn't even a thought in anyone's mind at Blend a year ago, because the capabilities weren't out there in the world to make this a reality. The fact that it's not only a thought, but it's real a year later is awesome. But it's early days. That team is moving so fast and is working so hard to make this better. It's going to compound. It's going to be a compounding advantage for us, and there's data there that we're getting. Every one of these 50,000 loans is a new data point for our model, or our harness, I should say, to get better. As we get more and more of these consumers going through it, we're finding areas where we can make the harness better and faster and cheaper. That's great, and obviously you're rolling it out to existings now. How does it help new logos, kind of your pipeline get over the finish line? Do you think it's going to help there? I think it should, right? Yeah. We had our first new logo. It signed in June. That was an Autopilot customer from day one. It was the first month that they could really buy it. It was perfect timing. I think everyone's going to need. If you could have an extra set of eyes that's much cheaper than your current set of eyes and take a lot of work off your current set of eyes, you're going to take it. I don't think that's going to be an abnormal thing. The other nice thing about Autopilot, because of the way that we built it as an open harness, meaning it can be used, it's hooked into our core platform, but it doesn't have to be used with our core platform. Okay. If that makes sense. All right. It can be triggered by. There's lots of customers who really liked Blend or loved Blend over the years, but their digital teams or whatever were saying, "Well, we really want to use all the integrations and the workflows and the compliance that Blend has built, and now the intelligence, but we really want to plug it into our mobile app. Right. Now with Autopilot, they can. It has opened up new conversations that may be around just Autopilot. Great. That maybe didn't exist before. So it could be a standalone sale, is what you're saying? I think it will be. I think we'll do our first Okay. few standalone sales some point. Great, a nd so that could be used in other channels, not just your existing channels. Like, you could go back to the mortgage broker market or, you know. Yeah. Or if it's the best at underwriting files, then maybe eventually gets the best at recommending and identifying product opportunities that can save consumers money, and then eventually gets to be the best, it's a compounding advantage thing. If you do that and you offer that as an agent, and the alternative for a bank or a lender is to go and use Claude plus some skill files, and we're demonstrably more accurate. Yeah. And we're cheaper and faster because our harness is more tuned to the specific industry, and we have all this data that we're using to make it better every day, and it's an open harness, so it's not like you can use it in any UI. It doesn't take Yeah. anything away from anybody in your team. It's just using us versus the Claude Yeah. harness or something. I think we can be a lot. I mean, it's early. Yeah, it could be. I don't want to overstate this. Theoretically, you've got a new business line that has a lot less to do with you're looking at financial health of your customers more broadly, right? I think banks need to do a better job at that. Oh, yeah. For sure. And if banks could do a better job at that, they would be much more profitable as well. There's a lot of cross-sell in banks that they don't take advantage of, right? Yeah. That's great. So you marry your Autopilot with some of your other leading-edge products, your Rapid Suite. Maybe we kind of talk about an update on Rapid, differentiated in the market, been out in the market now for about a year. Which it'd be great to get an update on customer feedback there, uptake, how you're viewing it competitively, et cetera. Well, one thing that our Autopilot pipeline in Q3, I said, is really good. We talked about near-term pipeline in the call. Near-term pipeline is things that we think is going to close in the coming quarter. That has been a huge boost for us in Q, that we talked about in the Q2 earnings. Even more somehow, because maybe these deals have been maturing around Rapid for a while. A lot of our near-term pipeline, the next quarter-out pipeline, is Rapid. It has been a bright spot. If you think about what the Rapid solutions are, just to summarize, you can make an offer to a consumer in real time for a mortgage, a home equity solution, a refi, whatever it is, in a matter of minutes. A real offer that you can stand behind as a lender and get them to lock their rate. That is the part that is like, how do you have an amazing experience to do that? Autopilot takes that from, "Hey, now they are excited, they like their rate," help take them to the closing line. Those two things together live very harmoniously. Yeah, it sounds like, yeah, Autopilot and Rapid together is a great one-two punch, right? That'll be one of our keynote discussions at our. We have a customer conference every August, where we have executives from the top 100 or so financial institutions come, and it's like a big part of our keynote is talking about how those two things together are so important for them to make a real-time offer to a consumer and then drive them to closing as quickly as possible. Sure. That's great. I think we talked about your Q2 performance in general, operating the business profitably in the current environment with upside and a better macro. Can you just give us a remind us where you sit on the balance sheet? I know you're buying back stock even at this point, and kind of how that fits into your business strategy. Well, it's nice that we have no sort of debt on the business. Right. We have a great balance sheet. We've been profitable since, I think it was Q3 of 2024, every quarter. I think, just if I'm remembering the quarters correctly. We're going to keep operating the business profitably. If the share price stays low, like we may buy back more. We got an authorization. Yeah. I think in Q1 earnings, we announced it, to do a certain amount, which we've used some of, and we announced publicly. Our balance sheet is really strong right now. We don't have any concerns about the balance sheet. We feel really good about it and think it's going to grow, and that's why we bought back some stock. Good. We're going to run out of time, Nima. Any closing thoughts for us? What we should be thinking about or tracking or paying attention to here? I think definitely people should pay attention to the Autopilot traction. The other thing that I talked about in the earnings call that we didn't talk about today was what I call internally Blend 3.0, and I talked about this on our earnings, which is we aim to be at the top 1% of agentic adopters internally. Great. Because that has compounding benefits to our customers. We've seen 3x engineering throughput year-over-year. It takes time for that to turn into P&L. Right. Because we have to build the products and then sell them to customers and have that turn into revenue. It's a compounding advantage for us long term. That's great. Well, I know the Blend platform's super high-quality software, so it'll be interesting to see how that evolves from here with those agents at work on your stack. All right. Well, with that, thank you very much for being with us, Nima. Thank you. Thank you.