Probably time to kick this off to keep us on schedule. What an honor it is today to welcome Todd Stevens, Chief Capital Officer of Figure. Todd, thank you so much for joining us today. Thanks for having me. It is again a great pleasure. You know, maybe it's a great place to start with having you kind of level set for everybody about Figure. Maybe just give us a brief overview of the business and how it's, you know, sort of evolved over the years. Yeah. Figure, we're a blockchain marketplace. We tend to play in the lending space, but we're also playing in the equity space. We think blockchain, like Larry Fink says, I mean, we think every asset will trade on a blockchain at some point in the future, and we're building the marketplace for that. We're really excited about what we're doing, and we're excited about the growth. Why would somebody wanna use a blockchain as a settlement rail? It's just a better settlement rail for a number of reasons. Transactionally, we do a lot of securitizations in the market, and given our automation and how we anchor stuff to blockchain, we have a much lower percentage of third-party review that we have to do. There's a ton of transactional efficiencies. There's a ton of liquidity efficiencies. Think about like, how the world's changing, and in the sense that like old school kind of bond people, I mean, when you invested in something, you used to get like a kind of a service or remit report once a month. Now you can get that real time. That's what the blockchain offers you, is the ability to get real time information. That is going to increase liquidity. Then there's also transactional benefits. A few people might be familiar with some of the misgivings of, maybe the Tricolor or the First Brands or the MFS kind of double pledging stuff that's been going on. With blockchain technology, you just can't do that. If you're on our system, you cannot double pledge your loans. I'm happy to send out a white paper to anybody that wants that. We issued a white paper a couple weeks ago on that. Think about the blockchain in this instance. Like, I don't know if many people have like Life360. Like, my wife has that on our kids, like all the time. Think about it as Life360 for your assets. You can track your assets. Think about putting on a lien registry, like Goldman Sachs is a warehouse lender to us. Before they accept a loan, they look on our digital lien registry, which reads from the blockchain and says, "Is this loan secured or not?" If it's secured already, there's a padlock on it. They cannot take it as a pledge. If it's not, game on, they can finance it. It's stuff like that, transactional liquidity and lending. You can also cross collateralize this collateral. So we're a blockchain marketplace company. There's a ton of benefits for people kinda hosting their assets in the blockchain. We're just getting started. Fantastic. I wanna dig into the ecosystem and the products, but I wanted to ask you first about your recent launch of the Figure secondary offering of blockchain native common stock. You know, outline why the on-chain public equity network open matters, why issuers and shareholders would wanna participate. What are the benefits of launching on-chain versus, you know, traditionally? Yeah. I think if we're giving this talk a year ago, everybody would be like scratching their head. Now, like even this morning, Kraken comes out with an announcement with their tie-up with Nasdaq on tokenized equity. It's a reasonably kinda hot sector. Let me lay out kinda what we do versus what the other groups of people in the market are doing. Our thesis is very blockchain-centric, very purist, very self-custodial. It is your equity, so you should be able to do with it what you want, compared to what New York Stock Exchange, Nasdaq, and all these other people are doing, which is a DTCC security, which they're issuing a digital twin and letting that trade anywhere. Or like maybe some of the other groups like Robinhood are doing with maybe synthetic derivative type representation. Think tracking error, think maybe not full capabilities with what New York Stock Exchange and Nasdaq are doing or think like full autonomy of your shares. Why would you do this as an issuer? As an issuer, you have a direct relationship now with your shareholders. Like, we went public six months ago today, and we don't know who our shareholders are. Certainly the retail. We can look at 13F filings to figure out who still has our stock. Blockchain just enables people to have a direct relationship. Imagine me being able to give everybody 50 basis points off their next loan that they have and just drop that as a reward to them directly. How about dividends? I mean, like, we could just give a dividend out very quickly once it gets approved. As an issuer, what you're trying to do is create a viral community. You're turning a static contract into an active kind of programmable asset which has a ton of utility. That's the issuer benefits. I think the bigger benefits are for the investors. The investors, right now, they can take their equity, and they can just lend it into a lending pool and sit there. Because there's all kinds of borrowed demand for stocks typically. Right now, prime brokerage pockets most of those economics and those rents. We're enabling the rents to go to the investor. You could cross-collateralize it into a borrowing relationship. You can basically almost pay, like I could say thank you for the spot today and give them a share of Figure, provided you're KYC'd. Tons of benefits for issuers, tons of benefits for investors. We think ours is the purest version of this because you can hold it in a self-custody wallet. It is your equity. I think that's a terrific point, and I think an underappreciated one, that it isn't just the efficiency of issuing securities on chain. It's also the access to this kind of Cambrian explosion of innovation and composability and programmability with things like, I guess, you know, DeFi is what we call it, even though that might be a misnomer in some cases. I think that's a gravitational pull that's actually quite important. You guys are right at the center of that, you know, that shift, I think, that will eventually occur. We didn't even mention, I mean, like, the extensibility is really important 'cause you can take this share, and you could list it. It could be listed on a DEX, a decentralized exchange. With a liquidity pool around it, you can offer looping of this, and it might just be a better way of getting leverage exposure to an equity. Absolutely. It's very extensible. When you have control of this asset, you can do a lot with it. Any very high-level thoughts about the interest levels among different types of issuers of various types of securities in terms of them, you know, contacting you to talk about, "Hey, how could this work for us? Yeah. We've had a tremendous outreach to us. I'd say there are two types of issuers really engaged in this. One is the crypto crowd. They're very interested in kind of being able to have a relationship in the FinTech crowd, have a relationship with their investors. That is, that's very important. DAOs, I mean, DAOs have had a tough little run over the last kind of several months. Think about, like, what can they do to get their NAV back to par? Well, if they had all their shares issued on blockchain, they could just issue a dividend of the underlying kind of a crypto into a wallet, and that'll give them a pull to par pretty quickly. Those are two of the big ones. We're really interested in people that are in the public filing process. We're interested in people that are already public. With our equity, you do have to file an S-1 or S-3. It is a separate share class, which gives it the benefits of the composability and extensibility. Yeah. It's a lot of tech-forward, a lot of DAOs, and then there's been some surprisingly large companies that kind of want to put the power back into their investors' hands. I wanna drill down now a little bit into the individual products and the ecosystem, particularly Figure Connect and Democratized Prime. Starting with Figure Connect, I think in Q4, more than half of your consumer loan marketplace volume transacted through Connect, which is a nice milestone. Talk about, you know, what is Figure Connect? What's the value proposition? Why has it resonated so much with originators and institutional buyers of this paper? Yeah. Figure Connect's really important to us 'cause we never stood out to be the world's largest non-bank lender. That's not what we wanna be. We wanna be a blockchain marketplace. In that marketplace, we wanna bring sources and users of capital together. There's a tremendous amount of demand for borrowing and a tremendous amount of demand for assets. Really, our marketplace, Figure Connect, is where all that interaction happens. Why does somebody wanna join Connect? A number of reasons. One, we make it very easy for originators to onboard to us. Instead of the originator who normally had to go out and negotiate with individual investor, spend four months on a master loan purchase agreement, spend $300,000 with outside counsel to get one deal done, not such a great use of time. Join our marketplace, you have access to all the investors that are onboarded onto Figure Connect. There's definitely efficiency there, but more importantly, what our originators really like is we give them the ability to maximize their gain on sale. We collect an ecosystem fee. That's all we're in the game for, but they can leverage our capital markets, almost like a outsourced capital markets team, and we can help them get a better gain on sale on their whole loans. We can help them with securitization. We are an outsourced capital markets unit for these originators, and we make their life very simple. We also enable them to get warehouses. We probably have north of 10 banks that warehouse our collateral. The collateral is fairly liquid. We just set up our originators to succeed and allow them to do what they really do best, originate loans. As we go into new products, a lot of them want to outsource that capital market functionality to us, and that's what we do at Figure Connect. We'll just collect our ecosystem fees. Thank you. This is a bit of a tangent, but there's kind of growing concern in private credit markets. You know, what are you guys hearing from your partners in the space? Yeah. I really love the media and how they kind of talk about private credit, and there's certain elements of private credit that there's a problem potentially. When kind of 23% of the direct lending market is software, and some companies have done a lot more, some of them have 30%, 35% exposure, these are 8-10 times levered companies. Bruce Richards had a great podcast with Bloomberg the other day. He said, "3% of the high-yield market is software. 13% of the broadly syndicated market is software. 23% of the direct lending market is software." The high-yield bond market does what it does. The broadly syndicated market tends to find that exposure finds its way into CLOs. Then the direct lending market just sits on these private credit balance sheets. They might lever them up, and it was a nice cash flow. When you're eight or 10 or 12 times levered, like, you're not able to pivot that business to an AI kind of, like, issue, AI kind of, like, disruption that's going on. That's private credit, and I get what's happening there. We live in the world of asset-based finance. It is a market where instead of being eight to 10 times levered, you're over-collateralized. Everything we do has some over-collateralization to the asset. You have $100 an asset, you only have $80 of a security. You're over-collateralized by that, 100 divided by 80. We just operate in a very different space, and we haven't seen a whole lot of contagion there at all. I mean, like, look last week, JPMorgan did a $5.7 billion securitization, and it cleared the market at a very solid price. We did a half a billion dollar securitization last week, and it cleared the market fine. We might be at December, kind of like where we execute in December. January was like a super risk on, but the market is super strong. I think we really have to differentiate asset-based finance from broader private credit. 'Cause broader private credit, you can pick a story out of it, and yeah, certain people have over-leveraged themselves and probably didn't risk manage themselves so well, maybe with some of their software bets. Our borrowers are the consumers. We have 5,000 loans in kind of our deals and there's a lot of over-collateralization. I think there'll be a flight to quality and towards our side. There's already been over $50 billion that's been raised in the private label, kind of a resi market this year. There'll be over $250 billion that's raised. And that's of the $1.8 trillion private credit market, where there's probably about $500 billion of dry powder. I think money's just gonna go to where safety is, and we think we're safe. Don't paint everything with the same brush, in other words. Exactly. Yeah. Okay. Talk about Democratized Prime. I think that's one of your kind of most innovative offerings. Launched last year, you know, according to you guys, scaling very nicely. Talk about some of the drivers of that growth. Actually, first describe for the audience sort of what it is. Yeah Talk about some of the drivers of the growth. Democratized Prime is us—it's our effort to democratize access to prime brokerage. Banks have a beautiful business. They make $20+ billion a year, top line, prime brokerage, great business. Why can't the man on the street get access to that? That's our goal and our ethos with Democratized Prime, is to give people access to what the banks are doing. Figure, we'll probably at any point in time, check our balance sheet, we have probably $500 million-$600 million of $500 million of warehouse balances, probably at any point in time. We turn over our collateral a lot. And then of that, we typically give that to JPMorgan, Goldman Sachs, the traditional warehouse banks. What we're doing now is we started Democratized Prime to really enable DeFi liquidity to fund those warehouses. We have. You can check the Kamino. We're on one blockchain, one layer one Solana, one application Kamino, and we have a $600 million market, or $579.97 million market. That includes liquidity pools as well as what we have pledged up there. It's been tremendously successful. There's a lot of liquidity in DeFi. All we're doing is just offering people the ability to really compete with warehouse lending. You have TradFi competing against DeFi liquidity. That's, I think, where the market needs to go. It keeps everyone honest. When you're trading on DeFi, those are just different. It's a different world. Like, when you're ostensibly in a crypto winter, whatever that means, like, funding rates go down. If you can offer real-world assets at a higher yield than Bitcoin lending rates are less than 2%. Like, if you can offer real-world assets at a reasonable yield, you're gonna get interest. It's quite an interesting project that we're working on. We think this will be a multi-billion-dollar tokenized warehouse lending marketplace. Our borrowers are quite interested in joining this. The reason they wanna join is, one, you don't have to spend four months and $300,000 on outside counsel setting up. Maybe it's six months to set up a bank warehouse. It's very quick to onboard. Typically they what they're doing is they're trading off. They can have a wider box, so they can originate to a wider box. They can democratize access to the borrowers, wider box. You have to offer hourly liquidity or instant liquidity. DeFi has no term structure. You have to have instant liquidity. The borrowers have to wrap their head around that. We think a great strategy for any borrower is to have a traditional finance warehouse and a Democratized Prime warehouse. We think that'll be the model. Part of our marketplace, we offer services. We can do pledging as a service and handle that for the originators 'cause again, we let the originators à la carte take what they want. They can do the all you can eat, or they can just pick and choose parts of our Figure Connect marketplace. Democratized Prime is a service in the marketplace. You can offer to use it or not, or we found a lot of people leaning into that. How does the yield stablecoin fit into the model? We think just as every asset will be tokenized in the future, per Larry Fink, stablecoins are gonna be the payment rail. I mean, well you exchange an asset for a stablecoin. We use our yield stablecoin as a payment rail for our ecosystem. We sell loans, we exchange, we have our buyers exchange give us yields for that, and then they trade out of it or keep into it or whatnot. What's different about our yields product, and this is why we're slightly indifferent to what's going on in D.C. with the CLARITY Act, is there's this big battle over yield, and can you pay yield on a stablecoin? Like, are the banks gonna win or is crypto gonna win? I don't know. Like we can always pay yield on our stablecoin because it's a security. We went through the S-1 process. We file 10-Ks. We file 10-Qs. It kinda looks like a tokenized money market fund, but it can trade peer-to-peer. We think we have a pretty interesting product. We think there'll be a lot of copycats to that product, but stablecoins are just the path of the future. I mean, like, there's a ton of pain points that it solves, not the least of which is cross-border payments. Is it a simple-minded yet probably accurate thing to say that you know, as you have on-chain assets that move in real time, you're also gonna need a settlement tool that moves kind of in real time, and that's the gravitational pull for stablecoins on the capital market side of things? I mean 100% because think about what happens today. Like, I sell you loans. I give you a loan tape with rights, and you give me a wire. That's kinda asynchronous. Like with stablecoins, you can put the rights in a smart contract, put the stablecoin in a smart contract, and they can click, and then it goes out to each other. So, there's no more asynchronous kind of like trust me type stuff. I mean, the reason some of the banks got burned on this double pledging warehouse stuff is 'cause it was a trust me game. Like, "Oh, I don't need an assignment of mortgage. Give me the assignment of mortgage later," and some people got burned on that. I think when you have atomic settlement, when you have that click, everything goes. Both sides come into the smart contract, and it clicks. The rights and the payment rail goes to the right people. It's interesting how much of the entire back end and infrastructure of capital markets is really predicated on ensuring settlement occurs. Once you have real-time settlement, you have to wonder whether a lot of these ancient building blocks on the back end might have to modify or. Well, I mean. Go away. Banks don't want it to go. I mean, that's. Right That's a cash cow for them. It's always the case. Like T+2 is somebody's making money. I wanted to touch on some of the other kind of product expansion, news that we've heard out of you guys. One of them is Agora. It's a strategic partnership with Agora Data to bring auto finance asset onto the Figure Connect marketplace and Democratized Prime. Talk us through that, you know, the dynamics of the partnership and sort of what it is. Yeah. Agora is really important to us, and it's also the beginning. I mean, it's the first third-party borrower that's coming onto our Connect marketplace. There'll be more coming. Stay tuned. Agora, when we sit across the table from them, they look just like Figure. I mean, they're in the auto space. Over 90% of their loans are automated originated. They have a nice kind of alignment of interest with their dealers that are the kind of originators of their loans. They really wanna lean in. They wanna leverage the Demo Prime. They wanna leverage Figure Connect. They're a classic group of solid originators, 20+ years of experience in the auto sector, but they have a part-time capital markets outfit. That is a perfect client for us. We can be their capital markets, outsource capital markets. We'll handle their securitizations. We'll handle their whole loan sales. We'll enable them through Democratized Prime, and they're gonna do what they do best, originate solid loans. This market needs solid origination because I mentioned that $500 billion of dry powder. We're trying to find a home for that with these solid originated loans. You know, I'm just trying to think through, you know, other potential loan categories that might be interesting for you guys to kinda delve into. I'm sure you're having plenty of conversations out there, but is auto something you can lean into with other partners? Are there other categories that you see expanding into? We like going into markets that have large addressable markets. The mortgage marketplace is about a $2 trillion addressable market. Auto's a $1.5 trillion. We're going in places, and we're not fighting for pieces of the pie. The pie is really large. Auto's gonna be great for us. There's a lot of other really interesting short-dated assets, maybe like receivables financing. That could be leveraged here. Could be small SMB loans because there's a need for the borrowers to get solid financing. There's a lot of potential there and we've really had. After the Agora announcement, which was great, we've had just a ton of inbounds on that side. We're just kinda sifting through and kind of drinking from the fire hose on the Democratized Prime side. What about first liens? I think that's increasingly a larger part of your mix. I have it here in my notes, loans growing to 19% of originations in Q4 from 12% a year ago. What are some considerations there as that becomes a larger, you know, you know, part of your mix? Yeah. I mean, that's just another asset class that we're originating. We think we have a right to win because our process is fully automated. I mean, we can get to a yes in minutes, and we could be funding in five days. Our average funnel is around nine business days. I think we said that in our S-1. We're very quick, and we're very efficient. It costs us less than $1,000 to create a loan, much less than $1,000 to create a loan, where the traditional market for first lien especially is $12,000, I think on average. Like, if you're spending $12,000 to originate a loan, you're not gonna be able to do small balance loans. You just can't do them profitably. We can. Mm-hmm. Think about there's 40-odd% of the U.S. market doesn't have a mortgage. That's a $15 trillion TAM. That's an easy market for us to take a ton of market share for. We make it easy to get a kind of a cash out on your property. You don't have to knock on the door of a consumer unsecured lender and pay a higher rate. We can do something very quick for you, wrap a lien around it, and get you your money at a more cost-effective price point. We're super excited about first liens. We think there's a tremendous opportunity for us to really grow that. Again, it's a function of when you're automated, and you do stuff quick, and you have a tight credit box, like, the world's your oyster on when you find use cases like the first loan use case. Mm-hmm For us. Where is the friction in the system still? Where are the challenges in terms of this floodgate, which seems to be opening, kind of opening further? Is it regulatory certainty? Is it just you mentioned banks, you know, there's an intrinsic friction in terms of changing these large platforms because they're making money on the old inefficient ways. Like, where are you seeing the hurdles that need to be overcome? I think there's a TradFi friction, and then there's a DeFi friction. The DeFi friction, regulatory clarity, evangelism, kind of education, getting people to come to DeFi. I think the winners are when TradFi comes to the middle and DeFi comes to the middle, and then I think you'll see an explosion of growth. I mean, every bank's got a digital asset team. Every bank of any size has a digital asset team, and they're all ready to get tapped on the shoulder and say, "Go." Most of them are going right now, so that's good. DeFi, it's literally evangelism, it's education, and it's regulatory clarity. TradFi, we just live in this funny TradFi world where there's a ton of borrower demand and there's a ton of, kind of like capital, and then there's this like small, thin little looking glass where only the cool kids get to go through and play the capital market game. That's because there's banks and the rating agencies as well as the lawyers. We're trying to just expand that out, so that's our marketplace. We're trying to just democratize access to the sources and users of capital. That's a friction kinda getting people there. I think the banks are getting close. Federal regulation's really close. We still need states to follow. Certain states, like the one we're in, is gonna be a big bar to kinda get over for people. No, I think there's optimism. I mean, everything's moving very quick. I argue the best thing that ever happened to blockchain was AI because blockchain in 2017, 2018 was supposed to be the next platform. You had mobile, you had social, you had cloud, and everybody's like, "Blockchain." Blockchain wasn't ready for the prime time at that point. Then AI comes along, and AI's doing a great job taking that mantle, and blockchain's just doing a lot of work, and they're getting everything. They're getting custody, they're getting piping. We think this will be the future of capital markets is gonna be built on a blockchain rail, and that's largely our North Star. You mentioned AI, and I feel like a lot of these panels wouldn't be complete without some AI questions. I know you mentioned it in the context of it sort of taking them. It's sort of become the shiny new thing and given blockchain maybe room to actually just execute, you know, quietly and methodically, such that when the tide turns in its direction, it'll be sort of more ready maybe than it was last cycle. That's what I took away from your last answer. Is there any AI overlay in the business in terms of agentic commerce, agentic originations or, you know, however you wanna look at it? Absolutely. We're working with some originators that it doesn't take long to spin up an AI loan officer. People are testing them and then kinda giving them context. In one case that we were out with a client probably a month ago, they were probably three months into their journey. Maybe two months of training and two months of launching, and their AI loan officer was like two times as efficient kinda getting stuff through the funnel. Like, 'cause AI, they don't miss calls. They always get callbacks, and they know the spiel. Our process is fully automated. I mean, we do not have underwriters. It's a feature, not a bug of what we do. Because of that, it's very rules-based and deterministic. It's perfect for AI. These AI agents are so good at what they do. In this one case, I think I'll get this right, but 80% of the time, the borrower on the phone wasn't aware that they were talking to AI. Of the 20% when they found out, only half of that they said, "Give me a human." The rest of it, they just chuckled and went along their way. Yeah, so we're all about funnel conversion, removing frictions, efficiency. There's definitely a role for AI to play in that. Fantastic. We only have a quick minute left, so I'll ask you an impossibly long question. What about what does the environment look like? What does Figure look like when you go forward a few years? I mean, what is the vision? What will success look like for Figure in a few years? I think we're gonna stick to our knitting. Right now we have a digital asset marketplace, a consumer loan marketplace. Those interact, those overlap. We'll have multiple different products. We'll have tons of volumes flowing through the system. We won't have to do as much education. People will come to us. We'll be the go-to place. There'll be a lot of diversity in our product mix. There'll be a lot more asset classes, and we're gonna have a lot of fun doing it. Awesome. What a great pleasure. Thank you so much. Thank you. Super insightful. Appreciate it. Yeah. Thanks.