10-Q 1 blnd-20230930.htm 10-Q blnd-20230930
2023December 31Q30001855747falsehttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrentP1YP1Y27400018557472023-01-012023-09-300001855747us-gaap:CommonClassAMember2023-10-31xbrli:shares0001855747us-gaap:CommonClassBMember2023-10-310001855747us-gaap:CommonClassCMember2023-10-3100018557472023-09-30iso4217:USD00018557472022-12-31iso4217:USDxbrli:shares0001855747us-gaap:CommonClassCMember2022-12-310001855747us-gaap:CommonClassBMember2022-12-310001855747us-gaap:CommonClassAMember2022-12-310001855747us-gaap:CommonClassAMember2023-09-300001855747us-gaap:CommonClassBMember2023-09-300001855747us-gaap:CommonClassCMember2023-09-300001855747blnd:SoftwareMember2023-07-012023-09-300001855747blnd:SoftwareMember2022-07-012022-09-300001855747blnd:SoftwareMember2023-01-012023-09-300001855747blnd:SoftwareMember2022-01-012022-09-300001855747blnd:ProfessionalServicesMember2023-07-012023-09-300001855747blnd:ProfessionalServicesMember2022-07-012022-09-300001855747blnd:ProfessionalServicesMember2023-01-012023-09-300001855747blnd:ProfessionalServicesMember2022-01-012022-09-300001855747blnd:TitleRevenueMember2023-07-012023-09-300001855747blnd:TitleRevenueMember2022-07-012022-09-300001855747blnd:TitleRevenueMember2023-01-012023-09-300001855747blnd:TitleRevenueMember2022-01-012022-09-3000018557472023-07-012023-09-3000018557472022-07-012022-09-3000018557472022-01-012022-09-300001855747blnd:RedeemableNoncontrollingInterestMember2022-12-310001855747us-gaap:CommonStockMember2022-12-310001855747us-gaap:AdditionalPaidInCapitalMember2022-12-310001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001855747us-gaap:RetainedEarningsMember2022-12-310001855747us-gaap:CommonStockMember2023-01-012023-03-310001855747us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-3100018557472023-01-012023-03-310001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001855747blnd:RedeemableNoncontrollingInterestMember2023-01-012023-03-310001855747us-gaap:RetainedEarningsMember2023-01-012023-03-310001855747blnd:RedeemableNoncontrollingInterestMember2023-03-310001855747us-gaap:CommonStockMember2023-03-310001855747us-gaap:AdditionalPaidInCapitalMember2023-03-310001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001855747us-gaap:RetainedEarningsMember2023-03-3100018557472023-03-310001855747us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-3000018557472023-04-012023-06-300001855747us-gaap:CommonStockMember2023-04-012023-06-300001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001855747blnd:RedeemableNoncontrollingInterestMember2023-04-012023-06-300001855747us-gaap:RetainedEarningsMember2023-04-012023-06-300001855747blnd:RedeemableNoncontrollingInterestMember2023-06-300001855747us-gaap:CommonStockMember2023-06-300001855747us-gaap:AdditionalPaidInCapitalMember2023-06-300001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001855747us-gaap:RetainedEarningsMember2023-06-3000018557472023-06-300001855747us-gaap:CommonStockMember2023-07-012023-09-300001855747us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001855747blnd:RedeemableNoncontrollingInterestMember2023-07-012023-09-300001855747us-gaap:RetainedEarningsMember2023-07-012023-09-300001855747blnd:RedeemableNoncontrollingInterestMember2023-09-300001855747us-gaap:CommonStockMember2023-09-300001855747us-gaap:AdditionalPaidInCapitalMember2023-09-300001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001855747us-gaap:RetainedEarningsMember2023-09-300001855747blnd:RedeemableNoncontrollingInterestMember2021-12-310001855747us-gaap:CommonStockMember2021-12-310001855747us-gaap:AdditionalPaidInCapitalMember2021-12-310001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001855747us-gaap:RetainedEarningsMember2021-12-3100018557472021-12-310001855747us-gaap:CommonStockMember2022-01-012022-03-310001855747us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100018557472022-01-012022-03-310001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001855747blnd:RedeemableNoncontrollingInterestMember2022-01-012022-03-310001855747us-gaap:RetainedEarningsMember2022-01-012022-03-310001855747blnd:RedeemableNoncontrollingInterestMember2022-03-310001855747us-gaap:CommonStockMember2022-03-310001855747us-gaap:AdditionalPaidInCapitalMember2022-03-310001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001855747us-gaap:RetainedEarningsMember2022-03-3100018557472022-03-310001855747us-gaap:CommonStockMember2022-04-012022-06-300001855747us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000018557472022-04-012022-06-300001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001855747blnd:RedeemableNoncontrollingInterestMember2022-04-012022-06-300001855747us-gaap:RetainedEarningsMember2022-04-012022-06-300001855747blnd:RedeemableNoncontrollingInterestMember2022-06-300001855747us-gaap:CommonStockMember2022-06-300001855747us-gaap:AdditionalPaidInCapitalMember2022-06-300001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001855747us-gaap:RetainedEarningsMember2022-06-3000018557472022-06-300001855747us-gaap:CommonStockMember2022-07-012022-09-300001855747us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001855747blnd:RedeemableNoncontrollingInterestMember2022-07-012022-09-300001855747us-gaap:RetainedEarningsMember2022-07-012022-09-300001855747blnd:RedeemableNoncontrollingInterestMember2022-09-300001855747us-gaap:CommonStockMember2022-09-300001855747us-gaap:AdditionalPaidInCapitalMember2022-09-300001855747us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001855747us-gaap:RetainedEarningsMember2022-09-3000018557472022-09-300001855747blnd:Title365Member2021-06-30xbrli:pure0001855747blnd:ForeignJurisdictionMember2023-09-300001855747blnd:ForeignJurisdictionMember2022-12-310001855747us-gaap:CustomerConcentrationRiskMemberblnd:InsuranceCompany1Memberus-gaap:RevenueFromContractWithCustomerMember2023-01-012023-09-300001855747us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberblnd:InsuranceCompany2Member2023-01-012023-09-300001855747us-gaap:CustomerConcentrationRiskMemberblnd:InsuranceCompany1Memberus-gaap:RevenueFromContractWithCustomerMember2022-01-012022-09-300001855747us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberblnd:InsuranceCompany2Member2022-01-012022-09-300001855747us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberblnd:CustomerAMember2023-07-012023-09-300001855747us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberblnd:CustomerAMember2022-07-012022-09-300001855747us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberblnd:CustomerAMember2023-01-012023-09-300001855747us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberblnd:CustomerAMember2022-01-012022-09-300001855747us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberblnd:CustomerAMember2023-01-012023-09-300001855747us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberblnd:CustomerAMember2022-01-012022-12-310001855747us-gaap:CustomerConcentrationRiskMemberblnd:CustomerBMemberus-gaap:AccountsReceivableMember2023-01-012023-09-300001855747us-gaap:CustomerConcentrationRiskMemberblnd:CustomerBMemberus-gaap:AccountsReceivableMember2022-01-012022-12-310001855747blnd:Title365Member2023-09-300001855747blnd:Title365Member2023-01-012023-09-300001855747blnd:Title365Memberus-gaap:CallOptionMember2023-01-012023-09-300001855747blnd:Title365Memberus-gaap:PutOptionMember2023-01-012023-09-300001855747blnd:MortgageSuiteMember2023-07-012023-09-300001855747blnd:MortgageSuiteMember2022-07-012022-09-300001855747blnd:MortgageSuiteMember2023-01-012023-09-300001855747blnd:MortgageSuiteMember2022-01-012022-09-300001855747blnd:ConsumerBankingSuiteMember2023-07-012023-09-300001855747blnd:ConsumerBankingSuiteMember2022-07-012022-09-300001855747blnd:ConsumerBankingSuiteMember2023-01-012023-09-300001855747blnd:ConsumerBankingSuiteMember2022-01-012022-09-300001855747blnd:BlendPlatformMember2023-07-012023-09-300001855747blnd:BlendPlatformMember2022-07-012022-09-300001855747blnd:BlendPlatformMember2023-01-012023-09-300001855747blnd:BlendPlatformMember2022-01-012022-09-300001855747blnd:TitleRevenueTraditionalMember2023-07-012023-09-300001855747blnd:TitleRevenueTraditionalMember2022-07-012022-09-300001855747blnd:TitleRevenueTraditionalMember2023-01-012023-09-300001855747blnd:TitleRevenueTraditionalMember2022-01-012022-09-300001855747blnd:TitleRevenueDigitallyEnabledMember2023-07-012023-09-300001855747blnd:TitleRevenueDigitallyEnabledMember2022-07-012022-09-300001855747blnd:TitleRevenueDigitallyEnabledMember2023-01-012023-09-300001855747blnd:TitleRevenueDigitallyEnabledMember2022-01-012022-09-3000018557472023-10-012023-09-3000018557472025-01-012023-09-3000018557472026-01-012023-09-300001855747us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2023-09-300001855747us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-12-310001855747us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2023-09-300001855747us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMember2023-09-300001855747us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2023-09-300001855747us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-09-300001855747blnd:MarketableSecuritiesMember2023-09-300001855747us-gaap:FairValueInputsLevel2Memberus-gaap:CertificatesOfDepositMember2023-09-300001855747us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2022-12-310001855747us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2022-12-310001855747us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMember2022-12-310001855747us-gaap:CashAndCashEquivalentsMember2022-12-310001855747us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMember2022-12-310001855747us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2022-12-310001855747us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-12-310001855747blnd:MarketableSecuritiesMember2022-12-310001855747us-gaap:FairValueInputsLevel2Memberus-gaap:CertificatesOfDepositMember2022-12-31blnd:position0001855747us-gaap:InternetDomainNamesMember2023-09-300001855747us-gaap:LicenseMember2023-09-300001855747us-gaap:CustomerRelationshipsMember2022-12-310001855747us-gaap:CustomerRelationshipsMember2022-01-012022-12-310001855747us-gaap:SoftwareDevelopmentMember2022-12-310001855747us-gaap:SoftwareDevelopmentMember2022-01-012022-12-310001855747us-gaap:InternetDomainNamesMember2022-12-310001855747us-gaap:InternetDomainNamesMember2022-01-012022-12-3100018557472022-01-012022-12-310001855747us-gaap:LicenseMember2022-12-310001855747blnd:ComputerAndSoftwareMember2023-09-300001855747blnd:ComputerAndSoftwareMember2022-12-310001855747us-gaap:FurnitureAndFixturesMember2023-09-300001855747us-gaap:FurnitureAndFixturesMember2022-12-310001855747us-gaap:LeaseholdImprovementsMember2023-09-300001855747us-gaap:LeaseholdImprovementsMember2022-12-310001855747us-gaap:NotesReceivableMember2023-09-300001855747us-gaap:NotesReceivableMember2023-01-012023-09-300001855747blnd:SeriesSeedPreferredStockMember2023-01-012023-09-300001855747us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-01-012022-12-310001855747us-gaap:OtherNoncurrentAssetsMember2022-01-012022-12-310001855747us-gaap:OtherCurrentLiabilitiesMember2023-09-300001855747us-gaap:OtherNoncurrentLiabilitiesMember2023-09-300001855747us-gaap:OtherCurrentLiabilitiesMember2022-12-310001855747us-gaap:OtherNoncurrentLiabilitiesMember2022-12-310001855747blnd:TermLoanMemberus-gaap:LineOfCreditMember2023-09-300001855747blnd:TermLoanMemberus-gaap:LineOfCreditMember2022-12-310001855747blnd:TermLoanMemberus-gaap:LineOfCreditMember2021-06-300001855747us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2021-06-300001855747us-gaap:RevolvingCreditFacilityMemberblnd:LetterOfCreditSublimitMemberus-gaap:LineOfCreditMember2021-06-300001855747us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberblnd:SwinglineSubFacilityMember2021-06-300001855747us-gaap:LineOfCreditMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2021-06-302021-06-300001855747us-gaap:LineOfCreditMemberus-gaap:BaseRateMember2021-06-302021-06-300001855747us-gaap:LineOfCreditMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2021-06-300001855747us-gaap:LineOfCreditMemberus-gaap:BaseRateMember2021-06-300001855747us-gaap:LineOfCreditMemberblnd:FederalFundsEffectiveRateMember2021-06-302021-06-300001855747us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2023-09-300001855747us-gaap:SeriesGPreferredStockMember2021-06-300001855747us-gaap:SeriesGPreferredStockMember2023-01-012023-09-300001855747us-gaap:LineOfCreditMember2023-09-30blnd:classblnd:vote0001855747us-gaap:CommonClassBMember2023-01-012023-09-300001855747blnd:A2012StockPlanMemberus-gaap:EmployeeStockOptionMember2023-09-300001855747blnd:IncentiveStockOptionsMemberblnd:A2012StockPlanMembersrt:MinimumMember2023-09-300001855747blnd:A2012StockPlanMemberus-gaap:EmployeeStockOptionMember2023-01-012023-09-300001855747blnd:A2021EquityIncentivePlanMember2021-07-310001855747blnd:A2012StockPlanMember2021-07-310001855747blnd:A2021EquityIncentivePlanMember2022-01-012022-01-010001855747blnd:A2021EquityIncentivePlanMembersrt:MinimumMember2021-07-012021-07-310001855747blnd:A2021EquityIncentivePlanMembersrt:MaximumMember2021-07-012021-07-310001855747blnd:A2012StockPlanMember2022-12-310001855747blnd:A2012StockPlanMember2022-01-012022-12-310001855747blnd:A2012StockPlanMember2023-01-012023-09-300001855747blnd:A2012StockPlanMember2023-09-300001855747blnd:A2021EquityIncentivePlanMember2023-09-300001855747blnd:A2021EquityIncentivePlanMember2022-12-310001855747blnd:A2021EquityIncentivePlanMember2023-07-012023-09-300001855747blnd:A2021EquityIncentivePlanMember2022-07-012022-09-300001855747blnd:A2021EquityIncentivePlanMember2023-01-012023-09-300001855747blnd:A2021EquityIncentivePlanMember2022-01-012022-09-300001855747blnd:A2012StockPlanMemberus-gaap:EmployeeStockOptionMember2022-07-012022-09-300001855747blnd:A2012StockPlanMemberus-gaap:EmployeeStockOptionMember2022-01-012022-09-300001855747us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001855747us-gaap:RestrictedStockUnitsRSUMember2022-12-310001855747us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001855747us-gaap:RestrictedStockUnitsRSUMember2023-09-300001855747srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001855747srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001855747us-gaap:RestrictedStockUnitsRSUMember2023-07-012023-09-300001855747us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-09-300001855747us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001855747us-gaap:PerformanceSharesMember2023-08-31blnd:tranche0001855747us-gaap:PerformanceSharesMember2023-01-012023-09-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:PerformanceSharesMember2023-07-012023-09-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:PerformanceSharesMember2023-01-012023-09-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:PerformanceSharesMember2023-09-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:CommonClassBMember2021-03-012021-03-310001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:CommonClassBMemberus-gaap:EmployeeStockOptionMember2021-03-012021-03-310001855747us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:CommonClassBMember2021-03-310001855747us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:EmployeeStockOptionMember2021-06-300001855747us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:EmployeeStockOptionMember2021-06-012021-06-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:EmployeeStockOptionMember2021-06-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:EmployeeStockOptionMember2021-06-012021-06-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:EmployeeStockOptionMember2023-07-012023-09-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:EmployeeStockOptionMember2022-07-012022-09-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:EmployeeStockOptionMember2023-01-012023-09-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:EmployeeStockOptionMember2022-01-012022-09-300001855747us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:EmployeeStockOptionMember2023-09-300001855747us-gaap:CostOfSalesMember2023-07-012023-09-300001855747us-gaap:CostOfSalesMember2022-07-012022-09-300001855747us-gaap:CostOfSalesMember2023-01-012023-09-300001855747us-gaap:CostOfSalesMember2022-01-012022-09-300001855747us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001855747us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001855747us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001855747us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001855747us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-300001855747us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-300001855747us-gaap:SellingAndMarketingExpenseMember2023-01-012023-09-300001855747us-gaap:SellingAndMarketingExpenseMember2022-01-012022-09-300001855747us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001855747us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001855747us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001855747us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-30blnd:plan0001855747blnd:WorkforceReductionPlanMember2022-04-012022-04-300001855747blnd:WorkforceReductionPlanMember2022-08-012022-08-310001855747blnd:WorkforceReductionPlanMember2022-11-012022-11-300001855747blnd:WorkforceReductionPlanMember2023-01-012023-01-310001855747blnd:WorkforceReductionPlanMember2023-08-012023-08-310001855747blnd:ExecutiveTransitionCostsMember2023-01-092023-01-090001855747blnd:ExecutiveTransitionCostsMember2023-03-310001855747blnd:WorkforceReductionPlanMember2023-07-012023-09-300001855747blnd:WorkforceReductionPlanMember2023-01-012023-09-300001855747blnd:WorkforceReductionPlanMember2022-07-012022-09-300001855747blnd:WorkforceReductionPlanMember2022-01-012022-09-300001855747blnd:WorkforceReductionPlanMember2021-12-310001855747blnd:WorkforceReductionPlanMember2022-01-012022-12-310001855747blnd:WorkforceReductionPlanMember2022-12-310001855747blnd:WorkforceReductionPlanMember2023-09-300001855747us-gaap:CommonClassAMember2023-07-012023-09-300001855747us-gaap:CommonClassBMember2023-07-012023-09-300001855747us-gaap:CommonClassAMember2022-07-012022-09-300001855747us-gaap:CommonClassBMember2022-07-012022-09-300001855747us-gaap:CommonClassAMember2023-01-012023-09-300001855747us-gaap:CommonClassAMember2022-01-012022-09-300001855747us-gaap:CommonClassBMember2022-01-012022-09-300001855747us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001855747us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001855747blnd:EarlyExercisedStockOptionsMember2023-01-012023-09-300001855747blnd:EarlyExercisedStockOptionsMember2022-01-012022-09-300001855747blnd:NonPlanStockOptionsMember2023-01-012023-09-300001855747blnd:NonPlanStockOptionsMember2022-01-012022-09-300001855747us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001855747us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001855747us-gaap:PerformanceSharesMember2023-01-012023-09-300001855747us-gaap:PerformanceSharesMember2022-01-012022-09-300001855747us-gaap:WarrantMember2023-01-012023-09-300001855747us-gaap:WarrantMember2022-01-012022-09-300001855747blnd:BlendPlatformMember2023-07-012023-09-300001855747blnd:BlendPlatformMember2022-07-012022-09-300001855747blnd:BlendPlatformMember2023-01-012023-09-300001855747blnd:BlendPlatformMember2022-01-012022-09-300001855747blnd:Title365Member2023-07-012023-09-300001855747blnd:Title365Member2022-07-012022-09-300001855747blnd:Title365Member2023-01-012023-09-300001855747blnd:Title365Member2022-01-012022-09-300001855747blnd:NimaGhamsariMember2023-01-012023-09-300001855747blnd:NimaGhamsariMember2023-07-012023-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from         to
Commission File Number 001-40599

BLEND LABS, INC.
(Exact name of registrant as specified in its charter)
Delaware45-5211045
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
415 Kearny Street
San Francisco, California 94108
(650) 550-4810
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.00001 per shareBLNDNew York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
As of October 31, 2023, there were 238,409,651 shares of the registrant's Class A common stock outstanding, 9,789,290 shares of the registrant's Class B common stock outstanding, and no shares of the registrant's Class C common stock outstanding.



Table of Contents
Page



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
changes in economic conditions, especially those affecting the levels of real estate and mortgage activity, such as mortgage interest rates, credit availability, real estate prices, inflation, and consumer confidence;
our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, targeted reduction in operating loss and plans for future operations, expense reductions and costs savings, our ability to determine reserves, and our ability to achieve and maintain future profitability;
our market position, growth opportunities and our ability to successfully execute our business and growth strategy;
the sufficiency of our cash, cash equivalents, and marketable securities to meet our liquidity needs;
the demand for our products and services;
our ability to increase our transaction volume and to attract and retain customers;
our ability to integrate more marketplaces into our end-to-end consumer journeys;
our ability to develop new products, services, and features and bring them to market in a timely manner;
our ability to make enhancements to our current products;
our ability to compete with existing and new competitors in existing and new markets and offerings;
our ability to successfully acquire and integrate companies and assets, including our ability to integrate Title365 with our operations;
the impairment of certain assets arising from our acquisition of Title365;
our ability to maintain the security and availability of our platform;
our expectations regarding the effects of existing and developing laws and regulations, including with respect to taxation, privacy, information security, and data protection;
our ability to manage risk associated with our business;
our expectations regarding new and evolving markets;
our ability to develop and protect our brand and reputation;
our expectations and management of future growth;
our expectations concerning relationships with third parties;
our ability to attract and retain employees and key personnel;
our ability to service our existing debt;
our ability to maintain, protect, and enhance our intellectual property; and
the increased expenses associated with being a public company.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.



You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.



PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Blend Labs, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
(Unaudited)
September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$84,555 $124,199 
Marketable securities and other investments160,406 229,948 
Trade and other receivables, net of allowance for credit losses of $198 and $436, respectively
19,583 22,718 
Prepaid expenses and other current assets18,645 19,231 
Total current assets283,189 396,096 
Property and equipment, net4,451 5,742 
Operating lease right-of-use assets9,411 11,668 
Intangible assets, net2,114 2,127 
Deferred contract costs2,233 1,691 
Restricted cash, non-current7,294 5,358 
Other non-current assets9,662 10,082 
Total assets$318,354 $432,764 
Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity
Current liabilities:
Accounts payable$2,121 $1,260 
Deferred revenue10,056 8,695 
Accrued compensation9,867 10,059 
Other current liabilities14,768 15,459 
Total current liabilities36,812 35,473 
Operating lease liabilities, non-current8,135 11,091 
Other non-current liabilities3,356 5,478 
Debt, non-current, net219,005 216,801 
Total liabilities267,308 268,843 
Commitments and contingencies (Note 8)
Redeemable noncontrolling interest44,754 40,749 
Stockholders’ equity:
Preferred stock, $0.00001 par value: 200,000 shares authorized and no shares issued and outstanding as of September 30, 2023 and December 31, 2022
  
Class A, Class B and Class C Common Stock, $0.00001 par value: 3,000,000 (Class A 1,800,000, Class B 600,000, Class C 600,000) shares authorized; 247,946 (Class A 238,045, Class B 9,901, Class C 0) and 240,931 (Class A 230,210, Class B 10,721, Class C 0) shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
2 2 
Additional paid-in capital1,318,037 1,286,815 
Accumulated other comprehensive loss(402)(708)
Accumulated deficit(1,311,345)(1,162,937)
Total stockholders’ equity6,292 123,172 
Total liabilities, redeemable noncontrolling interest and stockholders’ equity$318,354 $432,764 
See accompanying notes to condensed consolidated financial statements
1



Blend Labs, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenue
Software$26,505 $28,161 $77,590 $90,345 
Professional services2,137 1,808 6,087 5,801 
Title11,949 25,384 37,065 96,270 
Total revenue40,591 55,353 120,742 192,416 
Cost of revenue
Software5,675 6,809 16,964 24,151 
Professional services2,937 3,084 8,448 11,371 
Title9,916 24,350 33,921 81,650 
Total cost of revenue18,528 34,243 59,333 117,172 
Gross profit22,063 21,110 61,409 75,244 
Operating expenses:
Research and development18,826 34,240 67,174 104,846 
Sales and marketing14,494 20,518 48,190 65,297 
General and administrative15,819 32,140 56,146 105,714 
Amortization of acquired intangible assets 275  8,411 
Impairment of intangible assets and goodwill 57,857  449,680 
Restructuring9,122 5,936 24,254 12,316 
Total operating expenses58,261 150,966 195,764 746,264 
Loss from operations(36,198)(129,856)(134,355)(671,020)
Interest expense(8,210)(6,158)(23,726)(17,442)
Other income (expense), net2,632 3,281 8,746 3,378 
Loss before income taxes(41,776)(132,733)(149,335)(685,084)
Income tax (expense) benefit(44)(14)(168)2,717 
Net loss(41,820)(132,747)(149,503)(682,367)
Less: Net loss attributable to noncontrolling interest60 6,619 1,095 42,764 
Net loss attributable to Blend Labs, Inc.(41,760)(126,128)(148,408)(639,603)
Less: Accretion of redeemable noncontrolling interest to redemption value(1,452)(7,847)(5,100)(46,297)
Net loss attributable to Blend Labs, Inc. common stockholders$(43,212)$(133,975)$(153,508)$(685,900)
Net loss per share attributable to Blend Labs, Inc. common stockholders:
Basic and diluted$(0.18)$(0.57)$(0.63)$(2.95)
Weighted average shares used in calculating net loss per share:
Basic and diluted246,410 235,267 244,057 232,717 
Comprehensive loss:
Net loss$(41,820)$(132,747)$(149,503)$(682,367)
Unrealized gain (loss) on marketable securities
181 835 229 (1,512)
Foreign currency translation gain
106 55 77 160 
Comprehensive loss(41,533)(131,857)(149,197)(683,719)
Less: Comprehensive loss attributable to noncontrolling interest60 6,619 1,095 42,764 
Comprehensive loss attributable to Blend Labs, Inc.$(41,473)$(125,238)$(148,102)$(640,955)
See accompanying notes to condensed consolidated financial statements
2


Blend Labs, Inc.
Condensed Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders’ Equity
(In thousands)
(Unaudited)


Redeemable Noncontrolling InterestCommon StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balances as of December 31, 2022    $40,749 240,931 $2 $1,286,815 $(708)$(1,162,937)$123,172 
Issuance of common stock upon exercise of stock options, net of repurchases— 17 — 134 — — 134 
Vesting of early exercised stock options
— — — 758 — — 758 
Vesting of restricted stock units
— 4,228 — — — — — 
Shares withheld related to net share settlement of equity awards— (1,568)— (2,440)— — (2,440)
Stock-based compensation— — — 16,392 — — 16,392 
Unrealized gain on investments in marketable securities— — — — 821 — 821 
Foreign currency translation loss— — — — (18)— (18)
Accretion of redeemable noncontrolling interest to redemption value2,056 — — (2,056)— — (2,056)
Net loss(777)— — — — (65,417)(65,417)
Balances as of March 31, 2023    42,028 243,608 2 1,299,603 95 (1,228,354)71,346 
Vesting of early exercised stock options
— — — 256 — — 256 
Vesting of restricted stock units
— 3,304 — — — — — 
Shares withheld related to net share settlement of equity awards— (1,137)— (1,092)— — (1,092)
Stock-based compensation— — — 14,364 — — 14,364 
Unrealized loss on investments in marketable securities— — — — (773)— (773)
Foreign currency translation loss— — — — (11)— (11)
Accretion of redeemable noncontrolling interest to redemption value1,592 — — (1,592)— — (1,592)
Net loss(258)— — — — (41,231)(41,231)
Balances as of June 30, 2023    43,362 245,775 2 1,311,539 (689)(1,269,585)41,267 
Issuance of common stock upon exercise of stock options, net of repurchases— 32 — 3 — — 3 
Vesting of early exercised stock options
— — — 230 — — 230 
Vesting of restricted stock units
— 3,242 — — — — — 
Shares withheld related to net share settlement of equity awards— (1,103)— (1,325)— — (1,325)
Stock-based compensation— — — 9,042 — — 9,042 
Unrealized gain on investments in marketable securities— — — — 181 — 181 
Foreign currency translation gain— — — — 106 — 106 
Accretion of redeemable noncontrolling interest to redemption value1,452 — — (1,452)— — (1,452)
Net loss(60)— — — — (41,760)(41,760)
Balances as of September 30, 2023    $44,754 247,946 $2 $1,318,037 $(402)$(1,311,345)$6,292 
See accompanying notes to condensed consolidated financial statements
3


Blend Labs, Inc.
Condensed Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders’ Equity (Continued)
(In thousands)
(Unaudited)
Three and Nine Months Ended September 30, 2022
Redeemable Noncontrolling InterestCommon StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balances as of December 31, 2021    $35,949 230,324 $2 $1,218,213 $(808)$(442,765)$774,642 
Issuance of common stock upon exercise of stock options, net of repurchases— 1,553 — 1,740 — — 1,740 
Vesting of early exercised stock options
— — — 1,913 — — 1,913 
Vesting of restricted stock units
— 523 — — — — — 
Stock-based compensation— — — 24,312 — — 24,312 
Unrealized loss on investments in marketable securities— — — — (1,845)— (1,845)
Foreign currency translation gain— — — — 28 — 28 
Accretion of redeemable noncontrolling interest to redemption value1,442 — — (1,442)— — (1,442)
Other— — — (270)— — (270)
Net loss(314)— — — — (72,104)(72,104)
Balances as of March 31, 2022    37,077 232,400 2 1,244,466 (2,625)(514,869)726,974 
Issuance of common stock upon exercise of stock options, net of repurchases— 524 — 540 — — 540 
Vesting of early exercised stock options
— — — 1,230 — — 1,230 
Vesting of restricted stock units
— 1,871 — — — — — 
Stock-based compensation— — — 29,248 — — 29,248 
Unrealized loss on investments in marketable securities— — — — (502)— (502)
Foreign currency translation gain— — — — 77 — 77 
Accretion of redeemable noncontrolling interest to redemption value37,008 — — (37,008)— — (37,008)
Net loss(35,831)— — — — (441,371)(441,371)
Balances as of June 30, 2022    38,254 234,795 2 1,238,476 (3,050)(956,240)279,188 
Issuance of common stock upon exercise of stock options, net of repurchases— 533 — 982 — — 982 
Vesting of early exercised stock options
— — — 530 — — 530 
Vesting of restricted stock units
— 2,249 — — — — — 
Stock-based compensation— — — 27,951 — — 27,951 
Unrealized loss on investments in marketable securities— — — — 835 — 835 
Foreign currency translation gain— — — — 55 — 55 
Accretion of redeemable noncontrolling interest to redemption value7,847 — — (7,847)— — (7,847)
Net loss(6,619)— — — — (126,128)(126,128)
Balances as of September 30, 2022    $39,482 237,577 $2 $1,260,092 $(2,160)$(1,082,368)$175,566 
See accompanying notes to condensed consolidated financial statements

4


Blend Labs, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20232022
Operating activities
Net loss$(149,503)$(682,367)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation39,79881,511
Depreciation and amortization1,85610,153
Impairment of intangible assets and goodwill449,680
Amortization of deferred contract costs2,4273,560
Amortization of debt discount and issuance costs2,2792,187
Amortization of operating lease right-of-use assets2,4502,661
Release of valuation allowance and change in deferred taxes(2,864)
Gain on investment in equity securities(2,884)
Other(4,657)1,960
Changes in operating assets and liabilities:
Trade and other receivables3,0297,162
Prepaid expenses and other assets, current and non-current(1,496)3,824
Deferred contract costs, non-current(542)2,222
Accounts payable861(3,610)
Deferred revenue1,3611,891
Accrued compensation(192)(4,387)
Operating lease liabilities(2,944)(2,663)
Other liabilities, current and non-current(1,657)(11,121)
Net cash used in operating activities(106,930)(143,085)
Investing activities
Purchases of marketable securities(203,281)(96,218)
Maturities of marketable securities277,855139,872
Additions to property, equipment, internal-use software and intangible assets(505)(1,610)
Net cash provided by investing activities74,06942,044
Financing activities
Proceeds from exercises of stock options, including early exercises, net of repurchases202,570
Taxes paid related to net share settlement of equity awards(4,857)
Payment of initial public offering costs(391)
Net cash (used in) provided by financing activities(4,837)2,179
Effect of exchange rates on cash, cash equivalents, and restricted cash(10)160
Net decrease in cash, cash equivalents, and restricted cash
(37,708)(98,702)
Cash, cash equivalents, and restricted cash at beginning of period129,557218,440
Cash, cash equivalents, and restricted cash at end of period$91,849$119,738
Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets:
Cash and cash equivalents$84,555$114,380
Restricted cash7,2945,358
Total cash, cash equivalents, and restricted cash$91,849$119,738
Supplemental disclosure of cash flow information:
Cash paid for income taxes$48$190
Cash paid for interest$21,464$18,558
Supplemental disclosure of non-cash investing and financing activities:
Vesting of early exercised stock options$1,244$3,673
Operating lease liabilities arising from obtaining new or modified right-of-use assets$327$977
Accretion of redeemable noncontrolling interest to redemption value$5,100$46,297

See accompanying notes to condensed consolidated financial statements
5

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Description of Business and Basis of Presentation
Description of Business
Blend Labs, Inc. (the “Company,” “Blend,” “we,” “us,” or “our”) was incorporated on April 17, 2012. The Company offers a cloud-based software platform for financial services firms that is designed to power the end-to-end consumer journey for banking products. The Company’s solutions make the journey from application to close fast, simple, and transparent for consumers, while helping financial services firms increase productivity, deepen customer relationships, and deliver exceptional consumer experiences.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, the unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022, the unaudited condensed consolidated statements of redeemable noncontrolling interest and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 reflect all adjustments that are of a normal, recurring nature and that are considered necessary for a fair statement of the results for the periods shown in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting periods. Accordingly, certain information and footnote disclosures have been condensed or omitted that would ordinarily be required under U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The accompanying unaudited condensed consolidated financial statements include the accounts of Blend Labs, Inc. and its subsidiaries in which the Company holds a controlling financial interest. On June 30, 2021 we acquired 90.1% ownership of Title365, a leading title insurance agency that offers title, escrow and other trustee services. Noncontrolling interest represents the minority stockholder’s share of the net income or loss and equity in Title365. All intercompany balances and transactions have been eliminated in consolidation.
Segment Information
In March 2023, the Company changed its reporting segments to align with how the Company’s Chief Operating Decision Maker (“CODM”) reviews financial information in order to allocate resources and assess performance. As the result of this change, the Company’s digitally-enabled title component (previously referred to as “software-enabled” title component) was reclassified from the Blend Platform segment to Title segment (previously referred to as “Title365” segment). In addition, the Company revised its revenue disaggregation within the Blend Platform segment. Prior period amounts reported in the unaudited condensed consolidated interim financial statements and notes thereto have been reclassified to conform to current period presentation.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the notes thereto. Actual results may differ from those estimates. Such estimates include, but are not limited to, estimates of variable consideration, evaluation of contingencies, determination of the incremental borrowing rates used in calculations of lease liabilities, determination of fair value of stock-based compensation, determination of fair value of warrants, valuation of deferred tax assets, valuation of acquired intangible assets, valuation of the redeemable noncontrolling interest, determination of useful lives of tangible and intangible assets, assessment of impairment of goodwill and intangible assets, and the valuation of equity securities without readily determinable fair value.
Risks and Uncertainties
The Company has been and may continue to be affected by various macroeconomic factors, including interest rate environment, housing affordability, and worldwide political and economic conditions. The global financial markets have recently experienced
6

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

extreme volatility and disruptions, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, rising interest rates, inflation, increases in unemployment rates and uncertainty about economic stability. The real estate environment, including interest rates and the general economic environment, typically impacts the demand for mortgage and mortgage related products. Recent changes in these areas have impacted the Company’s results of operations. Purchase volume and refinance activity were strong in 2021 and 2020 relative to historical averages over the preceding decade; however, an increase in interest rates due to efforts by the Federal Reserve to manage rising inflation, combined with ongoing supply constraints, resulted in a decline in mortgage origination activity for 2022, which has continued into 2023, and could bring further reductions in future periods.

The Company’s operations are principally funded by available liquidity from cash, cash equivalents and investments. The Company has incurred net losses in each period since inception, and its limited operating history in an evolving industry makes it difficult to accurately forecast the impact of macroeconomic or other external factors on its business and may increase the risk that the Company may not be able to achieve or maintain profitability in the future, or otherwise suffers adverse impacts on its operational and financial results.
2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes to these policies during the three and nine months ended September 30, 2023.
Cash and Cash Equivalents
The Company places its cash with high credit quality and federally insured institutions. Cash with any one institution may be in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes the exposure to credit risk is not significant. The Company considers all highly liquid investments with an original maturity date of three months or less at the time of purchase to be cash equivalents. As of September 30, 2023 and December 31, 2022, cash and cash equivalents consisted of cash, money market accounts, and highly liquid investments with original maturities less than 90 days. The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents approximate fair value due to the short-term nature of the investments.
Restricted Cash
The Company has classified cash that is not available for use in its operations as restricted cash. Restricted cash consists primarily of collateral for letters of credit related to security deposits for the Company’s office facility lease arrangements and collateral for surety bonds related to the Title segment. As of September 30, 2023 and December 31, 2022, the Company had restricted cash of $7.3 million and $5.4 million, respectively, all of which was classified as non-current.
Trade and Other Receivables and Credit Loss Reserves
The Company reports trade and other receivables net of the allowance for credit losses, in accordance with Accounting Standards Codification (“ASC”) 326, Financial Instruments—Credit Losses. ASC 326 requires an entity to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The Company’s estimate of expected credit losses is determined based on expected lifetime loss rates calculated from historical data and adjusted for the impact of current and future conditions, such as the age of outstanding receivables, historical payment patterns, any known or expected changes to the customers’ ability to fulfill their payment obligations, or assessment of broader economic conditions that may impact the customers’ ability to pay the outstanding balances. As of September 30, 2023 and December 31, 2022, the reserve for expected credit losses was $0.2 million and $0.4 million, respectively. The provision for expected credit losses and the uncollectible portion of the receivables written off against reserve for expected credit losses were not material for the three and nine months ended September 30, 2023 and 2022.
7

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Concentrations of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable securities, and trade accounts receivable. The Company maintains its cash equivalents primarily in money market funds and highly liquid investments. As of September 30, 2023, cash and cash equivalents of $84.6 million include $1.8 million cash held in a foreign jurisdiction. As of December 31, 2022, cash and cash equivalents of $124.2 million include $1.3 million of cash held in a foreign jurisdiction. Under its investment policy, the Company limits amounts invested in marketable securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the United States government. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The goals of the Company’s investment policy, in order of priority, are safety and preservation of principal and liquidity of investments sufficient to meet cash flow requirements. Collateral is not required for trade accounts receivable.

Title365 has agreements with insurance underwriters authorizing the Company to issue title insurance policies on behalf of the insurance underwriters. The policies are underwritten by two title insurance companies, which accounted for approximately 70% and 30% during the nine months ended September 30, 2023, and 56% and 44% during the nine months ended September 30, 2022, respectively, of title policy fees earned during the period.

The following customer, which generates revenue in both Blend Platform and Title segments, comprised 10% or more of the Company’s revenue for the following periods:

Three Months Ended September 30,Nine Months Ended September 30,
Customer
2023202220232022
A18%26%19%31%

The following customers comprised 10% or more of the Company’s trade and unbilled receivables:
Customer
September 30, 2023December 31, 2022
A11%12%
B8%10%
Redeemable Noncontrolling Interest
The Company’s 90.1% ownership of Title365 results in recognition of 9.9% noncontrolling interest, which represents the minority stockholder’s share of the net income and equity in Title365. The Title365 stockholders agreement includes a provision whereby the Company has a call option to purchase the 9.9% noncontrolling interest at a purchase price equal to the greater of (1) $49.5 million plus an amount of interest calculated using an interest rate of 5.0% per annum compounding annually; or (2) 4.4 multiplied by the trailing 12-month EBITDA multiplied by the noncontrolling interest ownership percentage (the “Title365 Call Option”). The Title365 Call Option is exercisable beginning 2 years following the acquisition closing date. The noncontrolling interest holder also holds an option to compel the Company to purchase the remaining 9.9% noncontrolling interest at a price calculated in the same manner as the Title365 Call Option (the “Title365 Put Option”). The Title365 Put Option is exercisable beginning 5 years following the acquisition closing date. Neither the Title365 Call Option nor the Title365 Put Option have an expiration date. However, pursuant to the Title365 stockholders agreement, the Company also has certain bring-along rights that it can exercise under certain circumstances, which may result in the Title365 Put Option being extinguished. As the Title365 Put Option is not solely within the Company’s control, the Company classified this interest as redeemable noncontrolling interest (“RNCI”) within the mezzanine equity section of the unaudited condensed consolidated balance sheets. The RNCI is accreted to the redemption value under the interest method from the acquisition date through the date the Title365 Put Option becomes exercisable. At each balance sheet date, the RNCI is reported at the greater of the initial carrying amount adjusted for the RNCI's share of earnings or losses and other comprehensive income or loss, or its accreted redemption value. The changes in the redemption amount are recorded with corresponding adjustments against retained earnings or, in the absence of retained earnings, additional paid-in-capital. For each reporting period, the entire periodic change in the redemption amount is reflected in the computation of net loss per share under the two-class method as being akin to a
8

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

dividend. As of September 30, 2023 and December 31, 2022, the redemption amount of the Title365 Put Option as if it was currently redeemable was $55.1 million and $53.2 million, respectively.
JOBS Act Accounting Election
As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies (that is, those that have not had a Securities Act of 1933, as amended (the “Securities Act”), registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). The Company intends to use this extended transition period under the JOBS Act until such time as the Company is no longer considered to be an EGC. The adoption dates discussed below reflect this election.
Recently Adopted Accounting Standards
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform (Topic 848), with amendments in 2021. This update provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. Under this update, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In October 2022, the Company entered into the first amendment to the Credit Agreement (as defined in Note 10, “Debt Financing”), which replaced the reference rate from LIBOR to the Secured Overnight Financing Rate ("SOFR") as a result of the expected cessation of LIBOR and adopted ASU 2020-04 and elected the optional expedient. The adoption did not have a material impact on the Company’s consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations: Accounting for Contract Assets and Contract Liabilities with Customers (Topic 805). This guidance requires an acquirer in a business combination to use principles in ASC 606 to recognize and measure contract assets and liabilities rather than fair value. The Company adopted ASU No. 2021-08 on January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The guidance simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20 that requires entities to account for beneficial conversion features and cash conversion features in equity separately from the host convertible debt or preferred stock. The guidance is effective for the Company for annual reporting periods, and interim reporting periods within those annual periods, beginning January 1, 2024. ASU 2020-06 should be applied on a full or modified retrospective basis and early adoption is permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820). This update clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments affect all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction. The guidance is effective for the Company for annual reporting periods, and interim reporting periods within those annual periods, beginning January 1, 2024. Early adoption is permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.
3. Revenue Recognition and Contract Costs
Disaggregation of Revenue
The following table provides information about disaggregated revenue by service offering:
9

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Blend Platform revenue:
Mortgage Suite$20,306 $22,897 $60,371 $76,627 
Consumer Banking Suite6,199 5,264 17,219 13,718 
Total Software revenue26,505 28,161 77,590 90,345 
Professional services2,137 1,808 6,087 5,801 
Total Blend Platform revenue28,642 29,969 83,677 96,146 
Title revenue:
Traditional8,701 19,303 27,492 89,895 
Digitally-enabled3,248 6,081 9,573 6,375 
Total Title revenue11,949 25,384 37,065 96,270 
Total revenue$40,591 $55,353 $120,742 $192,416 

In the first quarter of 2023, the Company recast its revenue disaggregation to align with the change in how the Company’s CODM reviews financial information. This change was driven by the introduction of Composable Origination, which gives customers the ability to build custom solutions using the Blend Builder Platform (a software platform within the Blend Platform segment), or configure workflows with pre-built solutions such as Instant Home Equity, Deposit Accounts, Credit Cards, and others.

Within the new disaggregation, Mortgage Suite revenue represents revenue related to mortgage transactions processed through the Company’s software platform, ancillary product revenue (income verification and close products), and marketplace revenue (property and casualty insurance). Consumer Banking Suite revenue represents revenue related to the Company’s consumer banking products including personal loans, credit cards, deposit accounts, and home equity. Professional Services revenue represents revenue related to the deployment of the Company’s software platform, client support and consulting services. Title revenue represents revenue related to title (traditional and digitally-enabled), escrow and other closing and settlement services provided by the Title segment. Prior period amounts have been reclassified to conform to current period presentation.
Contract Balances
The following table provides information about contract assets and contract liabilities from contracts with customers:

Contract Accounts
Balance Sheet Line Reference
September 30, 2023December 31, 2022
(In thousands)
Contract assets—currentPrepaid expenses and other current assets$407 $1,252 
Contract liabilities—currentDeferred revenue, current$(10,056)$(8,695)

There were no long-term contract assets or deferred revenue as of September 30, 2023 and December 31, 2022.

During the three months ended September 30, 2023 and 2022, the Company recognized $5.6 million and $5.8 million, respectively, of revenue that was included in the deferred revenue balances at the beginning of the respective periods. During the nine months ended September 30, 2023 and 2022, the Company recognized $7.7 million and $6.8 million, respectively, of revenue that was included in the deferred revenue balances at the beginning of the respective periods.

10

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

During the three and nine months ended September 30, 2023, the Company recognized approximately $0.2 million and $1.9 million of revenue related to performance obligations satisfied in previous periods. During the three and nine months ended September 30, 2022, the Company reversed approximately $0.9 million and $1.6 million of revenue related to performance obligations satisfied in previous periods. The revenue recognized or reversed from performance obligations satisfied in the prior periods primarily related to changes in the transaction price, including changes in the estimate of variable consideration.
Remaining Performance Obligations
As of September 30, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations was $58.9 million. These remaining performance obligations represent commitments in customer contracts for services expected to be provided in the future that have not been recognized as revenue. The expected timing of revenue recognition for these commitments is largely driven by the Company’s ability to deliver in accordance with relevant contract terms and when the Company’s customers utilize services, which could affect the Company’s estimate of when the Company expects to recognize revenue for these remaining performance obligations. The Company expects to recognize approximately 50% of the remaining performance obligations as revenues over the next 12 months. The majority of non-current remaining performance obligations will be recognized over the next 13 to 24 months.
Deferred Contract Costs
As of September 30, 2023 and December 31, 2022, total unamortized deferred contract costs were $3.4 million and $5.2 million, respectively, of which $1.2 million and $3.5 million was recorded within prepaid expenses and other current assets and $2.2 million and $1.7 million was recorded within deferred contract costs, non-current, on the unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively.

The amortization of deferred contract costs was $0.7 million and $1.2 million for the three months ended September 30, 2023 and 2022, respectively, and $2.4 million and $3.6 million for the nine months ended September 30, 2023 and 2022, respectively, and is included in sales and marketing expense in the accompanying unaudited condensed consolidated statements of operations.
4. Investments and Fair Value Measurements
The carrying amount, unrealized gain and loss, and fair value of investments by major security type were as follows:

September 30, 2023
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair Value
Fair Value Hierarchy
(In thousands)
Cash equivalents: 
 
 
 
Money market funds$69,882 $— $— $69,882 Level 1
Marketable securities:
U.S. treasury and agency securities93,761  (361)93,400 Level 2
Commercial paper7,632   7,632 Level 2
Debt securities59,688 4 (348)59,344 Level 2
Total marketable securities161,081 4 (709)160,376 
Other investments:
Certificates of deposit30 — — 30 Level 2
Restricted cash, non-current:
Money market funds6,959 — — 6,959 Level 1
Certificates of deposit335 — — 335 Level 2
Total$238,287 $4 $(709)$237,582 

11

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

December 31, 2022
Amortized
Cost
Gross
Unrealized
Loss
Fair Value
Fair Value Hierarchy
(In thousands)
Cash equivalents: 
 
 
Money market funds$26,389 $— $26,389 Level 1
Commercial paper29,242 — 29,242 Level 2
U.S. treasury and agency securities12,163 — 12,163 Level 2
Total cash equivalents67,794 — 67,794 
Marketable securities:
U.S. treasury and agency securities197,734 (918)196,816 Level 2
Commercial paper23,686  23,686 Level 2
Debt securities4,462 (16)4,446 Level 2
Total marketable securities225,882 (934)224,948 
Other investments:
Certificates of deposit5,000 — 5,000 Level 2
Restricted cash, non-current:
Certificates of deposit335 — 335 Level 2
Total$299,011 $(934)$298,077 

Restricted cash that is not available for use in operations consists of $5.0 million collateral for standby letters of credit related to the Company’s office lease facilities and $1.9 million collateral for surety bonds related to the Title segment as of September 30, 2023.

Marketable securities consist primarily of U.S. treasury and agency securities, commercial paper, and corporate debt securities. The Company classifies its marketable securities as available-for-sale securities at the time of purchase and reevaluates such classification at each balance sheet date. The Company has classified its investments as current based on the nature of the investments and their availability for use in current operations.

The fair value of the Company’s investments in money market funds classified as Level 1 of the fair value hierarchy is based on real-time quotes for transactions in active exchange markets involving identical assets. The fair value of the Company’s investments in commercial paper and marketable securities classified as Level 2 of the fair value hierarchy is based on quoted market prices for similar instruments. The Company’s certificates of deposit are short-term in nature and are carried at amortized cost, which approximates fair value; as such, the certificates of deposit are classified within Level 2 of the fair value hierarchy.

The following table summarizes the stated maturities of the Company’s marketable securities and other investments:

September 30, 2023December 31, 2022
(In thousands)
Due within one year$133,283 $201,921 
Due after one year through two years27,123 28,027 
Total marketable securities and other investments
$160,406 $229,948 

The Company evaluates marketable securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or other factors. The Company considers the extent to which the fair value is less than cost, the financial condition and near-term prospects of the security issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.
12

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


The Company does not have an intent to sell any of these securities prior to maturity and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date. Accordingly, as of September 30, 2023, the Company believes that the unrealized losses are due to noncredit-related factors, including changes in interest rates and other market conditions, and therefore no impairment losses have been recognized in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, the number of investment positions that are in an unrealized loss position were 53 and 38, respectively. As of September 30, 2023, the Company had one security, with a fair value of $4.9 million, that has been in a continuous unrealized loss position for twelve months or greater. As of December 31, 2022, the Company had no securities that have been in a continuous unrealized loss position for twelve months or greater. The Company determines realized gains or losses on the sale of marketable securities based on a specific identification method.

The Company recognized interest income from its investment portfolio of $2.7 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively and $8.8 million and $0.7 million for the nine months ended September 30, 2023 and 2022, respectively. Accrued interest receivable related to marketable securities was $0.8 million and $0.9 million, as of September 30, 2023 and December 31, 2022, respectively, and is presented within prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets. The Company does not measure an allowance for credit losses on accrued interest receivable and recognizes interest receivable write offs as a reversal of interest income. No accrued interest was written off during the three and nine months ended September 30, 2023 and 2022.
5. Intangible Assets
Intangible assets consisted of the following:

September 30, 2023
Weighted Average Remaining AmortizationGross AmountAccumulated AmortizationNet Book Value
(In years)(In thousands)
Intangible assets subject to amortization:
Domain name8.0$210 $(96)$114 
Indefinite-lived intangible assets:
Acquired licenses2,000 — 2,000 
Total intangible assets, net$2,210 $(96)$2,114 


13

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

December 31, 2022
Weighted Average Remaining AmortizationGross AmountAccumulated AmortizationImpairment ChargeNet Book Value
(In years)(In thousands)
Intangible assets subject to amortization:
Acquired customer relationships$179,000 $(16,548)$(162,452)$ 
Internally developed software11,391 (11,391)  
Domain name8.6210 (83) 127 
Total finite-lived intangible assets, net8.6190,601 (28,022)(162,452)127 
Indefinite-lived intangible assets:
Acquired licenses2,000 — — 2,000 
Total intangible assets, net$192,601 $(28,022)$(162,452)$2,127 

Amortization of intangible assets for the three and nine months ended September 30, 2023 was immaterial. Amortization of intangible assets for the three and nine months ended September 30, 2022 was $0.3 million and $8.4 million, respectively.
6. Significant Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
September 30, 2023December 31, 2022
(In thousands)
Contract assets$407 $1,252 
Deferred contract costs1,244 3,518 
Prepaid software5,018 5,472 
Prepaid insurance2,953 3,646 
Prepaid other5,270 2,184 
Recording fee advances612 857 
Other current assets3,141 2,302 
Total prepaid expenses and other current assets$18,645 $19,231 

Recording fee advances represent amounts advanced on behalf of customers in the Title segment associated with the recording of mortgage documents. These amounts are primarily recouped within 30 days from funds in the escrow accounts the Company administers.
Property and Equipment, Net
Property and equipment, net, consisted of the following:

14

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

September 30, 2023December 31, 2022
(In thousands)
Computer and software$6,318 $5,843 
Furniture and fixtures1,816 1,886 
Leasehold improvements4,886 4,884 
Total property and equipment, gross13,020 12,613 
Accumulated depreciation and amortization(8,569)(6,871)
Total property and equipment, net$4,451 $5,742 

Depreciation expense for the three months ended September 30, 2023 and 2022 was $0.6 million. Depreciation expense for the nine months ended September 30, 2023 and 2022 was $1.9 million and $1.7 million, respectively.
Note Receivable
The Company holds a $3.0 million investment in a privately-held company via a convertible promissory note. Interest accrues at 2% per annum and outstanding principal and accrued interest is due and payable at the earliest of (i) 60 months from the execution of the note, (ii) an initial public offering, or (iii) change in control, unless otherwise converted to shares of the issuer. The outstanding principal and unpaid accrued interest are convertible into 4,500,000 shares of the issuer’s Series Seed Preferred Stock at the option of the issuer, upon a change in control, upon the issuer’s initial public offering, or upon a qualified equity financing. The conversion option is not bifurcated from the promissory note as the option does not meet the net settlement criteria of a derivative instrument due to the option not being readily convertible to cash. The Company also has a call option to merge the issuer with the Company for aggregate consideration of $500.0 million. The value of the call option was determined to be inconsequential. The note receivable is presented within other non-current assets on the unaudited condensed consolidated balance sheets.
Investments in Non-Marketable Equity Securities
The Company holds an equity investment in a privately-held company in exchange for 103,611 shares of Series Growth 1a Preferred Stock. This investment in the equity securities without readily determinable fair value is measured at cost, less impairment, if any, plus or minus observable price changes in orderly transactions of an identical or similar investment of the same issuer. The carrying value of this investment was $5.4 million as of September 30, 2023 and December 31, 2022, respectively, which includes a cumulative upward adjustment of $2.9 million based on an observable price change in the three and nine months ended September 30, 2022. There were no impairments or observable price changes for the three and nine months ended September 30, 2023.
Cloud Computing Arrangements
The Company capitalizes certain implementation costs incurred during the application development stage under cloud computing arrangements that are service contracts. The carrying value of the capitalized costs was $0.3 million as of September 30, 2023, which is presented within prepaid expenses and other current assets. The carrying value of the capitalized costs was $0.9 million as of December 31, 2022, of which $0.7 million is presented within prepaid expenses and other current assets, and $0.2 million is presented within other non-current assets on the unaudited condensed consolidated balance sheets. Amortization of capitalized implementation costs is recognized on a straight-line basis over the term of the associated hosting arrangement when it is ready for its intended use. Costs related to preliminary project activities and post-implementation activities are expensed as incurred.
15

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Other Current Liabilities
Other current liabilities consisted of the following:

September 30, 2023December 31, 2022
(In thousands)
Accrued expenses$2,440 $3,051 
Accrued interest8173
Accrued professional fees1,9412,615
Accrued connectivity fees4,0833,143
Accrued litigation contingencies455700
Operating lease liabilities, current portion4,2944,089
Other1,474 1,788 
Total other current liabilities$14,768 $15,459 
Other Long-Term Liabilities
Other long-term liabilities consisted of the following:

September 30, 2023December 31, 2022
(In thousands)
Early exercise liabilities$641 $2,002 
Payroll tax liabilities8541,354
Other liabilities1,861 2,122 
Total other long-term liabilities$3,356 $5,478 

Title and Escrow Loss Reserve
The Company performs title insurance services and issues a title insurance policy as an agent for a third-party title insurance underwriter. The Company pays part of the title insurance policy fee charged to its customers to the third-party title insurance underwriter as compensation for accepting the risk associated with issuing the title policy. The Company may incur a loss if it does not follow the guidelines outlined in the agency agreements, and in the state of California, the Company is obligated to reimburse the insurance company for up to the first $5,000 in losses related to a claim on a policy issued through Title365. Reserves for estimated future losses on policies issued are established at the time the title insurance revenue is recognized in accordance with ASC 450, Contingencies, and are based on claim loss history, industry trends, legal environment, geographic considerations, and the type of title insurance policies written. As of September 30, 2023, title and escrow loss reserves were $1.8 million, of which $0.2 million, is presented within other current liabilities and $1.6 million is presented within other non-current liabilities on the consolidated balance sheets. As of December 31, 2022, title and escrow loss reserves were $2.1 million, of which $0.2 million is presented within other current liabilities and $1.9 million is presented within other non-current liabilities on the consolidated balance sheets.
7. Leases
The Company leases its facilities under non-cancelable operating leases with various expiration dates. Leases may contain escalating payments.

16

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

The Company’s total operating lease costs were $1.7 million and $2.0 million for the three months ended September 30, 2023 and 2022, respectively. The Company’s total operating lease costs were $5.0 million and $5.6 million for the nine months ended September 30, 2023 and 2022, respectively. The Company’s total operating lease costs include variable costs in the amount of $0.6 million and $0.5 million for the three months ended September 30, 2023 and 2022, respectively, and $1.6 million and $1.5 million for the nine months ended September 30, 2023 and 2022, respectively. Variable lease costs are primarily comprised of maintenance costs and are determined based on the actual costs incurred during the period. Variable lease payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities.

As of September 30, 2023 and December 31, 2022, the weighted average remaining operating lease term was 3.3 years and 3.8 years, respectively. The weighted average discount rate used to estimate operating lease liabilities for leases that existed as of September 30, 2023 and December 31, 2022 was 8.1% and 7.9%, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $1.2 million and $1.1 million for the three months ended September 30, 2023 and 2022, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $3.7 million and $3.6 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, maturities of operating lease liabilities were as follows:

(In thousands)
Remainder of 2023$1,297 
20245,106 
20254,251 
20261,301 
20271,094 
Thereafter1,259 
Total lease payments14,308 
Less: imputed interest(1,879)
Total operating lease liabilities$12,429 
8. Commitments and Contingencies
Contingencies
From time to time and in the normal course of business, the Company may be subject to various legal matters, such as threatened or pending claims or proceedings. The litigation contingencies, if realized, could have a material negative impact on the Company’s financial condition, results of operations, and cash flows. The Company recognizes a provision for litigation losses when a contingent liability is probable and the amount thereof is reasonably estimable. Costs associated with the Company's involvement in legal proceedings are expensed as incurred. Amounts accrued for litigation contingencies are based on the Company’s best estimates, assessments of the likelihood of damages, and the advice of counsel and often result from a series of judgments about future events and uncertainties that rely heavily on estimates and assumptions, therefore the actual settlement amounts could differ from the estimated contingency accrual and result in additional charges or reversals in future periods. The Company had a litigation contingency accrual of approximately $0.5 million and $0.7 million as of September 30, 2023 and December 31, 2022 respectively which was presented within other current liabilities in the unaudited condensed consolidated balance sheets.

Warranties, Indemnifications, and Contingent Obligations
The Company’s platform, products, and services are generally warranted to perform substantially as described in the associated documentation and to satisfy defined levels of uptime reliability. The service-level agreements that provide for defined levels of uptime reliability and performance permit the customers to receive credits or to terminate their agreements in the event that the Company fails to meet those levels. To date, the Company has not experienced any significant failures to meet defined levels of reliability and performance as a result of those agreements and historically the Company has not incurred any material costs associated with warranties. Accordingly, the Company has not accrued any liabilities related to these agreements in the unaudited condensed consolidated financial statements.

17

Blend Labs, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

The Company enters into indemnification provisions under (i) its agreements with other companies in the ordinary course of business, typically with business partners, contractors, customers, and landlords and (ii) its agreements with investors. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. These indemnification provisions often include indemnifications relating to representations made by the Company with regard to intellectual property rights. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. Accordingly, the Company has no liabilities recorded for these agreements as of September 30, 2023 or December 31, 2022.

The Company has agreed to indemnify its officers and directors to the fullest extent permitted by its amended and restated bylaws and the General Corporation Law of the State of Delaware for certain events or occurrences arising as a result of the officers or directors serving in such capacity. The coverage applies only to acts that occurred during the tenure of the officer or director and has an unlimited term. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited.

Escrow or Trust Funds
The Company administers escrow and trust deposits held at third-party financial institutions representing funds received under real estate contracts, escrowed funds received under escrow agreements, and undisbursed amounts received for settlement of mortgage and home equity loans. These funds are not considered assets of the Company and, therefore, are not included in the accompanying unaudited condensed consolidated balance sheets; however, the Company remains contingently liable for the disposition of these funds on behalf of its customers. Cash held by the Company for these purposes was approximately $5.3 million, net of outstanding checks in transit of $25.3 million as of September 30, 2023, and approximately $5.0 million, net of outstanding checks in transit of $42.8 million as of December 31, 2022.
9.