Blend Labs, Inc. [BLND] Filings

10-Q 1 blnd-20240930.htm 10-Q blnd-20240930

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, 2024


☐			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)


Delaware						45-5211045
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

7250 Redwood Blvd., Suite 300

Novato, California 94945

(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 class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.00001 per share

BLND

New 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 filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller 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, 2024, there were 252,182,833 shares of the registrant's Class A common stock outstanding, 3,747,235 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
	PART I. FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2
	Condensed Consolidated Statements of Redeemable Noncontrolling Interest, Series A Redeemable Convertible Preferred Stock, and Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46
	PART II. OTHER INFORMATION	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	98
Item 3.	Defaults Upon Senior Securities	98
Item 4.	Mine Safety Disclosures	98
Item 5.	Other Information	98
Item 6.	Exhibits	99
Signatures		100

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;

•our expectations regarding our share repurchase program;

•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;

•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, artificial intelligence, 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 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, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	55,041	$	30,962
Marketable securities and other investments	61,744		105,960
Trade and other receivables, net of allowance for credit losses of $76 and $149, respectively	15,894		18,345
Prepaid expenses and other current assets	13,722		14,569
Total current assets	146,401		169,836
Property and equipment, net	9,723		3,945
Operating lease right-of-use assets	1,715		8,565
Intangible assets, net	2,085		2,108
Deferred contract costs	2,063		2,453
Restricted cash, non-current	7,294		7,291
Other non-current assets	16,848		11,867
Total assets	$	186,129	$	206,065
Liabilities, redeemable equity and stockholders’ equity
Current liabilities:
Accounts payable	$	1,863	$	2,170
Deferred revenue	19,857		8,984
Accrued compensation	6,046		5,562
Other current liabilities	17,478		14,858
Total current liabilities	45,244		31,574
Operating lease liabilities, non-current	955		6,982
Other non-current liabilities	1,292		2,228
Debt, non-current, net	—		138,334
Total liabilities	47,491		179,118
Commitments and contingencies (Note 8)
Redeemable noncontrolling interest	50,747		46,190
Series A redeemable convertible preferred stock, par value $0.00001 per share: 200,000 shares authorized as of September 30, 2024 and December 31, 2023, 150 and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively (Note 10)	137,493		—
Stockholders’ equity:
Class A, Class B and Class C Common Stock, par value $0.00001 per share: 3,000,000 (Class A 1,800,000, Class B 600,000, Class C 600,000) shares authorized as of September 30, 2024 and December 31, 2023; 255,881 (Class A 252,134, Class B 3,747, Class C 0) and 249,910 (Class A 240,262, Class B 9,648, Class C 0) shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	2		2
Additional paid-in capital	1,333,781		1,321,944
Accumulated other comprehensive loss	765		441
Accumulated deficit	(1,384,150)		(1,341,630)
Total stockholders’ equity	(49,602)		(19,243)
Total liabilities, redeemable equity and stockholders’ equity	$	186,129	$	206,065

See accompanying notes to condensed consolidated financial statements

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,
	2024		2023		2024		2023
Revenue
Software platform	$	31,066	$	26,505	$	79,277	$	77,590
Professional services	2,038		2,137		6,363		6,087
Title	12,080		11,949		34,971		37,065
Total revenue	45,184		40,591		120,611		120,742
Cost of revenue
Software platform	6,294		5,675		17,143		16,964
Professional services	2,310		2,937		7,614		8,448
Title	10,584		9,916		30,039		33,921
Total cost of revenue	19,188		18,528		54,796		59,333
Gross profit	25,996		22,063		65,815		61,409
Operating expenses:
Research and development	10,127		18,826		37,226		67,174
Sales and marketing	9,883		14,494		29,468		48,190
General and administrative	13,140		15,819		39,599		56,146


Restructuring	6,165		9,122		7,355		24,254
Total operating expenses	39,315		58,261		113,648		195,764
Loss from operations	(13,319)		(36,198)		(47,833)		(134,355)
Interest expense	—		(8,210)		(6,747)		(23,726)
Other income (expense), net	10,710		2,632		11,952		8,746
Loss before income taxes	(2,609)		(41,776)		(42,628)		(149,335)
Income tax expense	(18)		(44)		(83)		(168)
Net loss	(2,627)		(41,820)		(42,711)		(149,503)
Less: Net loss attributable to noncontrolling interest	182		60		191		1,095
Net loss attributable to Blend Labs, Inc.	(2,445)		(41,760)		(42,520)		(148,408)
Less: Accretion of redeemable noncontrolling interest to redemption value	(1,760)		(1,452)		(4,748)		(5,100)
Less: Accretion of Series A redeemable convertible preferred stock to redemption value	(4,048)		—		(6,709)		—
Net loss attributable to Blend Labs, Inc. common stockholders	$	(8,253)	$	(43,212)	$	(53,977)	$	(153,508)

Net loss per share attributable to Blend Labs, Inc. common stockholders:
Basic and diluted	$	(0.03)	$	(0.18)	$	(0.21)	$	(0.63)
Weighted average shares used in calculating net loss per share:
Basic and diluted	254,910		246,410		252,977		244,057

Comprehensive loss:
Net loss	$	(2,627)	$	(41,820)	$	(42,711)	$	(149,503)
Unrealized gain on marketable securities	448		181		302		229
Foreign currency translation gain	13		106		22		77
Comprehensive loss	(2,166)		(41,533)		(42,387)		(149,197)
Less: Comprehensive loss attributable to noncontrolling interest	182		60		191		1,095
Comprehensive loss attributable to Blend Labs, Inc.	$	(1,984)	$	(41,473)	$	(42,196)	$	(148,102)

See accompanying notes to condensed consolidated financial statements

Blend Labs, Inc.

Condensed Consolidated Statements of Redeemable Noncontrolling Interest, Series A Redeemable Convertible Preferred Stock, and Stockholders’ Equity

(In thousands)

(Unaudited)


	Three and Nine Months Ended September 30, 2024
	Redeemable Noncontrolling Interest		Series A Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity

			Shares	Amount		Shares	Amount
Balances as of December 31, 2023	$	46,190	—	$	—	249,910	$	2	$	1,321,944	$	441	$	(1,341,630)	$	(19,243)
Issuance of common stock upon exercise of stock options, net of repurchases	—		—	—		410	—		619		—		—		619
Vesting of early exercised stock options	—		—	—		—	—		184		—		—		184
Vesting of restricted stock units	—		—	—		3,257	—		—		—		—		—
Shares withheld related to net share settlement of equity awards	—		—	—		(1,258)	—		(3,806)		—		—		(3,806)
Stock-based compensation	—		—	—		—	—		8,707		—		—		8,707
Unrealized loss on investments in marketable securities	—		—	—		—	—		—		(104)		—		(104)
Foreign currency translation gain	—		—	—		—	—		—		9		—		9
Accretion of redeemable noncontrolling interest to redemption value	1,461		—	—		—	—		(1,461)		—		—		(1,461)
Net income (loss)	5		—	—		—	—		—		—		(20,668)		(20,668)
Balances as of March 31, 2024	$	47,656	—	$	—	252,319	$	2	$	1,326,187	$	346	$	(1,362,298)	$	(35,763)
Issuance of common stock upon exercise of stock options, net of repurchases	—		—	—		62	—		95		—		—		95
Vesting of early exercised stock options	—		—	—		—	—		172		—		—		172
Vesting of restricted stock units	—		—	—		2,887	—		—		—		—		—
Shares withheld related to net share settlement of equity awards	—		—	—		(1,061)	—		(3,213)		—		—		(3,213)
Stock-based compensation	—		—	—		—	—		7,764		—		—		7,764
Unrealized loss on investments in marketable securities	—		—	—		—	—		—		(42)		—		(42)
Accretion of redeemable noncontrolling interest to redemption value	1,527		—	—		—	—		(1,527)		—		—		(1,527)
Issuance of Series A redeemable convertible preferred stock, net of issuance costs	—		150	130,784		—	—		—		—		—		—
Issuance of the Warrant in connection with the Series A redeemable convertible preferred stock	—		—	—		—	—		9,111		—		—		9,111
Accretion of Series A redeemable convertible preferred stock to redemption value	—		—	2,661		—	—		(2,661)		—		—		(2,661)
Net loss	(14)		—	—		—	—		—		—		(19,407)		(19,407)
Balances as of June 30, 2024	$	49,169	150	$	133,445	254,207	$	2	$	1,335,928	$	304	$	(1,381,705)	$	(45,471)
Issuance of common stock upon exercise of stock options, net of repurchases	—		—	—		65	—		155		—		—		155
Vesting of early exercised stock options	—		—	—		—	—		7		—		—		7
Vesting of restricted stock units	—		—	—		2,617	—		—		—		—		—
Shares withheld related to net share settlement of equity awards	—		—	—		(1,008)	—		(3,984)		—		—		(3,984)
Stock-based compensation	—		—	—		—	—		7,483		—		—		7,483
Unrealized gain on investments in marketable securities	—		—	—		—	—		—		448		—		448
Foreign currency translation gain	—		—	—		—	—		—		13		—		13
Accretion of redeemable noncontrolling interest to redemption value	1,760		—	—		—	—		(1,760)		—		—		(1,760)
Accretion of Series A redeemable convertible preferred stock to redemption value	—		—	4,048		—	—		(4,048)		—		—		(4,048)
Net loss	(182)		—	—		—	—		—		—		(2,445)		(2,445)
Balances as of September 30, 2024	$	50,747	150	$	137,493	255,881	$	2	$	1,333,781	$	765	$	(1,384,150)	$	(49,602)

See accompanying notes to condensed consolidated financial statements

Blend Labs, Inc.

Condensed Consolidated Statements of Redeemable Noncontrolling Interest, Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity (Continued)

(In thousands)

(Unaudited)


	Three and Nine Months Ended September 30, 2023
	Redeemable Noncontrolling Interest		Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity

			Shares	Amount
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 loss on investments in marketable securities	—		—	—		—		821		—		821
Foreign currency translation gain	—		—	—		—		(18)		—		(18)
Accretion of redeemable noncontrolling interest to redemption value	2,056		—	—		(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 gain	—		—	—		—		(11)		—		(11)
Accretion of redeemable noncontrolling interest to redemption value	1,592		—	—		(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 value	1,452		—	—		(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

Blend Labs, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
Operating activities
Net loss	$	(42,711)	$	(149,503)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	22,013		39,798
Depreciation and amortization	1,803		1,856
Amortization of deferred contract costs	779		2,427
Amortization of debt discount and issuance costs	690		2,279
Amortization of operating lease right-of-use assets	2,334		2,450
Accelerated amortization of right-of-use asset in connection with lease abandonment	2,992		—
Gain on investment in equity securities	(4,417)		—
Loss on extinguishment of debt	5,476		—
Gain on sale of insurance business	(9,213)		—
Other	(685)		(4,657)
Changes in operating assets and liabilities:
Trade and other receivables	2,394		3,029
Prepaid expenses and other assets, current and non-current	(203)		(1,496)
Deferred contract costs, non-current	390		(542)
Accounts payable	(621)		861
Deferred revenue	10,873		1,361
Accrued compensation	446		(192)
Operating lease liabilities	(3,192)		(2,944)
Other liabilities, current and non-current	2,394		(1,657)
Net cash used in operating activities	(8,458)		(106,930)
Investing activities
Purchases of marketable securities	(96,422)		(203,281)
Sale of available-for-sale securities	100,327		—
Maturities of marketable securities	41,850		277,855
Additions to property, equipment and internal-use software development costs	(7,263)		(505)
Other	(283)		—
Proceeds from sale of insurance business	9,075		—
Net cash provided by investing activities	47,284		74,069
Financing activities
Proceeds from exercises of stock options, including early exercises, net of repurchases	869		20
Taxes paid related to net share settlement of equity awards	(11,003)		(4,857)
Repayment of long-term debt	(144,500)		—
Net proceeds from the issuance of the Series A redeemable convertible preferred stock and the Warrant	149,375		—
Payment for issuance costs related to the Series A redeemable convertible preferred stock and the Warrant	(9,480)		—
Net cash used in financing activities	(14,739)		(4,837)
Effect of exchange rates on cash, cash equivalents, and restricted cash	(5)		(10)
Net increase (decrease) in cash, cash equivalents, and restricted cash	24,082		(37,708)
Cash, cash equivalents, and restricted cash at beginning of period	38,253		129,557
Cash, cash equivalents, and restricted cash at end of period	$	62,335	$	91,849
Reconciliation of cash, cash equivalents, and restricted cash within the condensed consolidated balance sheets:
Cash and cash equivalents	$	55,041	$	84,555
Restricted cash	7,294		7,294
Total cash, cash equivalents, and restricted cash	$	62,335	$	91,849
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	76	$	48
Cash paid for interest	$	6,150	$	21,464
Supplemental disclosure of non-cash investing and financing activities:
Vesting of early exercised stock options	$	363	$	1,244
Operating lease liabilities arising from obtaining new or modified right-of-use assets	$	1,151	$	327
Stock-based compensation included in capitalized internal-use software development costs	$	1,941	$	—
Accretion of redeemable noncontrolling interest to redemption value	$	4,748	$	5,100
Accretion of Series A redeemable convertible preferred stock to redemption value	$	6,709	$	—
Warrant received in connection with strategic partnership and sale of insurance business	$	222	$	—
Accrual of transaction costs incurred in connection with sale of insurance business	$	314	$	—
Capitalized internal-use software development costs included in accrued compensation	$	419	$	—

See accompanying notes to condensed consolidated financial statements

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, 2024 and December 31, 2023, the unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023, the unaudited condensed consolidated statements of redeemable noncontrolling interest, Series A Redeemable Convertible Preferred Stock (the “Series A redeemable convertible preferred stock” or “Series A Preferred Stock”), and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 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, 2023.

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. Noncontrolling interest represents the minority stockholder’s share of the net income or loss and equity in a consolidated subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

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 values of stock-based compensation, marketable securities, determination of the fair value of each of the Series A Preferred Stock and the Warrant, determination of fair values of assets transferred and performance obligations committed to under the strategic partnership agreement, assessment of expected credit losses on notes receivable, 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 and capitalized internal-use software development costs, assessment of impairment of long-lived assets, and 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 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. Recent increases in interest rates due to efforts by the U.S. Federal Reserve (the “Federal Reserve”) to manage rising inflation, combined with ongoing supply constraints, resulted in a decline in mortgage origination activity for 2022 and 2023. The demand for mortgage and mortgage related products continued to be sensitive to these factors, and any material changes in Federal Reserve policy, interest rates or housing supply are expected to impact overall origination activity levels

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

during 2024.

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 Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes to these policies during the three and nine months ended September 30, 2024, with the exception of the policy related to the issuance of the Series A Preferred Stock as described below.

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, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, the Company had restricted cash of $7.3 million, 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 each of September 30, 2024 and December 31, 2023, the reserve for expected credit losses was $0.1 million. 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, 2024 and 2023.

Capitalized Internal-Use Software

The Company capitalizes certain costs incurred in the development of its platform and product offerings when (i) the preliminary project stage is completed, (ii) management has authorized further funding for the completion of the project, and (iii) it is probable that the project will be completed and performed as intended. These capitalized costs include personnel and related expenses and stock-based compensation for employees who are directly associated with and who devote time to internal-use software projects. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended purpose. Costs incurred for significant upgrades and enhancements to the existing software are also capitalized, while the costs incurred for minor modifications, as well as training and maintenance are expensed as incurred. The capitalized internal-use software development costs are reported in property and equipment, net, in the condensed consolidated

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

balance sheets. Capitalized internal-use software development costs are amortized using the straight-line method over an estimated useful life of the software, as the straight-line recognition method best approximates the manner in which the expected benefit will be derived. The Company does not transfer ownership of its software, license, or lease the software to third parties.

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 that are issued or guaranteed by the United States government or its agencies. As of September 30, 2024 and December 31, 2023, cash and cash equivalents was $55.0 million and $31.0 million, respectively, and included $2.3 million and $1.9 million, respectively, of cash held in a foreign jurisdiction. 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 61% and 39% during the nine months ended September 30, 2024, and 70% and 30% during the nine months ended September 30, 2023, respectively, of title policy fees earned during the period.

The following customer comprised 10% or more of the Company’s revenue for the following periods:


	Three Months Ended September 30,		Nine Months Ended September 30,
Customer	2024	2023	2024	2023
A1	20%	18%	17%	19%
(1) this customer generates revenue in both Blend Platform and Title segments

The following customers comprised 10% or more of the Company’s trade and unbilled receivables:

Customer

September 30, 2024

December 31, 2023

10%

N/A1

13%

11%

N/A1

(1) trade and unbilled receivable balance from this customer did not exceed 10% as of the date presented

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 became 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

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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 dividend. As of September 30, 2024 and December 31, 2023, the redemption amount of the Title365 Put Option as if it was currently redeemable was $58.0 million and $55.9 million, respectively.

Series A Preferred Stock

On April 29, 2024, the Company entered into an Investment Agreement (the “Investment Agreement”) with Haveli Brooks Aggregator, L.P. (“Haveli”) and issued 150,000 shares of the Company’s Series A Preferred Stock. The Series A Preferred Stock is classified as mezzanine equity due to the redemption features that are not solely within the Company’s control. The Series A Preferred Stock is accreted to its maximum redemption value over the seven year term, using the effective interest method. The increases in the redemption amount are recorded with corresponding adjustments against additional paid-in capital, in the absence of retained earnings. 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 dividend, by reducing the income (or increasing the loss) attributable to common stockholders.

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 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 adoption did not have a material impact on the Company’s 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 adoption did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280). This update improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, for all public entities to enable investors to develop more decision-useful financial analyses. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740). This update improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

made available for issuance. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This update improves the disclosures about a public entity’s expenses, primarily through additional disclosures of specific information about certain costs and expenses in the notes to financial statements. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. 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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In thousands)
Blend Platform:
Mortgage Suite	$	21,546	$	20,306	$	55,078	$	60,371
Consumer Banking Suite	9,520		6,199		24,199		17,219
Total software platform	31,066		26,505		79,277		77,590
Professional services	2,038		2,137		6,363		6,087
Total Blend Platform	33,104		28,642		85,640		83,677
Title	12,080		11,949		34,971		37,065
Total revenue	$	45,184	$	40,591	$	120,611	$	120,742

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, 2024		December 31, 2023
		(In thousands)
Contract assets—current	Prepaid expenses and other current assets	$	3,167	$	1,593
Contract liabilities—current	Deferred revenue, current	$	(19,857)	$	(8,984)

There were no long-term contract assets or deferred revenue as of September 30, 2024 and December 31, 2023.

During the three months ended September 30, 2024 and 2023, the Company recognized $8.6 million and $5.6 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, 2024 and 2023, the Company recognized $6.7 million and $7.7 million, respectively, of revenue that was included in the deferred revenue balances at the beginning of the respective periods.

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

During the three and nine months ended September 30, 2024, the Company recognized revenue of approximately $1.9 million and $0.3 million, respectively, related to performance obligations satisfied in previous periods. During the three and nine months ended September 30, 2023, the Company recognized revenue of approximately $0.2 million and $1.9 million, respectively, related to performance obligations satisfied in previous periods. The revenue reduced or recognized 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, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations was $107.4 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 half of the remaining performance obligations as revenue over the next 12 months. The Company expects the majority of non-current remaining performance obligations to be recognized over the next 13 to 24 months.

Deferred Contract Costs

As of September 30, 2024 and December 31, 2023, total unamortized deferred contract costs were $3.2 million and $3.5 million, respectively, of which $1.1 million and $1.0 million was recorded within prepaid expenses and other current assets and $2.1 million and $2.5 million was recorded within deferred contract costs, non-current, on the unaudited condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

The amortization of deferred contract costs was $0.3 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively, and $0.8 million and $2.4 million for the nine months ended September 30, 2024 and 2023, respectively, and is included in sales and marketing expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss).

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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, 2024
	Amortized Cost		Gross Unrealized Gain		Fair Value		Fair Value Hierarchy
	(In thousands)
Cash equivalents:
Money market funds	$	10,209	$	—	$	10,209	Level 1
Commercial paper	17,346		—		17,346		Level 2
Total cash equivalents	27,555		—		27,555
Marketable securities:
U.S. treasury and agency securities	31,074		204		31,278		Level 2
Commercial paper	17,663		—		17,663		Level 2
Debt securities	12,607		196		12,803		Level 2



Total marketable securities	61,344		400		61,744
Restricted cash, non-current:
Money market funds	6,961		—		6,961		Level 1
Certificates of deposit	333		—		333		Level 2
Total restricted cash	7,294		—		7,294
Total	$	96,193	$	400	$	96,593


	December 31, 2023
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Fair Value Hierarchy
	(In thousands)
Cash equivalents:
Money market funds	$	6,804	$	—	$	—	$	6,804	Level 1
Commercial paper	14,932		—		—		14,932		Level 2
Total cash equivalents	21,736		—		—		21,736
Marketable securities:
U.S. treasury and agency securities	33,225		8		(71)		33,162		Level 2
Debt securities	56,512		187		(127)		56,572		Level 2
Asset-backed securities	16,037		99		—		16,136		Level 2
Mutual funds	60		—		—		60		Level 1
Total marketable securities	105,834		294		(198)		105,930
Other investments:
Certificates of deposit	30		—		—		30		Level 2
Total marketable securities and other investments	105,864		294		(198)		105,960
Restricted cash, non-current:
Money market funds	6,959		—		—		6,959		Level 1
Certificates of deposit	332		—		—		332		Level 2
Total restricted cash	7,291		—		—		7,291
Total	$	134,891	$	294	$	(198)	$	134,987

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Restricted cash that is not available for use in operations consisted of $5.0 million collateral for standby letters of credit related to the Company’s office lease facilities, $1.9 million collateral for surety bonds related to the Title segment and $0.3 million statutory deposits required under the California insurance code as of September 30, 2024 and December 31, 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, 2024		December 31, 2023
	(In thousands)
Due within one year	$	38,365	$	66,620
Due after one year through two years	23,379		39,340
Total marketable securities and other investments	$	61,744	$	105,960

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.

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, the Company believes that generally the unrealized losses are due to noncredit-related factors, including changes in interest rates and other market conditions, and therefore no impairment charges or allowance for credit losses have been recognized in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023. As of September 30, 2024 and December 31, 2023, the number of investment positions that are in an unrealized loss position were 0 and 28, respectively. As of September 30, 2024, the Company had no securities that have been in a continuous unrealized loss position for twelve months or greater. As of December 31, 2023, the Company had four securities, with an aggregate fair value of $16.0 million, 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 $1.5 million and $2.7 million for the three months ended September 30, 2024 and 2023, respectively and $4.2 million and $8.8 million for the nine months ended September 30, 2024 and 2023, respectively. Accrued interest receivable related to marketable securities was $0.3 million and $0.9 million, as of September 30, 2024 and December 31, 2023, 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, 2024 and 2023.

5. Intangible Assets

Intangible assets consisted of the following:

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


	September 30, 2024
	Weighted Average Remaining Amortization	Gross Amount		Accumulated Amortization		Net Book Value
	(In years)	(In thousands)
Intangible assets subject to amortization:


Domain name	7.0	$	192	$	(107)	$	85

Indefinite-lived intangible assets:
Acquired licenses		2,000		—		2,000
Total intangible assets, net		$	2,192	$	(107)	$	2,085


	December 31, 2023
	Weighted Average Remaining Amortization	Gross Amount		Accumulated Amortization		Net Book Value
	(In years)	(In thousands)
Intangible assets subject to amortization:


Domain name	7.7	$	210	$	(102)	$	108

Indefinite-lived intangible assets:
Acquired licenses		2,000		—		2,000
Total intangible assets, net		$	2,210	$	(102)	$	2,108

Amortization of intangible assets for the three and nine months ended September 30, 2024 and 2023 was immaterial.

6. Significant Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


	September 30, 2024		December 31, 2023
	(In thousands)
Contract assets	$	3,167	$	1,593
Deferred contract costs	1,081		1,015
Prepaid software	3,075		4,319
Prepaid insurance	1,547		1,855
Prepaid other	1,848		3,438
Recording fee advances	1,366		470
Other current assets	1,638		1,879
Total prepaid expenses and other current assets	$	13,722	$	14,569

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.

Blend Labs, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Property and Equipment, Net

Property and equipment, net, consisted of the following:


	September 30, 2024		December 31, 2023
	(In thousands)
Computer and software	$	3,506	$	6,335
Furniture and fixtures	149		1,816
Capitalized internal-use software	9,100		63
Leasehold improvements	—		4,886
Total property and equipment, gross	12,755		13,100
Accumulated depreciation and amortization	(3,032)		(9,155)
Total property and equipment, net	$	9,723	$	3,945

Depreciation expense for the three months ended September 30, 2024 and 2023 was $0.5 million and $0.6 million, respectively. Depreciation expense for the nine months ended September 30, 2024 and 2023 was $1.5 million and $1.9 million, respectively.

Amortization of capitalized internal use software development costs for the three and nine months ended September 30, 2024 was $0.2 million. Amortization of capitalized internal use software development costs for the three and nine months ended September 30, 2023 was immaterial.

Notes Receivable

In 2021, the Company made a $3.0 million investment in a privately-held company via a convertible promissory note. In 2023, the Company made an additional $2.5 million investment into the issuer via another 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 each note, respectively, (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 on the notes is convertible into 4,500,000 shares of the issuer’s Series Seed Preferred Stock and 2,192,308 shares of the issuer’s Series A Preferred Stock, respectively, 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 options are not bifurcated from the promissory notes as th

Blend Labs, Inc. [BLND] Filings
10-Q	[2024-11]
10-Q	[2024-08]
10-Q	[2024-05-08]
10-K	[2024-03-14]
10-Q	[2023-11-07]
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S-1	[2021-06-21]