Blend Labs Q3 Revenue Edges Higher as Q4 Decline Is Expected

Blend Labs Inc. (NYSE: BLND) reported modest third-quarter revenue growth and higher non-GAAP operating income, supported by continued expansion in its Consumer Banking Suite and lower operating expenses. The mortgage software provider also forecast a year-over-year revenue decline for the fourth quarter, alongside an assumed contraction in mortgage market volumes.

Revenue for the quarter ended Sept. 30 rose 1% from a year earlier to $32.9 million, landing in the top half of the company’s guidance range. Software platform revenue, which accounted for 93% of the total, increased 1% to $30.6 million, while professional services revenue declined 1% to $2.3 million.

Non-GAAP operating income increased 14% to $4.9 million, exceeding the high end of Blend’s guidance, while the non-GAAP operating margin expanded to 15% from 13%. Non-GAAP operating expenses declined to $20.5 million from $21.1 million, primarily reflecting lower general and administrative spending.

On a GAAP basis, Blend’s operating loss narrowed to $2.6 million from $5.3 million a year earlier as total operating expenses fell to $26.4 million from $29.6 million. GAAP gross profit declined to $23.8 million from $24.3 million, with gross margin falling to 72% from 74%. Non-GAAP gross margin was 77%, down 100 basis points.

The company recorded a GAAP net loss attributable to common stockholders of $7.1 million, or $0.03 per diluted share, compared with net income of $7.5 million, or $0.02 per diluted share, in the prior-year quarter. Non-GAAP net income from continuing operations was $5.2 million, broadly unchanged from a year earlier, while non-GAAP diluted earnings per share rounded to zero.

Consumer Banking offsets weaker mortgage revenue

Mortgage Suite revenue decreased 2% year over year to $17.4 million. Funded loan volume declined 4% to about 193,500 loans, while economic value per funded loan was $81, compared with $86 in the third quarter of 2025. Core software contributed $73 of the latest quarterly figure and partnerships contributed $9, with figures affected by rounding. Trailing-12-month economic value per funded loan declined to $82 from $90.

Consumer Banking Suite revenue rose 5% to $13.2 million. The business includes home equity, personal lending, credit cards, deposit accounts, auto finance and other banking products.

Blend said it closed 26 new deals and customer expansions during the quarter, including a new top-10 bank customer, marking its strongest sales quarter in more than three years. The company also signed its tenth Autopilot customer, up from six in early August.

For the first nine months of 2026, total revenue increased 7% to $97.6 million. Non-GAAP operating income rose to $16.0 million from $9.7 million, and the corresponding margin increased to 16% from 11%. Free cash flow for the period was $14.3 million, representing a 15% margin, compared with $1.5 million and a 2% margin a year earlier. Third-quarter free cash flow was approximately break-even, improving from negative $5.0 million.

Fourth-quarter revenue decline expected

Blend expects fourth-quarter revenue of $27.7 million to $29.7 million, representing a year-over-year decline of 15% to 8%. Non-GAAP operating income is projected at $2.3 million to $3.3 million.

The outlook assumes Mortgage Suite revenue will fall 28% to 23% from a year earlier, while Consumer Banking Suite revenue is expected to increase 2% to 10%. Blend also assumes fourth-quarter economic value per funded loan of approximately $86 to $87.

The guidance incorporates an estimated mortgage market size of 847,000 to 910,000 units, down 33% to 28% year over year. Actual results remain subject to mortgage volumes, customer activity and the timing of revenue recognition. Blend did not provide a GAAP reconciliation for its non-GAAP operating income outlook because of uncertainty surrounding stock-based compensation and potentially variable non-recurring or unusual items.