Blend Labs reported third‑quarter 2025 results that showed a modest 1% year‑over‑year decline in total revenue to $32.9 million, a figure that slightly outpaced the consensus estimate of $32.8 million but fell short of the higher $33.45 million forecast cited by some analysts. The company posted a GAAP diluted earnings per share of $0.02, beating the consensus of –$0.03 by $0.05, while non‑GAAP diluted EPS of $0.00 missed the consensus estimate of $0.01.
Revenue mix shifted as the software platform segment slipped 2% to $30.5 million, reflecting a 1.5% decline in mortgage‑suite sales amid a broader loss of market share. In contrast, professional services revenue grew 18% to $2.4 million, driven by higher‑margin consulting and implementation contracts. The consumer banking suite, which now accounts for 39% of total revenue, expanded 11% quarter‑over‑quarter, underscoring the company’s pivot toward higher‑margin, subscription‑based offerings.
Gross margins improved to a GAAP 74% and a non‑GAAP 78% level, up from 73% and 76% respectively in the prior quarter, as the higher‑margin software platform offset the decline in mortgage revenue. Operating loss narrowed to $4.9 million from $11.3 million a year ago, while non‑GAAP operating income surged to $4.6 million from $0.3 million, a result of disciplined cost management and a shift toward more profitable service contracts.
For the fourth quarter, Blend Labs guided revenue of $31.0 million to $32.5 million and non‑GAAP operating income of $2.5 million to $3.5 million. The guidance sits below the analyst consensus of approximately $34.3 million, signaling management’s caution amid ongoing mortgage‑market headwinds and a focus on sustaining profitability through cost discipline.
The earnings announcement triggered a negative market reaction, with the stock falling 7.14% during regular trading and an additional 1.02% in after‑hours trading. Investors cited the revenue miss relative to higher consensus estimates, the non‑GAAP EPS shortfall, and the softer‑than‑expected guidance as key drivers of the sell‑off, while concerns over the company’s continued loss of mortgage market share weighed on sentiment.
CEO Nima Ghamsari highlighted the quarter’s deal activity, noting 14 new contracts and a seven‑figure expansion with a top‑20 bank, and expressed optimism about the macro environment and the company’s AI‑driven product roadmap. He described AI as “almost like water for us at this point,” underscoring its central role in the firm’s strategy to build the next generation of banking platforms.
Overall, Blend Labs’ Q3 results demonstrate progress toward a software‑first, platform‑centric model, with improving margins and a growing consumer banking portfolio. However, the company’s revenue trajectory remains modest, and the mortgage‑segment decline, coupled with softer guidance, suggests that investors will continue to scrutinize the pace of top‑line recovery and the sustainability of the shift to higher‑margin services.
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