Blend Labs Inc. says it has cut 25% of its workforce since April as it struggles to improve its financial position following a $478 million loss in the second quarter.
Nima Ghamsari, co-founder and CEO of the San Francisco-based mortgage technology company, noted the reduction in force in his prepared remarks Monday during the company’s call with analysts about its quarterly financial results.
“Since April, we have eliminated over 400 positions, or 25% of our workforce, including the elimination of backfills,” Ghamsari said. “We should see the full impact of these actions by Q1 2023. In aggregate, both actions are expected to reduce our annualized expenses by approximately $60 million.”
The job reductions were announced in two filings with the Securities and Exchange Commission, one dated April 18 and the other Aug. 11. The April filing stated the company would eliminate approximately 200 jobs, while the filing last week stated Blend would eliminate 220 jobs, including 140 current employees and 80 unfilled positions.
“We will continue to monitor and adjust this cost base as market conditions warrant,” Ghamsari said during the earnings call. “We have also significantly limited hiring, focusing on the most important positions for the company.”
The cuts come as the company reported its second-consecutive quarterly loss. The $478.4 million loss, or $2.06 per share, in the second quarter followed a first-quarter loss of $73.5 million.
The second-quarter loss was attributed in part to a $391.8 million impairment of intangible assets and goodwill related to Title365, a provider of title insurance and settlement services that Blend acquired from Mr. Cooper last year.
“While this is a noncash charge, it is clearly a significant number,” Ghamsari said of the Title365 impairment charge. “This business was purchased during a much more robust economic and mortgage refinance environment. In light of current market challenges, we performed an assessment of goodwill and intangible assets within the Title365 reporting unit and have recognized an impairment charge.”
He added, however, that “Title365 has strategic value to Blend and remains a leader in its business.”
Blend reported second-quarter revenue was $65.5 million. By segment, it reported that Blend Platform revenue was $33.6 million, up 5% year-over-year. Mortgage Banking revenue, meanwhile, was $23.9 million, down $1.5 million, or 6%, from the second quarter last year.
The Title365 segment revenue was $31.9 million, “reflecting continued decline of industry refinance volume and partially offset by performance of our Title365 home equity and default products,” the company said.
“Blend continues to gain market share in mortgage, and we are seeing traction in our consumer banking and marketplace business amid a highly uncertain mortgage banking and economic environment,” Ghamsari said. “We are addressing the challenging market conditions by playing to win long-term, taking decisive actions to improve our cost structure and optimizing returns on our innovation investments.”
He added, “These steps will best position Blend to enable our financial institution partners to build deeper relationships with their customers at a lower cost, and in turn create long-term value for our shareholders.”