Mortgage software platform Blend Labs set terms for its initial public offering Tuesday including its goal to raise up to $360 million for a targeted valuation of nearly $4 billion. According to the California-based software company, Blend is offering 20 million shares in the IPO priced between $16 and $18 each.
The company also announced expectations to have a total of 219.6 million Class A, Class B and Class C shares outstanding after the IPO. Goldman Sachs & Co, Allen & Company and Wells Fargo Securities are the IPO’s lead underwriters, according to the filing. The company will be listed on the New York Stock Exchange under the symbol “BLND.”
After filing confidentially for its listing in April, Blend was last valued at $3.3 billion following a Series G funding round from Tiger Global Management and others in January 2021. It has raised a total of $655 million since its founding in 2012, according to Crunchbase.
Blend, which was named as one of HousingWire’s 2021 Tech 100 winners, has steadily grown to be a powerhouse in the mortgage tech industry. Blend’s white label technology is what powers mortgage applications on the site of banks such as Wells Fargo and U.S. Bank and integrated with CoreLogic in 2019 for an easier access line to borrowers’ credit.
The company also stepped in to the title insurance realm in March after Blend announced it was expanding its cloud-based platform thanks to the acquisition of Title365 from the Mr. Cooper Group. That acquisition cost roughly $422 million.
Since it was estabslihed in 2012, Blend has been run by its co-founders ― CEO Nima Ghamsari, a former employee of analytics giant Palantir Technologies, and Blend President Timothy Mayopoulos, a former chief executive officer at Fannie Mae.
In a 2020 interview with HousingWire, Mayopoulos said the company is interested in delivering closings in whatever format is deemed necessary – whether that be digital, hybrid or in-person. But Mayopoulos has also stated that virtually “every aspect of mortgage lending can be improved through digitization.”
Like the many other mortgage giants that went public in last year’s generous market, Blend’s numbers reflect a business that took full advantage of the housing boom. According to Blend’s updated IPO, As of March 31, 2021, the number of participants in its “ecosystem” has grown by more than 1,300% year-over-year. Blend also claims that financial services firms used their software platform to process 1.4 million completed banking transactions in 2020, a 190% year-over-year increase relative to the 0.48 million completed banking transactions processed in 2019.
“For 2019 and 2020, our revenue was $50.7 million and $96.0 million, respectively, representing a 90% year-over-year growth rate,” Blend said.
However, the company is not profitable, which could deter investors not yet convinced that the product is so much more powerful than a slew of competitors.
“We incurred net losses of $81.5 million and $74.6 million for 2019 and 2020, respectively, as we have continued to invest in growth to capture the large market opportunity available to us,” the company said in its S-1.
The public markets also haven’t quite embraced the more traditional nonbank mortgage lenders that have gone public over the last year – the stocks of Rocket Companies, United Wholesale Mortgage, Guild Holdings, loanDepot and others have largely remained level or fallen.