Blend Labs (BLND) risk factors, FY2024 10-K

Risks Related to Our Business and Operations

1. 01Our business is substantially dependent on revenue from the financial services industry and is therefore subject to risks impacting the mortgage industry and the larger financial services industry
2. 02Increases in market interest rates have, and will likely continue to, adversely affect our business, financial condition, and results of operations
3. 03Unfavorable conditions in our industry or the global economy or reductions in technology spending could limit our ability to grow our business and adversely affect our financial condition and results of operations
4. 04We have a history of net losses, and we may not be able to achieve or maintain profitability in the future
5. 05If we fail to retain our existing customers or to acquire new customers in a cost-effective manner, or if our customers fail to maintain their utilization of our products and services, our revenue may decrease and our business, financial condition, and results of operations could be adversely affected
6. 06We face intense competition, and if we are unable to compete effectively, our business, financial condition, and results of operations could be adversely affected
7. 07We have a limited operating history in an evolving industry, and have experienced fluctuating growth rates in recent periods, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful
8. 08Our business, financial condition, and results of operations depend on our ability to adapt to technological change as well as global trends in the way customers access cloud-based banking software and successfully introduce new and enhanced products, services and business models
9. 09depend on our ability to respond to technological advances and emerging industry standards and practices in a cost-effective and timely manner
10. 10Our results of operations have fluctuated from period to period, which has caused the market price of our Class A common stock to fluctuate
11. 11We often rely on self-reporting of completed transactions by our customers due to our primarily success-based model, which can make it difficult to estimate and forecast revenue
12. 12provide no assurance that such acquired businesses, or any investment or strategic transaction that we enter into, will be successfully integrated into our business, generate revenue, or achieve any expected benefits on a timely basis or at all
13. 13In particular, failure to realize the full extent of the anticipated benefits of our acquisition of Title365 has and could continue to have an adverse effect on our revenue, level of expenses, and results of operations
14. 14The impairment of intangible assets, goodwill, and other assets arising from any future acquisitions or investments may have an adverse effect on our business, financial condition, and results of operations
15. 15A cyberattack, security breach, or incident affecting us or the third parties we rely on or partner with could expose us or our customers and consumers to a risk of loss or misuse of confidential information and have an adverse effect on our reputation, brand, business, financial condition, and results of operations
16. 16Additionally, these risks may be elevated in connection with geopolitical events such as the current war in Ukraine and the conflict in the Middle East
17. 17The success of our business depends on a trustworthy reputation and strong brand and any failure to maintain, protect, and enhance our brand would hurt our ability to retain or expand our base of customers and our ability to increase their level of engagement
18. 18If we fail to manage our operations effectively, our reputation, business, and financial condition could be adversely affected
19. 19Systems failures and resulting interruptions in the availability of our website or platform, or other delays or slow response times from our website or platform, could adversely affect our business, financial condition, and results of operations
20. 20If we are unable to successfully implement AI to our platform, core solutions, or applications, our business could be harmed
21. 21Our sales cycle can be unpredictable, time-consuming, and costly
22. 22We may encounter deployment challenges, which could adversely affect our business, financial condition, and results of operations
23. 23Defects, errors, or vulnerabilities in our applications, backend systems, or other technology systems and those of third-party technology providers could harm our reputation and brand and adversely impact our business, financial condition, and results of operations
24. 24Any failure to offer high-quality customer support by us or by partners, vendors, and other service providers may adversely affect our relationships with our customers and could adversely affect our reputation, brand, business, financial condition, and results of operations
25. 25We experience seasonal fluctuations in our financial results, which could cause our Class A common stock price to fluctuate
26. 26The market for cloud-based banking software is still in relatively early stages of growth and if this market does not continue to grow, grows more slowly than we expect, or fails to grow as large as we expect, our business, financial condition, and results of operations could be adversely affected
27. 27Misconduct and errors by our employees, partners, vendors, and other service providers could adversely affect our business, financial condition, results of operations, and reputation
28. 28We are committed to expanding our platform and enhancing the user experience, which may not maximize short-term financial results and may yield results that conflict with the market’s expectations, which could result in our stock price being adversely affected
29. 29We rely on assumptions, estimates, and unaudited financial information to calculate certain of our key metrics and other figures presented herein, and real or perceived inaccuracies in such metrics could adversely affect our reputation and our business
30. 30Our marketing efforts to help grow our business may not be effective
31. 31We believe that our company culture has been critical to our success. We have invested substantial time and resources in building out our team with an emphasis on our shared beliefs and practices and a commitment to diversity and inclusion
32. 32If we are not able to maintain and evolve our culture, our business, financial condition, and results of operations could be adversely affected
33. 33Our presence outside the United States and any future international expansion strategy will subject us to additional costs and risks and our plans may not be successful
34. 34We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all
35. 35If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
36. 36If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our results of operations could be adversely affected
37. 37Operating as a public company requires us to incur substantial costs and requires substantial management attention. In addition, key members of our management team have limited experience managing a public company
38. 38Our investment portfolio may become impaired by conditions in the financial markets and failures at financial institutions at which we deposit funds or maintain investments could adversely affect us

Risks Related to Our Legal and Regulatory Environment

1. 39We may be subject to claims, lawsuits, government investigations, and other proceedings that may adversely affect our business, financial condition, and results of operations
2. 40been the subject of increasing public scrutiny. In order to minimize these risks to our reputation and brand, we may limit our use of arbitration and class action waiver provisions or be required to do so in a legal or regulatory proceeding, either of which could cause an increase in our litigation costs and exposure
3. 41Our customers are, and in some cases we are or may be, subject to, and we facilitate compliance with, a variety of federal, state, and local laws, including those related to consumer protection and financial services
4. 42and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in interpretation or enforcement, and may impose conflicting and inconsistent obligations
5. 43other developments. These changes may in turn impair our ability to offer our existing or planned products and services and/or increase our cost of doing business
6. 44A heightened regulatory environment in the financial services industry may have an adverse impact on our customers and our business
7. 45Failure to obtain or maintain state licenses or other regulatory infractions resulting in license revocation could impact our ability to offer products and services
8. 46Regulation of title insurance rates and relationships with insurance underwriters could adversely affect our title insurance business
9. 47Our position as an agent utilizing partners, vendors, and other service providers for issuing a significant amount of title and property and casualty insurance policies could adversely affect the frequency and severity of claims
10. 48We and our insurance carriers and underwriters are subject to extensive insurance industry regulations
11. 49The CFPB is a relatively new agency that has sometimes taken expansive views of its authority to regulate consumer financial services, creating uncertainty as to how the agency’s actions or the actions of any other new agency could adversely affect our business, financial condition, and results of operations
12. 50other similar order against us, this could also directly or indirectly adversely affect our business, financial condition, and results of operations
13. 51Our business could be adversely impacted by changes in the Internet and mobile device accessibility of consumers, and our software platform’s failure to comply with existing or future laws governing the Internet and mobile devices
14. 52Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection and other losses
15. 53We are subject to various U.S. and international anti-corruption laws and other anti-bribery and anti-kickback laws and regulations
16. 54Changes in, or interpretations of, U.S. and international tax laws and regulations could have a material adverse effect on our business, financial condition and results of operations
17. 55Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited

Risks Related to Our Title365 Business

1. 56Our exposure to regulation and residential real estate transaction activity may be greater in Texas, California and Florida, where we source a significant proportion of our premiums
2. 57Competition in the title insurance industry may adversely affect our business, financial condition, and results of operations
3. 58Our success depends upon the real estate and title insurance industries continuing to adopt new products at their current pace and the continued growth and acceptance of digital products and services as effective enhancements and alternatives to traditional manual products and services

Risks Related to Our Dependence on Third Parties

1. 59We rely on partners, vendors, and other service providers to provide some of the software or data for our platform. If such partners, vendors, and other service providers interfere with the distribution of our platform or with our use of such software, our business could be adversely affected
2. 60We primarily rely on Amazon Web Services to deliver our services to users on our platform, and any disruption of or interference with our use of Amazon Web Services could adversely affect our business, financial condition, and results of operations
3. 61We depend on the interoperability of our platform across third-party applications and services that we do not control
4. 62The loss of access to credit, employment, financial and other data from external sources could harm our ability to provide our products and services

Risks Related to Our Intellectual Property

1. 63Failure to adequately protect our intellectual property could adversely affect our business, financial condition, and results of operations
2. 64Intellectual property infringement assertions by third parties could result in significant costs and adversely affect our business, financial condition, results of operations, and reputation
3. 65Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to provide our platform

Risks Related to Ownership of Our Class A Common Stock

1. 66The trading price of our Class A common stock has been and may continue to be volatile, and you could lose all or part of your investment
2. 67We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors
3. 68Delaware law and provisions in our Amended and Restated Certificate of Incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the market price of our Class A common stock
4. 69The holders of our Series A Preferred Stock are entitled to vote on an as-converted to Class A common stock basis and have rights to approve certain actions. Additionally, Haveli may exercise influence over us through their ability to designate a member of our board of directors
5. 70The holders of our Series A Preferred Stock have the right to receive a payment on account of the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of our business before any payment may be made to holders of any other class or series of capital stock
6. 71If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our business or our market, or if they change their recommendation regarding our Class A common stock adversely, the market price and trading volume of our Class A common stock could decline
7. 72We do not expect to pay dividends in the foreseeable future