Revenues in 2020-2021
Invest in IPO Blend
Blend is a company that has developed cloud-based software platform for financial services firms that is designed to power the end-to-end consumer journey for any banking product.
Its growing suite of out-of-the-box, white-label products currently powers digital-first consumer journeys for mortgages, home equity loans and lines of credit, vehicle loans, personal loans, credit cards, and deposit accounts.
As of December 31, 2020 company had 291 customers, including 31 of the top 100 financial services firms in the United States by assets under management. Customers are currently based in the United States and range in size from the largest banks, credit unions, fintechs, and non-bank mortgage lenders in the nation to smaller community lenders with less than $1 billion in assets under management. Representative customers include Wells Fargo, U.S. Bank, M&T Bank, Opendoor and others.
Global enterprise IT spending for software within the banking industry was approximately $72.4 billion in 2020, which is expected to grow annually at approximately 13% through 2025. The main drivers for this expected growth are a need for financial institutions to modernize their infrastructure stack to remain competitive for younger demographic users.
Also, the industry needs improved business intelligence solutions as competitive pressures increase from newer fintech firms.
Traditional banks are extremely slow to innovate, and they need a company like Blend, because through its flexible and scalable platform, helps them to adapt quickly to the new digital reality.
Blend’s market share in the US mortgage market reached 30%. In May 2021, company signed a definitive agreement to acquire Title365, a leading title insurance agency . This purchase should have a good synergistic effect and strengthen Blend’s position in this segment.
Blend’s clients are large companies and consequently its revenues are highly concentrated. In 2020, the company’s top 18 customers contributed more than $1 million each, accounting for 53% of total revenue for the year. However, net retention rate, which shows how effectively the company keeps current customers and increases their life-time value was 162% in 2020, indicating that Blend strengthens relationships with current customers, increasing their value.
The primary risk to the company’s outlook is its novel revenue model, which is based on completed transactions rather than a standard fee for number of seats or quoted price approach for a SaaS solution. Although the company bears the cost of maintaining all the operations on the platform. Blend’s competitors include Figure, LendingTree, Maxwell, Cloudvirga, Quicken Loans, Roostify and others.
Blend will list on the New York Stock Exchange under the symbol "BLND. It aims to sell 20 million shares priced between $16 and $18 each to raise up to $360 million. Goldman Sachs & Co, Allen & Company and Wells Fargo Securities are the IPO's lead underwriters. Blend could be valued at $4 billion after the IPO
In the IPO prospect, the company revealed strong revenue growth. In 2020, it grew by 90% and comprised $96 million. The gross margin in 2019-2020 remained at 60%. So far, the company is not profitable, but the net loss decreased by 8% in 2020, amounting to 74 million.
On the IPO, company was valued with P/S multiplier equals to 31x. It can be compared to Marqeta (NASDAQ:MQ) which is operating in the B2B segment and was recently placed on the NASDAQ stock exchange in June. Its listing was extremely successful and on the first day of trading the shares of the company increased by 20%. However, after a slight correction in the shares of technology companies, Marqeta’s capitalization declined and now the company is trading with the P/S 40x. These companies are similar in growth rates, but Blend’s gross profitability is 20% higher. We expect that after the IPO company’s evaluation will be equal to $5.1B. The expected yield is average, up to 40%.
2-3 weeks before the start of the company publishes information about the opening of trading: financial statements for 3 years, a description of the company's business, plans for the future, as well as the risks that management sees in their own business. We analyze such offers and publish the best ones. Investors apply for deposits. Before the deadline for applications, you can change the request or cancel it.
We submit one large application for the purchase of shares by pre-subscription with reduced price to large investors. The application may be rejected in part or in full. Over the past three years, our applications have been rejected only three times. The next day, or every other day, we'll know at what price and at what percentage the order is executed, and we'll post it on «The my investment page».
The price of shares is rising from the first day due to the demand of investors deprived of the opportunity to buy shares before trading. Most of the stocks we've been recommending buying over the past three years have been starting to trade on the stock exchange at tens of percent higher than the price at which customers bought the shares. There comes a Lock up period when it is forbidden to sell shares purchased by subscription. Typically lasts 3 months.
After the expiration of the Lock Up period, the investment is automatically closed and the investor receives a profit on account of the deduction commissions UT. You can always view the results of your past investments in investment archive.
Although no shares are allowed to be sold during the lock-up period, our traders seek to offer investors fixed profit by way of using various financial instruments, including forwards, options, short positions etc.
From the investor’s point of view this means that he or she may close an investment by paying a certain part of its value (as a rule, approximately 15 percent). This is due to high prices for the instruments which are employed to ensure availability of fixed profit. As such, you shall press any relevant button in the Investor Account as soon as it is active.
The closing procedure is similar to commencement of investment business. You shall file a bid which is executed within a business day by UT. So, your investment is closed at the price currently prevailing on the stock exchange. However, we rarely recommend using this feature, since upon expiry of an applicable lock-up period the average performance is higher.
3 per cent of the share price. This fee is charged as soon as your investment bid is confirmed.
1.75 per cent of the purchase price paid for your shares as soon as trading is closed. This fee is charged upon closure of any relevant investment.
20 per cent of the profit your derive. This fee is charged only if you show positive performance as of the moment any relevant investment is closed.
TO EARLY EXIT
Usually, 15 per cent (depends on the stock exchange environment). It is calculated per each investment individually.
Our risk managers ensure proper support throughout the entire transaction.
IN THE PROFIT FROM THE FIRST DAY
Such an approach allows it to limit extra risks related to bankruptcy of start-ups and considerably increase profit vs investors purchasing shares on open Market.
LOW ENTRY THRESHOLD
Millions of dollars are required to buy shares on a subscription basis. We have generated a pool of traders and investors which enables any newbie to participate in any transaction as aforesaid by investing just USD50 or more.