FIGR

Image source: The Motley Fool. Thursday, Aug. 13, 2026, at 8:30 a.m. ET Head of Investor Relations-Bryan Michaleski Chief Executive Officer-Michael Tannenbaum Chief Financial Officer-Macrina Kgil Operator: Good morning, everyone. Welcome to the Figure Technology Solutions Second Quarter 2026 Earnings Conference Call. [Operator Instructions] And lastly, today's call is being recorded. I would now like to turn the call over to Mr. Bryan Michaleski, Head of Investor Relations. Please go ahead, sir. Bryan Michaleski: Thank you. Good morning, and welcome to Figure's Second Quarter 2026 Earnings Call. My name is Bryan Michaleski, Head of Investor Relations here at Figure. Joining me on today's call are Michael Tannenbaum, Chief Executive Officer; and Macrina Kgil, our Chief Financial Officer. Before we get started, I'd like to note that in today's call we'll refer to certain non-GAAP measures. These measures have been reconciled to their GAAP equivalents in the earnings release we issued earlier this morning as well as in the appendix of the supplemental slide presentation posted to our website. As a reminder, non-GAAP measures are not intended to be a substitute for GAAP results. I'll also highlight that certain comments made during today's call may be considered forward-looking statements under federal securities law. The company cautions you that forward-looking statements involve substantial risks and uncertainties and a number of factors, many of which are beyond the company's control, could cause actual results, events or circumstances to differ materially from those described in these statements. Please note the risk factors we've identified in our most recent 10-Q and other SEC filings. We are not undertaking any commitment to update these statements if conditions change, except as required by law. Recording of this conversation will be made available on our website following the conclusion of this call. Following the conclusion of the prepared remarks, we'll open the line for questions. And with that, I'll turn the call over to Michael Tannenbaum. Michael, please go ahead. Michael Tannenbaum: Thank you, Bryan. Good morning, everyone, and thank you for joining today's call. Figure delivered another great quarter as more and more partners see our vision for bringing the capital markets on chain. As previewed in July, Figure generated $4.3 billion of consumer loan marketplace volume, beating the top end of our guidance by 4% with 132% year-over-year growth. This was our strongest ever quarter, and we've seen continued strength in Q3, with application volumes on our platform surpassing $1 billion per week for the first time in early July. The continued rapid growth extends to our origination partner ecosystem as well. We now have 489 partners on our platform, up 102 from last quarter, with growth across all segments, including independent mortgage banks, servicers, depositories and fintech SMB. Importantly, recently closed partners are ramping faster than we traditionally see, aided by our investments in AI-enabled onboarding processes, thereby proving the scalability of our model and the value we drive for partners. Overall, our flywheel is spinning faster and our blockchain-based infrastructure and marketplace advantages are compounding. Prospects are hearing about the benefits of our disruptive capital marketplace and our liquidity that's soon approaching what they get from the likes of Fannie Mae. The volume is improving our execution and pricing, adding loan buyers and in turn, attracting more prospects. The investor side of the marketplace is also building momentum with large demand. Our recent prefunded securitization is a great example, where investors committed to purchase the bonds on our platform before loans were originated, a testament to their confidence in the standardized nature of Figure production. Investors continue to join the platform and appreciate our strong credit quality, the transparency and speed of our investor reporting and the reduced third-party diligence cost characteristics of our platform. Not only do we have nearly 100% revenue growth, but we are accomplishing this with over 50% EBITDA margins. Our EBITDA margins were strong at 55% this quarter, reflecting the growth of the capital-light Figure Connect marketplace and our ongoing commitment to capital discipline. We are continuing to make progress toward our medium-term goal of 60% margins through the growth of Connect and the operating leverage inherent in our business model. This growth and margin profile puts us at a Rule of 150 in the Rule of 40 investor framework. This quarter marked 2 years since the June '24 launch of our tokenized loan marketplace, Figure Connect, which now represents 65% of our consumer loan marketplace volume, up from 56% last quarter. This is very material growth, especially considering that aggregate volume is growing 130% plus. That 0 to 65% in just 2.0 years. Turns out, when you build a better highway on chain, capital moves at high speed. As a result, more of our growing volumes are generated off balance sheet, again, demonstrating the momentum of our partner flywheel. Growth in Connect has been broad-based with both new partner additions and expanding wallet share with existing partners. In terms of new partners, our trend has been increasingly aggressive. At the time of our IPO, we had around 250 partners, which then was roughly 3 years after being in the B2B business. And recent quarters have been 307, then 387 and now 489 this quarter. One new partner in Q2 onboarded straight to Figure Connect and has already become the largest or second largest partner we have depending on the month. Importantly, most whale-sized new partners are going direct to Connect, which means lots of incremental volume is skipping the Figure as intermediary phase. This gives us an updated line of sight to predict that Figure Connect is likely to approach 70% of volume in the medium term rather than our previous estimate of 60%. Each point of mix shift to Connect reduces balance sheet usage, increases fee-based economics and builds toward our medium-term 60% EBITDA margin goal. We've said before that we're a company that does what we say. We don't just whale watch. We bring the whales and we bring them into Figure Connect day 1. Take rate for the quarter was 3.6%, toward the low end of our guided range. We know take rate is an area of focus for investors, so I'd like to dedicate some time to addressing the contributing factors. For Figure, take rate is an output of our strategic focus on accelerating our growth flywheel rather than a metric we manage to. The results I've just shared in terms of volumes, partner network expansion, migration of channel mix toward Figure Connect and our adjusted EBITDA performance all demonstrate strong execution toward that objective. The take rate performance reflects this in a few ways. First, Figure Connect has the lowest take rate of our 3 channels, although with strong contribution margin and the least capital intensity. We now have our largest partners going direct to Figure Connect, which is a favorable dynamic to our business, although at the trade-off of take rate and was not a dynamic we anticipated to accelerate this quickly when we gave the initial take rate range. Second, interest rates rose meaningfully in the quarter, which hurts our gain on sale and therefore, impacts take rate. And third, we previously mentioned that first-lien loans typically have a lower take rate. And this quarter, we saw a 3x growth year-over-year in first-lien volume, although at a flattish mix quarter-over-quarter. As we expand our first-lien origination volumes, it's likely to be a modest headwind to this metric over time. As we're nearly midway through Q3 today, our expectation is that the combination of these dynamics will keep the take rate at the bottom end of the guided range in the current quarter. Stepping back, when we set pricing with our customers, we focus on contribution margin, which includes operations and support costs and therefore, better reflects our total earnings power for each dollar of marketplace revenue. This strategy is working, and this is the first quarter in which ecosystem fees are the largest line item on our P&L. This is consistent with our strategic focus on increasing our scale and the network effects from our flywheel, including asset classes to our marketplace -- including adding asset classes to our marketplace. To that point, as Kiavi closes later this year, this will add a new dynamic to take rate. We're taking a closer look at this with the goal of giving you a better aligned way to measure our success as we build out the platform with a focus on unit economic margins. More to come on that. Figure Connect's growth is also leading to growth in Democratized Prime. These are 2 complementary layers of the same capital market stack designed to serve our partners at every stage of their financing journey. First, Figure Connect fast tracks our ability to launch new asset classes, adding auto, small business and third-party home equity alongside our core HELOC product without needing to build the origination engine ourselves. This expands our platform breadth, adds diversification and attracts deeper capital supply. Second, that increased supply systematically drives down borrowing costs across the platform. Origination partners can leverage Democratized Prime as a flexible, modern warehouse facility to aggregate loans, benefiting from streamlined onboarding, significantly reduced operational friction and rates that are closely competitive with legacy warehouse alternatives. Ultimately, growth in Figure Connect fuels growth in Democratized Prime, making it a key value proposition for the broader Connect ecosystem. Given the growth and maturity of these dynamics, we're moving quickly to launch the next phase of this initiative, which includes long-term capital takeout via whole loan sales and securitizations for non-Figure assets. Similarly, every partner we acquire is an upsell opportunity as we add more products like residential transition loans and DSCR with Kiavi. Our Kiavi acquisition will only serve to strengthen partner interest as their market-leading RTL technology was previously not available as a private label marketplace offering and many prospects have, therefore, expressed excitement. We have started to receive key regulatory approvals for the transaction and anticipate closing by the end of this year. This was a very attractive transaction with an under 4-year unlevered payback period and adds 40% to our volume as well as $100 million of EBITDA. This was a great opportunity to use an inorganic approach to make our flywheel spin faster. The opportunity with Kiavi reflects an important point about fintech and the broader problem Figure is solving. The residential transition loans are not agency eligible, and therefore, companies like Kiavi use their advantages, underwriting, technology and brand to benefit themselves. But that approach can only go so far. That's why we are so excited about our acquisition because we can use their market-leading technology to develop liquidity and standardization for the space. By putting the marketplace first, we expand access to the advantage that made Kiavi the market leader, which is their post-renovation home loan valuation technology. And then we will make this technology the industry default, driving adoption at scale. We did this in HELOC. We're doing it with Demo Prime and other asset classes, and we'll do it with Kiavi as well. So I've shared a lot here on our growing business momentum. Now I'd like to dive in a little deeper on some of the details on the growing volumes our partners are bringing to us. 40% of our Figure Connect volume growth was attributed to customers that have been with us for longer than 1 year. We have shared previously that over time, we see 100% growth in monthly volumes from existing partners that adopt Connect. And this quarter, we saw a number of existing partners migrate to Connect and expand volume accordingly. Our partner, New American Funding is one such example as they grew volume 80% in Q2 versus Q1. They onboarded onto Figure Connect in early April. As interest rates have risen, end consumers are using their home equity balances to pay off higher interest rate consumer balances. Year-to-date, this has grown 4 percentage points of our total volume, reflecting the massive opportunity of the $35 trillion of home equity outstanding in the United States. Additionally, as these dynamics drive additional HELOC activity, our credit quality has improved and delinquency performance has remained low. These growth stories are part of a larger winning with winners trend that we see at Figure, where market-leading companies, forward-thinking business leaders and those with offensive strategies are leaning into Figure and growing their businesses. There has been increased M&A in the mortgage space. Within the past few months, for example, CrossCountry purchasing Two Harbors and Synergy One buying the retail business from Newrez. In each of these cases, for example, you have an existing Figure partner buying business from a non-Figure partner, allowing us to, in turn, grow with our customers. Along similar lines, in 2025, 185 of our partners have been live on our platform long enough for the full year of Home Mortgage Disclosure Act data to attribute their volume to us. We ran a counterfactual analysis to get a sense of how that volume compares to what they were doing pre-Figure. We took each partner's HELOC activity from before they joined our platform and grew it forward at the rate the rest of the non-Figure HELOC market grew over the same period. That's the baseline. What these partners would have produced had they continued at their prior trajectory. The result, our partners originated 2.6x more HELOC volume in 2025 than their pre-Figure baseline would predict. We call this the Figure factor. Banks and credit unions are starting to take notice of this momentum. This is a focus area for us, and we moved this into our recently launched new verticals go-to-market motion to give it extra attention. Banks are leaning into mortgage and home equity as they see the market opportunity and also the potential capital relief from proposed changes to risk weightings. More recently, we've started to engage with large depositories that have big home equity businesses and are looking to leverage Figure Connect as a way to manage their exposure and even buy Community Reinvestment Act eligible assets, meaning they can use Figure Connect to source loans that meet their regulatory requirements to lend in certain ZIP codes. It sometimes gets lost on the market that depositories are big customers of Fannie Mae and Freddie Mac. Just because they have deposits does not mean they want to hold fixed rate assets for 30 years. They want Connect. That same new verticals go-to-market motion includes our HELOCs sold for business financing and via home improvement partners. These 2 businesses saw $470 million run rate volume as of June, with SMB growing 57% quarter-over-quarter at real scale. The partners originating home equity loans for business purpose are also generating opportunities for Democratized Prime as the SMB market has very little capital market standardization, and we, therefore, launched our SMB pool officially in July. Before I close it out, I'll share a few examples of how important technologies in the market today, AI and blockchain are making a difference in our marketplace. I'll start with AI. Figure has a large task in that we must standardize multiple asset classes with disparate loan data and naming conventions that must be transformed into a standardized schema with a loan tape as an end product. In response, we built an AI adapter tool that creates this necessary standardization. For the Agora auto assets alone, the AI adapter accomplished in 5 weeks what would have been a several months-long process and solves a huge partner pain point. This tool is also giving us the confidence to bring in Kiavi assets to our marketplace later this year. Similarly, we've been growing the use of stablecoin, yields in particular, as the payout infrastructure in Figure Connect. Partners selling loans can get paid in yields days faster than the status quo with lower fees. Doing so has us projecting meaningful savings from wire fees and reconciliation time. Stablecoin allows for atomic settlement, which means asset ownership and conveyance can happen at the exact same time as money moves, reducing fraud and reconciliation. We are building the modern capital marketplace, and we continue to use cutting-edge technology to modernize our products. In summary, our Q2 results demonstrate once again that we are building on our first-mover advantage and market leadership amid a paradigm shift in the capital markets toward tokenization and standardization. This is reflected in the growth of Figure Connect, our capital-light marketplace, huge partner acquisition momentum and diversification of our partner base. The future is bright. The future is tokenized. And with that, I turn it over to Macrina. Minchung Kgil: Thank you, Michael, and good morning, everyone. This was a great quarter, growth across every part of the business. Consumer loan marketplace volume was $4.3 billion, up 132% year-over-year from $1.8 billion and 4% above the top end of our guidance, our third consecutive quarter of triple-digit year-over-year growth. Adjusted net revenue was $218 million, up 95% year-over-year from $112 million. Figure Connect volume grew to 65% of CLM volume, up from 42% a year ago and up more than $2 billion year-over-year in absolute dollars. Overall, partner-branded volume is now at 83% of CLM volume. One milestone worth reiterating, ecosystem and technology fees this quarter became our largest contributor to adjusted net revenue for the first time, directly reflecting the ongoing mix shift toward Figure Connect, where we earn fee-based technology and ecosystem revenue. As Michael noted earlier, net take rate was 3.6% for this quarter within the 3.5% to 4% range we discussed earlier in the year. Connect comes in at a lower take rate but with high profitability to adjusted EBITDA and is the most capital-light of our business. This brings more fee-based economics and is the fastest growth driver for our business and revenue. Democratized Prime ended the quarter with a matched offers balance of $392 million, reflecting continued adoption following the expansion onto the Ethereum network this quarter and our broader Solana real-world assets consortium initiatives adding distribution as well. We are also at $170 million of third-party assets on Democratized Prime as of last week, primarily from growth coming out of the Agora partnership announced earlier this year. We think this is an important number to watch going forward because it's the clearest signal we have that Democratized Prime is strengthening as a 2-sided marketplace as part of our broader Connect value proposition. Every dollar of third-party demand that comes on to the platform is a dollar that's choosing Figure's infrastructure over a traditional warehouse line. We expect this to keep building as we bring more partners onto the platform and as awareness of the capital availability and pricing advantage spreads across our existing partner base. Moving to GAAP profitability. Net income was $87 million, up from $30 million a year ago, an approximately 190% increase. That included a $4.4 million tax benefit from excess benefits on continued stock option exercises following a similar and larger benefit in Q1. We expect ongoing post-IPO equity activity to continue to create periodic tax benefits that may not be indicative of our normalized operational rate. Over the long run, we still believe an annual effective tax rate of 26% is appropriate. Adjusted EBITDA was $119 million, up 126% year-over-year from $53 million with a margin of 55% versus 47% a year ago. This quarter included realized profit of $5.9 million from the sale of a business where we owned a minority interest. Margin, excluding this gain, would be approximately 52% and continued progress toward our medium-term 60% plus target. We continue to support Democratized Prime by deliberately retaining a portion of our loans on balance sheet longer than we normally do, approximately $360 million at quarter end, as I indicated last quarter to help build out the Democratized Prime marketplace. That had 2 effects. Both interest income and interest expense were higher and adjusted EBITDA margin was reduced by approximately 1.7 points since it added lower margin interest revenue to a larger denominator. As continued proof of operating leverage, operations and processing costs were at approximately 67 basis points of volume, down from roughly 79 basis points a year ago, even as we processed more than double the volume. We continue to invest in AI and automation in our operations process. For this quarter, I wanted to briefly touch on the strength and performance of Figure and partner originated loans that have followed Figure's underwriting standards and utilize our loan origination system. Today, these loans are held by loan buyers or securitization vehicles. We sometimes get asked with growth at this pace, whether we're opening up the credit box to get there. In short, we're not. If anything, the underwriting standards have gotten stronger. Weighted average FICO at origination has moved from 737 in 2020 to 756 year-to-date. And weighted average CLTV, which is combined loan-to-value, has come down over that time period to 62.1%. Average loan size has grown as well from $52,000 to $96,000, reflecting a shift toward larger, more established borrowers. Our execution in the capital markets has strengthened right alongside that as we continue to show a track record on loan performance. AAA spreads on our Figure HELOC securitization shelf have come in from roughly 255 basis points in 2023 to roughly 135 basis points year-to-date across 22 priced deals, about 120 basis points tighter, while economics for note buyers have held up well. We've also grown the buyer base materially from approximately [indiscernible] buyers in 2023 to over 100 unique note buyers today with 70% of them active across multiple deals. On performance, our securitized loan pools continued to perform well as they season even as the securitized collateral base nearly doubled to $7.7 billion year-over-year. This reflects the same credit discipline we apply at origination. We also continue to see strong recovery behavior across the broader servicing portfolio. A meaningful share of loans that go delinquent cure back to current or pay off in full within 6 months rather than continuing to deteriorate. That combination of disciplined underwriting and strong post-delinquency recovery is what gives us confidence in the book as it scales. Turning to our balance sheet. We ended the quarter with $1.44 billion in cash and cash equivalents. And subsequent to quarter end, on July 14, we closed our rated $600 million senior notes offering at 8.5%, putting financing for the acquisition fully in place ahead of our expected Kiavi close in the second half. This debt transaction broadened our funding base and added a new source of liquidity for us to be able to tap into the future. We think this strongly demonstrates the maturity of the company, the quality of the franchise and our ability to access capital in a disciplined way. We want to preserve balance sheet flexibility, avoid unnecessary equity dilution and fund strategic opportunities in a way that supports long-term growth. This unsecured debt raise is not just to finance the Kiavi acquisition, but is an important step in expanding our capital toolkit as we continue to scale the business. Looking ahead, we are establishing our Q3 consumer loan marketplace volume guidance in the range of $4.8 billion to $5.2 billion. We're 1 month into the quarter and July came in at $1.7 billion. July has historically been a good indicator for the full quarter and applying the actual August and September historical pattern from both 2024 and 2025 to this July result lands Q3 volume in a narrow band around $5 billion, the midpoint of the range we're guiding to today. We feel good about how the quarter is tracking. Our confidence here is really an extension of everything I walked through earlier. The partner ramp we're seeing on Figure Connect isn't slowing down and Kiavi is on track to close in the second half, which will layer in a potential additional growth vector we haven't reflected in this range yet. So when we say we feel good about the quarter, it's not just 1 month of data. It's that same set of drivers continuing to compound. Before we go to questions, I want to close with the same note I opened on. This was a genuinely strong quarter across every dimension we care about: volume, revenue and margin, which none of it came at the expense of credit discipline. Connect is scaling even faster than we planned. Our balance sheet is stronger and more diversified than it's ever been, and we're heading into the back half of the year with Kiavi, Democratized Prime and our core Connect business, all pulling in the same direction. Thank you, and we will now open up the queue for questions. Operator: [Operator Instructions] We'll go first this morning to Patrick Moley of Piper Sandler. Patrick Moley: So I guess I just was hoping you could maybe elaborate on the 3Q guidance for origination volumes. It seems like you're expecting strength in July to continue throughout the rest of the quarter. So if you could just maybe talk about some of the assumptions that are baked in there. And then in terms of the new partners that were added in the second quarter, could you maybe just talk about the size? I know you said one of them was already one of the largest players on Connect, but just maybe the nature of those new partners added and how we should think about them contributing to volume into the back half of the year? Minchung Kgil: Sure. Patrick, I'll go first and then hand it over to Michael for the partner section. So last quarter was the first time that we guided as a company. And back then, as we were talking about during the call, we leaned toward being a little bit more conservative. We had some new partners that onboarded in late Q4 and into early Q1 and volume ramp time frame was in the range. And so we wanted to be prudent as much as possible last quarter. This quarter, we feel very strongly confident in the range that I mentioned before. As I indicated earlier, July was $1.7 billion. We understand from looking at history how August and September would come in. I would also take into account some level of business days in the months of August and September, which is why we're pretty confident around the $5 billion midpoint of the range that I mentioned. I'll turn it over to Michael on the partner expectations. Michael Tannenbaum: Thank you. So we're operating with a well-oiled go-to-market machine. Of that 102, it's pretty broad-based around the different segments of the market, meaning independent mortgage banks, banks and credit unions, IMBs, fintechs, et cetera. And at the same time, you also have a pretty nice range of size. So we talked about in the quarter, in Q2, we had a partner go directly to Figure Connect and become one of the largest. That's not necessarily the norm, but it's also not something that we expect to be unusual going forward. So we're attracting a broad range of customers in terms of both the type, but also the size. And we have a number of different go-to-market motions that we see as very successful in continuing to expand. Operator: We'll go next now to James Yaro of Goldman Sachs. James Yaro: I hoped we could turn perhaps to the buyer side of the consumer loan marketplace. Could you just maybe provide some additional color on what sort of buyer types you're adding? And what percentage of those are engaged with Figure Connect? Michael Tannenbaum: So all our buyers are engaged with Figure Connect. That's the way that they buy on the platform and all the incremental buyers we bring are Connect first. And the range is pretty broad and consistent with what we have talked about before. So it's going to be a combination of insurance companies, asset managers, credit funds. And we continue -- in fact, earlier this week, we were out meeting with a very large asset manager that has not yet purchased on the platform. So there's a number of opportunities, and Todd Stevens and his team dedicate all of their time to meeting with asset managers, both existing and new to continue to drive momentum. And one thing that he often shares is volume begets volume. So people like to buy at scale. And as we get bigger, it actually opens up the opportunity for more people to join because people want to see that consistency and want to know that if they do the work on understanding Figure, there's going to be volume to purchase in the future. So our growth is back to that flywheel concept, adding more buyers and therefore, helping us continue to take in spreads and therefore, bring more volume in a very virtuous cycle. James Yaro: Great. Just as a follow-up, I just wanted to level set on the take rate. Could you just clarify whether there have been any pricing cuts that have affected the take rate? Or is the lower take rate entirely from mix shift into new products? I think that's an important distinction. And then if that's true, there have not been any take rate cuts on the pricing side, do you see any risk that you might have to cut pricing in the near term? Michael Tannenbaum: Great question. And you're right, it's good to clarify this. We don't see take rate as the take rate performance in this quarter coming from price cuts. Instead, take rate is really a product of the success of Figure Connect. And we've talked about Figure Connect as having the lowest take rate of the 3 ways we do volume, direct-to-consumer, Figure as intermediary and then Connect. And so because we're seeing partners that are coming direct to Connect, that's a dynamic we didn't necessarily appreciate would happen as fast as it is. And so that's why we've gone -- we went 9 points as a percentage of volume in the quarter in terms of what Figure Connect was. And so you see take rate as really a result of that strategy. It's something that we want to happen. We're excited about this. It's not coming from partner pressure. And what you'll see is that, that 3.5% to 4%, as I mentioned in the prepared remarks, is still appropriate, but we see the lower end of that range as realistic for the coming quarter. Operator: We'll go next now to Ryan Tomasello with KBW. Ryan Tomasello: Maybe dovetailing off of James' question on the take rate. I think it would be helpful if you could maybe quantify where the pricing floor is in the Connect channel, particularly when considering, I think, the tiered pricing volume discounts that you have for your larger partners, which I think is something that may not be as appreciated by investors. So maybe just as a starting point, sharing where that lowest pricing tier is on Connect, and that would be irrespective, obviously, of like the volatility that gain on sale can cause to the take rate. Michael Tannenbaum: Sure. Sure. So I'll talk about -- so our pricing is in terms of ecosystem fees rather than take rate, but obviously, they're related. So our kind of top volume tier pricing is right at the bottom of the range of take rate, meaning if you're a partner that goes to the highest tier in general, you're going to be at the bottom of the take rate range we provided. Of course, there's other dynamics such as servicing fees, interest rates as well as whether or not the loan is securitized, all of those impact take rate and then you have sort of volatility and gain on sale. So there's a couple of things that are moving there, but the pricing that we do is generally aligned with the bottom of the range. I'll note, though, that when we set the pricing, we don't actually set it based on take rate. We set it based on contribution margin. So one of the things we want to do with the Kiavi acquisition is give the analyst and investor community a bit more color into how contribution margin looks because that trajectory has actually been both better and more stable as a percentage of volume over the past couple of quarters. So I think that additional disclosure will be helpful. We just want to give it when we have full line of sight into Kiavi to make sure that we really only have to explain it one time to you all and not waste your time. Ryan Tomasello: That's helpful. But I guess maybe a follow-up to that. Help us understand why you're talking about 3Q take rates at the low end of that 3.5% range when you're saying that, that low end is only aligns with your largest volume partners on Connect and considering the mix of the business with a lot of smaller origination partners, the business is not on Connect. Why are we talking about the all-in take rate across the entire business already hitting that 4%? Am I missing something there? Michael Tannenbaum: No, you're not missing anything. 65% of the volume is already on Figure Connect. In general, we see that increasing in the quarter. And then we have the general variability that comes with other business models as well as differing mix shifts potentially on servicing as well as mix shifts that come from the securitization parts of the business. So based on the visibility that we have, we continue to see the low end of the range as realistic, but we'll continue to update you if that changes. Operator: We'll go next now to Rob Wildhack of Autonomous Research. Robert Wildhack: Maybe on that last line of discussion, you've got nice growth in Figure Connect volumes, but growth in ecosystem and technology fees is not growing as fast. And I think this quarter, just isolating those 2 lines alone, like ecosystem and tech fees are less than 3% of Connect volumes. So why is that? Like is there some kind of non-volume-related component that's in ecosystem and tech fees or something that we're all missing here? Michael Tannenbaum: Well, I'll start, and Macrina is the closest to the composition of take rate. But just remember that, for example, servicing fees are a separate line item. And so that's one of the components. And in general, this is the first quarter that ecosystem fees are the largest on the P&L. So it continues to reflect that migration to Figure Connect, but I'll turn it over to you, Macrina. Minchung Kgil: Yes. And what we also have as part of the take rate is that we have the mortgage servicing adds addition, so gain on mortgage servicing that goes on to our revenue. The total part that you see on GAAP P&L includes fair value, and we actually adjust that out as part of adjusted net revenue. So I do want to keep you honest in terms of -- we're not taking the full GAAP amount. We are taking just the addition of the new servicing that is being added as part of our take rate. Robert Wildhack: Okay. But if we -- like if I just isolate ecosystem and tech fees, so no servicing, no origination fees and divide that by Figure Connect volumes, like that number is coming down over time. And so we hear you on no pricing cuts or anything like that, but what would be the driver there? Michael Tannenbaum: So it's going to be the tiers that people hit on volume. So I just want to be super clear on this point. We're not renegotiating our volume tiers with partners. But when we sign up partners, we establish volume-based pricing that comes down to incentivize partners to do volume with us. And so as they hit higher volume tiers, their individual pricing comes down. But in general, as we talked about, that's going to put us at the lower end of the guided range we gave. Is that making sense? Robert Wildhack: It does. And then if I could just sneak one more in, loans on the balance sheet up to like $600 million. Can you just remind us of the strategy because we hear you talking about how Figure Connect is less balance sheet intensive and third-party Demo Prime is growing nicely. Does that continue to grow? Or is like $600 million maybe the cap? Minchung Kgil: Okay. So I'll just put this into parts. So balance sheet loans was about $600 million at the end of the quarter. We had about $360 million of Democratized Prime that was supported with Figure's borrower demand. This is pretty consistent with what we had back in Q1 moving into Q2. So that number really hasn't changed. We are continuing to add more in terms of third-party Democratized Prime loans from the borrower side, which I mentioned in my earlier remarks. The other part that is making up the $600 million is we do have loans where Figure does go direct to consumer, where Figure is also the acting intermediary before the loans are sold on to Connect. And as you saw, our growth overall in volume from Q1 to Q2 is quite significant. And what that translates to is that we hold on to these types of loans, whether we're going direct-to-consumer or Figure as an intermediary around 3 to 4 weeks at a time before it's sold on to Connect, and that's because we want to be able to aggregate the loans before it's sold. And so you're just seeing really a natural way of seeing that volume growth is translating into loans on our balance sheet for a temporary amount of time before it's sold on in Q3. Operator: We go next now to Dan Dolev of Mizuho. Dan Dolev: Really nice results here, fascinating growth, triple digits. I wanted to ask about the SMB home improvement diversification. It looks really interesting here. Any comments you can make on this strategy and what it does for Figure would be really helpful for investors. Michael Tannenbaum: Thanks, Dan. It's interesting to reflect on that because it shows a number of highlights of what Figure does best, right? You have the $35 trillion of home equity outstanding. And as we talked about, in any interest rate environment, that's going to be really attractive. And so what's happening is people who have that home equity are using that to fund small business financing. And that's a new avenue for us. We're lapping about a year of us launching that. And it's already grown to a meaningfully significant portion of our volume. And it's a new go-to-market motion. So back to what's driving that 102 partners is we're now signing up people that would historically not have been in the mortgage business whatsoever. They're business loan originators, brokers, fintechs, but they're able to use Figure because we make it so simple and easy and inexpensive. And that's a big part of our broader strategy is to take partners that normally wouldn't be in this space and give them tooling to join our platform, join our marketplace, be capital-light, be part of Figure Connect, and you're really seeing that strategy borne out. We're also seeing a similar dynamic in the home improvement space. So this would be traditionally unsecured loans toward things like home renovation, roofing, pools, et cetera. That's starting to grow really nicely as well, and we're excited about the momentum we see in that space. And as I pointed out on the call, we've decided to make depositories a specific focus within the new vertical approach that we're taking, which is really a go-to-market motion in terms of how do we align internal resources and mobilize. And we see just massive opportunity there as well. So a lot of momentum on growth, which is our focus and continuing to bring that growth into Figure Connect, that capital-light marketplace. That's our strategy, and we're continuing to execute accordingly. Operator: We'll go next now to Kyle Peterson with Needham. Kyle Peterson: Nice results and not to belabor the take rate, but I wanted to start off there and maybe see if you guys could directionally give us some impact on -- you guys mentioned a spike in interest rates kind of weighed on some of the gain on sale this quarter or is expected to in the third quarter. But I guess, how much of a headwind is that expected to be? And like what's the relative impact of that, that's kind of pushing you toward the 3.5% range? And then I guess, if rates stabilize, is -- should that headwind kind of abate after this quarter? Minchung Kgil: Kyle, I'll get started, and then Michael, feel free to add if you'd like. So in our prepared remarks, we did talk about some of the rate headwind in terms of gain on sale and gain on sale is another portion of take rate that we consider. And it does get impacted by the macro markets. And so when rates are wider, then we are going to have a little bit less of a gain on sale. When rates are tighter, then we're going to have a better gain on sale, which is what you're seeing, and that's more volatile compared to what we would see for ecosystem fees and technology fees. The other part that I would also mention is although our take rate is coming in on the lower end of the range, Michael had mentioned earlier as well, we are seeing a lot of success in Figure Connect. The Figure Connect contribution margin is coming in really nicely. That is why you're seeing additional growth in our adjusted EBITDA margin and growth in our profitability as well. Michael, do you want to add a few more things? Michael Tannenbaum: No, just agree. And we were simply talking about Q2 there. We can't yet know all of the interest rate movements for Q3. We're just letting you know that we -- that volatility will always be a part of the Figure as intermediary revenue line item, and that's why we're so focused on growing Figure Connect because it gives us much more stability and also that capital light. So that's really our focus. Kyle Peterson: Great. That's helpful. And then I guess as a follow-up, it's great to see Agora. It seems like the volumes there are really starting to inflect higher, and there's a lot of things -- good things happening on the auto front. I guess should we think about in terms of time line and additional asset classes that you guys are spinning up, is this kind of the playbook and time frame from when you get someone or an asset class announced and signed to when the volumes start to really inflect and start to contribute a little more meaningfully? I guess like how -- is like this quarter, like a couple of quarters time frame, a good way to think about the ramp time to get these upscaled and running? Or can that cycle time reduce over time? Just like how should we think about additional asset classes and how long it will take to ramp them up? Michael Tannenbaum: It's a great question. And the -- as I talked about, I think AI is critical here because it's something that we can leverage to reduce what is a very complicated process to ingest and standardize third-party assets. And so when we bring on Agora as an example, we're thinking broader than just one individual auto loan originator. We're thinking how can we set the standard for the way that auto loans and then ultimately, auto securitizations can operate in a tokenized way. And so that's the approach that we're taking. So there is probably to open up a new asset class is going to be much more significant than to open up a specific originator onto that asset class. But because everything is new for Democratized Prime right now, those 2 are the same thing, but we would expect another auto originator, for example, to go much faster than that. And I mentioned this in the prepared remarks, but I think you're going to start to see us in the coming quarters work on making Figure Connect as a concept work for permanent sale and securitization of the assets that are being financed on Democratized Prime. And that's really going to start to turn the flywheel because we're going to be able to take originators, give them short-term financing with Democratized Prime, but then take those assets and get investors that want to buy them permanently or securitize them and use Figure Connect earning those ecosystem fees that we love so much in the process. So this is -- so more to come there. And that blueprint that you've seen is a really good way to look at a new asset class rather than a new originator. Operator: Thank you. And ladies and gentlemen, that is all the questions that we have for today. So that will bring us to the conclusion of today's conference call. We'd like to thank you all so much for joining the Figure Technology Solutions Second Quarter Earnings Conference, and wish you all a great day. Goodbye. Before you buy stock in Figure Technology Solutions, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Figure Technology Solutions wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $432,621!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,314!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 20, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Figure Technology Solutions. The Motley Fool has a disclosure policy. Figure Technologies (FIGR) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Figure Technology Solutions stock has fallen about 28.1% year to date, yet still screens as expensive on the broad valuation checks. That combination raises questions about whether the recent share price still builds in optimistic expectations that the fundamentals have not clearly backed up. Year to date, the share price is down 28.1%, which suggests the market has cooled on the story after earlier optimism. The investment case can benefit if Figure Technology Solutions converts its business pipeline into more predictable cash flows. Any signs of weaker unit economics or heavier funding needs may weigh on what investors are willing to pay. The stock does not come through as a bargain on the broader checks, with 0 of 6 valuation tests pointing to it as undervalued, which aligns with a picture of shares leaning expensive rather than clearly cheap. The issue now is whether Figure Technology Solutions' current market price still builds in more optimism than its financial profile supports. Figure Technology Solutions delivered 0.0% returns over the last year. See how this stacks up to the rest of the Consumer Finance industry. The P/E multiple suits Figure Technology Solutions because it gives a clean read on what investors pay for each dollar of earnings today. Figure Technology Solutions trades on a P/E of about 42.5x, which is much higher than the Consumer Finance industry average of roughly 9.8x and also well above the peer group average of around 11.9x. That points to a sizeable premium versus many other listed consumer finance stocks. The tailored fair P/E ratio for Figure Technology Solutions is estimated at about 35.8x. This benchmark reflects the company’s earnings profile, business risks and sector positioning. The current P/E still sits meaningfully above that level, which suggests the market is already pricing in a strong earnings outlook and a relatively high quality of those earnings compared with what the model implies. On this P/E framework, Figure Technology Solutions stock appears overvalued relative to both its industry and its own fair multiple. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Figure Technology Solutions are designed to connect the valuation puzzle above to concrete, forward looking assumptions. Each narrative explains what would need to happen to Figure Technology Solutions' growth, margins and earnings power for the stock to be worth materially more or less than today’s price. It also ties those numbers to a clear view of how growth, profitability and risks might evolve, which you can revisit on the Community page as fresh information comes through. The community is split on Figure Technology Solutions, with one camp leaning into the blockchain marketplace upside and another focused on execution and funding risks. Bull case: 55% undervalued Read the full Bull Case to see why Figure Technology Solutions could be undervalued Bear case: roughly fairly valued Read the full Bear Case to see why Figure Technology Solutions could be overvalued Do you think there's more to the story for Figure Technology Solutions? Head over to our Community to see what others are saying! Figure Technology Solutions still screens as overvalued on market multiples, with a P/E well above both its industry and its tailored fair ratio. That leaves less room for error if growth, margins or funding costs fall short of optimistic expectations. For you as an investor, the key question is whether Figure Technology Solutions can turn its blockchain and capital markets ambitions into consistent, high quality earnings that justify this premium. The central issue in the bull versus bear debate is whether that earnings path becomes clear enough for the current valuation to feel comfortable rather than stretched. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include FIGR. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by a record $4.3 billion in marketplace volume, representing 132% year-over-year growth as the platform flywheel gains momentum. The strategic shift toward Figure Connect reached 65% of total volume, accelerating the transition to a capital-light, fee-based revenue model. Management attributed rapid partner growth to AI-enabled onboarding tools that reduced asset standardization timelines from months to weeks. Take rate performance of 3.6% reflects a deliberate trade-off as the largest 'whale' partners migrate directly to the lower-fee Figure Connect channel. Market expansion is being fueled by the 'Figure factor,' where partners originate 2.6x more volume than their pre-platform baseline due to superior liquidity. The acquisition of Kiavi is positioned as a strategic move to standardize the residential transition loan (RTL) market using Figure's blockchain infrastructure. Q3 volume guidance of $4.8 billion to $5.2 billion assumes historical August and September seasonal patterns hold following a strong $1.7 billion July. Management raised the medium-term Figure Connect volume mix target to 70%, up from 60%, citing faster-than-expected adoption by large-scale partners. The company is targeting a 60% adjusted EBITDA margin through continued operating leverage and the growth of high-margin ecosystem fees. Future growth initiatives include launching long-term capital takeout via whole loan sales and securitizations for non-Figure assets on Democratized Prime. The Kiavi acquisition is expected to close by year-end 2026, adding approximately 40% to total volume and $100 million in incremental EBITDA. Interest rate volatility remains a headwind to take rates by impacting gain-on-sale margins, particularly for loans where Figure acts as an intermediary. The company deliberately retained $360 million in loans on-balance sheet to seed liquidity for the Democratized Prime marketplace, temporarily impacting EBITDA margins by 1.7 points. A $600 million senior notes offering at 8.5% was completed to fund the Kiavi acquisition and diversify the long-term capital toolkit. Credit quality remains a priority, with weighted average FICO scores increasing to 756 and combined loan-to-value (CLTV) ratios decreasing to 62.1%. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expressed high confidence in the $5 billion midpoint based on July's $1.7 billion performance and established seasonal business day patterns. New partner growth is broad-based across banks, credit unions, and fintechs, with some large partners reaching top-tier volume status immediately upon onboarding. Management clarified that the lower take rate is an output of mix shift toward Figure Connect rather than competitive pricing cuts. The company intends to introduce 'contribution margin' as a primary success metric post-Kiavi to better reflect the profitability of fee-based volumes. The Agora partnership serves as a blueprint for using AI to rapidly ingest and standardize disparate asset classes like auto loans. Small business financing and home improvement verticals are scaling quickly, with The combined SMB and home improvement verticals reached a $470 million run rate volume as of June. Current balance sheet holdings are largely temporary (3-4 weeks) for aggregation purposes before being sold into the Connect marketplace. Third-party demand on Democratized Prime reached $170 million, signaling the platform's growing strength as a viable alternative to traditional warehouse lines.

This article first appeared on GuruFocus. Consumer Loan Marketplace Volume: $4.3 billion, up 132% year-over-year from $1.8 billion, and 4% above the top end of guidance. Adjusted Net Revenue: $218 million, up 95% year-over-year from $112 million. Net Income: $87 million, up approximately 190% from $30 million a year ago. Adjusted EBITDA: $119 million, up 126% year-over-year from $53 million, with a margin of 55% versus 47% a year ago. Net Take Rate: 3.6% for the quarter, within the 3.5% to 4% range. Figure Connect Volume: Grew to 65% of CLM volume, up from 42% a year ago. Ecosystem and Technology Fees: Became the largest contributor to adjusted net revenue for the first time. Democratized Prime Matched Offers Balance: $392 million at quarter end. Third-Party Assets on Democratized Prime: $170 million as of last week. Operations and Processing Costs: Approximately 67 basis points of volume, down from roughly 79 basis points a year ago. Cash and Cash Equivalents: $1.44 billion at quarter end. Q3 Consumer Loan Marketplace Volume Guidance: $4.8 billion to $5.2 billion. Warning! GuruFocus has detected 3 Warning Sign with FIGR. Is FIGR fairly valued? Test your thesis with our free DCF calculator. Release Date: August 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Figure Technology Solutions Inc (NASDAQ:FIGR) delivered record Q2 2026 consumer loan marketplace volume of $4.3 billion, up 132% year-over-year and exceeding the top end of guidance by 4%. Figure Connect, the tokenized loan marketplace, now represents 65% of total volume, up from 56% last quarter, driving a shift toward capital-light, fee-based revenue. Adjusted EBITDA margin reached 55% in Q2, up from 47% a year ago, with continued progress toward the medium-term target of 60%. The partner ecosystem expanded significantly, adding 102 new partners in Q2 to reach 489 total, with new partners ramping faster due to AI-enabled onboarding. Credit quality remains strong, with weighted average FICO at origination improving to 756 and CLTV down to 62.1%, while securitized loan pools continue to perform well. The Kiavi acquisition is on track to close by year-end, expected to add 40% to volume and $100 million of EBITDA, with an under four-year payback period. Net take rate came in at 3.6%, at the low end of the guided range, pressured by the rapid shift to Figure Connect, which has a lower take rate, and rising interest rates impacting gain on sale. Interest rates rose meaningfully in Q2, negatively affecting gain on sale and contributing to the lower take rate. The company expects take rate to remain at the bottom of the 3.5%-4% range in Q3 due to continued mix shift and rate volatility. Figure deliberately retained approximately $360 million of loans on balance sheet to support Democratized Prime, which reduced adjusted EBITDA margin by about 1.7 percentage points. The company's balance sheet loans increased to $600 million, reflecting temporary holding of loans for aggregation, which adds interest income and expense and can dilute margins. The take rate is expected to face a modest headwind from the expansion of first-lien volume, which typically carries a lower take rate. Q: Can you elaborate on the 3Q guidance for origination volumes and the assumptions baked in, and discuss the size and nature of new partners added in Q2?A: CFO Macrina Kgil stated that July volume was $1.7 billion, and applying historical August and September patterns from 2024 and 2025 lands Q3 volume in a narrow band around the $5 billion midpoint of the $4.8 billion to $5.2 billion guidance range. CEO Michael Tannenbaum added that the 102 new partners added in Q2 were broad-based across segments (IMBs, banks, credit unions, fintechs) and sizes, with one new partner onboarding directly to Figure Connect and immediately becoming one of the largest partners on the platform. Q: Can you clarify whether the lower take rate is due to pricing cuts or entirely from mix shift, and do you see any risk of having to cut pricing in the near term?A: CEO Michael Tannenbaum clarified that the take rate performance is not from price cuts but is a product of the success of Figure Connect, which has the lowest take rate of the three channels. The rapid migration of partners directly to Connect, which was not anticipated to accelerate this quickly, is the primary driver. He confirmed the 3.5% to 4% take rate range remains appropriate, but the lower end is realistic for the coming quarter. Q: Can you quantify where the pricing floor is in the Connect channel, particularly considering tiered volume discounts for larger partners?A: CEO Michael Tannenbaum explained that the top volume tier pricing is right at the bottom of the take rate range provided. He emphasized that pricing is set based on contribution margin, not take rate, and that the Kiavi acquisition will provide more color into contribution margin trajectory, which has been better and more stable as a percentage of volume over recent quarters. Q: Why is ecosystem and technology fee growth not keeping pace with Figure Connect volume growth, and what is driving the decline in ecosystem and tech fees as a percentage of Connect volumes?A: CEO Michael Tannenbaum explained that volume-based pricing tiers are established when signing up partners, and as partners hit higher volume tiers, their individual pricing comes down. This is not a renegotiation but a pre-established incentive structure. CFO Macrina Kgil added that the GAAP P&L includes fair value adjustments that are excluded from adjusted net revenue, and only the addition of new servicing is included in the take rate calculation. Q: Can you remind us of the strategy behind the increased loans on the balance sheet (approximately $600 million) and whether this will continue to grow?A: CFO Macrina Kgil explained that approximately $360 million of the balance sheet loans support Democratized Prime borrower demand, consistent with Q1 levels. The remainder consists of loans where Figure goes direct-to-consumer or acts as intermediary, held for approximately three to four weeks before being sold to Connect. This reflects the natural aggregation process as volume grows, not a strategic shift toward balance sheet retention. Q: Can you provide additional color on the buyer side of the marketplace, including buyer types and their engagement with Figure Connect?A: CEO Michael Tannenbaum stated that all buyers are engaged with Figure Connect, as that is how they purchase on the platform. The buyer base includes insurance companies, asset managers, and credit funds. He noted that "volume begets volume" - as the platform grows, it attracts more buyers who want consistency and scale, creating a virtuous cycle that helps tighten spreads and attract more volume. Q: Can you comment on the SMB and home improvement diversification strategy and what it does for Figure?A: CEO Michael Tannenbaum highlighted that the $35 trillion of home equity outstanding is being used to fund small business financing, a new avenue launched about a year ago that has grown to a significant portion of volume. The strategy brings in partners that historically were not in the mortgage business, such as business loan originators, brokers, and fintechs, by providing simple, inexpensive tooling to join the platform and marketplace. The home improvement space is also growing nicely, and depositories have become a specific focus area. Q: Can you provide directional impact of the interest rate spike on gain on sale and whether this headwind will abate if rates stabilize?A: CFO Macrina Kgil explained that gain on sale is impacted by macro markets - wider rates result in less gain on sale, while tighter rates improve it. This is more volatile compared to ecosystem and technology fees. She noted that despite the lower take rate, Figure Connect contribution margins are coming in nicely, driving growth in adjusted EBITDA margin and profitability. CEO Michael Tannenbaum added that this volatility is why the company is focused on growing Figure Connect, which provides more stability and is capital light. Q: In terms of additional asset classes, what is the timeline from announcement to meaningful volume contribution, and can the cycle time be reduced?A: CEO Michael Tannenbaum explained that opening a new asset class is more significant than onboarding a specific originator to an existing asset class. AI is critical in reducing the complex process of ingesting and standardizing third-party assets. He indicated that the company will work on making Figure Connect work for permanent sale and securitization of assets financed on Democratized Prime, which will turn the flywheel by providing short-term financing to originators and then connecting them with permanent investors or securitization buyers. Q: Can you discuss the strength and performance of loans originated under Figure's underwriting standards and whether the company is opening up the credit box to achieve growth?A: CFO Macrina Kgil stated that underwriting standards have actually gotten stronger. Weighted average FICO at origination has moved from 737 in 2020 to 756 year-to-date, while weighted average CLTV has declined to 62.1%. Average loan size has grown from $52,000 to $96,000, reflecting a shift toward larger, more established borrowers. AAA spreads on Figure HELOC securitizations have tightened from roughly 255 basis points in 2023 to approximately 135 basis points year-to-date across 22 priced deals, while the buyer base has grown from approximately 50 buyers in 2023 to over 100 unique note buyers today. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Figure Technology Solutions, Inc.? Here are five stocks we like better. Strong second-quarter growth: Consumer loan marketplace volume rose 132% year over year to $4.3 billion, while adjusted net revenue increased 95% to $218 million and adjusted EBITDA climbed 126% to $119 million. GAAP net income reached $87 million, though adjusted EBITDA benefited from a $5.9 million investment-sale gain. Figure Connect is driving the business mix: The tokenized marketplace accounted for 65% of consumer volume, up from 42% a year earlier, and ecosystem and technology fees became the company’s largest adjusted-revenue contributor. Figure expects Connect to approach 70% of volume over the medium term, although its increasing share is pressuring the net take rate toward the low end of the 3.5%–4% range. Expansion and outlook remain positive: Figure expects to close its Kiavi acquisition by year-end, potentially adding 40% to marketplace volume and $100 million in EBITDA, funded by a recent $600 million senior-notes offering. Third-quarter marketplace volume is forecast at $4.8 billion to $5.2 billion, excluding any contribution from Kiavi. Figure Technology Solutions (NASDAQ:FIGR) reported second-quarter results marked by triple-digit growth in consumer loan marketplace volume, expanding adoption of its Figure Connect tokenized loan marketplace and a higher share of fee-based revenue. Consumer loan marketplace volume reached $4.3 billion, up 132% from $1.8 billion a year earlier and 4% above the company’s guidance range, Chief Executive Officer Michael Tannenbaum said. Adjusted net revenue increased 95% year over year to $218 million, while adjusted EBITDA rose 126% to $119 million. The company reported an adjusted EBITDA margin of 55%, compared with 47% in the prior-year period. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be GAAP net income was $87 million, up from $30 million a year earlier. Chief Financial Officer Macrina Kgil said the quarter included a $4.4 million tax benefit related to stock-option exercises, while adjusted EBITDA included a $5.9 million realized gain from the sale of a minority investment. Excluding that gain, adjusted EBITDA margin would have been about 52%, she said. Figure Connect represented 65% of consumer loan marketplace volume in the quarter, rising from 56% in the preceding quarter and 42% a year earlier. The marketplace allows partners and investors to transact through the company’s blockchain-based infrastructure, and management characterized it as the most capital-light of the company’s operating channels. → Nebius’ Q2 Beat Shows the AI Bottleneck Is Capacity, Not Demand “This quarter marked two years since the June 24 launch of our tokenized loan marketplace, Figure Connect, which now represents 65% of our consumer loan marketplace volume,” Tannenbaum said. He added that the company now expects Connect to approach 70% of volume over the medium term, versus a prior estimate of 60%. The company had 489 partners on its platform at quarter end, up 102 from the previous quarter. Tannenbaum said growth came from independent mortgage banks, servicers, depositories and fintech small-business partners. One new partner joined directly through Figure Connect and became either the company’s largest or second-largest partner depending on the month, he said. → On Holding's Price Stumble May Be an Opening for a Company Built to Run Partner-branded volume accounted for 83% of marketplace volume. Kgil said ecosystem and technology fees became the largest contributor to adjusted net revenue for the first time, reflecting the mix shift toward Connect. Management said the company’s net take rate was 3.6% during the quarter, toward the lower end of its previously discussed 3.5% to 4% range. Tannenbaum attributed the lower rate to Connect’s increasing share of business, the impact of higher interest rates on gain-on-sale revenue and strong year-over-year growth in first-lien loan volume. During the question-and-answer session, Tannenbaum said the decline was not caused by pricing cuts. Instead, he said, larger partners can reach lower pricing tiers as their volumes increase. The company expects take rate to remain near the lower end of its range in the third quarter. Figure said its underwriting standards have not been loosened amid rapid growth. Kgil said weighted-average FICO scores at origination increased to 756 year to date from 737 in 2020, while weighted-average combined loan-to-value declined to 62.1%. Average loan size increased to $96,000 from $52,000 over the same period. The company said AAA spreads on its HELOC securitization shelf narrowed to roughly 135 basis points year to date from approximately 255 basis points in 2023, across 22 priced deals. Its securitized collateral base nearly doubled year over year to $7.7 billion, while the buyer base expanded from about three buyers in 2023 to more than 100 unique note buyers. Democratized Prime, Figure’s financing platform for loan originators, ended the quarter with $392 million in matched offers. The platform had $170 million of third-party assets as of the week before the call, primarily tied to growth from the company’s Agora partnership, Kgil said. Figure retained approximately $360 million of loans on its balance sheet at quarter end to support Democratized Prime. Total loans on the balance sheet were about $600 million, with the remainder including loans originated directly to consumers or held temporarily while being aggregated for sale through Connect, Kgil said. Figure said it has begun receiving regulatory approvals for its acquisition of Kiavi and anticipates closing the transaction by year-end. Tannenbaum said the deal is expected to add 40% to marketplace volume and $100 million of EBITDA, with an under-four-year unlevered payback period. The acquisition would add residential transition loans and debt-service-coverage-ratio products to Figure’s marketplace. Management said Kiavi’s post-renovation home-loan valuation technology could help establish greater liquidity and standardization in residential transition lending. The company also highlighted growth in home-equity products used for small-business financing and home-improvement purposes. Those channels had a $470 million annualized volume run rate as of June, with small-business volume rising 57% sequentially, according to Tannenbaum. Figure ended the quarter with $1.44 billion in cash and cash equivalents. Subsequent to quarter end, it closed a $600 million rated senior-notes offering carrying an 8.5% interest rate. Kgil said the financing fully funds the planned Kiavi acquisition and broadens the company’s funding sources. For the third quarter, Figure forecast consumer loan marketplace volume of $4.8 billion to $5.2 billion. July volume totaled $1.7 billion, and Kgil said historical seasonal patterns in August and September support guidance centered near $5 billion. The guidance does not include potential growth from the Kiavi transaction, which management expects to close in the second half of the year. Figure is building the future of capital markets using blockchain-based technology. Figure's proprietary technology powers next-generation lending, trading and investing activities in areas such as consumer credit and digital assets. Our application of the blockchain ledger allows us to better serve our end-customers, improve speed and efficiency, and enhance standardization and liquidity. Using our technology, we continue to develop dynamic, vertically-integrated marketplaces across the approximately $2 trillion consumer credit market and the rapidly growing approximately $4 trillion cryptocurrency and digital asset market. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Figure Technology Solutions Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Image source: The Motley Fool. Tuesday, May 12, 2026 at 8:30 a.m. ET Executive Chairman — Michael Cagney Chief Executive Officer — Michael Tannenbaum Chief Financial Officer — Minchung Kgil Need a quote from a Motley Fool analyst? Email [email protected] Michael Cagney: Thanks. So I want to thank everyone for taking the time to join us on the call today. We've got a lot to cover and a very strong quarter. Before we kick off, I know there were some questions about my absence from the earnings call last quarter, so I wanted to set expectations. And my role as Executive Chairman, I'm thrive to long-term strategy of Figure. I'll join these calls when we're spending time on that topic like today. You should expect to hear from me about every other call, but that will be -- that will vary based on what's happening with the business. So I understand that for an investor looking at Figure for the first time, there's a lot to take in and often leads investors to take the easy path assuming Figure is a HELOC company, but Figure is not a HELOC company, Figure is a company building a capital market ecosystem native to blockchain, this is a total overhaul of the existing market. To kick off this call, I'd like to lay out the ecosystem we're building, how we plan to scale it and why it matters. So Figure's ecosystem has 3 verticals: debt and structured finance, equity and non-debt digital assets and capital and financing markets, YLDS acts as the currency that ties these verticals together. With debt and structured finance, our first launch into that vertical was through our own retail HELOC production back in 2018. We quickly evolved that into a B2B business. And today, the vast majority of our mortgage production on the platform comes from our 380-plus third-party partners. Further, over half of that production trades on Connect our whole loan marketplace. With Connect, we pioneered what we believe to be the only liquid private credit capital PSCs, which only quasi-private. This capital market, not the originating technologies are moat in this business and our primary revenue driver for loans in our ecosystem. Last year, we began to bring our digital assets over to DeFi for financing, introduced the problems remain to all real-world assets on blockchain. DeFi's asset-based lending, the premises that the collateral backing the loan is liquid. What are the collaterals a whole loan given LTV breach, how does a lender take a fractional position in the whole loan. And even if they could, where would they sell it. This is where our platform forge comes in. We built forwards to transform whole loans in the small single dollar liquid participation units. Loans get pledged or sold into a bankruptcy remote container that container issues participation units against the loans, these units have a natural market. They get expensive, entities will buy loans on connect and pledge into the container than sell participation units in the market. They get cheap, bigger and others will buy them, swap in the loans and securitize them. This 2-way arbitrage supports the liquid marketplace. With liquidity, the unit's work as collateral in DeFi. Lenders can see market liquidity, volatility and advance rate to decide on whether to participate as they would with Bitcoin or other crypto assets. Forge acts as a critical intermediary between on chain loans and DeFi. We were excited to announce Agora in Q1 is the first forge third-party partner and are building a pipeline of many other issuers across consumer mortgage receivables, SMB and other loan categories, with the goal of bringing these issuers onto blockchain into connect via forge to DeFi. Michael will talk more about the economic model to this and the other 2 verticals. But essentially, we make money running the marketplace, which is Connect, the bridge to DeFi, which is Forge and DART, DeFi itself, which today is Democratized Prime and the arbitrage from participating in the token market. For equity and nondigital assets in Q1, Figure launched the on-chain public equity network or OPEN. With OPEN, we are capturing the blockchain value proposition, transactional efficiency, liquidity and DeFi through public equities native on-chain. On open stock is registered on the blockchain, not DTCC, stocks trade on our ATS, which functions like a decentralized exchange of self-custody self-clearing. The ATS supports Direct Wallet Connect eliminating the need for introducing brokers. And through self-custody stockholders can access DeFi for lend and borrow. OPEN delivers important value to companies and investors. First, companies can do proxy and other outreach and distributions directly to wallet holders eliminating the cost of these services from firms like DTCC. Check the combination of 24/7 trading and Wallet Connect opens up access to trading to a global investor base, but a most important value proposition lies in DeFi. With OPEN, shareholders can put their stock up as collateral to borrow in DeFi markets at potentially better advance in interest rates that can cross collateralize combining stock with Bitcoin, for example, to borrow against both. But most importantly, they control stock loan rather than the prime broker sitting in between a stock lender and borrower at an opaque market, the shareholder can put their stock out or borrow directly on a limit order book. This redirects the money that primes make today to the shareholder. It also creates an interesting mitigant to high short interest where the underlying stock is -- when the underlying stock is on special. With the shareholder getting this full stock loan benefit, the company creates a countervailing force to own a heavily shorted stock, high coupon from the stock loan. OPEN is unique and that the stock is native on chain, not a DTC copy or an SPV interest. Shareholders have full rights in the stock can trade in the limit order book. Competing efforts suffer from limited access as PVs are available to U.S. investors, for example, limited liquidity DTCC copies can't trade in the limit order book because of Reg NMS and best execution or limited utility. So copies of assets generally won't work in DeFi protocols. In addition to OPEN, we also support marketplaces for other non-debt digital assets, including crypto, or we're not actively trying to grow these markets today, they provide an important laboratory for testing and product and technology ideas. Again, Michael will talk about the unit economics, but with OPEN, we earn in listing fees, trading fees, but the bulk of the economics come from DeFi. On capital and financing markets, the common threat across the debt and equity verticals and the biggest value from blockchain is the DeFi. Last year, Figure stood up a custody bilateral marketplace called Democratized Prime. As the name implies, we weren't trying to hide our ambitions into the separate. We're building a compete venue for financing digital assets on blockchain. Democratized Prime currently supports markets across whole loans, loan participations, crypto and equity. Democratized Prime is native to the Provenance blockchain or primary layer 1 chain. Last year, the Provenance Foundation launched Hastra, a DeFi protocol that swaps wrapped yields for a prime token. The Hastra protocol unwraps the yield takes yield to Democratized Prime and passes on the interest less a feed to the prime token holder. There are liquid markets for prime token and active DeFi protocols away from Provenance blockchain that provide leverage called looping for prime token holders boosting returns from mid-single-digit mid-teens. Hastra access middle from third-party Layer 1 blockchains to Democratized Prime. It launched on Solana in Q4 using Camino for financing and Radium for Liquidity. The Prime Token was the fastest-growing token in Camino's history and is the largest actively deployed real-world asset open for DeFiLlama in the entire DeFi ecosystem across any blockchain. Last week, Hastra announced its launch on the Morpho protocol on Ethereum, opening up an even water addressable DeFi market on blockchain today. Again, Michael will talk in detail about the economics, but the primary driver here is the spread we earn between lenders and borrowers with some protocol fees from Hastra eventually paid back to Figure. In terms of what we're trying to do to scale these verticals, we're pursuing a set of discrete strategies to build out our blockchain native capital market ecosystem. First, we're working on growing the first lien market via HELOC on Connect. The first lien market is upwards of 25x larger than the second lien space. We've been pushing an innovative solution of using HELOC and first lien position, dramatically lowering originating costs relative to traditional mortgages and are beginning to establish dominance in the sub-$300,000 first lien loan marketplace. Second, we're focused on bringing USDC, USDT utility yields. While yields per appear transferable as the security it still requires a transfer agent and then the name and address of each holder. We're advocating both to the SEC and via Clarity satisfied transfer agent requirements with wallet address. This would bring identical utility to yields afforded to any genius at coin, but with the added feature that yields pays interest. We see this as a significant unlock for applications from DeFi to payments. Third, we're working to build a proof point of the -- we're going to improve a point of the borrow benefit to shareholders on OPEN. We've been working with some of our largest shareholders and migrate their stock positions from NASDAQ to OPEN. We believe this will cause a tipping point where borrow for shorts must happen on change. Once we've established this proof point, we'll make a concerted go-to-market push more listings. Fourth, we're bringing third-party borrow on to Democratized Prime. And in order for us to scale significantly, we need to make bolder bets in terms of the types of companies that we partner with and the structure in which we do. The team has done a nice job of adding 380 partners in our tokenized mortgage marketplace, but we are exploring ways to add additional assets and change the capital markets in. In fact, we'll talk about adding SMB as part of Michael's comments. Fifth, to accommodate this expected increase in volume, we're working to bring TradFi capital on to Democratized Prime. The DeFi ecosystem is still nascent size relative to TradFi wholesale capital markets. To get DeFi scale, we need TradFi dollars from retail investors and institutional asset managers to begin to use protocols like Democratized Prime to earn yield. We're working with multiple partners on this, including ensuring security perfection and collateral and helping third parties launch dedicated DeFi yield funds where they have guaranteed access to certain democratized prime pools. Finally, we're beginning to allocate resources into existential problems for blockchain a wallet-centric experience. Terms like coinbase, Robin Hood and so are building Super App. So one-stop shop where the firm controls the customer data, custody transactions and experience. Blockchain affords a different user-centric approach, notably with self-custody wallets and distributed applications and east can control the data, pick their own transaction venues and maintain a consistent user experience. Blockchain is a very small pond. The only way to make it a lake in a notion is to deliver an experience that both retail and institutional TradFi customers can embrace. You'll hear more from us on this topic over the coming months. Our blockchain ecosystem is a multiyear endeavor with massive upside. I know public companies look quarter-to-quarter, but we want to set expectations on timing. It took us several years to drive means treatment option in HELOC and it wasn't an easy path. We expect the same as we build into additional credit equity and yields, but believe the payoff is worth the upward. To help explain the upside and to provide a recap of the quarter, I'm handing it off to Michael. Michael Tannenbaum: Thanks, Mike. I'll kick it off by covering our strong performance this quarter. Q1 '26 continued our impressive financial performance with again over 110% consumer loan marketplace growth and roughly 50% adjusted EBITDA margins, putting us at a rule of 140 versus benchmark of 40. Revenue was up 92% and adjusted EBITDA margin at 50% as we continue to see the benefits of our capital light marketplace, Figure Connect in the financials. In fact, Figure Connect grew to 56% of volume, up from 54% last quarter. In terms of volume, we saw growth across all channels, most notably new partners, depository activity, business purpose and partner growth via Figure Connect. I'll walk through each now. We added 80 new partners the most ever, and launched partners, including the seventh largest lender in the country. Our business purpose product highlighted by the SMB channel continued its very rapid expansion with volume in almost $60 million this quarter. We've also seen a significant acceleration of depository activity within our pipeline, reflecting a clear and growing demand for Figure's own products from this important market segment. Highlighting this is the recent onboarding of Flagstar Bank, a large regional depository and now the largest bank originator on our marketplace to date. This validates our platform's institutional grade and our ability to support complex, large-scale banking operations. We're currently in the final stages of implementation. We believe this momentum will only be amplified by proposed regulatory shifts. Specifically, Fed guidance regarding reduced risk weightings for mortgage assets and home equity loans serves as a substantial tailwind further incentivizing depositories to leverage our platform and optimize their balance sheets. The business channel progress coincides with growth we are seeing in SCR and residential transition loans. These 2 products, often used by real estate investment businesses represent a roughly $100 billion addressable annual origination market. The SCR loans focus on rental housing and are one of the fastest-growing pockets of residential lending and residential transition loans are an attractive category for us on democratized Prime due to their short-term nature. In Q1, we saw 70% growth from both of these products, and we expect this to be a focus going forward. Last quarter, I jumped 2026 the year of the first lien. Today, I'm pleased to share first lien volume now accounts for 20% of our total, up from 19% last quarter. We compete there primarily in the small balance loans where our $1,000 average cost to originate versus industry average of $11,500 is most differentiated because the cost savings makes the largest difference on smaller loans. The standardization and liquidity that we are bringing to the mortgage industry is showing up in our strong results, our volume growth and our execution in the face of complex geopolitical and macroeconomic environments. In a recent meeting with a major potential partner and executive shared that their company sees 2 existential threats. The first I expected, AI disrupting the value chain such that their company's cost advantage erodes, but the second was that Figure becomes the default capital market and that they're late to partner with us. So that company is one we've called on for years and the posture ship was notable. Macrina will cover take rate in more detail, but we achieved 3.8 this quarter, in line with the guidance we provided. Reminder that in connection with the airline Mike just gave our economic level for Figure Connect and the consumer loan marketplace more broadly is take rate by volume. On this quarter's take rate, we see this result as impressive, especially in light of the volatility and interest rate expectations experienced throughout one, as we indicated last quarter, while our take rate is lower on firs-lien volume, the total revenue contribution margin and EBITDA we earn on each first lien loan is higher as balances are significantly larger. For example, we would rather earn a 2% take rate on a $300,000 first lien loan or $6,000, then a 4% take rate on a 60,000 second lien loan or $2,400, as the cost to originate are the same. Any decrease in take rate is not a reflection on our competitive differentiation or demand for our platform. Having just recently crossed the $1 billion monthly marketplace origination mark, we see a clear path to $2 billion. On the acquisition side, we benefit from what we refer to as Wales, which can do $50 million plus per month at scale. We've been adding at least one of these per quarter consistently. One of the wells we added in late Q3, for example, did over $150 million this quarter. While smaller partners contribute less, we have also been adding conservatively around 50 per quarter and with the wide open TAMs and SMB and depositories, we see lots of opportunity. Then we go from existing partners, which continues to exceed expectations. This is fueled by improvements we make to the product as well as the incentives that drive volume on Figure Connect. Think of Figure Connect as the Baylin for these walls, it's the specialized infrastructure that allows them to swim through the capital market and efficiently ingest vast amounts of volume. Just as been filters everything a well takes in, Connect standardizers and filters their originations into AAA quality assets for our capital markets. Three examples: one, product improvements we made in Q3, such as expanding the underwriting automation to business bank accounts now account for almost 10% of our monthly volume. Two, for Connect, on average, we see over 2x monthly volume on a same partner basis, 6 months after launching on Connect. And three, in Q1 saw offering 5x monthly volume growth for Mutual of Omaha, a Fortune 300 financial institution after upselling to Connect. Ultimately, we see a very clear path forward to continuing to double the business from here. Turning to the blockchain ecosystem. We continue to see rapid growth with yields and democratized prime balances both growing roughly 80% quarter-over-quarter. With yields democratized prime participants are staking yield via the Hastra protocol as a way to earn yield. Growth also came via a measure milestone with an OCC chartered bank on yield on its balance sheet for treasury purposes. Lastly, we are working with a large region bank on a sweep arrangement that we expect to drive significant balances. The economic model of yields is a captured spread over SOFR, which is roughly 35 basis points multiplied by the yields balance outstanding. Democratized Prime saw the launch of Acura auto assets with $24 million borrowed as of the end of last month. Third-party borrowers are the immediate focus of Democratized Prime and the quarter we have already added 3 more, including a DSCR originator and Credibly, a fintech lender for salt and medium-sized businesses. Credibly highlight the traction we've made in the SMB space as well as the opportunity to build new tokenized Capital Markets rails. In 2026, we planned to add a total of 8 to 10 third-party originators, although we are on our way to exceeding that goal. Adding third-party borrower volume on Democratized Prime is important because, one, it's currently the bottleneck to growth; and two, because our revenue model earns economics from the borrower. 50 basis points has been the baseline but with the value of Forge, as Mike mentioned earlier, we see upside to that number. On the lend side of the marketplace, the state yields prime token is now the #1 by TBL on the Camino marketplace, and we recently announced an extension into Ethereum. Even though third-party borrow is the current limiter on growth in the marketplace, we maintain robust efforts to diversify our lender mix as well. I mentioned this because to echo Mike earlier, figure has ambitions for Democratized Prime to be much larger, and we are seeking to bring entire asset classes on chain. While the take rate Democratized Prime is lower than our consumer loan marketplace, the TAM is much larger and the inbound interest we have from borrowers joining the platform is significant. We see a medium-term world where Democratized Prime balances are measured in the tens to hundreds of billions. In terms of open, our on-chain public equity network we maintain a robust pipeline of issuers with OpenWorld being the second issuer to publicly file a registration statement with the SEC with the intent to use OPEN. Mike outlined a lot of the why with OPEN, but from an economic perspective, we see a number of fee opportunities here. Listing fees and trading fees are endemic to the equity capital markets, the broader prime brokerage activity with the same monetization model we see for debt and Democratized Prime is the largest opportunity by total addressable market. Before turning it over to Macrina, I want to quickly cover private credit before ending on AI. In terms of the capital markets, our platform was resilient despite the industry's concerns around retail investor-driven redemptions from private credit bonds. In March '26 alone, when private credit concerns were heightened, over $1.15 billion of whole loan sales were executed on Biggest Marketplace. In April 2026 a BWIC bid wanted in competition or a loan auction was completed on Figure's platform that resulted in a record low spread to the applicable risk-free rate, reflecting strong institutional investor demand for our assets. In fact, we're seeing increased interest in Figure assets as investors rotate out of leveraged loans where there are more concerns and into the high-quality, diversified consumer assets on our marketplace. As a reminder, the credit performance of loans in our marketplace reflects a borrower base with strong fundamentals. Turning to AI and building off our discussion from last quarter, we believe rapid AI adoption represent a massive tailwind for blockchain native coding like figure, and I'll continue to detail our efforts here regularly. Capital markets are undergoing a simultaneous shift from blockchain and AI and Figure is building the system that connects them. Here, we say AI is the brain, blockchain as the nervous system. Our custom AI platform operates on a structured, time-stamped on-chain financial data set that is directly tied to actual transactions, trained on real outcomes and helps with execution within our marketplace. This is a key point of differentiation and I can't emphasize enough. Many organizations today are building AI-enabled features or experimenting with agents, but moving capital markets requires an underlying system that is optimized for reliability, control compliance. As I repeatedly say, you can't AI your way into AAA. To lead this next phase of execution, we recently welcomed back Rod Albuyeh as our Head of AI. Under his leadership, we're developing agenetic workflow systems on top of our platform that handle tasks like data onboarding, document validation, underwriting checks and exception handling. Everything we do is in systematically reduced friction in areas where automation complemented by human oversight when necessary, delivers the most value. Three specific examples I'll cover are: one, our use of AI and building product; two, our use of AI and customer support; and three, our use of AI in adapting Agora's third-party auto assets to Democratized Prime. In the last year, we've seen a 25% increase year-over-year in what we call story completion, which is essentially engineering projects delivered on flat headcount. In chat containment, we've seen 70% and are now implementing voice AI and most significantly, with Agora and now other third-party Democratized Prime assets, we introduced an AI-enabled validation workflow that compares third-party assets against the underwriting criteria those assets were intended to satisfy at origin. The initial results have been encouraging and are helping us build a more scalable workflow and control framework for honoring third-party assets. And now I'll turn it over to Macrina for financials. Minchung Kgil: Thank you, Michael, and good morning, everyone. As Michael highlighted, the first quarter of 2026 was a period of both significant growth and strategic diversification of our partner network and product offerings for Figure. We are operating at a rule of 140, a best-in-class standard we've achieved through 92% year-over-year adjusted net revenue growth, combined with an adjusted EBITDA margin of 50%. To put that in perspective, we are performing at more than triple the traditional rule of 40 industry benchmarks. Our consumer loan marketplace volume grew over 110% year-over-year. This brings our Q1 '26 volume to approximately $2.9 billion compared to $1.4 billion in Q1 of 2025. As momentum accelerated coming out of the winter months this quarter, in March, for the first time as a company, we crossed above $1 billion of CLM volume at $1.2 billion. To highlight the scale, March volume alone represented 85% of all of Q1 2025. This momentum has continued into Q2 with our published April volumes continuing to accelerate both sequentially and year-over-year. Our volume on Figure Connect accounted for 56% overall Q1 volume suggesting enhanced capital efficiency given the balance sheet light dynamic of Figure Connect. Democratized Prime ended the quarter with matched offer balances of $368 million when YLDS ended at $598 million, reflecting continued adoption following the Prime token expansion on to Solana and our broader real-world assets consortium initiatives, adding distribution for these products. Our adjusted net revenue for Q1 '26 was $167 million, an increase of 92% over the prior year quarter. Adjusted net revenue benefited from higher consumer loan marketplace volume alongside servicing and interest income, which are asset balance based revenue lines. Adjusted net revenue directly correlated to consumer loan marketplace volume grew 109% year-over-year while servicing and interest income combined grew by 42%. Our net take rate for the quarter was 3.8%, which is in line with our previous guidance between 3.5% to 4%. We continue to see more first lien volume, which reached 20% of our total volume this quarter up from 14% in Q1 of '25. As we've mentioned, there are a number of inputs to take rate, which is why we do not really view it as the core North Star metric for the business. Mix shift is one factor. And over time, you should expect some of our key growth areas, including first non-Figure Connect impact towards lower take rates than junior lean volume. That said, these businesses are attractive because they are less capital intensive, operating much larger markets and generate strong contribution margins and profitability for the company. So when we evaluate performance, we are much more focused on contribution profit, EBITDA and the absolute dollar economics of the business and just take rate. In this quarter specifically, some of the inputs to take rate were net positive based on normal market variability, including interest rate-related dynamics in some of the higher take rate portions of the business. More broadly, as we continue leaning into larger opportunities like first lien, which is roughly 25x the size of the junior lien market, we believe that is the right trade-off for long-term growth and profitability. To touch on loan sale execution on Interconnect, it has held quite steady in Q1 '26 and into April of 2026 despite the macro and geopolitical environment. Since the beginning of the year, we have priced 5 securitizations with an aggregate notional value of nearly $1.9 billion and are continuing to see our pools priced competitively in new issue markets, reflecting a strong market consensus on the quality and resilience of the underlying credit on our marketplace. One further point to add in this revenue discussion section is that we are strategically retaining a portion of our loans as reflected by the approximately $350 million on our balance sheet at quarter end. Longer than we normally do, which was a deliberate decision to support the buildout of our Democratized Prime DeFi marketplace, as I had indicated during the Q4 earnings call. During our IPO roadshow and recent earnings calls, we have highlighted the importance of using our own inventory to build this marketplace. Lenders on blockchain are showing significant appetite as we see continued interest and growth in lender supply coming into Democratized Prime and Figure originated loans are supporting the supply to match offers. This translated to higher interest expense of approximately $2 million quarter-over-quarter. Our adjusted EBITDA margin was impacted as a result by approximately 1.4% with a larger revenue denominator for lower margin interest revenue with more lenders and asset classes coming online into Democratized Prime over the next quarters, as Michael announced today, we expect this interest income expense and loan balance trends to diminish. As Mike Cagney noted in his remarks and also have noted a number of times in past remarks, building out marketplaces requires upfront investments. With that, the scale comes quickly and handsomely as with Democratized Prime, where we are already seeing scale benefits into prevailing lending rates which will flatter margins going forward. I will cover this further in the balance sheet and liquidity section. Moving to profitability and adjusted EBITDA. Our GAAP net income for this quarter was $45 million including a tax benefit of $7 million. Following the post-IPO lockup expiration, we saw a onetime tax benefit from option exercises. While equity activity can continue to create periodic tax benefits, we view the magnitude of the Q1 benefit is elevated and not indicative of the full year expected tax rate. Assuming no additional material tax benefits from option exercises, we currently expect the full year effective tax rate to be closer to the 20% range. Adjusted EBITDA was $83 million, up approximately 190% year-over-year, and adjusted EBITDA margin was 50% compared to 33% in the prior year period. In addition to the interest income and interest expense impact to our margin, as I discussed earlier from a variable cost efficiency perspective, we are making further investments to utilize AI and automate our operations. Our technology platform has proved to be extensible. And even as we have been adding a number of enhancements to the mortgage products such as support for new income types and property ownership models, there has not been a material increase in these costs. Operations and processing income declined 20% from 93 basis points to 74 basis points as a percent of volume as our CLL volume more than doubled from Q1 '25 to Q1 '26. This is the power of our AI-driven efficiency road map. Near term, we expect operations and processing costs to remain relatively flat as a percent of volume as we continue these initiatives with AI-driven improvements expected to impact further in the second half of 2026. Moving to our balance sheet and liquidity. We ended the quarter with approximately $1.5 billion in cash and cash equivalents. Loans held for sale was approximately $500 million at quarter end, an increase of $100 million since year-end and on par with a year ago. Our loans held for sale balance typically reflect the periodic timing of loan sale and securitization programs as we generally only hold these for a few weeks. As I mentioned earlier, as we scale Democratized Prime and utilize figure loans for collateral to meet lender supply, we extended the time we hold certain loans on our balance sheet for this quarter. Available lender supply was 0.9x borrower demand at the end of the year. This is now 1.2x at the end of this quarter. As more third-party borrower demand comes on to the platform such as Agora data as well as Credibly, which we announced this May, we expect these balances to normalize back to historical trends. In addition, as more lender supply comes in from East network, we expect to add more lender supply and also bring down cost to borrowers on Democratized Prime marketplace. I wanted to provide some color on changes to adjusted net revenue as YLDS in circulation continues to grow, we are updating our definition of adjusted net revenue to deduct YLDS related interest expense. Bondholders of yields earned, which today is still for minus 35 basis points. This better reflects the true spread take rate on YLDS as part of adjusted net revenue. In addition, as our CLM volume continues to grow, we are holding more marketable securities on our balance sheet as a regulatory requirement to hold at least 5% of figure sponsored securitization. We are adjusting net revenue and adjusted EBITDA for unrealized P&L volatility from these securities. Note that securitizations issued by our guarantor do not have a risk retention requirement. Finally, starting this quarter, we are introducing quarterly guidance for our consumer loan marketplace volume. Looking ahead, we are establishing our Q2 '26 CLM volume guidance in the range of $3.8 billion to $4.1 billion. This marks the first quarter in which we are providing formal volume guidance. We believe this is the appropriate inflection point to do so as the increased data transparency from our blockchain integration, combined with more predictable scaling patterns provides us with requisite visibility to forecast with a high degree of confidence. Our outlook is supported by a robust start to the year. Following a strong Q1, April delivered another record-breaking volume month. That momentum has carried into May where we continue to see strong activity levels ahead of normal holiday-related trends later in the quarter. As Michael noted earlier, our strategy remains focused on onboarding high-volume Wale partners. In our guidance, we have been intentionally conservative regarding the ramp-up of larger accounts onboarded in Q4 and Q using a 3 to 6 months' time line. While we have seen partners integrate faster, we believe it is prudent to provide a range that accommodates a more measured ramp up. This approach ensures our guidance remains grounded as we continue to scale these enterprise-level relationships. Thank you, and we will now open up the queue for questions. Operator: [Operator Instructions] And we'll take our first question from Dan Dolev with Mizuho. Dan Dolev: Guys, excellent results out there, very, very strong. I just had a question about DSCR. Can you talk about -- it looks like -- it looks really promising. Can you talk about the market opportunity compared to traditional HELOCs and how we think about it into the future? Michael Tannenbaum: Thanks, Dan. We talked both about residential transition loans and DSCR, which is debt service covenant ratio. And both of those are targeted towards traditionally investment orientation in the business case, so people using a loan for business purposes, often renovation or fix and flip. And you're seeing product traction there in markets that have historically been pretty manual, fragmented, operationally intensive. These capital markets have also been really slow with legacy processes and loan by loan sales. And so we think this creates an opportunity for modernization on name. These greenfield opportunities come in that broader business market that I was mentioning, which we see as another avenue to attack that $35 trillion of home equity outstanding. And I mentioned this in the prepared remarks, but for residential transition loans, in particular, we see that as a really nice fit with Democratized Prime because the loans are relatively high rate they're collateralized by a home, but they're also short term. So it's almost a perfect set there. Dan Dolev: And congrats again. Operator: Our next question from James Yaro with Goldman Sachs. James Yaro: Michael, I wanted to touch on your comments on potentially lower bank risk weights for mortgages. I guess I would think that those could make banks more incentivized to hold assets on balance sheet, but you talked about how you expect this to support volumes. I just want to get a little bit more from you, just how you think that, that could drive even more activity on Figure? Michael Tannenbaum: There's 2 ways. There's the origination and there's the capital market. from an origination perspective, if banks are looking to have the flexibility and reenter the mortgage space, as you likely know, it's generally a nonbank market today. Then Figure is the easiest way for them to get up and running. And it also provides the most flexibility from a capital market perspective because they can make and hold some portion and they can also even hold just for CRA eligible, for example. So we've seen a lot of interest from banks and depositories in doing so. And then more broadly, in the event that bank balance sheets actually become a strong long-term opportunity for holding mortgages, which today is not the case, right? Many banks participate in Fannie Mae securitizations even though they have the balance sheet, but if that were to change, then we think Figure Connect would be the ultimate rails and pipeline to help those banks aggregate mortgages because they're not going to overnight become large originators of this asset class. James Yaro: That's super clear. Can I just ask one follow-up here. I'd love to just get your sense or your aspirations in the first lien purchase mortgage market. I guess, is this a goal for you to add to the platform? And what do you think you need to build before you could start to tap that obviously, very sizable TAM? Michael Tannenbaum: It's a medium-term goal for sure. We think that it's obviously a large addressable market. We have great relationships across partners, and we think as we look to ultimately take the entire capital market on chain, purchase mortgage as a part of that. For us, we are currently contemplating with some of our larger partners, some of those whales we've mentioned, who have actually come inbound and asked for that. So we're currently developing that in connection with some of those partners. Operator: We'll take our next question from Patrick Moley with Piper Sandler. Unknown Analyst: This is Will [indiscernible] on for Patrick Moley. Earlier in the call, you mentioned upselling Mutual Omaha to Figure Connect. Can you talk a little bit more about the upselling process to connect some of the sticking points, if any, and the pace at which you expect nonconnect volume to switch to connect over time? Michael Tannenbaum: Thanks for the question. Process generally is a volume-based one. The incentives are naturally aligned. As a reminder, when people move to connect, they ultimately earn more of the economics and then Figure goes to be increasingly balance sheet light and earns a higher EBITDA margin as a result. And so generally, around $5 million to $10 million of monthly volume is when conversations start regarding Figure Connect. And we've made it as easy as possible by building a large ecosystem of products, including Democratized Prime, which is a way that people can finance assets as they aggregate to then ultimately securitize. So everything that we do, Figure Forge, as Mike was mentioning, all of these -- all this tooling that we provide in this broader ecosystem ultimately greases the wheels of Figure Connect and that's why you're seeing 60% of volume and why folks like Mutual of Omaha are flocking to this and also increasing their volume by such amounts when they do so. Operator: We'll take our next question from Ryan Tomasello with ABW. Ryan Tomasello: Nice to see the addition of Five Star. I know you've already given some prepared remarks on it, but I wanted to double click on the traction you're seeing with traditional depositories, particularly for Flagstar, what drove that win? And then in general, how that sales motion differed versus going to your traditional more common IMB and fintech partners beyond some of these regulatory dynamics? Michael, what's driving the unlock of those conversations? Michael Tannenbaum: The drive towards depositories is personal for me, I was an investment banker covering regional banks right out of school. So I've been really focused on the space since I got here and Mike Cagney is also as a way with regional banks. So for both of us, it's been a big focus, and we have yet until recently to make really significant traction. And I think the turning point has been one, just the scale of what we're doing at some point now in the past quarter, we crossed over $1 billion a month of volume, which is really significant. I think us being a profitable public company, makes banks more likely to work with us. And I think the years in business, frankly, is another thing I hear and of all those years being really careful not to cross sell and not to cross market, which is really important to banks who spend, in many cases, centuries protecting our brand. I'd also add that banks, in particular, are not as well equipped to the boom and bust cycles that the rate environment has brought more recently. And so as people look to outsource with a simpler, faster on-chain solution like Figure, we're a natural choice. And then furthermore, as people look to the smaller balance first lien loans, in particular, those we make profitable, which are historically unprofitable and banks, unlike others, can't turn their existing customers down. They support all their depositors or at least try to. So these are all reasons why banks are increasingly interested. Flagstar, in particular, has been a partner and Mike feel free to elaborate because it's been a partnership dating back to when it was New York Community Bank. And we have known them and we have been a deposit customer, but it was only until recently that we were able to turn that long-standing relationship into an origination one, and we think that is going to be a major deal as we go and seek to get the rest of those 5,000 banks and 5,000 credit unions that currently aren't working with Figure. Michael Cagney: Yes. I think just to build on that and to reemphasize the ability for us to offer competitive product in the sub-300,000 first lien category, is an enormous opportunity. But I think all 3 of us have commented on the fact that first thing's a 25x larger market in the second lien space, where [indiscernible] traditionally been used. And we see the banks, in particular, as wanting to lean in. But going back to what Michael said earlier and reemphasizing our big partners have been coming to us proactively asking for first lien, asking for first lien, not just refi, but purchase. And I think it's an estimate to how effective the technology is. And in particular, the benefit of the marketplace that those loans can go into. Ryan Tomasello: Great. I appreciate that. And then just a quick follow-up for Macrina. Can you just talk about the near-term outlook for expenses? You're obviously reiterating the midterm EBITDA target of 60%, which is nice to see, but any color on the expense trajectory coming out of 1Q as we think about modeling for the rest of '26 would be helpful. Minchung Kgil: Sure, Ryan, thanks for joining the call. And we've talked about how our expenses are bifurcated into fixed expenses and variable expenses. As you know, variable expenses will grow as a percentage of volume. So sales and marketing, option processing, those you'll tend to see they are going to be larger compared to where we were in the past because volumes are just growing naturally as well. Fixed expenses, we do anticipate them to be pretty stable. I think we were pretty stable versus Q1 for both of those accounts, which is tech and product and G&A. We expect that trend to continue into the following quarters as well and interest expense as we bring down our own loans on Democratized Prime over the coming quarters, we do expect that to come down as well. Operator: We'll take our next question from Rob Wildhack with Autonomous Research. Robert Wildhack: Just on the volume outlook for the second quarter, you've got the $4 billion roughly at the midpoint, and I think you called out $1.3 billion in April. So that kind of suggests May and June on average will be about the same as April. And that's a little bit different from the more -- the pattern of sequential growth we've seen through this year. So is there anything to read into there because my instincts would have been for more sequential growth given the huge opportunity to seasonally strong spring months in home lending and all the new products you've been highlighting? Minchung Kgil: Sure. I've also mentioned in my prepared remarks, we want to make sure that we look at our whales that have been coming through for Q4 and Q1, and they tend to ramp in a 3 to 6 months' time line. So when we're providing guidance and where we think we're going to end up for Q2, we really want to take a balanced approach as we think about where it could come out. We could be a little bit on the conservative side, just looking at trends, but I do think we need to be looking at this on the right pace, and that's where we think we're going to end up. Robert Wildhack: Okay. And then just one on the take rate. Mike Cagney, you called out some interest rate volatility in the quarter, you have that. give the faster growth in some of the lower take rate products. I would think both of those would be negative from a take rate perspective. So is there any specific offset that led to the flat take rate sequentially? Just any other color you have there would be great. Michael Tannenbaum: Take rate is an output of lots of inputs. So we have, for example, mix shift to Figure Connect, we have mix shift to first lien. We have shifts from DTC to B2B. And then you have the annual take rates that are coming partner by partner as people expand volume tiers, for example. And you also have take rates that are coming from the overall execution and gain on sale. So all of those things collectively create the take rate for the quarter. And that take rate is ultimately, as we've said, it's an output metric. And our view is that the activity for this quarter, the puts and takes of all that ended up at $3.8 billion which we -- which is something that we think is strong and as you noted, and particularly in light of the volatility that happened towards the end of the quarter. That said, that broader range that we provided, we maintain because of all the variability in these inputs. But I'll just restate the example that I gave in the prepared remarks, which is the focus on first lien and on product diversification are ultimately strengths of the platform in terms of both EBITDA and contribution margin, and that's where we're focused in terms of our execution. Operator: We'll take our next question from Randy Binner with Texas Capital. Randy Binner: So obviously, the overall volume trend is good for the guide. But for HELOC, just the HELOC market in particular, are you -- do you feel that you're gaining share there's more banks because of the lock-in effect who are offering it products so far had an announcement that got some investor reaction. So just can you give us a sense of kind of almost halfway through a year, do you think you're gaining share? Where are you fitting in, and then the overall kind of HELOC competitive market in the U.S.? Michael Tannenbaum: Thanks for the question. We've said this before, which is that we don't actually consider the HELOC market to be relevant to what we do. One, because so much of what we do is greenfield and two, because so many of our partners don't consider themselves mortgage companies or participants in the HELOC market; and three, because of so much of what we do is first lien, which would have historically been the per view of a traditional mortgage. And so for us, HELOC is a way to approach not only that $35 trillion of home equity, but also that $2 trillion of annual mortgage origination. So kind of the announcements of SoFi and others, right, those are welcome to kind of emphasize the value of the space. But ultimately, those are not part of our consideration set when we look at the addressable market for Figure. Randy Binner: Okay. I guess then I would maybe shift the question to say, for your addressable set do you -- how will you characterize your share gain? Michael Tannenbaum: I'd characterize our share gain as a combination of new partner growth, and we see the opportunities there as not only the existing first lien origination market, right, so call it people like banks, credit unions and independent mortgage banks that originate mortgages, but also fintechs and home improvement companies that historically don't consider themselves in this space, but look to tap home equity as places where we're gaining share both in terms of net new customers, but also very importantly, as I mentioned in the prepared remarks, as gaining share versus ultimately Fannie and Freddie's market, right? So if you look at Mutual Omaha, something cited in the quarter, that 5x quarter-over-quarter growth that we saw didn't just come from an overall 5x growth at Mutual Omaha, right, that came at the expense of Fannie and Freddie market share, and that's where we see ultimately our competition, that combination of call it, the Ellie Mae, Ice and Fannie and Freddie Mac complex. Michael Cagney: Just to build on that, I think it's important to emphasize that, that sub-$300,000 first lien category is a loan that wasn't done before. So it's not that we're taking the share from anybody. I said no one was originating that asset. I think Anthony Stratis talked about this in his earnings remarks at Loan Depot last week, and references partnership with Figure's opening up this market for them in a market that couldn't address before. So a lot of what we're doing isn't competing amongst an existing pie, it's greenfield. We're making bigger pies. Operator: We'll take our next question from Dan Fannon with Jefferies. Daniel Fannon: I was hoping you could expand upon your comments on the outlook for new partners. Obviously, a lot of momentum in that in the numbers we saw this quarter. But how does that compare to, say, at the beginning of the year? And then also the 3 to 6 months of ramping that you highlighted for your larger customers, I would also just be curious about how that compared to, say, a year ago. Is that 3 to 6 months shorter than maybe what you saw previous as customers have become more comfortable with the platform or you've grown in your size and scale? Michael Tannenbaum: Dan, the future is bright. We see the pipeline the same day as it has been. And in fact, I feel Mike has said to me, we can't double forever, but so far, we are doubling forever. So we feel really good about where we are. And we also feel that, if anything, the implementations that we're doing in terms of AI and onboarding and examples, like I gave a Mutual of Omaha are being helped by tooling technology and the more visibility that we have being a public company. And so we don't see any extension of time lines for partner onboarding nor do we see any reduction in pipeline. Operator: [Operator Instructions] We'll take our next question from Kyle Peterson with Needham. Kyle Peterson: Nice results. I wanted to touch on the funding partner mix. Really helpful how you guys kind of split that out in the slides, but I wanted to follow up a little bit more on the asset measure place. Maybe if you guys could give some direction and color even qualitatively on kind of what of that is backed by kind of longer duration institutional capital versus kind of some of these more semi-liquid retail products like BDCs or interval funds? Any color or direction there would be great. Michael Tannenbaum: We broke that out in terms of the types of funds in particular. And as I mentioned in the prepared remarks, we have seen somewhat of a rotation into the figure and the consumer loan space, given some of the weakness in the software and overall private credit. So from our standpoint, we -- and I mentioned some of those executions we saw both in late March as well as early April. And I think that reflects the rotation that I'm sharing about. Kyle Peterson: Okay. And then maybe just a follow-up, taking the take rate and mix and kind of what you guys are seeing in April. It seems like at least the macro has gotten a little less favorable for first lien, more favorable for HELOC and probably some other products, but I know you guys are scaling this off of kind of really small bases as Mike referred to, like creating new buys. So I guess how should we think about the mix? Like have you guys seen any change in April that reflects rates kind of spiking back up? Michael Tannenbaum: Our platform is strong because it is able to be successful and create bigger pies regardless of the rate environment. So when we have rates moving up like they have been in the near term, you have that $35 trillion of home equity opportunity we talk about, and I'd also point out that from our marketplace, about 20% of loans are used to pay off higher interest rate debt. So credit cards, student loans, auto loans and the like. And as a result, that opportunity goes up as those rates tend to go up more than the prevailing mortgage and home equity rates. And then separately, as you know, we're creating just larger pies to greenfield nature of what we do. And given borrowing against your home tends to be the lowest cost option for anyone who has home equity, which includes that $35 trillion and the 40% of homeowners who own their home free and clear, it creates a really nice opportunity and a tailwind for us. And I think what you've seen in the SMB space, in particular, where people are partners are using our ability to access home equity to fuel their business -- their business lending franchise is a great example. Michael Cagney: And just to build on that again, I think you don't have the same price elasticity in the sub-300,000 first lien products because, again, they just weren't offered before. And so the fact that we're unlocking that market there's less rate sensitivity there and more just being able to access the credit. And so while we are a barbelled in the sense that higher rates push us towards second lien, lower rates pushes towards first lien, we have those products. This first lien space is so greenfield. It just doesn't have the same rate elasticity that you'd expect in normal mortgage. Operator: There are no additional questions at this time. This will conclude today's Figure Technology Solutions First Quarter 2026 Earnings Conference Call. 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See the 10 stocks » *Stock Advisor returns as of May 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Figure (FIGR) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue Growth: 92% year-over-year increase in adjusted net revenue, reaching $167 million. Consumer Loan Marketplace Volume: Grew over 110% year-over-year, totaling approximately $2.9 billion in Q1 2026. Adjusted EBITDA Margin: 50%, up from 33% in the prior year period. Net Income: $45 million, including a $7 million tax benefit. Take Rate: 3.8%, in line with guidance between 3.5% to 4%. First Lien Volume: Accounts for 20% of total volume, up from 14% in Q1 2025. Figure Connect Volume: 56% of overall Q1 volume. Democratized Prime Balances: $368 million in matched offer balances. YLDS Balances: Ended at $598 million. Cash and Cash Equivalents: Approximately $1.5 billion at quarter end. Loans Held for Sale: Approximately $500 million at quarter end. Q2 2026 CLM Volume Guidance: Projected between $3.8 billion to $4.1 billion. Warning! GuruFocus has detected 3 Warning Sign with FIGR. Is FIGR fairly valued? Test your thesis with our free DCF calculator. Release Date: May 12, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Figure Technology Solutions Inc (NASDAQ:FIGR) reported a strong financial performance with over 110% growth in the consumer loan marketplace and a 50% adjusted EBITDA margin. The company achieved a 92% increase in revenue, driven by the capital-light marketplace, Figure Connect, which accounted for 56% of the volume. FIGR added 80 new partners, including the seventh-largest lender in the country, and saw significant growth in business purpose products and depository activity. The launch of the on-chain public equity network (OPEN) and the expansion of Democratized Prime into Ethereum highlight FIGR's innovative approach to integrating blockchain technology. FIGR's strategic focus on first lien volume, which now accounts for 20% of total volume, demonstrates its ability to tap into larger markets and achieve higher revenue contributions. The company faces substantial risks and uncertainties with forward-looking statements, as highlighted in their cautionary note. Despite strong growth, the take rate is lower on first lien volume, which could impact overall profitability if not managed carefully. FIGR's expansion into new markets and technologies, such as blockchain and AI, involves significant upfront investments and long-term development, which may not yield immediate returns. The competitive landscape, including traditional HELOC markets and new entrants like SoFi, poses challenges to FIGR's market positioning. Interest rate volatility and macroeconomic factors could affect FIGR's take rate and overall financial performance, as noted in their earnings call. Q: Can you talk about the market opportunity for DSCR compared to traditional HELOCs and how we think about it into the future? A: Michael Tannenbaum, CEO: DSCR and residential transition loans are targeted towards investment-oriented business cases, such as renovation or fix and flip. These markets have been traditionally manual and fragmented, creating an opportunity for modernization. We see this as a greenfield opportunity to tap into the $35 trillion of home equity outstanding. Q: How do you expect lower bank risk weights for mortgages to support volumes on Figure? A: Michael Tannenbaum, CEO: Lower risk weights could incentivize banks to re-enter the mortgage space. Figure provides an easy way for banks to originate and hold some portion of mortgages, offering flexibility and capital market advantages. If bank balance sheets become a strong opportunity for holding mortgages, Figure Connect could help banks aggregate mortgages efficiently. Q: Can you elaborate on the upselling process to Figure Connect and the pace at which non-Connect volume is expected to switch? A: Michael Tannenbaum, CEO: The upselling process is volume-based, with incentives aligned for partners to earn more economics. Conversations about Figure Connect typically start around $5 million to $10 million of monthly volume. Our ecosystem, including Democratized Prime, facilitates this transition, leading to increased volume and higher EBITDA margins. Q: What drove the win with Flagstar Bank, and how does the sales motion differ with traditional depositories? A: Michael Tannenbaum, CEO: The scale of our operations and being a profitable public company have made banks more likely to partner with us. Our ability to offer competitive products in the sub-$300,000 first lien category is a significant opportunity. Flagstar's partnership, dating back to New York Community Bank, highlights our long-standing relationships and the potential for origination growth. Q: How do you characterize your share gain in the addressable market, and what is your competition? A: Michael Tannenbaum, CEO: Our share gain is driven by new partner growth and tapping into markets like banks, credit unions, fintechs, and home improvement companies. We are gaining share from Fannie and Freddie's market, with partners like Mutual of Omaha showing significant growth. Our competition is the traditional mortgage complex, but we are creating new markets rather than competing for existing ones. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Figure Technology Solutions, Inc.? Here are five stocks we like better. Figure Technology Solutions posted a strong Q1 2026, with adjusted net revenue up 92% year over year to $167 million and adjusted EBITDA up about 190% to $83 million, while consumer loan marketplace volume nearly doubled to $2.9 billion. Management emphasized that Figure is evolving beyond home equity lending into a blockchain-native capital markets platform, highlighting growth in its Figure Connect marketplace, Figure Forge tokenization platform, and DeFi-related products like YLDS and Democratized Prime. The company guided Q2 2026 consumer loan marketplace volume to $3.8 billion to $4.1 billion and said AI-driven efficiencies are helping lower operating costs, with further margin improvement expected in the second half of the year. Figure Technology Solutions (NASDAQ:FIGR) reported sharply higher first-quarter 2026 revenue and profitability as executives emphasized that the company is positioning itself as a blockchain-native capital markets platform rather than a traditional home equity lender. Chief Executive Officer Michael Tannenbaum said the company delivered “over 110% consumer loan marketplace growth” and an adjusted EBITDA margin of roughly 50%, describing the performance as a “rule of 140” when combining revenue growth and margin. Chief Financial Officer Macrina Kgil said adjusted net revenue rose 92% year over year to $167 million, while GAAP net income totaled $45 million, including a $7 million tax benefit. Adjusted EBITDA increased about 190% year over year to $83 million. → Beyond NVIDIA: Picks-and-Shovels AI Plays with Strong Momentum Consumer loan marketplace volume reached approximately $2.9 billion in the quarter, up from $1.4 billion in the prior-year period. Kgil said March marked the first month in which Figure crossed $1 billion of consumer loan marketplace volume, reaching $1.2 billion. Figure Connect accounted for 56% of overall first-quarter volume, up from 54% in the prior quarter. Executive Chairman and Co-founder Mike Cagney used the call to outline Figure’s long-term strategy and said investors should not view the company simply as a home equity line of credit business. → MercadoLibre Boldly Invests in Growth: Discount Deepens “Figure is not a HELOC company,” Cagney said. “Figure is a company building a capital market ecosystem native to blockchain.” Cagney said the company’s ecosystem is organized around three verticals: debt and structured finance, equity and non-debt digital assets, and capital and financing markets. He said yield is the “currency” connecting those verticals. → 3 Ways to Target the Resources Powering AI and Data Centers In debt and structured finance, Cagney said Figure began with its own retail HELOC production in 2018 but has since evolved into a business-to-business debt platform. He said the company now has more than 380 third-party partners, and more than half of mortgage production trades on Figure Connect, its whole-loan marketplace. Cagney also described Figure Forge as a platform designed to turn whole loans into smaller participation units that can be used more effectively as collateral in decentralized finance, or DeFi. He said the company announced Agora as its first third-party Forge partner in the first quarter and is building a pipeline across consumer, mortgage, small business and other loan categories. Tannenbaum said Figure added 80 new partners during the quarter, the most in company history, and launched partners including the seventh-largest mortgage lender in the country. He also highlighted the onboarding of Flagstar Bank, which he described as a large regional depository and the largest bank originator on Figure’s marketplace to date. The company continued to expand first-lien lending, with first-lien volume reaching 20% of total volume, up from 19% in the prior quarter and 14% in the year-earlier period. Tannenbaum said Figure competes primarily in small-balance loans, where its $1,000 average cost to originate compares favorably with an industry average of $11,500. Cagney said the company sees a significant opportunity in sub-$300,000 first-lien loans, a category he said many lenders historically did not originate because the economics were not attractive. In response to an analyst question, he said that market is “greenfield” in many cases rather than a direct share-taking opportunity. Tannenbaum also pointed to rapid growth in business-purpose lending, including small and medium-sized business channels, with volume approaching $60 million in the quarter. He said debt service coverage ratio loans and residential transition loans both grew 70% in the quarter and represent part of a roughly $100 billion annual origination market. Kgil said Figure’s net take rate was 3.8% in the quarter, in line with prior guidance of 3.5% to 4%. She said the company does not view take rate as its primary performance metric because it is affected by product mix, partner mix and market execution. Tannenbaum said first-lien loans generally carry lower take rates but higher dollar revenue because balances are larger. He gave the example of a 2% take rate on a $300,000 first-lien loan producing $6,000 of revenue, compared with a 4% take rate on a $60,000 second-lien loan producing $2,400, while origination costs are similar. Kgil said the company is more focused on contribution profit, EBITDA and absolute dollar economics than on take rate alone. She also said Figure had retained some loans on its balance sheet longer than usual to support the build-out of Democratized Prime, its DeFi marketplace, which contributed to higher interest expense and reduced adjusted EBITDA margin by about 1.4 percentage points. Tannenbaum said YLDS and Democratized Prime balances each grew roughly 80% quarter over quarter. Kgil said Democratized Prime ended the quarter with matched offer balances of $368 million, while YLDS ended at $598 million. Tannenbaum said YLDS growth included “a major milestone” involving an OCC-chartered bank keeping YLDS on its balance sheet for treasury purposes. He also said Figure is working with a large regional bank on a sweep arrangement expected to drive additional balances. He described the YLDS economic model as a captured spread over SOFR of roughly 35 basis points multiplied by the outstanding YLDS balance. Democratized Prime added Agora Auto Assets during the quarter, with $24 million borrowed as of the end of the prior month, Tannenbaum said. He said the company has already added three more third-party borrowers this quarter, including a DSCR originator and Credibly, a fintech lender for small and medium-sized businesses. Figure had planned to add eight to 10 third-party originators in 2026, though Tannenbaum said the company is on track to exceed that goal. Cagney also discussed OPEN, Figure’s On-chain Public Equity Network, saying it allows stock to be registered on blockchain rather than through DTCC and supports trading through the company’s ATS. Tannenbaum said Open World Ltd. is the second issuer to publicly file a registration statement with the SEC with the intent to use OPEN. Figure introduced formal quarterly guidance for consumer loan marketplace volume, with Kgil projecting second-quarter 2026 volume of $3.8 billion to $4.1 billion. She said April was another record volume month, and momentum continued into May. Kgil said Figure ended the quarter with approximately $1.5 billion in cash and cash equivalents. Loans held for sale totaled about $500 million at quarter end, up $100 million from year-end and roughly in line with the prior-year period. Executives also discussed artificial intelligence as a driver of operating efficiency. Tannenbaum said Figure has seen a 25% year-over-year increase in engineering “story completion” on flat headcount, as well as 70% chat containment in customer support. Kgil said operations and processing costs declined to 74 basis points of volume from 93 basis points a year earlier as consumer loan marketplace volume more than doubled. Management said fixed expenses are expected to remain relatively stable, while variable expenses will grow with volume. Kgil said the company expects additional AI-driven improvements to have a greater impact in the second half of 2026. Figure is building the future of capital markets using blockchain-based technology. Figure's proprietary technology powers next-generation lending, trading and investing activities in areas such as consumer credit and digital assets. Our application of the blockchain ledger allows us to better serve our end-customers, improve speed and efficiency, and enhance standardization and liquidity. Using our technology, we continue to develop dynamic, vertically-integrated marketplaces across the approximately $2 trillion consumer credit market and the rapidly growing approximately $4 trillion cryptocurrency and digital asset market. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Figure Technology Solutions Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.