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Welcome to the Figure Technology Solutions first quarter 2026 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you'd like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. To get to as many questions as time permits, we ask you kindly limit yourself to one question and one follow-up. That others can hear your questions clearly, we ask you pick up your handset for best sound quality. Lastly, today's call is being recorded. I would like to now turn the call over to Brian Michaleski, Head of Investor Relations. Please go ahead.

Good morning. Welcome to Figure's first quarter 2026 earnings call. My name is Brian Michaleski, Head of Investor Relations here at Figure. Joining me on today's call are Mike Cagney, Executive Chairman, Co-founder of Figure, Michael Tannenbaum, our Chief Executive Officer, and Macrina Kgil, our Chief Financial Officer. Before we begin today, I'd like to briefly note that in today's call, we will refer to certain non-GAAP measures. These measures have been reconciled to their GAAP equivalents in the earnings release we issued today or yesterday, as well as in appendix to our supplemental slide presentation posted to our website. As a reminder, non-GAAP measures are not intended to be a substitute for GAAP results. I'd also highlight that certain comments made today may be considered forward-looking statements under federal securities law.

The company cautions you that forward-looking statements involve substantial risks and uncertainties, a number of factors, many of which are very beyond the company's control, can cause actual results, events, or circumstances to differ materially from those described in the statements. For more information, please refer to the risk factors we've identified in our most recent Form 10-K and other SEC filings. We are not undertaking any commitment to update these statements if conditions change, except as required by law. With that, I'll turn the call over to Mike Cagney. Mike, please go ahead.

Thanks. 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. I want to set expectations. In my role as Executive Chairman, I'm tasked with 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, that will vary based on what's happening with the business. 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's a HELOC company. 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. Figure's ecosystem has three verticals: debt and structured finance, equity and non-debt digital assets, and capital and financing markets. Yield is 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 debt 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 BSEs, which are only quasi-private. This capital market, not the origination technology, is our 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. That introduced a problem germane to all real-world assets on blockchain. DeFi is asset-based lending. The premise is that the collateral backing the loan is liquid. What are the collateral as a whole loan? Given an LTV breach, how does a lender take a fractional position in the whole loan? Even if they could, where would they sell it? This is where our platform Forge comes in. We built Forge to transform whole loans into 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. If they get expensive, entities will buy loans on Connect and pledge them to the container, then sell participation units in the market. If they get cheap, Figure and others will buy them, swap them to loans, and securitize them. This two-way arbitrage supports a liquid marketplace. With liquidity, the units 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 as the first Forge third-party partner, and are building a pipeline to many other issuers across consumer mortgage receivables, SMB, and other loan categories, with the goal of bringing these issuers onto blockchain into Connect and via Forge to DeFi. Michael will talk more about the economic model for this and the other two 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 non-digital 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. It's self-custody, self-clearing. The ATS supports direct WalletConnect, eliminating the need for introducing brokers. Through self-custody, stockholders can access DeFi to 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. Second, the combination of 24/7 trading and WalletConnect opens up access to trading to a global investor base. 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. Most importantly, they control stock loan.

Rather than the prime broker sitting in between a stock lender and borrower in an opaque market, the shareholder can put their stock out or borrow directly on a lit limit order book. This redirects the money that primes make today to the shareholder. It also creates an interesting mitigant to high short interest when the underlying stock is on special. With the shareholder getting the full stock loan benefit, the company creates a countervailing force to own a heavily shorted stock, a high coupon from the stock loan. OPEN is unique in that the stock is native on-chain, not a DTC copy or an SPV interest. Shareholders have full rights. The stock can trade in the limit order book. Competing efforts suffer from limiting access. SPVs aren't available to U.S. investors, for example.

Limited liquidity, DTC 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. While 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 listing fees, trading fees, but the bulk of the economics come from DeFi. On capital and financing markets, the common thread across the debt and equity verticals and the biggest value from blockchain is the DeFi. Last year, Figure stood up a self-custody bilateral marketplace called Democratized Prime. As the name implies, we weren't trying to hide our ambitions into this effort.

We're building a competing 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, our primary layer one chain. Last year, the Provenance Blockchain Foundation launched Hastra, a DeFi protocol that swaps wrapped yields for a Prime token. The Hastra protocol unwraps the yield, stakes the yields to Democratized Prime, and passes on the interest, less a fee, to the Prime token holder. There are liquid markets for Prime tokens and active DeFi protocols away from Provenance Blockchain that provide leverage, called looping, for Prime token holders, boosting returns from mid-single digits to mid-teens. Hastra acts as middleware from third-party layer one blockchains to Democratized Prime. It launched on Solana in Q4 using Kamino for financing and Raydium for liquid.

The Prime token was the fastest-growing token in Kamino's history and is the largest actively deployed real-world asset token per 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 larger addressable DeFi market on blockchain today. Michael will talk in detail about the economics, but the primary driver here is a 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 origination costs relative to traditional mortgages, are beginning to establish dominance in the sub $300,000 first lien loan marketplace. Second, we're focused on bringing USDC, USDT utility to yields. While yields is peer-to-peer transferable, as a security, it still requires a transfer agent to know the name and address of each holder. We're advocating both to the SEC and via clarity to satisfy transfer agent requirements with wallet address. This would bring identical utility to yields afforded to any GENIUS Act coin, 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 proof of claim of the borrow benefit to shareholders on Open. We've been working with some of our largest shareholders to migrate their stock positions from Nasdaq to OPEN. We believe this will cause a tipping point where borrow for shorts must happen on-chain. Once we've established this proof point, we'll make a concerted go-to-market push for more listings. Fourth, we're bringing third-party borrow onto Democratized Prime. 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-plus partners in our tokenized mortgage marketplace. We are exploring ways to add additional assets and change the capital markets at scale. 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 onto Democratized Prime. The DeFi ecosystem is still nascent in size relative to TradFi wholesale capital markets. To get DeFi to 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 of 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, the wallet-centric experience. Firms like Coinbase, Robinhood, and SoFi are building super apps, a 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, entities can control their data, pick their own transaction venues, and maintain a consistent user experience. Blockchain today is a very small pond. The only way to make it a lake, then an ocean, 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. A blockchain ecosystem is a multi-year 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 mainstream adoption in HELOCs. It wasn't an easy path. We expect the same as we build into additional credit, equity, and yields. We believe the payoff is worth the effort. To help explain the upside and to provide a recap of the quarter, I'm handing it off to Michael.

Thanks, Mike. I'll kick it off by covering our strong performance this quarter. Q1 2026 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 continued to see the benefits of our capital-light marketplace, Figure Connect, in the financials. 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 mortgage lender in the country.

Our business purpose product, highlighted by the SMB channel, continued its very rapid expansion with volume at 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 loan 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 DSCR and residential transition loans. These two products, often used by real estate investment businesses, represent a roughly $100 billion addressable annual origination market. DSCR 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 dubbed 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 1K 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, an executive shared that their company sees two existential threats. The first I expected, AI disrupting the value chain such that their company's cost advantage erodes. The second was that Figure becomes the default capital market and that they're late to partner with us. That company is one we've called on for years, and the posture shift 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 outline Mike just gave, our economic model 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 in interest rate expectations experienced throughout Q1. As we indicated last quarter, while our take rate is lower on first 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 than 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 whales, 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 whales 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, with the wide-open TAMs in SMB and depositories, we see lots of opportunity. We have growth 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 baleen for these whales. It's the specialized infrastructure that allows them to swim through the capital market and efficiently ingest vast amounts of volume. Just as baleen filters everything a whale takes in, Connect standardizes 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 two times monthly volume on a same partner basis six months after launching on Connect. three, in Q1, we saw, for example, 5x monthly volume growth from 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 YLDS and Democratized Prime balances both growing roughly 80% quarter-over-quarter. With YLDS, Democratized Prime participants are staking YLDS via the Hastra protocol as a way to earn yield. Growth also came via a major milestone with an OCC chartered bank keeping YLDS on its balance sheet for treasury purposes. Lastly, we are working with a large regional 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 Agora Auto Assets, with $24 million borrowed as of the end of last month. Third-party borrowers are the immediate focus of Democratized Prime, and this quarter we have already added three more, including a DSCR originator and Credibly, a fintech lender for small and medium-sized businesses. Credibly highlights 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 eight to 10 third-party originators, although we are on our way to exceeding that goal. Adding third-party borrow 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 staked yields prime token is now the one by TVL on the Kamino 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 mention 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 of 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 10 to hundreds of billions. In terms of OPEN, our On-chain Public Equity Network, we maintain a robust pipeline of issuers, with Open World Ltd. 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, but 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 funds. In March 26 alone, when private credit concerns were heightened, over $1.15 billion of whole loan sales were executed on Figure's 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 represents a massive tailwind for blockchain-native companies 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 is 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 it 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, and compliance. As I repeatedly say, you can't AI your way into AAA.

To lead this next phase of execution, we've recently welcomed back Rod Albuyeh as our head of AI. Under his leadership, we're developing agentic workflow systems on top of our platform that handle tasks like data onboarding, document validation, underwriting checks, and exception handling. Everything we do is an attempt to systematically reduce 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 in building product, two, our use of AI in 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.

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 origination. The initial results have been encouraging and are helping us build a more scalable workflow and control framework for onboarding third-party assets. Now, I'll turn it over to Macrina for financials.

Thank you, Michael. 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 benchmark. 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% of 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, and meanwhile YLDS ended at $598 million, reflecting continued adoption following the Prime token's expansion onto Solana and our broader real-world assets consortium initiatives adding distribution for these products.

Our adjusted net revenue for Q1 2026 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-based, 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%-4%. We continue to see more first lien volume, which reached 20% of our total volume this quarter, up from 14% in Q1 of 2025.

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 lien on Figure Connect impact towards lower take rates than junior lien volume. These businesses are attractive because they are less capital-intensive, operating much larger markets, and generate strong contribution margins and profitability for the company. When we evaluate performance, we are much more focused on contribution profit, EBITDA, and the absolute dollar economics of the business than on 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 Figure Connect, it has held quite steady in Q1 2026 and into April 2026, despite the macro and geopolitical environment. Since the beginning of the year, we have priced five securitizations with an aggregate notional value of nearly $1.9 billion and are continuing to see our pools priced competitively within 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 build-out 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 this 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 trend to diminish. As Mike Cagney noted in his remarks, and also has 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 re-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 lock-up expiration, we saw a one-time tax benefit from option exercises. While equity activity can continue to create periodic tax benefits, we view the magnitude of the Q1 benefit as 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 product, such as support for new income types and property ownership models, there has not been a material increase in these costs. Operations and processing costs declined 20% from 93 basis points to 74 basis points as a percent of volume as our CLM volume more than doubled from Q1 2025-Q1 2026. This is the power of our AI-driven efficiency roadmap. 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. 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. More third-party borrower demand comes onto 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.

As more lender supply comes in from Ethereum, we expect to add more lender supply and also bring down costs 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 while holders of YLDS earn, which today is SOFR minus 35 basis points. This better reflects the true spread take rate on YLDS as part of adjusted net revenue. 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 securitizations. 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 2026 CLM volume guidance in the range of $3.8 billion-$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 the 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 whale partners. In our guidance, we have been intentionally conservative regarding the ramp-up of larger accounts onboarded in Q4 and Q1 using a three to six months timeline. 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. We will now open up the queue for questions.

Thank you. The floor is now open for questions. Again, we kindly ask you limit yourself to one question and one follow-up and pick up your handset when posing your question. Thank you. We'll take our first question from Dan Dolev with Mizuho. Please go ahead. Your line is open.

Hey, guys. Excellent results out there. Very, very strong. I just had a question about DSCR. Looks really promising. Can you talk about the market opportunity compared to traditional HELOCs and how we think about it into the future? Thank you.

Thanks, Dan. We talked both about residential transition loans and DSCR, which is debt service coverage 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. 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. We think this creates an opportunity for modernization on chain. 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.

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. It's almost a perfect fit there.

Thank you, and congrats again.

Thank you. We'll take our next question from James Yarrow with Goldman Sachs. Please go ahead.

Good morning, and thanks for taking the question. 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. You talked about how you expect this to support volumes. I'd just love to get a little bit more from you, just how you think that could drive even more activity on Figure.

There's two 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 non-bank market today, then Figure is the easiest way for them to get up and running. 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. We've seen a lot of interest from banks and depositories in doing so. 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.

If that were to change, we think Figure Connect would be the ultimate rails and pipeline to help those banks aggregate mortgages because they're not gonna overnight become large originators of this asset class.

That's super clear. Thank you. Can I just ask 1 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?

It's a medium-term goal for sure. We think that it's obviously a large addressable market. We have great relationships across partners. We think as we look to ultimately take the entire capital market on chain, purchase mortgage is 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. We're currently developing that in connection with some of those partners.

That's great. Thanks a lot, Michael.

Thank you. We'll take our next question from Patrick Moley with Piper Sandler. Please go ahead. Your line is open.

Hey, guys. Good morning. This is Will Copps on for Patrick Moley. Thanks for the question. Earlier in the call, you mentioned upselling Mutual of 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 non-Connect volume to switch to Connect over time? Thanks.

Thanks for the question. Process generally is a volume-based one. The incentives are naturally aligned. As a reminder, when people move to Figure 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. Generally around $5 million-$10 million of monthly volume is when conversations start regarding Figure Connect. 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.

Everything that we do, Figure Forge, as Mike was mentioning, 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.

Thanks again.

Thank you. We'll take our next question from Ryan Tomasello with KBW. Please go ahead.

Thanks. Nice to see the addition of Flagstar. I know you've already given some prepared remarks on it, but wanted to double-click on the traction you're seeing with traditional depositories, you know, particularly for Flagstar. What drove that win? In general, how that sales motion differs versus going to your traditional, more common IMB and Fintech partners, you know, beyond some of these regulatory dynamics, Michael, you know, what's driving the unlock of those conversations? Thanks.

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 this space since I got here, and Mike Cagney is also as a way with regional banks. For both of us, it's been a big focus, and we have yet, until recently, to make really significant traction. I think the turning point has been, one, just the scale of what we're doing. At some point now, you know, 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.

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 spent, in many cases, centuries, you know, protecting their 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. As people look to outsource with a simpler, faster on-chain solution like Figure, we're a natural choice. Furthermore, as people look to the smaller balance first lien loans in particular, those we make profitable, which are historically unprofitable. Banks, unlike others, can't turn their existing customers down. They support all their depositors, or at least try to. These are all reasons why banks are increasingly interested.

Flagstar, in particular, has been a partner, and Mike, feel free to elaborate 'cause it's been a partnership dating back to when it was New York Community Bank. 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 a origination one. 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.

Yeah. I think just to build on that to reemphasize the ability for us to offer competitive product in the sub 300,000 first lien category is an enormous opportunity. Both I think all three of us have commented on the fact that first lien's a 25x larger market than the second lien space where HELOCs traditionally been used. You know, we see the banks in particular as wanting to lean in. Going back to what Michael said earlier and reemphasizing, our big partners have been coming to us proactively asking for first lien, not just refi, but purchase. I think it's a testament to how effective the technology is, and in particular, the benefit of the marketplace that those loans can go into.

Great. Appreciate that. 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. Any color on the expense trajectory coming out of 1Q as we think about modeling for the rest of 2026 would be helpful. Thanks.

Sure. Ryan, thanks for joining the call. 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. Sales and marketing, ops and processing, those you'll tend to see they are gonna 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. Then 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.

Great. Thank you.

Thank you. We'll take our next question from Rob Wildhack with Autonomous Research. Please go ahead.

Morning, guys. 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. That kinda suggests May and June on average will be about the same as April. That's a little bit different from the more, you know, the pattern of sequential growth we've seen through this year. Is there anything to read into there? Because my instinct would've been for more sequential growth given the huge opportunity this seasonally strong spring months in home lending and all the new products you've been highlighting.

Sure. I've also mentioned in my prepared remarks, you know, we wanna make sure that we look at our whales that have been coming through for Q4 and Q1. They tend to ramp in a 3 to 6-month timeline.

When we're providing guidance and where we think we're gonna end up for Q2, we really wanna 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 gonna end up.

Okay. Thanks. Just one on the take rate. Mike Tannenbaum, you called out some interest rate volatility in the quarter. You have that. You have the faster growth in some of the lower take rate products. I would think both of those would be negatives from a take rate perspective. Is there any specific offset that led to the flat take rate sequentially? Just any other color you'd have there would be great.

Take rate is an output of lots of inputs. 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 actual take rates that are coming partner by partner as people expand volume tiers, for example. You also have take rates that are coming from the overall execution and gain on sale. All of those things collectively create the take rate for the quarter. That take rate is ultimately, as we've said, it's an output metric. Our view is that the activity for this quarter, the puts and takes of all that ended up at 3.8, which is something that we think is strong.

As you noted, particularly in light of the volatility that happened towards the end of the quarter. That said, you know, that broader range that we provided, we maintain because of all the variability in these inputs. 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. That's where we're focused in terms of our execution.

Thank you. We'll take our next question from Randy Binner with Texas Capital. Please go ahead. Your line is open.

Hey, thanks. The obviously the overall volume trend is good per the guide. For HELOC, just the HELOC market in particular, do you feel that you're gaining share there? You know, there's more banks because of the lock-in effect who are offering HELOC products. SoFi had an announcement that got some investor reactions. Just, you know, can you give us a sense where you kind of, you know, almost halfway through the year, do you think you're gaining share? Where are you fitting in the overall kinda HELOC competitive market in the U.S.?

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. Two, because so many of our partners don't consider themselves mortgage companies or participants in the HELOC market. Three, because of so much of what we do is first lien, which would have historically been the purview of a traditional mortgage. 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.

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.

Oh, okay. Well, thanks for that clarification. I guess I would maybe shift the question to say, for your addressable set, how would you characterize your share gain?

I'd characterize our share gain as a combination of new partner growth. We see the opportunities there as not only the existing first lien origination market, right? 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. Also, very importantly, as I mentioned in the prepared remarks, as gaining share versus ultimately Fannie Mae and Freddie Mac's market, right? If you look at Mutual of Omaha as 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 of Omaha, right? That came at the expense of Fannie Mae and Freddie Mac market share.

That's where we see ultimately our competition, that combination of, call it the Ellie Mae, ICE, and Fannie Mae and Freddie Mac, complex.

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. It's not that we're taking the share from anybody. It's that no one was originating that asset. I think Anthony Hsieh talked about this in his earnings remarks at loanDepot last week, and referenced his partnership with Figures opening up this market for them in a market they couldn't address before. A lot of what we're doing isn't competing amongst an existing pie. It's greenfield. We're making bigger pies.

All right. That's helpful. Thank you.

Thank you. We'll take our next question from Dan Fannon with Jefferies. Please go ahead. Your line is open.

Great. Thanks. Good morning. 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. You know, how does that compare to, say, at the beginning of the year? Also, the three to six 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 three to six months shorter than maybe what you saw previous as customers have become, you know, more comfortable with the platform or you've grown in your size and scale?

Dan, the future is bright. We see the pipeline the same today as it has been. In fact, I feel Mike has said to me, you know, we can't double forever, but so far we are doubling forever. We feel really good about where we are. We also feel that if anything, the implementations that we're doing in terms of AI and onboarding and examples like I gave of Mutual of Omaha are being helped by tooling technology and the more visibility that we have being a public market company. We don't see any extension of timelines for partner onboarding, nor do we see any reduction in pipeline.

Great. Thank you.

Thank you. We'll take our next question from Kyle Peterson with Needham. Please go ahead.

Hey, good morning. Thank you for taking my questions and nice results. Wanted to touch on, you know, the funding partner mix. Really helpful how you guys kinda split that out in slides. You know, wanted to follow up a little bit more on the asset manager slice. You know, maybe if you guys could give some direction or color even qualitatively on kinda what of that is backed by kinda longer duration institutional capital versus kinda some of these more semi-liquid, you know, retail products like BDCs or interval funds. Any color or direction there would be great?

We broke that out in terms of the types of funds in particular. 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. From our standpoint, 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.

Okay. You know, maybe just a follow-up to, you know, the take rate and mix and kinda what you guys are seeing in April. You know, it seems like at least the macro has gotten a little less favorable for first lien, more favorable for HELOCs and probably some other products. I know you guys are scaling this off of kind of really small bases as Mike referred to, like, creating new pies. I guess how should we think about the mix? Like, you know, have you guys seen any change in April that to reflect, you know, rates kinda spiking back up?

Our platform is strong because it is able to be successful and create bigger pies regardless of the rate environment. 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. I'd also point out that, you know, 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. As a result, you know, that opportunity goes up as those rates tend to go up more than the prevailing mortgage and home equity rates. Separately, as you know, we're creating just larger pies through the greenfield nature of what we do.

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. I think what you've seen in the SMB space, in particular, where partners are using our ability to access home equity to fuel their business, their business lending franchises is a great example.

Just to build on that again, I think, you know, you don't have the same price elasticity in these sub $300,000 first lien products because, again, they just weren't offered before. The fact that we're unlocking that market, there's less rate sensitivity there and more, you know, just being able to access the credit. While we are barbelled in the sense that higher rates push us towards second lien, lower rates push us towards first lien, we have both products. This first lien space is so greenfield, it just doesn't have the same rate elasticity that you'd expect in a normal mortgage.

Great. That's very helpful. Thank you.

Thank you. There are no additional questions at this time. This will conclude today's Figure Technology Solutions first quarter 2026 earnings conference call. Please disconnect your line at this time and have a wonderful day.

Please standby, your meeting is about to begin. Welcome to the Figure Technology Solutions, Inc. Class A Common Stock Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. To get to as many questions as time permits, we kindly ask that you limit yourself to one question and one follow-up. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, today's call is being recorded. I will now turn the call over to Brian Michaleski, Head of Investor Relations.

Thanks, Leo. Good afternoon. And welcome to the Figure Technology Solutions, Inc. Class A Common Stock fourth quarter 2025 earnings call. My name is Brian Michaleski, Head of Investor Relations here at Figure Technology Solutions, Inc. Class A Common Stock. Joining me on today's call are Michael Tannenbaum, Chief Executive Officer, and Minchung Kgil, our Chief Financial Officer. Michael Cagney, our Executive Chairman and Co-Founder, is not able to join us today due to a prior commitment at the White House. I would like to note that in today's call, we refer to certain non-GAAP financial measures. These measures have been reconciled to their GAAP equivalents in the earnings release we issued today, as well as in the appendix to our supplemental slide presentation posted to our website. As a reminder, non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, the results we discuss today, including our net revenue and profitability, refer to their non-GAAP equivalents. I would also highlight that certain statements 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, can cause actual results, events, or circumstances to differ materially from those described in the statements. See the risk factors we have 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. A recording of the conversation will be made available on our website following the conclusion of today's call. Following the conclusion of our prepared remarks, we will open the line for questions. I remind you to limit yourself to one question and one follow-up during the Q&A period. With that, I will turn the call over to Michael Tannenbaum. Michael, please go ahead.

Thank you, Brian. And thanks to all of you who are joining us this afternoon. As many of you know, we previewed our results earlier this month. And what we are reporting today is consistent with that update. Rather than walking through the numbers you have already seen, I want to focus our time today on what this quarter sets up going forward. As we look ahead to 2026, there are three areas that we are focused on. First is continuing to scale our marketplace, particularly through Figure Connect and driving more volume into our capital-light exchange. Second is broadening the types of products that live inside that marketplace, especially across mortgage-adjacent categories where we already have strong partner relationships. And third is expanding the broader blockchain ecosystem around that marketplace, where tokenization, decentralized finance, and atomic settlement are setting the standard of how a modern capital marketplace should function. Everything we are doing across the business, from product launches to partnerships, ties back to those themes. They reinforce each other, and together, they move us further along the path of modernizing capital markets and bringing them onto blockchain. Let me start with the marketplace. Pillar one, scaling the marketplace. Figure Connect is the operating system for how capital flows through our ecosystem. This past quarter, more than half of our consumer loan marketplace volume transacted through Connect for the first time ever. That milestone matters not only because of the speed at which it happened—reminder, we launched Connect in June 2024—but also because it represents structural progress in how the business operates. The more volume that flows through Connect, the less we rely on balance sheet intermediation. The model becomes more capital-light, and our margins become more durable. What is also important and often underappreciated is how difficult it is to build and scale a marketplace to this level of integration. Marketplaces are not software features. They are trust systems. They require standardized assets, consistent underwriting, clean data, transparent performance history, deep institutional relationships on both sides of the market, and credibility with rating agencies and securitization buyers. They require repeat investors who trust the standardization of the asset. You cannot simply AI your way into that. What AI can do is optimize processes and fuel growth. We are leaning into that. We have been explicit that AI is primarily about fueling growth opportunities for us and our partner ecosystem rather than simply optimizing costs. From an AI growth perspective, because our mortgage process is the fastest and lowest cost—again, as we have built our own integrated loan origination system and capital market that removes friction—it is the most optimized for AI. In fact, this month, I was visiting with a partner, and they showed me a demo of an AI salesperson walking someone through their white-label Figure Technology Solutions, Inc. Class A Common Stock product. They said to me, we are going to divert more to Figure Technology Solutions, Inc. Class A Common Stock versus Fannie Mae because the process is so simple. It is much better suited for an AI workflow. I expect more partners to do the same in the coming months. On the cost side, two weeks ago, we launched an AI customer service agent to streamline parts of our application flow, with roughly three-quarters of chat volume containment. Importantly, we can now deploy our staff to focus on either enhanced support, which expands our partner ecosystem, or more growth-oriented tasks, especially as many of our unlicensed partners need our licensed staff for true sales activities. We have also embedded AI into property title review workflows and as a parallel validation step against our underwriting guidelines. These tools reduce error and enhance the quality and homogeneity of our assets. More importantly, the agents we train on these workflows can then be deployed on third-party assets, making it easier for us to bring in new asset originators into our democratized prime short-term financing marketplace, something I will cover a bit later today. But before that, I will make one final point on AI and our business here, particularly in the context of the market thinking about which companies benefit versus are disrupted. While AI can improve underwriting models, enhance servicing workflows, and further reduce costs in our origination flow, AI cannot create liquidity, nor can it replicate years of standardized asset performance across cycles. As I wrote last year, you cannot AI your way into AAA. Furthermore, Figure Connect works in tandem with Democratized Prime, our on-chain short-term financing marketplace that provides the working capital layer to fuel additional origination. Where Connect drives long-term liquidity and asset distribution, Democratized Prime provides programmable, decentralized short-term warehouse capacity. Together, they create a vertically integrated capital market stack from origination to financing to distribution. Each incremental originator and new product expands asset supply. Each additional investor, whether DeFi or traditional, improves price discovery. And every transaction enhances performance history and transparency—back to that durable ecosystem and moat. This is the formula we believe builds durable marketplaces. And once they reach the levels of scale we have achieved, they are not easily displaced. So our focus is to stick to the same formula: increase penetration, broaden liquidity, and continue shifting volume into this capital-light framework. Pillar two, product expansion. That brings me to our second pillar for 2026: expanding the types of products within our marketplace on the back of Figure Technology Solutions, Inc. Class A Common Stock’s second-lien HELOC success. If Connect is the engine, product expansion is the fuel. Our goal here is straightforward: extend the Figure Technology Solutions, Inc. Class A Common Stock ecosystem into mortgage-adjacent verticals without changing the core architecture that makes the model work. Importantly, we are not reinventing the system every time we enter a new product. We are extending the same standardized, blockchain-native infrastructure into new use cases. As I shared previously, we are leveraging AI to make it go faster. There are three important examples of this. First, adding third-party volume, meaning volume not originated by our loan origination system. One of the most powerful evolutions of our model is the ability to bring externally originated assets onto our capital markets rails. For example, we just signed a major partnership with Agora Data to bring auto finance assets into Democratized Prime. Agora is a fintech platform that provides analytics, capital markets access, and loan performance data solutions to auto finance lenders, helping them originate, fund, and manage auto loans more efficiently and profitably. With our partnership, which is expected to bring tens of millions of dollars of auto finance to Democratized Prime and Connect in just the next few months, we are expanding distribution without owning the front end or powering the LOS. What matters is that the loan ultimately flows into a standardized marketplace with transparent underwriting, blockchain registry preventing double pledging, and both institutional and DeFi liquidity. By integrating with third-party originators, we dramatically expand addressable supply without material costs. We effectively turn our marketplace into a capital markets highway—one that can accept assets from multiple on-ramps. That increases network liquidity and, importantly, further strengthens Democratized Prime and Figure Connect. For the auto loan space, the road ahead is paved on-chain. Second, SMB loans. SMB is another clear example of how we extend the Figure Technology Solutions, Inc. Class A Common Stock ecosystem without changing the core architecture. Many small business owners are asset rich but liquidity constrained, and oftentimes that core asset is their home. According to the Consumer Finance Bureau, more than two-thirds of business owners also own their homes. At the same time, many entrepreneurs are boxed out of traditional capital sources. They may lack sufficient time in business, they may not meet minimum revenue thresholds, and may not fit conventional underwriting boxes. As a result, they often turn to higher-cost capital products because they believe those are their only options. We intend to be a big part of changing that. Given the substantial portion of these operators that own a home and have strong personal credit profiles, we can service these borrowers where most others cannot or will not. In Q4, partners on our SMB platform did over $46 million of loans, twice as much as the prior period. In this spirit, we are very excited to announce that Figure Technology Solutions, Inc. Class A Common Stock is finalizing a strategic partnership with Newtek, a highly established and trusted leader in the small business financial services space. In the near term, we are excited to support Newtek in delivering Figure Technology Solutions, Inc. Class A Common Stock’s HELOC small business to Newtek's deep network of loyal business owners through our partner-branded channel. Over time, we see this evolving into a fully embedded small business lending, banking, and money movement partnership anchored by our SEC-registered stablecoin, YIELDS (YLDS). This partnership reflects our shared commitment to serving small businesses and highlights how Figure Technology Solutions, Inc. Class A Common Stock’s full ecosystem can power transformative, long-term growth. Lastly, I will touch on a product category that, while not new, has been increasing in importance for us: first-lien mortgage. As of Q4, first lien represents roughly 19% of our originations, up from 12% just a year ago. That change in mix reflects both growing partner adoption and increasing investor comfort with the asset. The opportunity here is significant. First lien is a multi-trillion-dollar market and represents the majority of our partners' existing volume. Our existing partners do over $300 billion of first lien. If we want our marketplace to be the winner in all of housing finance, we have to participate meaningfully in that market. And that is exactly what we are doing. Over the past several quarters, first lien has moved from being an extension of HELOC to becoming a central driver of growth. That momentum gives us confidence that 2026 will be the year of the first lien for Figure Technology Solutions, Inc. Class A Common Stock. Chinese New Year was last week. That rang in the Year of the Horse. This is now the Year of the First Liens. What differentiates our approach is the low cost and speed that we can offer our origination partners. Repetition does not spoil the prayer. We do a mortgage in less than $1,000 and in five days, versus the industry average of $11,045. Our first-lien HELOC offers everything a mortgage does but with the full redraw functionality, and sits in the first position. That structure provides flexibility and unlocks a strong competitive differentiation against the GSE-driven conventional mortgage alternative. Today, when partners originate first-lien mortgages, they are often routed into a Fannie Mae or Freddie Mac channel by default. By offering an alternative with faster cycle times and lower costs, we provide a different path and one that integrates directly into our capital markets rails. The result is that mortgage partners no longer view us as their HELOC outlet. They are increasingly coming to us as a comprehensive mortgage platform. Pillar three, blockchain ecosystem expansion. The third pillar for 2026 is expanding our blockchain ecosystem. This is where our long-term differentiation becomes most visible. From the beginning, we have said blockchain is core to our strategy. It is the critical infrastructure layer that allows us to modernize capital markets. Over the last several years, we have proven this thesis in private credit. We have shown that tokenized real-world assets can originate, trade, and securitize efficiently on public blockchain. We have demonstrated that transparency and immutability reduce friction, and we built liquidity around standardized on-chain assets. And we are extending that infrastructure even further with the recent developments here. I will start with an update on Democratized Prime, our decentralized finance marketplace that competes with traditional warehouse lines and prime brokerage, but in a structurally different way. Instead of relying on bilateral agreements, legal complexity, and bank intermediation, assets can be pledged, financed, and settled directly on-chain with programmable collateral management. This is not theoretical anymore. We are seeing real traction. Democratized Prime delivered outstanding results with nearly 10x quarter-over-quarter growth, expanding from $20 million to over $200 million in matched offers. We now have more than 1,000 active participants on the platform, demonstrating strong market demand for decentralized warehouse financing. And we have almost doubled again this number since the beginning of the year. We successfully launched our real-world asset consortium partnership this quarter, extending Democratized Prime access into the Solana ecosystem. The cross-chain expansion allows DeFi participants to access U.S. real estate–backed yield, which is quite different versus the speculative assets typically seen in DeFi. We brought institutional assets to a broader participant base. Reminder that Democratized Prime adds an important cog into our flywheel by providing critical working capital for loan origination for our partners, while generating fee income for Figure Technology Solutions, Inc. Class A Common Stock. It is also the most natural way that third-party assets enter our ecosystem because it is easier to offer short-term financing than permanent capital. We see Democratized Prime, with an upsell of Figure Connect, as the baseline go-to-market approach for third-party assets. And the aforementioned Agora Data auto finance partnership is a consummate example. Next, I will touch on YIELDS, the settlement layer of our ecosystem. YIELDS is not just a stablecoin. What makes it differentiated is that it is regulated, yield-bearing, and natively integrated into our capital markets infrastructure. It can settle loans. It can finance assets. It can move across chains. And over time, it can serve as a bridge between traditional financial institutions and on-chain markets. As the oil of the machine, YIELDS growth directly correlates with increased activity across our lending marketplace and Democratized Prime platform. You see this reflected in the results this quarter and to date, with YIELDS in circulation nearing half a billion, increasing by over 20x since the end of the third quarter. We expect YIELDS adoption to continue to accelerate on this exponential curve as more partners recognize the efficiency benefits of blockchain-based atomic settlement and as regulatory clarity continues to favor compliant stablecoin structures over less regulated alternatives. As mentioned previously, Newtek, as one example, is exploring funding loans in YIELDS, thereby reducing the interest burden for borrowers and settlement expenses for itself. And finally, last week, we demonstrated something that underscores the broader opportunity in front of us. We became the first public company to launch a blockchain-native share class of our own security, listed on an exchange we purpose-built to enable others to participate in the same model. The equity marketplace is called OPEN, On-chain Public Equity Network. This is not a tokenized wrapper of a DTCC security or a synthetic representation of legacy infrastructure. We issued equity that is native to the blockchain from day one, with its registry, trading venue, settlement layer, custody model, and financing rails fully integrated on-chain. Let me explain why this is important. First, we rebuilt the transactional structure. Trades occur 24/7 on our ATS with atomic settlement. Investors can self-custody through wallet connectivity. Ownership is recorded directly on-chain through an integrated transfer agent model. That reduces friction and cost, and restores direct control to the shareholders and issuers. Second, and most economically meaningful, is holders realize the benefits of true ownership and self-custody through financing and DeFi integration. Equity on OPEN is programmable collateral. Shareholders can borrow against it at up to 80% loan-to-value. They can cross-collateralize with other on-chain assets inside Democratized Prime. They can lend their shares directly through transparent limit order books, retaining stock loan economics rather than seeding them to opaque prime broker structures. This is a structural shift in who captures value in equity markets. And third, this is the beginning of issuers forming direct relationships with their shareholder base. On-chain, issuers can access their shareholders directly—for communication, rewards, governance—without intermediaries like brokerages or proxy advisers. Shareholder communication is increasingly important to issuers, especially as a broader segment of retail enters the public markets. OPEN offers important keys for issuers to navigate this dynamic. When you step back and look at what we have accomplished this year, the through-line is clear. 2025 was about proving that this model works, operationally and financially; about establishing real first-mover advantages; and building out marketplace infrastructure. 2026 is about compounding that momentum. We believe we are still early in the transition towards more efficient on-chain capital markets, and we are operating with increased scale. Before we move on, I want to briefly address a recent security incident. To be clear, this was not a blockchain or protocol-related event. This incident involved a targeted phishing attack that affected our loan inquiry records and a limited number of customer accounts in our loan products. There was no compromise of our blockchain infrastructure or core transaction processing systems. The impacted information includes names, loan account numbers, addresses, and dates of birth, as well as Social Security numbers for approximately 12,400 individuals. We have begun notifying individuals and are offering appropriate support. We moved quickly to contain the incident and implemented additional safeguards, including enhanced office authentication controls, expanded employee training, and further monitoring to reduce the likelihood of similar events in the future. We take information security extremely seriously, and we will continue investing in our controls and processes. At this time, the incident is not expected to have a material impact on our financial results. I will now turn the call over to Minchung Kgil to walk you through our financial results for the quarter.

Thank you, Michael. I will walk through our results, touching on our growth, scale, profitability, and balance sheet for the quarter. Starting with growth, we reported exceptional consumer loan marketplace volume this quarter, reaching $2.7 billion, an increase of 131% year over year, primarily driven by new partner expansion with 307 partners and continued growth in volume from nascent products such as SMB loans and DSCR loans. As a reminder, the winter months from November to February represent seasonally low levels of activity for home-based lending. Despite this, we reported sequential quarterly growth in our consumer loan marketplace volume, with contribution from new partners and newer product categories offsetting the seasonal headwinds. Democratized Prime ended the quarter with a balance of $206 million, and YIELDS ended at $328 million, reflecting continued adoption following Prime's expansion onto Solana and our broader RWA consortium initiatives adding momentum for these products. Shifting to scale, we reported adjusted net revenue of $158 million, an increase of 16% year over year. Adjusted net revenue benefited from the higher consumer loan marketplace volume and by servicing and interest income, which are asset-balance-based revenue lines. Year-over-year adjusted net revenue directly correlated to consumer loan marketplace volume grew 130%, while servicing and interest income combined grew by 47%. Net take rate was 3.8% this quarter, 40 basis points higher year over year, with better gain-on-sale execution as the primary driver of increase. Last year, we had very little Connect volume in Q4. This year, 54% of our volume comes from Connect, where we primarily earn a net take rate on volume traded. Compared to the prior quarter, net take rates were lower from a decline in gain-on-sale premium, in line with broader market execution, which was wider from increases in deal flow during 2025. Secondarily, we saw net take rate slightly lower quarter over quarter due to business mix. For example, as we introduced first-lien securitizations, credit buyers' premium on the loans—what we call gain on sale—is more attractive to the buyers, which means it is lower for Figure Technology Solutions, Inc. Class A Common Stock. Another would be as we scale with larger Connect partners who bring more volume to our marketplace, they benefit from lower ecosystem fees due to the sliding scale rate we offer for higher volumes. It is important to note we manage the business to optimize for marketplace volume growth and long-term profitability, rather than to maximize our net take rates for each quarter. This approach aligns with the broader strategy Michael outlined today. As to our near- to medium-term outlook on net take rate, we believe the range will be between 3.5% to 4%, which takes into account factors such as product mix, marketplace participation, and capital market conditions. That range may fluctuate quarter to quarter, but our focus remains on scaling long-term marketplace margin durability and capital efficiency, not short-term pricing optimization at the expense of marketplace slowdown. Turning now to profitability. GAAP net income for the quarter was $15 million, representing a margin of 9.4% compared to 7% in Q4 of last year. GAAP net income was impacted by higher overall share-based expenses in the quarter, which were primarily driven by one-time fully vested grants to third-party advisers and for certain of our restricted stock units that incurred accelerated recognition of expense to earlier years within the vesting period. We expect stock-based compensation to normalize around $21 million over the next few quarters. Adjusted EBITDA was $81.3 million, up approximately 426% year over year. Adjusted EBITDA margin expanded to 51.6% compared to 20.2% in the prior-year period. This quarter, we recognized additional public company–related costs of $2 million, and we expect this trend to continue into 2026. Our medium-term goal for adjusted EBITDA margin is to be above 60%, and our progress this quarter can be explained as follows: first, we are growing volume and assets in Figure Connect and Democratized Prime that reduce balance sheet usage and improve contribution margins as more volume moves into our capital-light marketplace. Second, we are seeing our contribution margin from partner-branded volume continue to be around 80%, as we have built out the core infrastructure that powers Figure Connect and our partner-branded initiatives. And third, we continue to execute on operating leverage across both fixed and variable expense categories, where our volume increased 131% and our operating expenses, excluding share-based compensation, increased 13% over the same period. I will move on to our balance sheet and liquidity. We ended the quarter with approximately $1.2 billion in cash and cash equivalents. Loans held for sale were approximately $44 million at the end of the year, an increase of $15 million this quarter. As a reminder, our loans held for sale balance typically reflects the periodic timing of loan sale and securitization programs, as we generally hold on to loans for a few weeks. As we scale Democratized Prime and supply Figure Technology Solutions, Inc. Class A Common Stock loans for collateral to meet the demand, we may extend the time we hold certain loans on our balance sheet. This could increase the balance sheet in future periods, while our loans represent available lend supply for this product. As more third-party lending supply comes onto the platform, like Agora that Michael mentioned earlier, we expect loans held for sale balances to normalize back to historical trends. In addition to our strong operating results, I would like to highlight our announcement today that our Board has authorized a $200 million share repurchase program. We are taking this step as a reflection of the strength of our balance sheet, the durability of our operating profile, and our confidence in the long-term opportunity in front of us. I would note this program does not obligate us to acquire any specific amount of shares, and it will be executed in a disciplined manner consistent with our liquidity position and strategic priorities. We expect to maintain substantial financial flexibility to continue investing in marketplace expansion, product innovation, and growth across our businesses. In summary, Q4 demonstrated strong volume growth, significant operating leverage, and continued migration toward a capital-light marketplace model. As we enter into 2026, we remain focused on margin durability, balance sheet efficiency, and further scaling our marketplace as the primary drivers of long-term profitability. With that, I would like to thank everyone for joining us today and for your continued interest in Figure Technology Solutions, Inc. Class A Common Stock. Leo, we are now available for questions.

Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad. Again, we kindly ask that you limit yourself to one question and one follow-up, and pick up your handset when posing your questions. Thank you. Our first question is coming from Dan Dolev with Mizuho. Your line is now open. Please go ahead.

Hey, guys. Michael and Katrina. Really, really nice results. Very impressive as always. I wanted to ask you about the Agora partnership. Looks like a very, very exciting development here—third-party-originated auto loans. Can you maybe frame the opportunity here and how much upside this should be adding to Figure Technology Solutions, Inc. Class A Common Stock over time? Because this seems like a phenomenal business, in our view. Thank you.

Thank you, Dan. Agora, in many ways, is like Figure Technology Solutions, Inc. Class A Common Stock. They are innovative. They have a huge partner network. In their case, it is dealers. And they have a really successful capital markets franchise. They are also really big believers in blockchain. And so for them, standardizing the capital market infrastructure is going to help them grow faster. In terms of the opportunity set, it is really threefold. One, it is an entrance into the massive auto finance sector, with about $1.5 trillion outstanding. It is also a huge opportunity for us from a Democratized Prime perspective because we are bringing third-party assets onto the platform, which is how we monetize Democratized Prime. And then lastly, it is also a Connect upsell opportunity. Because as Agora standardizes its assets onto Figure Technology Solutions, Inc. Class A Common Stock, we will have the exposure to our buyers who will then be able to participate in Figure Connect and transact in permanent acquisition of loans rather than just temporary financing on Democratized Prime. So a really massive opportunity across all of our capital-light products.

Very impressive. Thanks again.

Thank you.

We will now move on to Patrick Moley with Piper Sandler. Your line is now open.

Thanks for taking the question. So, I wanted to talk about loan origination partner adds. You have almost doubled it in the last six months, up 25% sequentially in the fourth quarter. So I was hoping you could maybe pull back the curtain and help us get a better sense for where those partner adds are coming from, the nature of those partners. And then given the accelerated pace of growth we have seen there recently, could this be a leading indicator of an acceleration in loan origination volumes in 2026? Thanks.

We are firing on all cylinders in terms of partner acquisition. We have three primary motions that are all working really well. We have the licensed approach, which is split into a focus on independent mortgage banks, and then separately depositories, which includes banks and credit unions. And we see significant traction in both of those. And then we also have the nonlicensed approach, where we have the SMB channel we talked about, doubled quarter over quarter. And we are seeing activity in fintech and broader real estate. I have not spent as much time talking about residential transition loans and DSCR, but that whole ecosystem and market of investors, people that fix and flip loans and properties, is a really massive opportunity. It is considered broadly non-QM, and the Figure Technology Solutions, Inc. Class A Common Stock product is a perfect fit for that space. And so a lot of our nonlicensed activity is partnering with those types. And so to directly answer your question, I do think it is indicative of a really strong pace of consumer loan marketplace volume growth that we continue to see into 2026.

Great. Thanks for that color, Michael.

We will now move on to Ryan Tomasello with KBW. Your line is now open.

Hi, everyone. Echo the congrats on the strong execution and the initiatives. To double click on the Agora partnership specifically on the monetization, I think we know that the Democratized Prime fee rate is roughly 50 bps, so that is pretty clear. But in terms of upfront tokenization fees, what the Figure Connect monetization looks like relative to first-party assets—anything to help size that math would be helpful. Thanks.

I will start, and I will turn it over to Minchung. From a monetization standpoint, I think the important point is that this is pure margin. We are not incurring the expenses to originate the asset, maintain the LOS. It is really about leveraging our capital market infrastructure. And I would also say that 50 basis points is the estimate that we have shared for assets. But as we enter into different conversations and asset classes, we see generally upside towards that number. Without being specific about this transaction, I do think that you will see as we add additional third-party assets, the contribution dollars and basis points of margin from Democratized Prime to go up. Minchung, what would you add?

Thanks, Ryan, for asking the question. I would also add, Michael mentioned earlier that this will be going into Figure Connect as we see more standardization in the loan product for auto. And so we do anticipate this impacting the overall volume coming into Figure Connect, which is great. And then additionally, as securitizations for this type of auto loans are developed, we would also be getting the securitization sponsor fee. Just keep in mind, I did allude to a net take rate range of 3.5% to 4%. That is taking into account these auto loan types because these are shorter duration, and so they will likely command a lower take rate rather than the HELOCs, which have a longer duration. And so we are thinking ahead to different types of asset classes being added and being helpful to us in the overall volume coming into our marketplace.

Great. Thanks for the color.

We will now move on to Robert Wildhack of Autonomous Research. Please go ahead. Your line is open.

Hi, guys. Just sticking with the take rate. I think previously you were suggesting the take rate to be stable around 4% and now you are saying more like 3.5% to 4%. So can you just unpack what has changed structurally there in the last couple months?

Sure. In 2025, our main products were really the second-lien HELOCs as part of our overall ecosystem. As we move into 2026 and we add different types of products, the product mix is changing into auto and more first lien coming across. And so auto, I gave the example earlier, these are shorter-term loans, and they are going to have a different type of profile and different types of buyers that come into the Connect marketplace. So we do anticipate the take rates really coming down for the shorter-duration products. And it is going to depend on the product that is going forward. And at the end of the day, we really want to be able to continue to grow our marketplace. The goal for us has always been to add different types of assets coming into our marketplace, not just the one HELOC second lien. And so first-lien products or auto or any different types of loans in the future will have an impact on take rate.

Okay. And I guess if the take rate is going to be that much lower going forward, but you are still targeting 60% margins, how do you bridge the gap there? Is that just more volume or lower cost in the longer term?

I will start, and Michael, if you want to add anything, please go ahead. I think the important part is, as I mentioned in my prepared remarks, our contribution margin has been around 80%. It is not that we are going to be spending additional expenses. As we mentioned for Agora, it is not that we are going to be adding more different types of LOS systems and having to spend. And so we do anticipate the contribution margin still to be higher than that 60% mark in the future with different types of assets.

It might also be worth adding, first lien was 19% this quarter, 12% last year, same period. So when you think about first lien in particular, those are larger loans. And as a result, take rate happens to be lower basis points on loan amount, but the dollars that we earn and the profit dollars are actually higher because the unit costs are the same for us to do so. So I would not look at take rate as an input metric or any decline in take rate as saying anything about maybe partners in a more competitive environment or renegotiating take rate—nothing like that. It is simply product mix. That 12% versus 19% is pretty material. And we are actually leaning into that. We want more of these larger first-lien loans. We started doing the smallest loans available—call it $100,000. And as we work our way up—remember, disruption starts at the bottom—we are doing a loan at $1,000 versus industry average of $11,000. And so we are able to continue to work our way up towards our partners' volume, doing larger and larger loans, being more and more competitive with Fannie Mae. That take rate may not be 4%, but the unit economics of that loan are going to be better just given the size. And so we are classically disrupting that market. And as I mentioned in my remarks, our existing partner base does $300 billion of first-lien production annually—more than that, conservative number—and we are adding partners all the time. So this is definitely a positive. I want to make sure that is clear.

It is. Yeah. If I could just—just one clarification because I think growing in first lien has been a priority for the company for some time. But the take rate outlook is softer. So is that just a function of even more first-lien loans that you are expecting or larger-dollar first-lien loans than you were expecting a couple of months ago?

Yeah. I mean, if you think about it, we are growing at 100% year over year, and we moved from 12% to 19%. So I do not think at the time of the IPO we expected first lien to have as much traction as we do. And so many of our conversations today with partners are about first lien because, at the end of the day, that is the biggest part of their business. And if we want to be as helpful and as disruptive as we can to the status quo, we are moving into that market. Our product is getting pulled in that direction.

Okay. Helpful. Thank you.

Thank you.

We will move now to James Yaro with Goldman Sachs. Your line is open.

Good afternoon, and thanks for taking the question. I just wanted to touch on the ramp-up in volumes for new originating partners. Is there a rule of thumb you could lay out for us for how long partners take before they are fully scaled up and originating volumes on your platform? And maybe could you comment on the composition of year-on-year growth in origination volume between new partners versus existing partners?

Hi, James. Our sales team would say it is three months because that is how the compensation structures work. But in general, that is roughly what we see. There are going to be different dynamics. Our partner base is diverse. Some are licensed. Some are not licensed. Some use an API. Some are bigger, and they take more time. So some of the partners we announced last quarter, even some of the larger ones, they are still not fully ramped because, especially as we expand into that first-lien ecosystem, as we do things like DSCR and SMB loans, and add things like YIELDS—right? All of these opportunities are a big reason why upsell is such a large part of our go-to-market motion. And so for us, we continue to see new products being added. But in terms of the core first- and second-lien HELOC, that is going to be about three months.

And, James, just—sorry, just to add to what Michael had mentioned as well, I would say that our partner count is getting up to 307. It is not that new partners are the ones that are contributing the most to this. We also have existing partners continuing to grow within our ecosystem as they move onto Connect. And we also see that new partners are joining us with Figure Technology Solutions, Inc. Class A Common Stock acting as an intermediary or going on directly to Connect, and some of them are taking a lot of the share within Q4, which is great. And these are newer partners that have joined in the second half.

Excellent. Thank you. Just a quick ticky-tacky one for you, Minchung. Any ability for you to comment a little bit on the seasonality in the first quarter? You touched a little bit on seasonality in fourth, but maybe you can just comment a little bit around the first quarter as well.

Sure. We are still in the deep throes of winter months. In New York as well, it is very cold. And so what we do see is that from November to February, those tend to be the months where we see less volume than the rest of the year. And so we are just exiting out of that and going into March. And so we do anticipate higher growth in March, as it was in the historical trends.

Thank you so much.

Thank you.

And once again, if you would like to ask a question, please press star 1 now. We will now move on to Randy Benner with Texas Capital. Please go ahead.

Hey, thanks. I was just hoping you could update on the securitization process—how that is going for the HELOC loan products—and then, I guess, for these newer products, if there would be a longer period of time where you gather loans before you would be able to place those in the securitizations as well.

Sure. Hi, Randy. It is Minchung. So what we are seeing in Q3, Q4, Q1—just a reminder for this group, we earned our AAA on our securitization from S&P and Moody's over the summer, and that has greatly helped us in terms of higher gain-on-sale premium that we are realizing for Q3 and Q4. You are seeing that in the trends compared to 2024, which has been very helpful for us. As you allude to in terms of newer products, first lien—we did our second securitization actually in Q4. The first one we did in Q3 for the first time. And so it does take some months to be able to gather the new products before we can move on from a whole-loan direct-from-Connect sale to a securitization vehicle. So how we think about it is, usually we want to be able to have size of about several hundred million dollars for each of the securitization products. So the new products that we talked about that are less than $100 million for this quarter, it is going to take some seasoning over the next few quarters before we can enter the market.

Okay. So the—those loans held on the balance sheet will just be higher, but that is the reason why, and so that is all helpful. Just on auto, is the auto part the—

Sorry to interrupt. On these types of loans, we actually just sell them through whole loans. So Connect is really a whole-loan marketplace where sellers come into the marketplace to be able to sell different types of loans. So they are being sold directly on Connect. Securitization is a different vehicle where Figure Technology Solutions, Inc. Class A Common Stock has stood up a shelf, worked with the rating agencies, and we collect a sponsor fee on those types of vehicles. And so it does take time—actually, a few quarters and more size—for these loans to go through a securitization, but that is additive to us in terms of take rate.

Okay. Understood. The last follow-up is just on the auto product. Is that going to be direct, or would some of that be held for securitizations over time?

So just want to make sure that we are 100% clear. With auto, Agora already has their own securitization shelf. And so what they are looking to do with Figure Technology Solutions, Inc. Class A Common Stock is to standardize that approach on our blockchain rails, take advantage of, for example, our registry and the fact that we prevent things like double pledging—as you saw in the Tricolor bankruptcy, those types of things—and get better execution over time by introducing also competition into the financing both on the Democratized Prime marketplace as well as in Connect. But we will not be taking those loans onto our balance sheet. Similarly, when we talk about, for example, the DSCR loans, those loans today are not living on our balance sheet. In fact, they are living on one of the originating partners' balance sheets. And then what we do is we work with the rating agencies and those partners over time to build out a shelf that then our partners can contribute into. And so, as Minchung mentioned, when the securitization ultimately happens, it is a fee-based event for us. We take a securitization fee as part of that transaction. It is the contributors who own the assets that contribute those assets into the securitization.

Alright. That is really helpful. Appreciate the clarification.

Thank you. Once again, that is star 1 if you would like to ask a question. With Needham. Your line is open.

Hey. Good afternoon, guys. Thanks for taking the questions. I want to start out, particularly on private credit, and it has been pretty topical of late. I think there have been some jitters about it. I know at least a decent chunk of some of the whole-loan and securitization buyers are kind of private capital and private credit investors. But has there been any change in—whether it is kind of tone or activity or anything like that—in buyer appetite in the last couple months as some of these concerns have crept up? I know it seems like it is more kind of isolated commercial credits, but just wanted to see if there is any change in sentiment or contagion concern with your partners.

Hey, Kyle. Thanks for the question. So what we have seen in the market, at the end of the day, is that we actually have not seen any change in the demand for Figure Technology Solutions, Inc. Class A Common Stock loans, and that is because we are in the market very often. People understand our product. We are in the market with securitization vehicles as often as well. And so, as you alluded to, the private capital/private credit capital jitters that you are seeing are really on the commercial loans rather than these residential mortgage-type loans, so we are not actually seeing that. With that said, though, as a reminder, our loans actually get originated within nine days on average, as fast as five days. So if we do see anything, it is going to take a long time for other loan originators to shift to meet the appetite. We have a very short time, and we are able to change trends as needed as quickly to accommodate the market. But that is not something that we see today.

Okay. That is really good to hear. And then I guess just a follow-up. I wanted to touch on the crypto-backed loans. I know that is a smaller kind of ancillary product now, but how has that product performed? I know there has been some recent volatility in crypto prices, but has the credit performance and collateral held up on par with your underwriting standards? Or, I guess, just how has that book performed over the last few months as there has been a little more volatility in crypto prices?

It is a dream asset class from the perspective of the investor or owner of the loan because you have the ability to liquidate that asset basically at any time because of the way the Bitcoin market works. And so even though there has been volatility, we have actually had a really easy time liquidating in the event we drop below LTV thresholds. So we have been handling that nicely. There have been zero losses in crypto-backed loans to date. And, in general, while you note there is an environment that people are spending more time on private credit, we are seeing across all of our products securitization execution at all-time tights, including even earlier this month. So, definitely, there is some distinction across asset classes and across issuers. And so we feel really good about the position that Figure Technology Solutions, Inc. Class A Common Stock is in.

Great. Thank you for taking my questions, and nice results.

Thank you.

Thank you. This concludes today's Figure Technology Solutions, Inc. Class A Common Stock fourth quarter and full year 2025 Earnings Conference Call. Please disconnect your line at this time. Have a wonderful day.

Goodbye.

Welcome to the Figure Technology Solutions Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Lastly, today's call is being recorded. I would now like to turn the call over to [ Craig Streem ] Investor Relations.

Thank you, Nicky. Good morning, everybody. Welcome to our third quarter 2025 earnings call. This is [ Craig Streem ] in the Investor Relations team at Figure. Joining me on today's call are Mike Cagney, Executive Chairman and Co-Founder of figure; Michael Tannenbaum, our Chief Executive Officer; and Macrina Kgil, our Chief Financial Officer. In today's call, we will refer to certain non-GAAP measures, which are reconciled to GAAP measures in the earnings release we issued yesterday after the market closed and in the appendix to our supplemental slide presentation posted to our website. Non-GAAP measures are not intended to be a substitute for GAAP results. Certain statements made during today's call may contain forward-looking statements, which may vary materially from actual results. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings and set forth on Page 3 of the earnings presentation we've posted in the IR section of our website and in the risk factors we've identified in our third quarter 10-Q filed earlier today as well as in other SEC filings. We're not undertaking any commitment to update these statements if conditions change, except as required by law. And a recording of the conversation will be made available on our website following the conclusion of today's call. Following the formal remarks, we will also open the line for questions, and I would encourage you to follow along in the posted earnings presentation as we go through our formal remarks. And with that, I'll turn the call over to Michael Tannenbaum. Michael, please go ahead.

Thanks, Craig, and thanks to all of you who are joining us this morning. Let's begin by turning to Slide 4. As you saw in the earnings press release we issued after the close yesterday, we had a very strong third quarter with great results in all of our key performance metrics. Adjusted EBITDA, the measure that most clearly demonstrates the profitability of our business, reached $86 million in the quarter, an increase of 75% year-over-year and EBITDA margin reached 55%. Net income for the quarter was nearly $90 million, more than triple last year's quarter. Total consumer loan marketplace volume reached almost $2.5 billion in the third quarter, representing a 70% increase year-over-year. This growth reflects continued expansion across our origination partner network and increased utilization of Figure Connect for liquidity. As more partners leverage the platform to fund and sell loans, we're seeing meaningful gains in both scale and efficiency. A standout example being first lien lending, where adoption has accelerated sharply among both new and existing partners. Firstly, volumes nearly tripled year-over-year, making it one of our fastest-growing products this quarter. Partners are leaning into Figure Connect as a liquidity solution, enabling faster funding, improved execution and lower cost versus traditional channels. This momentum demonstrates how our marketplace model extends beyond home equity and into the broader consumer ecosystem, capturing a larger share of the housing finance value chain. We also continue to see encouraging progress from new product categories, which together contributed more than $80 million in volume in the third quarter. These include innovative blockchain-based solutions for crypto-backed loans, loans to small and medium businesses and debt service covenant ratio, or DSCR, loans. Each of these products leverages the same origination and trading infrastructure that powers our core marketplace. This combination of core growth and product innovation reinforces the scalability of the Figure ecosystem. By expanding both vertically within home lending and horizontally across adjacent asset classes, we're creating multiple avenues for growth and ensuring that Figure remains the leading blockchain marketplace for consumer credit origination and liquidity. Now let's turn to Slide 5. Given it's our first earnings call as a public company, I want to share a bit about our evolution and how we have succeeded in delivering against what we see as a generational capital markets opportunity. From the beginning of the company, we've had a relentless focus on innovation and technology, in particular, on the use of blockchain to drive scale, achieve competitive differentiation and disrupt incumbents. With mortgage and home equity, we identified a greenfield product set where we could improve the product experience and capital market. But our ultimate objective has always been to create a true marketplace that will connect assets with the capital markets in a capital-light manner that generates the sort of margins you see in this quarter's results. Over time, we believe this will translate into lasting shareholder value. On Slide 6, I'll start by going back to 2018 when we became one of the first entities to originate consumer loans on blockchain. In 2020, we did the first securitization of blockchain assets. In 2023, we did the first AAA-rated securitization of blockchain assets and now our securitizations have AAA ratings from both S&P and Moody's. To date, we've originated over $18 billion in loans on the Provenance blockchain and executed over $60 billion in blockchain transactions. We believe we are, by far, the largest player in the public blockchain real-world asset space and our lead is growing. We began as a direct-to-consumer lender using our balance sheet to originate loans. We very quickly grew to a business-to-business to consumer platform and now have nearly 250 third parties, that's up a lot from last quarter who use our technology to originate blockchain-native assets. Originally, we used our balance sheet to bridge between our partners and the capital markets but we began to move away from that in June of 2024 with the launch of Figure Connect, where we allow our origination partners to access capital market liquidity directly. Instead of intermediating with our balance sheet, our partners sell directly to the capital markets using our marketplace. This fee-based model is more profitable for us, and in addition, does not require us to use our equity capital. We went from 0 volume in the marketplace of June of 2024 to having it comprise almost half of our total consumer loan marketplace volume in this quarter. Turning to Slide 7. I want to share a bit more about why blockchain is so important to our approach and how it has become the backbone of our entire strategy. We focus on 3 foundational elements of blockchain. Transactional efficiency, liquidity and lending and each of these is an essential element contributing to our ability to transform capital markets. Starting with transactional efficiency, we have found that blockchain has enabled us to save roughly 85 basis points in securitization costs by taking advantage of the immutability of putting loan attributes on blockchain, which has allowed us to reduce third-party review costs. Moving to liquidity. We created via standardization an homogeneity in our loans. Every loan originated across our now almost 250 partners is done electronically end-to-end on the blockchain without human involvement in the data. Regardless of the partner, every loan is underwritten the same way, and all performance data is captured transparently. We've seen the value of this approach validated recently given some of the capital markets issues and fraud highlighted by the Tricolor and First Brands situation. Earlier, I mentioned $60 billion in transaction versus $18 billion in originations, which demonstrates that through Figure Connect, we're turning homogeneity and data integrity into real tradable liquidity. That's a breakthrough for a historically illiquid asset class and is quickly becoming one of Figure's strongest moats. Finally, the last element is what we broadly characterize as lending, specifically how lean perfection and cross collateralization can provide greater economic efficiency for a variety of products. One way we're applying this directly is through Democratized Prime where our frictionless, short-term liquidity funding marketplace is delivering financing rates below those achievable in wholesale capital markets. This not only validates DeFI's potential efficiency, but also gives us a road map to extend this to other asset classes, something Mike Cagney will discuss later on this call. Turning to Slide 8. you'll see the 2 core marketplaces that anchor the Figure ecosystem today, our consumer credit marketplace and our digital asset marketplace. These are the primary engines of our business model. The consumer credit marketplace supports our origination partners, which include banks, credit unions and mortgage companies. Every loan they originate is fully digitally standardized and executed on chain, creating homogeneity and transparency across the ecosystem. Our digital asset marketplace provides a connection point between the capital seekers I just spoke about and the capital providers who seek to earn the best possible return. Our digital asset marketplace is a global regulated exchange built on the same blockchain rails as our consumer credit network. Embedded within this marketplace is Democratized Prime, our decentralized short-term funding market. Democratized Prime connects lenders and borrowers directly, eliminating traditional intermediaries. And importantly, it's not isolated from the rest of the platform. It can also finance the same loans originated by our consumer credit partners. These 2 marketplaces work together. One generates high-quality, real-world assets and the other provides the liquidity to fund them. Across both ecosystems, our revenue model is simple. We earn a fee-based take rate on ecosystem volume. On the next slide, you can see the illustration of the life cycle of a loan within the Figure ecosystem and how we capture value at each stage. Let's use a credit union partner as an example. When their customer applies for a loan, a credit union connects directly to Figure's system through an API or web app and sends us just a few key data points. Things like income, property details and loan amount. Within seconds, our technology determines whether that loan meets prespecified underwriting parameters. If approved, Figure's platform automatically verifies both income and property value by linking to the consumer's bank account and third-party data sources. In nearly all cases, there's no human touch. The resulting data credit score, income and property valuation are written immutably to the blockchain forming a digital audit trail that dramatically reduces quality control costs as those loans move through the capital markets. Loans are then aggregated and financed either through warehouse lines or increasingly on Democratized Prime before being sold to loan buyers. At sale, Figure earns a roughly 3% ecosystem fee which is deducted from proceeds, meaning our partners are not out of pocket. If the loan is later securitized through our platform, we earn an additional 40 basis points. Separately, we earn a 25 basis point annual servicing fee for as long as the loan remains outstanding, which typically runs about 5 years. Across this life cycle, automation and blockchain verification translate to meaningful cost savings in origination, diligence and secondary market execution. All efficiencies that directly strengthen the partner economics while creating recurring high-margin revenue for Figure. These improved economics for all parties involved have been a significant contributor to the growth and relationships you'll see on the next slide. Our partner network is one of Figure's most powerful differentiators. Today, that network spans traditional banks and credit unions, more than half of the top 20 independent mortgage banks and a growing base of fintechs, solar and home improvement companies. As highlighted in our earnings release, this quarter, we onboarded one of the largest mortgage servicers in the United States to our marketplace. These partners rely on our infrastructure to originate and distribute consumer credit products more efficiently creating a nearly continuous flow of high-quality assets. Because our partners can originate, fund and sell loans seamlessly, their economics improve and our overall reach continues to expand. As a result, over the past 5 years, partner-originated volume has grown at roughly a 74% CAGR. This network is a core part of our flywheel, broadening access to borrowers while also increasing liquidity for investors across our platform. Turning to Slide 12, expanding the supply side to meet this demand for credit is an important part of our mission to be a marketplace for these products. We are achieving this through Figure Connect, a purpose-built marketplace that enables buying and selling of standardized blockchain-native assets for all counterparties in the transaction. We now have a diverse range of participants on the platform. These are high-grade institutional counterparties such as banks, asset managers and insurers looking for transparent data-rich credit exposure that settles faster and more efficiently than anything available in traditional markets. On this same note, in Q3, we added 7 new buyers to our securitization program, including a prominent sovereign wealth fund who has become a programmatic buyer, benefiting our broader ecosystem. In short, Figure Connect is transforming what used to be a fragmented and opaque process into an always-on data transparent and institutionally funded marketplace, redefining how real-world assets move throughout the capital markets. Before concluding on Slide 13, I want to also note that in the conversations with investors, we frequently hear we have a high "do versus say ratio". This slide summarizes some of the operational proof points we have been highlighting recently. The first is expanding our consumer loan marketplace to first lien, which is up almost 3x year-over-year and is rapidly proliferating through our partner ecosystem. The second is the progress on our blockchain pillars with our blockchain native equity listing and our growth in our stablecoin yields or YLDS. The third is the ubiquity we have been building for our YLDS stablecoin, including recent expansions into the Sui and Solana ecosystems. We are committed to continued delivery on the growth of our marketplace and our vision of bringing the capital markets on chain. So before I hand it over to Mike, I want to take a step back and put this quarter in context. What you've heard today, strong financial results, growing partner adoption and continued product innovation, all reflect the strength of Figure's platform and the durability of our business model. We're executing with discipline, scaling a capital-light marketplace and translating technology investment into measurable financial performance. At the same time, we're still in the early stages of an even larger opportunity, which is transforming the capital markets themselves. The traction we're seeing in Democratized Prime, the expansion of YLDS and the upcoming equity initiatives underscore how blockchain is driving real change here at Figure. I'm incredibly proud of the progress our team has made and confident in the foundation we've built for sustainable long-term growth. With that, I'll turn it over to Mike Cagney to share his perspective on the broader opportunity ahead and the next phase of innovation at Figure.

Thanks, Michael. I want to start off my remarks today by reminding the investors about the enormous opportunity we're executing into at Figure. This quarter was exceptional. We optimized for the long term in our approach to product technology investment and corresponding shareholder value. We're transforming the capital markets with blockchain, and we see the opportunity to build a $100 billion or more market capitalization company in this field. We built our consumer loan marketplace in a series of very deliberate, methodical steps over the past 7 years. And as Michael pointed out, that's clearly paying dividends for us today. The early progress you're seeing in YLDS and Democratized Prime is just that. It's early progress, but we're confident that over time, we will continue to build out these products and many more we've not even revealed yet. On Slide 15, Democratized Prime, our DeFi lending product is an important part of our future. And in many ways, it's the most scalable platform, the most natural place for both third-party assets and our ecosystem. Many of you heard me talk about the liability flight from banks to stablecoin, which will in turn drive demand for DeFi as alternative funding sources. We believe Democratized Prime is well positioned to benefit from that flight. Democratized Prime competes directly with traditional capital allocators that intermediate between sources and uses of capital, directly connecting borrowers and lenders and reduces significant time and cost benefits. We stood up at a number of loan marketplaces on Democratized Prime, and importantly, the funding cost there is lower than traditional warehouse lines. We see a significant opportunity to use Democratized Prime to offer warehouse into our existing Figure Connect lending partners eliminating the 90-day diligence, minimum fees, excessive legal costs that they have to face with the banks in lieu of a lightning fast, cheaper financing solution. The economic model of Democratized Prime is compelling as it generates incremental pure margins since it operates as a decentralized exchange-like marketplace rather than a balance sheet business. This continues our broader trend of introducing capital-light, higher-margin products that expand the ecosystem's velocity and profitability. Over time, we see Democratized Prime becoming the preferred liquidity venue not only for assets originating within our consumer credit network, but also for blockchain native real-world assets more broadly and a direct extension of the structural efficiencies we built across the Figure platform. And as we add additional blockchain ecosystem connectivity to YLDS, like you're seeing with Sui and Solana, we have a natural platform to access to Democratized Prime for their ecosystems. On Slide 16, earlier this week, we announced a partnership with Solana to deploy our yield-bearing stable coin YLDS on the Solana blockchain, the second major blockchain partnership for YLDS after Sui and that we've announced since the IPO. This collaboration brings together Solana speed, throughput and composability with YLDS regulatory anchor design and attractive transparent returns. The step also supports our broader strategy at Figure, building modern capital markets infrastructure that bridges traditional finance and decentralized systems. YLDS is not just a token, it's a regulated financial infrastructure asset designed to support fiat movement on and off chain and enable a seamless flow of yield and liquidity across our ecosystem and other LLMs. The Solana and Sui deployments extend that capability into one of the most active blockchain developer communities, opening up new rails for innovation, adoption and scale. Finally, I'm pleased to share one major strategic marker that further accelerates how we are reinventing capital markets as we continue to build out the blockchain ecosystem Michael referred to. Yesterday, we announced that we filed a confidential S-1 for the upcoming launch of a blockchain-native equity share class on Provenance blockchain. This offering is a nondilutive secondary transaction and represents the first public equity class to exist entirely on blockchain infrastructure. We'll share more about this offering in a call with the analysts and investor community next Tuesday, November 18 after the market closes, at which time we expect our registration statement will be public. This is a watershed moment for Figure for Provenance blockchain and for capital markets more broadly, and one we believe will define how asset classes are created, financed and traded for decades to come. With that, I'll turn it over to Macrina to walk through our financial results for the quarter.

Thanks, Mike. Turning to Slide 18. Let's take a closer look at our financial performance this quarter. As a reminder, at Figure, we focus on 3 key metrics: volume, revenue and EBITDA. Starting with volume, our total ecosystem activity continues to grow rapidly. Notably, our consumer loan marketplace volume reached a record level nearing $2.5 billion this quarter. Importantly, volume on Figure Connect made up nearly half of the total consumer loan marketplace volume as we continue on our path to building out our capital-light marketplace with limited balance sheet exposure. Moving to revenue. Adjusted net revenue reached $156 million in the quarter, an increase of 42% from the third quarter of last year. Adjusted net revenue benefited from the higher level of ecosystem volume I just mentioned, partially offset by lower take rates from partner branded volume as we shift more volume away from Figure branded. I would remind you that Figure-branded volume generates a higher growth take rate in revenue with higher operating expenses. Overall, our partner branded volume, especially volume from Figure Connect brings us higher adjusted EBITDA margin. Turning to our profitability. Figure achieved an adjusted EBITDA of $86 million for the quarter, up 75% year-over-year, representing an adjusted EBITDA margin of 55.4% compared to 44.9% in the prior year period. That's over a 10-point improvement in margin, driven by operational efficiency, automation and the continued shift toward our marketplace. On the expense side, we continue to demonstrate meaningful operating efficiency. Our fixed costs, which include technology and product development as well as G&A functions like finance, legal and capital markets, have remained stable from pre-IPO levels relative to our revenue growth. The investments in technology that we've made over the last 7 years allows us to add new product verticals without significant incremental development costs. Variable costs that move with our volumes have benefited from continued reduction in funding costs in addition to automation and AI applications embedded throughout the business. Variable expenses as a percentage of adjusted net revenue declined from 36% to 28% year-over-year, highlighting the efficiency of our marketplace model and transition away from using our balance sheet. On the next slide, there are trends I want to make sure you are aware of. As we look ahead to the remainder of '25 and early '26, it's important to note the typical seasonality in home equity loan origination volumes that we expect to see in the fourth and first quarters based on historical information from '23 and '24. According to a third-party data source, Q4 and Q1 volumes historically trended below the annual average, lower than the yearly baseline. This pattern is consistent with what we've seen historically as demand for lending tends to moderate heading into the year-end holiday period and through the winter months. We see that consumers typically defer major financial decisions such as home improvements or debt consolidation during the late fall and winter as household budgets shift toward holiday spending and travel. That said, we believe our diversified partner base and capital-light marketplace model position Figure to navigate these dynamics effectively. Before we close, I want to highlight the 3 long-term financial goals that guide our strategy shown on the next slide. First, adjusted EBITDA margin. We are targeting annual margins above 60%, reflecting the scalability of our model as more activity moves to Figure Connect, and as Democratized Prime adoption continues to grow. These initiatives fundamentally reduce the need for balance sheet capital, increase transaction velocity and drive a higher contribution margin with each incremental dollar of volume and balance. Our progress this year with adjusted EBITDA margin reaching nearly 55% this quarter demonstrates that level is achievable in the longer term. Second, capital light. Figure is moving to a marketplace model and as partners increasingly originate, fund and sell loans through our platform, our role becomes that of an infrastructure provider, capturing recurring marketplace economics without tying up capital. The transition to third-party and on chain funding through Figure Connect and Democratized Prime continues to reduce the use of our own balance sheet while maintaining liquidity and flexibility across the ecosystem. And third, operating efficiency. We've maintained a disciplined cost structure with limited increases in fixed expenses even as revenue and volume have scaled substantially. Our technology investments, particularly in AI and process automation have reduced variable costs as a percentage of revenue and allowed us to support more partners, more products and more transaction volume without proportional increases in headcount or spend. We believe we are uniquely positioned as the future of capital markets with an integrated platform that uses blockchain to originate, finance and trade real-world assets at a fraction of traditional cost. As we continue to grow our partner networks and develop our decentralized finance capabilities, we expect to deliver sustained volume growth, stable and attractive take rates and expanding operating margins over time. I'd like to thank everyone for joining us today and for your continued interest in Figure. Nicky, we're now available for questions.

[Operator Instructions] Our first question is coming from Dan Dolev with Mizuho.

Amazing quarter. I mean you're really crushing it. You obviously crushed all of our expectations. So maybe a question for you, Michael and Mike, what is either of you most excited about in the business right now? Because there seems to be so many moving parts and so many great things. Kind of I think investors want to know what's the most exciting thing for you guys. And great results again.

Thanks, Dan. I'll start, and then I'll let Mike add what he's most excited about. For me, it's very simple. Our existing and future customers are coming to us rather than us going to them, asking us how they can use our blockchain tech to improve their business, which I think is definitely exciting. I spend a lot of my time on partner acquisition and growth. And when I joined this company, blockchain for most of our partners was very much in the background. I've referred to it kind of similar to cloud technology where it just works. But increasingly, I see that our origination partners want to have conversations about our blockchain ecosystem more directly. They're considering YLDS, our stablecoin and Demo Prime in addition to our tokenized loans, and they see the connection between these things. So that go-to-market and sort of that dynamic is very exciting. Mike, I would be interested to hear from you.

So I think you know my -- what I'm most excited about. I think the press release yesterday announcing that we're issuing equity native to public blockchain is a huge transformational opportunity. It's an opportunity to build an entirely new capital market ecosystem. And then unfortunately, I can't spend a ton of time talking about that today, but we're going to spend a lot of time talking about that next Tuesday. But I think that's a real leap of us demonstrating that the value proposition that Michael articulated earlier in the call, the transactional efficiency, the liquidity and the capital financing DeFI aspects of blockchain are applicable not just to the credit asset class, which I think we've clearly demonstrated, but to other asset classes as well and equity being the next one on the agenda for us.

Our next question is coming from James Yaro with Goldman Sachs.

Also congrats on the IPO as well as on the strong results coming out of the gate here. I'd love to just touch on your product road map. What's the order of prioritization of your products from here? And then maybe if you could comment on the TAM and profitability of those top few products? And what do you see as being meaningful to results among these new products over the next, let's say, 2 to 3 years?

Thanks, James. That's a good question. I'll start by saying that we have a huge $185 billion plus market opportunity in front of us. We see all consumer credit and asset classes, as Mike just mentioned, beyond consumer credit as addressable. From the core standpoint of our HELOC product, we're executing into $35 trillion of home equity. And there is just a huge amount of runway in that product. Importantly, though, as you heard us mention in the prepared remarks, we've seen a lot of traction as well in the first lien aspect of the business, which is a -- which is the largest consumer credit asset class. And so that is something that we're pushing really hard, and we'll continue to do so in the coming quarters. In terms of the blockchain ecosystem pillars, namely Democratized Prime and YLDS, we're also making significant progress and really excited in the coming months to share some ways that we're going to be bringing more liquidity and ubiquity to those products, particularly some of the liquidity you see in other blockchain ecosystems, bringing that into our Demo Prime marketplace. So Mike, I don't know if you want to elaborate on that a bit.

No, I think we're going to continue to invest in Demo Prime. It's a core aspect of what we're trying to deliver on in terms of capital market disruption. Then as I mentioned in Dan's comment or question, the application of equity native chain is really an extension of the existing infrastructure that we have. Obviously, it's an extremely novel transaction, but it's one that's tapping into again, the transactional efficiency, liquidity and financing benefits we've demonstrated on the credit side. So we really look at this as just an extension, but an important part of the road map.

Yes, I'd like to add because it's -- could I just -- we called it Democratized Prime, which I think that name Democratized Prime is a reference to prime brokerage. So it really connects kind of all the pieces of our ecosystem, right? The cross-collateralization you could get across crypto, tokenized loans, tokenized equity. And so that name was very intentional, and you'll be hearing more about that in the future. Next?

Super helpful. Maybe if you could just perhaps touch on the Figure Connect outlook. 46% of your volume on our estimates came from Connect this past quarter, which was better than at least we had anticipated. How do you think about the -- what that could comprise and over what time frame?

Sure. James, thank you for being on the call. How we think about Connect is we've made progress. We opened up Connect in June of 2024. Within 2025, we are already reaching very close to 50% of Connect volume across our overall consumer loan marketplace volume. We do think that in the mid- to near term, 60% of Connect volume is quite doable, and we're working hard with our partners to get there. .

Our next question is coming from Patrick Moley with Piper Sandler.

Congrats on the IPO. So you saw really impressive partner growth in the quarter. So I was hoping you could elaborate on that. Can you help us get a better sense for the composition of those new partners in terms of size and the types of loans you'd expect them to be originating. And then how should we think about the time that it's going to take for those new partners to reach what you'd expect to be kind of a realistic run rate from them?

Yes. The partner growth was really impressive. I think the biggest aspect of partner growth for the quarter was growth in the SMB segment. That's because there -- it's completely greenfield, and we actually saw not only tailwinds because of the government shutdown and the small business administration being closed, but also just broad recognition of the opportunity and what we're doing and the applicability into the SMB use case. That was coupled with a product improvement that we released that allowed us to underwrite small and medium business bank accounts. But more broadly, we are constantly onboarding a range of partners that range in size. And I think one of the nice things that add stability to our business is that we bring on people that can get up and running in as fast as 2 weeks. And then we bring on enterprise parties that are doing more of a years long in some cases, sales cycle and implementation, and we have all of that capability in-house. This quarter, you saw us add a major servicer, one of the largest, if not the largest in the United States. We also added an extremely large independent mortgage bank. And we also added one of the players that has done a partnership with Robinhood and so we do expect to see some volume from there as well. And so we're continuing to add a diversified group of partners and that range in size and now also end market with the SMB additions.

Our next question is coming from Ryan Tomasello with KBW.

Congrats on the strong quarter out of the gate. I wanted to ask about Democratize Prime and YLDS. If you could just discuss the strategies you're leaning into to drive adoption there. I think one of the opportunities, it sounds like you've alluded to in the past is given the ecosystem you have, the possibility of promoting some incentives to existing origination partners as well as the underlying consumer borrowers to jump-start usage of those products. So if you can just elaborate on what the strategy is there?

Sure. I'll start, and I'll let Mike add as he's very close to Democratized Prime. In terms of the marketplace, where we're focused today is on the funding side. We originate, as you can see from the results this quarter, a very large number of tokenized loans each month. And ultimately, we see Democratized Prime as serving not only those loans but third-party loans as well. So it's a really massive opportunity. It's, frankly, the most scalable in many ways because of our ability to work and support with third-party assets. And so now our focus is on building out the funding side where we want to make sure that there is sufficient liquidity for these assets because when you're building out a marketplace, which is something that Figure has a lot of success in doing, you need to kind of control one side of the marketplace and then add others. And so we have the asset side down, and we're looking to increase funding. Mike, anything you would add there?

Yes. I think as it relates to YLDS, the announcement with Sui and Solana are important in terms of the direction we're taking with YLDS. YLDS started as a Provenance security and Provenance doesn't have the builder community that both Sui and Solana have. And so bringing a security into those ecosystems where you have a fiat on/off ramp and a yielding stablecoin for purposes of payments, cross-border remit, collateral, we think is a significant opportunity, and we expect to get significant acceleration off of that. We're also making headway with YLDS in terms of collateral on exchanges. I think you'll see some announcements from us as we go into the second half -- or at the end of this year as it relates to that and that's natural. We would expect that YLDS would be a superior collateral type versus USDC because of the yielding nature for it. On Democratized Prime, as Michael said, we have the ability to put billions of dollars of assets on there. What we're looking at now is the funding side, and we're doing this in lockstep fashion. So we can't drop $1 billion of assets and then expect the capital to show up. Conversely, we can't drop $1 billion of capital unless we're ready to put the assets to work. What we're very focused on in terms of the capital side is replicating what Athena and others have done in liquid staking protocols where we have an underlying yielding asset. In this case, a home equity line of credit or lending against such asset as the yield-generating feature for that as opposed to something Athena does, which is the drop between the spot and forward market and the yield that's there, which is extremely volatile as the market is seeing today. And so we expect that we have an enormous opportunity to drive asset generation through that yielding liquid staking protocol construct. And we believe that's going to add a significant amount of dollars in Democratized Prime.

Great. Appreciate all that color. And then in terms of the value proposition of tokenization, you've clearly demonstrated that within the consumer credit asset class thus far. But if you're able to give us just your general thoughts on what you see that value proposition being for tokenized equities given the stronger liquidity and transparency in that asset class at least relative to consumer credit. So what are the additional benefits you see being unlocked from tokenization there?

Well, without getting too much into the structure because most of that's going to be covered on next Tuesday's call, and I do encourage everyone to join because I think it's very innovative, and we'll give a lot more detail. But I think one of the focuses and you've heard both Mike and I talk about this is a lot of the existing market today is focused on kind of tokenizing but not necessarily adjusting the full blockchain infrastructure behind that tokenization and what we're about to unveil will be a little bit more fundamental. So that's, I think, hopefully enough to make you interested in joining next Tuesday.

I can add to that a little bit in a more general construct. I think that a lot of our peers are discussing tokenization of equities and what they're doing is promoting the idea of taking a DTCC security and doing a blockchain representation of that. And the value prop they allude to is 24/7 trading. And I don't think 24/7 trading is that appealing to the broader market. And I don't think the market makers want to make market 24/7. And so I think it's a little bit of a red herring in terms of why there's value here. If you go back to the 3 value props of blockchain that Michael talked through earlier, there's transactional efficiency, and there's some transactional benefit you get with a blockchain native equity. The transfer agent costs, for example, is lower, but it's not enough to move the needle. There's a liquidity benefit at the margin in that you do have 24 hours -- 24/7 trading. But again, I think we were looking to lift FTX out of bankruptcy. They had a U.S. equity [ perp ] business that traded 24/7. And that's all that mattered, that business would have been flying and it was and it was going sideways. I think the real value in putting equity on blockchain is the DeFI construct, the ability to cross collateralize your stock with other assets like Bitcoin, like Figure loans, for example, and build unique borrowing pools through processes like Democratized Prime, where you access leverage in a way that traditional prime brokerage can't service. And even more importantly, the ability to lend that stock out. So rather than the opaque locate market we have today, where the prime broker earns the benefit when the security goes on special and pays an extraordinary yield, you have a straight-up limit order book, a limit order book where you put the stock out for loan and you decide what you want to get paid for it. And that's enough that should drive anyone on the buy side to want to own the blockchain version of that security. There's considerations about liquidity and how do you keep the price in lockstep. Again, Michael alluded, we'll talk to that in depth next Tuesday, in particular, how we're doing this for our issuance. But I think this is the future of how capital markets, equity capital markets are going to work. And just as we did with lending, where we pioneered it with our own product, we think we'll do the same thing here on equity.

We will move next with Rob Wildhack with Autonomous Research.

Just a quick one to start. I appreciate the comments on seasonality. Do you think we should expect the quarter-over-quarter cadence in 2025 to reflect what happened in 2024? Or are there any differences that we should be aware of this year? And then same question heading into 2026.

Rob, this is Macrina. So as you saw our Q3 was outsized growth compared to last year, and we have been trending really well with our IPO and all of the efforts with partners. I do expect some level of seasonality in Q4 and also into Q1, but I do want to balance out that we have been having great success with our partners. We're seeing a lot of interest. So for us, it's more of a balanced approach.

Okay. And then bigger picture, you guys have really emphasized the lower cost to originate and faster time to close as big advantages. I think this quarter, we've seen or heard several other fintechs either growing in or expanding their own HELOC businesses, some even with automated appraisals, income verification, things like that. So I was hoping you could talk a bit more about the sources of your advantage like how much of the better Figure process comes from the blockchain-based infrastructure versus maybe more traditional tech improvements? Because I think the extent to which it's the former could matter a lot for your defensibility there.

The thing to remember about what we do is we've built an alternative capital market that has deep liquidity ratings, tokenization and it brings -- we use blockchain as a tool to bring the transparency and to bring the immutability of the data. And for example, as we mentioned, highlighted this quarter with Tricolor, the lean perfection. And so having that data and the ability to track the true provenance of the loan is critical to building out that capital market. And so we're doing something very different than everybody else in the space. And HELOC is just kind of a primitive to that marketplace. And the reason is because we've built an alternative capital market on blockchain rails. And to be very specific, when we make a change to our technology, it's integrated into the capital market. So what we do is if we decide to push an automation like we did with small business bank account, it's our capital market and technology that are working together, and it's that point of integration between those 2 that unlocks the really high margins that you see this quarter, the capital-light marketplace and the growth that you're seeing.

Our next question comes from Dan Fannon with Jefferies.

I wanted to discuss the outlook for the non-HELOC loan growth. I think it was roughly $80 million in the quarter. Can you talk about how you see that progressing as the products expand? And which of the products you mentioned in the release were really -- was there an outsized driver of those loans?

We're seeing significant growth in first lien, as we mentioned, 3x year-over-year. And that is the primary focus for figure of the new products that you've heard us mention because of the, frankly, market size and opportunity for our partners -- existing partners to grow. That said, the SMB and crypto backed loans are also extremely important to the growth story, HELOC loans has been grown as well around the 3x year-over-year number. And what we're seeing is just the beginning of that marketplace as we expect to pursue the same B2B2C approach that we did in the mortgage market. And so today, that's mainly direct to consumer. And then in SMB, as we add more and more partners and build that go-to-market engine, we do expect to see significant growth there as well.

Great. And as a follow-up, you mentioned the government shutdown as being a catalyst for some SMBs joining. Can you talk about just the outlook for new origination partners given the strength we saw in the adds in the third quarter and maybe how you're seeing those conversations in the outlook in terms of potential additions over the next several quarters.

Yes. So the opportunity is definitely much broader than that specific shutdown. But the parallel is interesting because in mortgage, you have Fannie Mae; in small and medium business, you have the SBA, and we are an alternative blockchain-based capital market to both. And so we think this is a huge opportunity to bring that transparency. Again, back to the earlier question, what makes us different, right? It's the combined technology with the blockchain transparent capital market. And that is a solution that is relevant not only for mortgage, not only for SMB, but for tons of asset classes. But SMB is where we are being pulled. And I think that the current market environment there is just adding further tailwinds.

[Operator Instructions] We will move next with Craig Siegenthaler with Bank of America.

So a follow-up on Dan's first question. On the first lien growth, is that a first lien HELOC? Or is that a first lien primary? And then I wanted to get an update on your appetite to expand outside of HELOC because I saw you referenced debt service covenant ratio loans in your prepared remarks. I think that's a pretty small TAM, but I'm wondering what about resident transition loans, auto loans and also primary first liens, non HELOCs. Could we see Figure move into some of these other potentially larger TAM segments in the future?

Yes. So I'll start on the first lien question. And it is a first lien HELOC. We distinguish that because the use case is very different. Oftentimes, when people think about a HELOC, they think about a mortgage on top of an existing first whereas the first lien HELOC that we originate via our partners is used to pay off an existing loan, often because the rate is higher than the prevailing rate. And it's also -- so it's a true replacement for a cash out refinance or a rate and term refinance to use traditional mortgage parlance. There's also 40% of homeowners that own their home free and clear, and so don't have an existing lien. So that's the first lien opportunity. And where we really see growth in there, just to be even more specific, is among especially small balance first lien because the cost to originate for Figure is $1,000, whereas industry average is $1,200. And so if you look at a, say, $200,000 mortgage that's a really material savings, and that's why we are seeing partner adoption. In fact, we are seeing some partners adopt first lien that don't use our HELOC products. So it's really massive growth. I do want to correct the record on the TAM of DSCR. That actually is one of the largest, if not the largest components of non-QM. I believe there's over $20 billion annual securitization of DSCR. But I will just use this opportunity to remind everyone that the capital market that we're building, and I think the SMB use case represents this the best is one that transcends any one specific asset class. We really see this as the beginning. Our ambitions are much broader than just mortgage or HELOC. And so you'll see more next week in the coming quarters, but we're definitely really excited about the business that we're building and its broad reach into the U.S. capital markets.

For a follow-up again on HELOC. I wanted to hear a little more details on your value proposition for large banks especially large banks that originate and hold HELOCs on their balance sheet, they might not receive the full value of the Figure Connect value proposition. And also with large banks, is it a headwind that you're really only offering capabilities in one lending segment because they might want solutions across all the consumer loan classes that they play in.

So this actually gets to kind of what I was saying I'm most excited about, and I think it would be good for Mike to expand here as well because there's this broad thesis that we have at Figure which is that you're going to have liabilities moving into stablecoin, which are tokenized liabilities, and therefore, assets themselves will need to be funded with those. And so if you think about the broad capital market as one where assets have been moving out of the banking system for the last 20 to 30 years, that will continue and accelerate with stable coin. And so for a large bank, actually, what's happening is they're going to want to tokenize their assets to access those viabilities that are tokenized and Democratized Prime is actually a perfect way to do so. And so this is part of our broader macro thesis and it's being borne out in the conversations we're having, Mike is having, the sales team is having. I don't know if you'd add anything there, Mike.

Yes. I mean I think that we got an interesting perspective in late '22, early '23, when we had some liability flight out of the banking system and the regionals and the super regionals were especially impacted by that. They were all selling assets at fire sale prices that had a cascading series of events that ultimately led to bank failure and the need for the FDIC and the treasury to step in with some extraordinary measures to stabilize the market. And the treasury is today talking about $2 trillion going to a stablecoin or $6 trillion going into stablecoin. And they're not talking about where that's coming from, which is clearly demand deposits. And we're in a discussion with a lot of banks, a lot of regional and super regionals about this across 2 factors. One is to Michael's point, the ability to originate blockchain-native assets and access that DeFI ecosystem, which paradoxically is just the reallocation of that capital pulled out of the demand deposit put into stablecoin and then reapplied in DeFi to generate yield. And we think there's an enormous opportunity and low balance first lien is a great use case for us to bring to those banks because they don't do that loan today. So it's a greenfield opportunity for them and an ability for them to get a front row seat as to how blockchain works. The second thing that we're doing where we're getting traction is around the ability to use yields defensively, where when JPMorgan comes with JP coin and tries to approach those deposits, the bank can offer up a yielding alternative where with YLDS we, just like any Genius Act coin we can hold treasuries and bank deposits, we have the ability to hold bank deposits back to that bank. So if a regional bank customer buys YLDS, and it comes through that regional bank, we can hold that deposit back at the bank balance sheet, therefore, not keeping the liability within the bank itself. And we think both of those are significant opportunities for us, especially as we're getting the Genius Act coming online, you're starting to see more noise out of Chase. I think Chase is going to make very aggressive moves here at the expense of regional and super regionals. And I think we're well positioned to bring both some defensive and certainly in certain circumstances, offensive capabilities into those banks, with the combination of on-chain asset origination and access to DeFi through Democratized Prime but also YLDS as a defensive measure for -- or an alternative to a nonyielding stablecoin.

And this concludes today's Figure Technology Solutions Third Quarter 2025 Earnings Conference Call. Please disconnect your lines at this time, and have a wonderful day.