BLNE Q3 2026 earnings call transcript, November 12, 2026

Good afternoon, everyone, and thank you for joining us today to discuss Beeline's results for the third quarter of 2026. I'm Tiffany Milton, Beeline's Chief Accounting Officer, and joining us on today's call to discuss these results is Nick Liuzza, our Chief Executive Officer, Jeff Kennedy, Chief Operating Officer, and Chris Moe, our Chief Financial Officer. Following our remarks, we will open the call to your questions. Now, before we begin with prepared remarks, we submit for the record the following statement. This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, included but not limited to statements regarding Beeline Holdings expected future growth of its core business, increased revenue, growth of fee-based revenue streams, including Beeline equity, our plans with regard to using blockchain and digital assets in our mortgage and home equity businesses, our operating priorities and plans, goals and expectations for future operating results, and expenditures for the remainder of 2026 and beyond, plans and expectations for a potential merger with TYTL, and the opportunities and benefits offered by such a transaction. Forward-looking statements are typically identified by words such as believe, expect, anticipate, plan, intend, seek, estimate, will, would, could, may, continue, forecast, target, potential, project, undertake, and similar expressions. These statements are based on management's current assumptions, beliefs, and expectations and are not guarantees of future performance. Actual results may

differ materially from those described in forward-looking statements due to various risks and uncertainties. These include, without limitation, the risk factors we provided in our 2025 Form 10-K and prospective supplement dated March 10, 2026, as well as in our Form 10-Q filed with the SEC. We caution investors not to place undue reliance on any forward-looking statements made during this call. All forward-looking statements speak only as of the date of this presentation and are based on information available to Beeline as of today. We undertake no obligation to publicly update or revise these statements to reflect events or circumstances occurring after today's date except as required by law. Now, with that said, I'd like to turn the call over to Nick Leuza. Nick, please proceed.

a regulated digital marketplace where mortgage-backed securities could eventually trade more efficiently, subject to applicable and regulatory approvals. I also want to emphasize my personal commitment to this transaction. Of my approximately 9 million anticipated merger shares, I intend to cancel approximately 3 million shares, which can be used to support VLINE's future capital raising initiatives, reducing dilution for shareholders. Another 33% will be tied to performance milestones. With 16.5% earned when VLINE achieved a $100 million market cap for five consecutive trading days and another 16.5% at a $200 million valuation. The remaining 33% will be issued at closing, subject to lockup restrictions. This structure aligns my interest directly with shareholders, while providing VLINE approximately 3 million shares to support future capital raises, which reduces shareholder dilution. Now let's take a look at Q3. The third quarter provided clear evidence. that our operating strategy is working. Revenue reached 3 million, up 30% year-over-year, and 15% sequentially, our strongest quarter revenue since 2021. Our net loss improved 6% sequentially, and our adjusted EBITDA improved for the third consecutive quarter, including a 33% sequential improvement. This happened despite a challenging interest rate environment. These results were driven not by chasing volume, but by focusing on higher margin products,

improving conversion rates, and increasing revenue per transaction, our margins have expanded every quarter this year. At the same time, we're implementing an additional $250,000 in monthly operating expense reductions, with more than half already realized, and our U.S. payroll costs have already declined 35% in November. This is an important combination, growing revenues, expanding margins, and reducing our cost structure simultaneously. I'll leave the operating details to Jess, because they demonstrate the scalability of the business. Two additional areas deserve attention. First, technology and AI. This was our first full quarter of owning 100% of Magic Blocks, our proprietary AI platform. AI is central to our strategy of growing revenue without proportionally increasing headcount. Jess will discuss its impact on conversion rates and loan product costs. Second, home equity. Home buyers are increasingly reluctant to refinance low-rate first mortgages. Our expanding home equity project products allow them to access equity while preserving their existing mortgages. Jess will cover our closed-end mortgage launch and upcoming products. I'll return later to discuss how these offerings connect with TYTL and our broader digital securitization strategy. With that, I'll turn it over to Jess to walk through our operating results. Jess?

Q3 was the quarter the operating model came together. Revenue was up, margins were up, and operating expenses were down. All in the same quarter, and against a tougher rate backdrop. Regarding originations and funnel efficiencies, we closed 268 loans in the third quarter, up 11% from both a year ago and from Q2 2026. The quarter built as it went, and September was our strongest closing month since March. That growth came on essentially flat dollar volume of roughly 67 million, which tells you the revenue improvement is coming from mix and margin and not from volume. Just as important is how we did it. We deliberately pulled marketing away from lower return segments to focus on non-QM mortgage products, so lead volume was down about 28% from Q2, and closing still rose 11%. Our lead to close conversion improved by more than 50% in a single quarter. We closed more loans with a meaningfully smaller funnel, and that's the efficiency we've been driving towards. Turning now to product mix and margin. The mix shift we began in the middle of Q2 is now fully in the numbers. Our products, led by DSCR and bank statement loans, represented nearly 9 out of every 10 loans we closed in Q3, up from roughly 8 in 10 in Q2. And that share rose every month, 83% in July, 89% in August, 93% in September. And that share has held above 90% in October. The margin result followed. Margins expanded for the third consecutive quarter this year. Overall margin was 3.56% in Q3.

Up from 3.07% in Q2. And 2.78% in Q1. A 16% improvement quarter over quarter. And roughly 84 basis points higher than a year ago. The strength carried through the quarter. September was our strongest margin month of the year at 3.59%. And October stepped up again to approximately 3.67%. Revenue per loan increased approximately 5% sequentially. And approximately 15% year over year. A year ago, choosing economics over volume was a strategy we described. And today we can see this decision in the unit economics. Now turning to MagicBlocks and AI. This was our first quarter with MagicBlocks wholly owned and consolidated. And you can see its fingerprints on the results I just described. MagicBlocks is the AI engine leading our customer journey. The conversion improvement I mentioned is the clearest evidence. Fewer leads, more closings, less marketing spend per funded loan. So, thank you. For the remainder of the year and into early 2027, we are extending the focus into back office operations. This application of AI will continue to build scale in the back office and loan fulfillment areas of the business. AI is how we grow revenue and reduce our costs to produce each loan at the same time. I'd also like to highlight new products, Close End Seconds and HELOCs. In the third quarter, we launched Close End Second Mortgages, and in the fourth quarter, we launched HELOCs. The logic is simple.

Those homeowners don't want to touch their first mortgage. Second lien products let them access their home equity while keeping that low first lien rate in place. And many of these transactions can carry our title and settlement services with it. Together with Beeline equity on the fractional side, this gives Beeline a full spectrum of home equity access, cash out refi, a second mortgage, a line of credit, or equity access without new debt. In the last three of your products whose demand holds up or improves when rates stay high, we can now meet a homeowner's equity needs in whatever form fits them, and it's not dependent on rates falling. Now looking ahead, and a measured word on the fourth quarter. Q4 brings normal seasonality, and the rate environment remains elevated. So we are planning for a quarter where volume growth is harder to come by. That is exactly why the work I've described matters on both sides of the ledger. On the cost side, the expense reductions we announced in mid-October, on top of the actions taken earlier this year, have meaningfully reduced our U.S. payroll. And we expect additional savings as we streamline our Australian operations. On the revenue side, we carry into Q4 a higher margin mix, a far more efficient funnel, and a set of home equity products, close on seconds and HELOCs and equity products, whose economics are not directly tied to interest rates.

Our priority in Q4 is protecting margin and efficiency, again, not chasing volume. With that, I'll turn it over to Chris to walk through the financials.

Walk through our third quarter financial performance with a focus on the sequential trend we built over the course of the year and then cover our balance sheet, liquidity, and financial priorities. Third quarter, total net revenue was $3 million compared with $2.3 million in the prior year quarter, an increase of 30%. Sequentially, revenue increased 15% from $2.6 million in Q1. The revenue mix was as follows. Gain and fill of loans net. was $2.1 million, up 23% from $1.7 million last year. Loan origination fees were $492,000, up 63% from $302,000 last year. Title fees were $380,000, essentially flat from last year. Fractional equity revenue was $20,000, and other revenue was $71,000. We originated 268 loans in the quarter compared with $2 million. 242 in the third quarter of 25, an increase of 11%. Non-QM loans remain our focus, representing 86% of our loans by origination volume and nearly 90% by units. We delivered that growth into a tougher rate environment with the average 30-year fixed rate at 7.03% in late September compared with 6.3% a year earlier. For the first nine months of 2026, total net revenue was $8.5 million. Up 59% from $5.3 million in the prior year period. Total operating expenses were $6.8 million compared with $5.2 million in the third quarter of 2025. The current quarter total included $1.1 million of stock-based compensation and $845,000 of depreciation and amortization. The year-over-year increase is driven largely by stock-based compensation under our 2025 and

equity incentive plan. Excluding stock-based compensation, operating expenses increased 10% year-over-year against revenue growth of 30%. Sequentially, operating expenses decreased by $327,000 or 5% from Q2 and by $1.1 million or 14% from Q1. With stock-based compensation broadly flat, that reduction came from cash expenses. Key expense categories included compensation commissions and benefits of $2.9 million, down $157,000 sequentially. General and administrative expense of $1.3 million, the one category that increased sequentially, reflecting increased costs for legal and special committee compensation. Marketing and advertising of $993,000 down $135,000 sequentially. Depreciation and amortization of $845,000 and other opportunities operating expense of $799,000 down $159,000 sequentially. As Jess noted, Q3 was the first quarter of this year in which revenue increased while operating expenses declined. Loss from operations was $3.8 million compared with $2.9 million a year ago. On a sequential basis, operating loss improved by $716,000 or 16% from Q2 and by $1.4 million or $2.9 million. On October 20, we announced an additional cost reduction plan targeting approximately $250,000 of monthly savings or about $3 million annualized on top of the reductions made earlier this year. We expect approximately $300,000 of one-time transition costs through December 1st, after which we expect to realize the full monthly savings. These are management estimates. Net loss was $3.8 million compared with $4 million

in the prior year quarter. On a continuing operations basis, the prior year net loss was $3.6 million. Sequentially, net loss improved by $224,000, or 6% from Q2. Recall that Q2 included a $480,000 non-cash gain from re-measuring our previously held interest of Magic Blocks. Excluding that gain, the sequential improvement was $704,000. Adjusted EBITDA was a loss of $1.8 million, in the future of Magic Blocks. Compared with a loss of $2.7 million in the prior year quarter, that is an improvement of $943,000, or 35%. Compared with Q2, adjusted EBITDA improved by $848,000, or 33%. That is the third consecutive quarter of improvement this year, from a loss of $3 million in Q1 to $2.6 million in Q2 to $1.8 million in Q3. Adjusted EBITDA excludes stock-based compensation, depreciation and amortization, non-warehouse interest expense, and certain non-recurring items, which in this quarter were $63,000 of legal defense costs. A reconciliation to net loss is included in our Forms NQ. At September 30, 2026, we had cash and cash equivalents of $2.1 million, plus $0.3 million of restricted cash. Mortgage loans held for sale of $11.2 million, warehouse fines of credit and accrued interest of $8.9 million, and total shareholders' equity. of $49.8 million. All three of our warehouse facilities were in compliance with their covenants at September 30, $16 million of availability. In October, one facility renewed for a further annual term and a $5 million line that we were utilizing only minimally reached the end of its term and was not renewed. Our total warehouse capacity is now $20 million.

For the first nine months of 2026, net cash use and operating activities have continued... The number of continuing operations was $1.6 million compared with $12.1 million in the prior year period. That figure benefited from working capital timing, including $1.8 million of loans that had closed but were not yet funded under warehouse lines at September 30 and should not be interpreted as a normalized cash burn rate. During the first nine months, we raised $5.4 million of net proceeds under our equity line and active market program, largely offset by $5.4 million. $5.6 million of net warehouse repayments. In August, Nick, as our CEO and principal shareholder, invested $500,000 through a convertible note, which converted into common stock on August 19 at $1.50 per share. On October 30, he exercised 400,000 warrants for proceeds of $264,000. The $350,000 promissory note we issued after the second quarter was repaid in full on October 1. $5.6 million. We are actively managing liquidity while continuing to improve the operating profile of the business. Looking ahead, our financial priorities are continue growing revenue with a focus on higher margin, non-QM products, recognizing normal fourth quarter seasonality, execute the October cost reduction plan and realize the full run rate savings from December, use magic blocks, which we consolidated from July 1 to improve automation and operating leverage, reduce cash use while secure.

the capital needed to fund or plan. And lastly, close the all stock combination with TYTL Corp. We're not providing formal financial guidance today. Our focus is executing against these priorities and reporting measurable progress as it is achieved. To summarize, third quarter revenue increased 30% year over year and 15% sequentially. Operating expenses declined for a third consecutive quarter. Operating loss improved 16% from Q2 and adjusted EBITDA improved 33% sequentially and 35% year over year. We still have work to do, but in Q3 revenue growth and cost reduction moved in the right direction at the same time. With that, I'll turn it back to Nick.

Let me close with where B-Line stands. This year, we fundamentally improved the operating model with higher margins, a more efficient cost structure, and technology doing more of the work every quarter. You heard the specifics from Jeff and Chris. We have expanded from a mortgage lender into a home equity platform, and with the TYTL definitive agreements expected to be signed within days, we are advancing the infrastructure that we believe can connect these products to institutional capital over time. And I back that conviction personally through the investments I made earlier this year and the 3 million shares I'm contributing to the company's treasury. We are committed to building long-term shareholder value through disciplined execution.

Thank you to our employees,

our shareholders, our lending partners, our customers for their continued support.

The first question comes from Scott Felsenthal, retail investor. Please go ahead.

The conference has now concluded.

under our 2025 Equity Incentive Plan. Excluding stock-based compensation, operating expenses increased 10% year-over-year against revenue growth of 30%. Sequentially, operating expenses decreased by $327,000 or 5% from... Q2, and by $1.1 million or 14% from Q1. With stock-based compensation broadly flat, that reduction came from cash expenses. Key expense categories included compensation commissions and benefits of $2.9 million, down $157,000 sequentially. General and administrative expense of $1.3 million, the one category that increased sequentially, reflecting increased costs for legal and special committee compensation. Marketing and advertising of $993,000, down $135,000 sequentially. Depreciation and amortization of... $845,000, and other operating expense of $799,000, down $159,000 sequentially. As Jess noted, Q3 was the first quarter this year in which revenue increased while operating expenses declined. Lost from operations was $3.8 million. Compared with $2.9 million a year ago. On a sequential basis, operating loss improved by $716,000, or 16% from Q2, and by $1.4 million, or 27% from Q1. On October 20, we announced an additional cost reduction plan. Targeting approximately $250,000 of monthly savings, or about $3 million annualized, on top of the reductions made earlier this year. We expect approximately $300,000 of one-time transition costs through December 1st, after which we expect to realize the full monthly savings. These are management estimates.

Net loss was $3.8 million compared with $4 million in the prior year quarter. On a continuing operations basis, the prior year net loss was $3.6 million. Sequentially, net loss improved by $224,000, or 6% from Q2. Recall that Q2 included a $480,000 non-Q2. cash gained from re-measuring our previously held interest of magic blocks. Excluding that gain, the sequential improvement was $704,000. Adjusted EBITDA was a loss of $1.8 million compared with a loss of $2.7 million in the prior year quarter. That is an improvement of $943,000, or 35%. Compared with Q2, adjusted EBITDA improved by $848,000, or 33%. That is the third consecutive quarter of improvement this year, from a loss of $3 million in Q1 to $2.6 million in Q2 to $1.8 million in Q3. Adjusted EBITDA excludes stock-based compensation, depreciation and amortization, non-warehouse interest expense, and certain non-recurring items, which in this quarter were $63,000 of legal defense costs. A reconciliation to net loss is included in our Forms NQ. On September 30, 2026, we had cash and cash equivalents of $2.1 million. Plus $0.3 million of restricted cash. Mortgage loans held for sale of $11.2 million. Warehouse fines of credit and accrued interest of $8.9 million. And total shareholder's equity of $49.8 million. All three of our warehouse facilities were in compliance with their covenants. Number 30, $16 million of availability. In October, one facility renewed for a further annual term and a $5 million line that we were utilizing only minimally reached the end of its term and was not renewed. Our total warehouse capacity is now $20 million. For the first nine months of 2026,

net cash use and operating activities of continuing operations was $1.6 million compared with $12.1 million in the prior year period. That figure benefited from working capital timing, including $1.8 million of loans that had closed but were not yet funded on our warehouse lines at September 30 and should not be funded. Interpreted as a normalized cash burn rate. During the first nine months, we raised $5.4 million of net proceeds under our equity line and active market program, largely offset by $5.6 million of net warehouse repayments. In August, Nick, as our CEO and principal shareholder, invested in our equity line. It's at $500,000 to a convertible note, which converted into common stock on August 19th at $1.50 per share. On October 30, he exercised 400,000 warrants for proceeds of $264,000. The $350,000 promissory note we issued after the second quarter. It was repaid in full on October 1. We are actively managing liquidity while continuing to improve the operating profile of the business. Looking ahead, our financial priorities are continued growing revenue with a focus on higher margin, non-QM products, recognizing normal fourth quarter seasonality. the October cost reduction plan and realize the full run rate savings from December. Use magic blocks, which we consolidated from July 1, to improve automation and operating leverage. Reduce cash use while securing the capital needed to fund our plan. And lastly, close the all stock combination with TYTL Corp.

Providing formal financial guidance today, our focus is on executing against these priorities and reporting measurable progress as it is achieved. To summarize, third quarter revenue increased 30% year over year and 15% sequentially. Operating expenses declined for a third consecutive quarter. Operating loss improved 16%. from Q2 and adjusted EBITDA improved 33% sequentially and 35% year over year. We still have work to do, but in Q3, revenue growth and cost reduction moved in the right direction at the same time. With that, I'll turn it back to Nick.

Let me close with where B-Line is. This year, we've fundamentally improved the operating model with higher margins, a more efficient cost structure, and technology doing more of the work every quarter. You heard the specifics from Jess and Chris. We've expanded from a mortgage lender into a home equity platform, and with the TYTL definitive agreement, expected to be signed within days, we are advancing the infrastructure that we believe can connect these products to institutional capital over time. And I back that conviction personally through the investments I made earlier this year and the 3 million shares I'm contributing to the company's treasury. We are committed to building long-term shareholder value through this.

Thank you to our employees, our shareholders, our lending partners, our customers for their continued support.

The first question comes from Scott Felsenthal, Retail Investor.

Please go ahead.