Figure Technology Solutions, Inc. Class A Common Stock (FIGR) Earnings

Management highlights

- **Long-Term Strategic Vision** * FIGR is building a blockchain-native capital market ecosystem across three verticals: debt and structured finance, equity and non-debt digital assets, and capital and financing markets, rather than operating only as a HELOC lender. * The ecosystem is designed to create liquid markets for tokenized real-world assets, connecting traditional finance (TradFi) to decentralized finance (DeFi) through proprietary infrastructure including Connect (whole loan marketplace), Forge (tokenization platform), and Democratize Prime (self-custody bilateral financing marketplace). - **Consumer Loan Marketplace Growth** * Added 80 new third-party partners in Q1 2026, the most ever, including the seventh largest U.S. mortgage lender and large regional depository Flagstar Bank, the largest bank originator ever onboarded to the platform. * Business purpose lending (including DSCR loans for rental housing and residential transition loans) grew 70% quarter-over-quarter, reaching $60 million in Q1 2026 volume; this segment serves a $100 billion annual addressable origination market, and short-term transition loans are a strong strategic fit for Democratize Prime. * Average origination cost for sub-$300,000 first lien loans is $1,000, compared to the industry average of $11,500, giving the company a major competitive advantage in this greenfield, historically underserved market. * Existing partners on Figure Connect average 2x monthly volume growth six months after onboarding; Q1 2026 saw 5x monthly volume growth from partner Mutual of Omaha after upselling to Connect. * In March 2026, FIGR crossed $1 billion in monthly CLM volume for the first time, reaching $1.2 billion, with volume growth continuing into April and May 2026. - **Blockchain Ecosystem Milestones** * Launched Agora as the first third-party Forge partner, with three additional third-party borrowers (including SMB fintech lender Credibly and a DSCR originator) already added in Q2 2026, putting the company on track to exceed its 2026 target of 8-10 new third-party originators for Democratize Prime. * Launched OPEN, the native on-chain public equity trading network, which allows self-custody of shares, direct investor access to DeFi lending, and redirects stock loan revenue from intermediaries directly to shareholders. * Achieved a major milestone with an OCC-chartered bank holding Yields on its balance sheet for Treasury purposes, and is progressing on a large regional bank sweep arrangement expected to drive significant future Yields balance growth. - **Operational and AI Improvements** * AI is a core competitive advantage, integrated across product development, customer support, and third-party asset onboarding; agentic AI workflows have already delivered a 25% year-over-year increase in engineering project delivery on flat headcount, 70% chat containment for customer support, and more scalable due diligence for on-chain assets. * Operations and processing costs declined from 93 basis points to 74 basis points as a percentage of CLM volume, as volume more than doubled year-over-year, demonstrating AI-driven operating leverage.

Guidance

- The company introduced its first formal quarterly CLM volume guidance, with a Q2 2026 target range of $3.8 billion to $4.1 billion. Guidance incorporates a conservative ramp-up timeline of 3-6 months for large new partners onboarded in Q4 2025 and Q1 2026, and reflects continued strong momentum from April and May 2026 activity. - The full-year 2026 effective tax rate is expected to be ~20%, excluding additional one-time tax benefits from employee option exercises. - Fixed expenses (technology, product, G&A) are expected to remain stable through the remainder of 2026, while variable expenses will grow naturally with volume. Interest expense related to temporarily held loans for Democratize Prime is expected to decline in coming quarters as third-party asset growth increases. - Management reaffirmed a mid-term target of 60% adjusted EBITDA margin. AI-driven operational efficiency improvements are expected to further reduce processing costs as a percentage of volume in the second half of 2026. - Management expects the company to continue doubling its business from current scale, with a medium-term target of $2 billion in monthly CLM volume and Democratize Prime balances in the tens to hundreds of billions of dollars.

Segment performance

1. **Consumer Loan Marketplace (CLM):** Q1 2026 total CLM volume reached $2.9 billion, growing 110% year-over-year. Figure Connect (the whole loan marketplace) accounted for 56% of total CLM volume, up from 54% in the prior quarter. First lien volume represented 20% of total CLM volume, up from 19% last quarter and 14% in Q1 2025. Adjusted net revenue directly tied to CLM grew 109% year-over-year, with a net take rate of 3.8% in line with guidance. The segment generated strong contribution margins, with higher absolute profit per first lien loan compared to second lien despite lower take rates, due to larger average balances and identical origination costs. 2. **Blockchain Capital Market Ecosystem (Democratize Prime, Forge, Yields, OPEN):** Democratize Prime ended Q1 2026 with matched offer balances of $368 million, growing ~80% quarter-over-quarter. Yields (yield-bearing token) ended the quarter at $598 million in circulation, also growing ~80% quarter-over-quarter. The Prime token is the largest actively deployed real-world asset token by TVL in the DeFi ecosystem, and recently launched on the Morpho protocol on Ethereum, opening access to a larger DeFi market. OPEN, the on-chain public equity network, maintains a robust pipeline of prospective issuers, with the second issuer having publicly filed a registration statement with the SEC. Revenue for this segment comes from spread earned between lenders and borrowers, protocol fees, and future expected listing and trading fees for OPEN. Overall company financials: Adjusted net revenue for Q1 2026 was $167 million, up 92% year-over-year. Adjusted EBITDA was $83 million, up 190% year-over-year, with an adjusted EBITDA margin of 50% (up from 33% in Q1 2025). GAAP net income was $45 million including a one-time $7 million tax benefit from post-IPO option exercises.

Risks & headwinds

- Forward-looking statements related to the buildout of the blockchain ecosystem, adoption of new products, and future financial performance are subject to substantial risks and uncertainties, including regulatory risk for crypto and on-chain financial products, macroeconomic interest rate volatility, and the early-stage nature of the DeFi market, which is still nascent relative to traditional wholesale capital markets. - Scaling the blockchain ecosystem requires upfront investment that may not produce expected returns, and third-party borrower volume is currently the primary bottleneck to growth for Democratize Prime. - Competition from existing legacy capital market infrastructure providers (including Fannie Mae, Freddie Mac, and incumbent technology vendors) and large fintech lenders could limit market share gains. - Navigating regulatory requirements for on-chain securities, including transfer agent rules for Yields, is an ongoing uncertainty that could impact product development timelines. - Geopolitical volatility and macroeconomic uncertainty could impact loan demand, investor demand for mortgage assets, and loan credit performance.

Analyst Q&A

• Q: What is the market opportunity for DSCR and residential transition loans compared to traditional HELOCs, and what is FIGR's competitive edge here?

  A: These products serve investment-oriented business purpose lending, a historically fragmented, operationally intensive market with slow legacy capital market processes. This creates a greenfield opportunity to modernize the space on-chain, and adds another avenue to tap the $35 trillion of U.S. home equity outstanding. Short-term residential transition loans are a particularly strong fit for Democratize Prime due to their high rates and short tenors.

• Q: How does the proposed Fed guidance lowering risk weights for mortgages drive activity on FIGR's platform, even though it could incentivize banks to hold more loans on their own balance sheets?

  A: Lower risk weights incentivize banks to re-enter the mortgage origination space, which has been dominated by non-banks in recent years. FIGR provides the easiest way for banks to quickly get up and running, with flexibility to hold some loans on balance sheet and sell others through the platform. If bank balance sheets become a long-term home for more mortgages, Figure Connect is the ideal infrastructure to help banks aggregate originations, since banks cannot build large origination capacity overnight.

• Q: What drove the recent win with Flagstar Bank, and how does the sales motion for traditional depositories differ from that for independent mortgage banks and fintechs?

  A: The turning point for depository adoption has been FIGR reaching scale (over $1 billion monthly CLM volume), becoming a profitable public company, and building a multi-year track record of respecting bank brand priorities. Banks also face challenges navigating recent interest rate volatility, and FIGR's on-chain platform makes small-balance sub-$300,000 first lien loans profitable, a segment banks cannot turn away from but have historically found unprofitable. This win leverages a longstanding existing relationship, and management expects it to open the door for partnerships with more of the 5,000+ U.S. banks and credit unions not yet working with FIGR.

• Q: Is FIGR gaining share in the U.S. HELOC market, and how should we think about its competitive position?

  A: Management does not focus on the existing HELOC market, because much of FIGR's growth is greenfield, and most new partners are not traditional HELOC lenders. Much of FIGR's first lien growth is in the sub-$300,000 category that was not served by existing lenders, so it is expanding the overall market rather than just taking share. Where FIGR does compete for share, it is gaining against the legacy Fannie Mae/government-sponsored enterprise complex, with partners shifting volume away from traditional channels to FIGR's platform.