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

Management highlights

- Core Business Growth & Flywheel Momentum * The company hit its 11th consecutive quarter of triple-digit YoY volume growth, hitting $4.3 billion in Q2 (4% above the top end of prior guidance). Q3 has already seen application volumes exceed $1 billion per week for the first time. * Total platform partners grew by 102 to 489 this quarter, with broad-based growth across independent mortgage banks, servicers, depositories, fintechs, and SMB-focused originators. New large partners are ramping faster than historical averages, aided by AI-powered onboarding, and most large new partners go directly to Figure Connect, skipping the on-balance sheet intermediary phase. * Existing partners that adopt Figure Connect see 100% average growth in monthly volumes over time; 40% of Figure Connect's Q2 volume growth came from partners with over 1 year on the platform. Partners on Figure originated 2.6x more HELOC volume in 2025 than their pre-Figure projected baseline. * Volume growth has expanded the investor base for securitized loans from ~30 buyers in 2023 to over 100 unique buyers today, with 70% active across multiple deals, driving tighter spreads and stronger execution. - Strategic Acquisition & Product Expansion * The company's upcoming Kyavi acquisition is on track to close by the end of 2026, after receiving key regulatory approvals. The acquisition has an under 4-year unlevered payback period, is expected to add 40% to total volume and $100 million in annual EBITDA, and adds market-leading residential transition loan (RTL) technology that will be offered as a private label marketplace solution to expand platform scale. * New vertical expansions: the company launched focused go-to-market motions for depositories, SMB home equity financing, and home improvement originations. Combined SMB and home improvement volume hit a $470 million annual run rate in Q2, with SMB volume growing 57% quarter-over-quarter. The official SMB loan pool on Democratize Prime launched in July 2026. * New asset classes: Auto loans and small business loans are being added to Figure Connect alongside the core HELOC offering to diversify the platform and attract additional capital supply. - Technology & Credit Discipline * AI is used to streamline standardization of disparate third-party asset data, cutting a multi-month process to just 5 weeks for new asset classes, enabling faster onboarding of new assets and partners. * The company has integrated stablecoin atomic settlement for Figure Connect, enabling faster payouts, lower wire and reconciliation fees, and reduced fraud risk. * Credit standards have strengthened amid rapid growth: weighted average FICO at origination has risen to 756 year-to-date (from 737 in 2020), and average combined loan-to-value has fallen to 62.1%. Delinquency performance remains strong, with a high share of delinquent loans curing or paying off in full within 6 months. - Capital Structure Update * Subsequent to quarter end, the company closed a $600 million 8.5% rated senior notes offering to fully fund the Kyavi acquisition, expanding its funding base and preserving balance sheet flexibility to avoid unnecessary equity dilution.

Guidance

- Q3 2026 consumer loan marketplace volume guidance is set at $4.8 billion to $5.2 billion, with a midpoint of $5 billion, based on July's $1.7 billion volume result and historical seasonal patterns for August and September. Kyavi acquisition volume is not included in this guidance range, as the acquisition is expected to close in the second half of the year. - The all-in net take rate is expected to remain at the lower end of the prior 3.5% to 4% guided range in Q3 2026. - Figure Connect is now projected to reach ~70% of total consumer loan volume in the medium term, an upward revision from the prior estimate of 60%. The company continues to target a medium-term adjusted EBITDA margin of 60%+. - Long-term normalized effective tax rate is maintained at 26%.

Segment performance

Total Q2 2026 consumer loan marketplace volume: $4.3 billion, up 132% YoY. Figure Connect (the company's capital-light, off-balance sheet tokenized loan marketplace) represented 65% of total consumer loan marketplace volume, up from 56% last quarter and 42% a year ago, with absolute volume growing over $2 billion YoY. Partner branded volume accounts for 83% of total consumer loan marketplace volume. Democratize Prime (the company's warehouse financing layer) held a matched offers balance of $392 million at quarter end, with $170 million in third-party assets as of one week post-quarter end. Adjusted net revenue was $218 million (up 95% YoY), with ecosystem and technology fees (primarily from Figure Connect) becoming the largest revenue line item this quarter. Adjusted EBITDA was $119 million (up 126% YoY) with a 55% margin (52% excluding a one-time minority stake sale gain, down from 55% including the gain). GAAP net income was $87 million, up 190% YoY.

Risks & headwinds

- Forward-looking statements involve substantial risks and uncertainties, and actual results may differ materially from projections due to factors outside the company's control, including macroeconomic interest rate volatility that impacts gain on sale margins and overall originator demand. - Lower average take rate is expected to continue as mix shifts to the lower-take-rate, higher-margin Figure Connect segment and large, high-volume partners that qualify for tiered pricing discounts grow as a share of total volume. - The company operates in a consolidating mortgage market, and integration of acquired partner volume depends on successful post-merger partner onboarding. New asset class ramps carry execution risk related to data standardization and investor adoption.

Analyst Q&A

• Q: What factors support confidence in the Q3 2026 volume guidance, after the company was conservative in prior guidance? /

  A: Management noted that Q3 opened with $1.7 billion in July volume, matching historical seasonal patterns that point to a full-quarter result around the $5 billion midpoint of the guided range. Growth is supported by broad-based partner growth across all market segments, with large new partners ramping faster than expected becoming an ongoing, not one-off, dynamic. (211 chars)

• Q: Is the lower current take rate driven by mix shift or actual price cuts, and is near-term additional pricing cuts likely? /

  A: Management confirmed the lower take rate is entirely due to mix shift: 65% of volume is now on the lower-take-rate Figure Connect, and the fastest growth is from large volume partners that qualify for pre-negotiated tiered pricing discounts. There have been no unplanned price cuts, and the lower end of the 3.5-4% take rate range remains realistic for the current quarter. (319 chars)

• Q: Why is the overall take rate already at the bottom of the guided range, when only the highest-volume Connect partners get the lowest tier pricing? /

  A: Management explained that 65% of total volume is already on Figure Connect, with that share expected to keep growing quarter-over-quarter. Additional volatility from gain on sale and servicing mix also contributes to the overall take rate sitting at the bottom of the range based on current visibility. (234 chars)

• Q: What is the strategy behind the temporary on-balance sheet loan holdings, and is $600 million a near-term cap? /

  A: Management noted that ~$360 million of the balance sheet loans are retained to support Democratize Prime marketplace buildout, a level that has been stable since Q1. The remaining balance comes from temporary holding of direct-to-consumer and intermediated loans (3-4 weeks) before aggregation and sale to Connect, so the higher balance is just a natural reflection of overall volume growth, not a change in strategy. (303 chars)

• Q: What is the strategic opportunity for the new SMB and home improvement verticals? /

  A: Management explained that these new verticals tap into the $35 trillion in U.S. home equity, and attract entirely new types of partners (non-mortgage business originators, brokers, fintechs, home improvement contractors) that would not have worked with Figure historically. The platform provides these new partners with capital light access to the Figure Connect marketplace, driving broader partner growth and platform diversification. (275 chars)