Beeline Holdings reports 27% revenue growth in Q2 2025 as it pivots to digital mortgage lending, expecting profitability by early 2026.

OPERATOR - (00:02:40)

Thank you for standing by. This is the conference operator. Welcome to the Beeline Holdings Incorporated Second Quarter 2025 Earnings Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press Star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing Star then zero. I would now like to turn the conference over to Tiffany Milton, Chief Accounting Officer. Please go ahead.

Tiffany Milton - Chief Accounting Officer - (00:03:18)

Thank you. Good evening everyone and thank you for joining us today to discuss Beeline's financial results for the second quarter of 2025. I'm Tiffany Milton, Beeline's Chief Accounting Officer and joining us on today's call to discuss these results is Nick Laiuzza, our Chief Executive 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, including, but not limited to statements regarding Beeline holdings, expected future growth, expected future operating results and financial condition, including projections concerning our ability to be cash flow positive, profitable and debt free within specified time frames, expected lower interest rates and the impact on our business, the anticipated Beeline equity closings, the future development and potential of our technology offering, creation of long term shareholders value and the timing of and the eliminating of our indebtedness. Forward looking statements are typically identified by words such as believe, expect, anticipate, plan, intend, seek, estimate, will, would, could, maybe 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 2024 Form 10K and the prospective supplements. In addition, there is a risk that our new technologies we are developing may not work as expected. 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 Liuzza. Nick, please proceed.

Nick Laiuza - (00:05:30)

Good afternoon everyone. And thank you for joining us today. I'm Nick Laiuza, Co Founder and CEO of Beeline Holdings. With me is our CFO Chris Mo. We appreciate you spending time with us on our second quarter 2025 earnings call. The quarter marks a pivotal moment for Beeline by successfully divesting one of our final Spirits assets. We are now fully focused on our core mission, operating as a digital mortgage lender with a proprietary SaaS platform unencumbered by nine core operations. We want to thank our friends at Bridgetown as they embark on their own journey to grow their business. Now that we have formally separated, our efforts in Q2 have been both inspiring and productive, furthering our mission of building repeatable, predictable and scalable products and services to drive higher volumes. We are an emerging high growth story driving innovation at scale and when stripping out the Bridgetown business we saw a 27% increase in revenue and a decrease of 40% in expenses in Q2 of 2025 versus Q1 of 2025. We believe our execution in Q2 will be looked back upon as the foundation for much stronger growth in future quarters due primarily to the introduction of a new equity product, stronger execution of the top of the funnel conversions through enhancements implemented with Bob, our AI sales agent, a stronger balance sheet, a heightened discipline in the management of expenses and the elimination of distractive non core service lines. These are facets of the business we can control. Yes, the market has been challenging due to higher interest rates affecting both refinance and purchase transactions. Going into Q2, our goal was to position Beeline for much faster growth for future quarters without relying on interest rate cuts while improving our financial condition. With a clear strategy to cash flow positive operations, rate cuts could be on the horizon and that will have a very positive impact on the business, but that is outside of our control. As previously mentioned, our appetite to grow a high demand equity product line that is not tied to interest rate provides a competitive advantage and a unique income stream to complement our mortgage business. This strategy has led us to support a fractional sale of equity products which is not tied to interest rates. We view Beeline Equity, which has unique features not offered by other mortgage lenders, as a significant opportunity complementing our already diverse suite of conventional and non QM mortgage products, further distancing our offerings from the big banks and top 50 lenders. Frankly, we are presenting diversified opportunities in one platform to the public that we believe are not being offered by banks and other lenders. We are solving the problems of the industry with innovation and fresh products better designed for an emerging gig economy and for customers with different needs versus offering the same product and services through legacy models. Many of our competitors are trying to fit new characteristics, particularly of younger customers or customers with alternative income streams, into the same old box. Beeline is different. We are positioned to capitalize through diversification and innovation. The first Beeline Equity transaction has been closed in partnership with an exclusive partner leveraging a new crypto backed coin, tying dollar for dollar residential real estate recorded in the public record to the blockchain while eliminating many of the middlemen. As previously discussed, I own 50% of our partner. We expect to close 10 to 15 more transactions over the next 30 to 45 days and are planning a larger launch in October. We believe the passing of the Genius act will aid our growth, laying the groundwork for Beeline Equity to grow rapidly by quickly infusing liquidity into a difficult market with a product that is not tied to interest rates. The opportunity is massive but also with several moving parts, which is why it is important we get this product right. Our decision to slow play this opportunity with our partner aligns with our strategy to deliver quality at scale. More details will emerge as we get closer to a larger launch. For now, we're perfecting the product in real time with a select number of real estate closings. I want to be clear, Beeline is not changing its model, but it's living up to our founding principles of disruption. Belon is and will continue to be one of the most unique mortgage lending and home equity platforms in the industry. Beeline Equity will complement our offerings, not replace them. Our sales agent Bob continues to deliver strong results. As we mentioned on our last call we saw a six time increase in lead conversion and an eight time increase in full mortgage applications, all while operating 24.7at net zero incremental costs during Q1 through the efforts of Bob. A larger deployment of Bob in Q2 with more sophistication of Bob through accelerated learning models led to exciting and stronger results. Bob handled 636 more conversations in Q2 while being responsible for generating 123 applications from lead gen initiatives while beating the benchmark set in Q1. We will continue to expand the possibilities with Bob as a lead gen agent. Further deployments include video and voice. Now that Bob's efforts are leading directly to revenue, we will be able to report on closing conversions related to Bob's top of the funnel initiatives in future calls. It's very early for Bob and while most of his efforts are responding to customer inquiries 24. 7 freeing up our loan guides to do more transactions. We're starting to see Bob's efforts lead directly to revenue. For those keeping score, Bob's efforts have led to approximately $150,000 in revenue and a limited function which will certainly grow over time. We've also seen strong performance in Hive, our workflow engine, which enables us to close loans in as little as 14 to 21 days, about twice as fast as traditional lenders. This efficiency allows us to handle growing volume without adding proportional cost, giving us a real structural advantage. We finished Q2 with our strongest balance sheet since inception. We paid down $2.7 million in debt, leaving our total non warehouse line debt owed to outsiders at less than $800,000. We entered 2025 with over $7 million in debt, reducing debt in 2025 by $6.2 million. We saw our net loss trim by 2.79 million in Q2 versus Q1. To be fair, we were able to take about $300,000 in write offs in Q2, but we also reduced approximately $225,000 of recurring expenses which we expect to be fully realized by September of 2025. The net result of these efforts position us well towards our goal of being debt free by November 1, 2025 and cash flow positive by January of 2026. These are huge accomplishments and in a very short period of time. I'm very proud of our entire company. This was and continues to be a strong organizational commitment from everyone at Beeline, and our cash flow and profitability models are built on downside cases which include running at our projected August revenue for the next 12 months. Beeline is well positioned to grow its revenue quickly regardless of market conditions in 2026. Of course, lower rates accelerate growth we are an emerging growth story with a focus on bottom line operating income in an industry that typically has very strong net income margins. Normal markets and we may just be headed toward a normal market at some point next year. Beeline is still in the very early innings, but it's starting to see the cost of development pay off. We achieved meaningful milestones in Q2. We funded loan volume of 52 million up 31% from Q1. 2025 revenues increased by 27% in Q2 versus Q1. With the spirits business stripped out, we expect monthly operating profitability by early 2026. Our net loss from continuing operations for Q2 was 4 million versus 6.79 million for Q1. Our adjusted EBITDA, a non GAAP financial measure for Q2 was a $2.8 million loss versus a $3.5 million loss in Q1. We have seen improvement throughout the quarter and while July numbers are still being reviewed, we believe it will be our strongest month in more than three years, topping April, our previous best in three years, by about 15%. As mentioned, we paid down $2.7 million in debt in Q2, expecting to be debt free by November 1st. As mentioned, we closed the first fractional sale of equity in residential real estate under our new Beeline Equity product supported by our crypto issuing partner. We divested Bridgetown Spirits in July of 2025, paving the way for complete focus on the digital mortgage business. We launched BlinkQC into Beeline's production environment. MagicBlocks is now live with 15 clients and growing by the day. We have a 47.6% ownership in Magic Blocks. MagicBlocks is based in Australia serving an international market with over half of its clients based outside of the us. I would now like to turn it over to Chris who will go deeper into our Q2 performance. The future is bright for Beeline.

Chris Moe - Chief Financial Officer - (00:15:38)

Thanks Nick As a reminder, due to pro forma accounting adjustments and GAAP purchase accounting rules, our income statement reflects the impact of our 2024 forward merger transaction and as such certain periods are not directly comparable. Additionally, MagicBlocks, our AI product technology company in which we hold a significant minority stake, is not consolidated in our income statement under GAAP. Additionally, our legacy spirits business, Bridgetown Spirits Corporation, has been reclassified during Q2 as discontinued operations and was subsequently sold early in Q3. Let me now walk you through the Q2 2025 financial highlights. Total net revenues were 1.7 million for Q2, driven primarily by Beeline's mortgage activities, which accounted for over 74% of revenue with the remainder from the Beeline title business and a small amount from data and Tech. In terms of growth rates for our mortgage and title businesses, Q2 2024 versus Q2 2025, we saw a 6% increase in originations, an 11% increase in average revenue per loan and a 64% increase in title revenue. Comparing Q1 2025 versus Q2 2025, we saw A 44% increase in originations, a 5% decrease in average revenue per loan and a 24% increase in title revenue. On the operating expense side, expenses totaled 5.6 million for Q2, reflecting costs associated with staffing, transactions and marketing and advertising. For Q2, there were 2.2 million in salaries and benefits, 1.2 million in professional fees, 0.8 million in marketing and advertising and 0.8 million in depreciation and amortization. This resulted in a loss from operations of 3.9 million, driven largely by scaling our mortgage platform combined with transaction expenses below the line. We incurred 0.4 million in interest expense and we reported a net loss from A continuing operations of 4 million for the quarter. While this loss was significant, it represents an improvement over our Q1 loss from continuing operations of 6.7 million and again reflects deliberate investments and onetime capital structure effects. Our core mortgage operations are scaling well and we are confident these investments will position us for a step change in performance in the quarters ahead. We are also seeing rapid customer revenue growth from our AI sales agent Spin Out MagicBlocks. The results are not reflected in these figures. Turning to the balance sheet, we ended the quarter with 6.3 million in cash, up from 1.5 million in cash in Q1. He made debt repayments of 5.8 million. Total equity at period end was 55.5 million, up from 48.1 million in Q1. Regarding cash flow, net cash used in operating activities was 5.6 million. Net cash provided by investing activities was 59,000. Net cash provided by financing activities was 10.9 million for net increase in cash of 5.4 million for the period. While I won't provide firm Q3 or H2 guidance due largely to the rapid pace of transformation of the business, I agree with Nick that Beeline expect to see continuous improvement in introducing new products, growing revenues and controlling expenses with the goal of achieving operating profitability and positive cash flow by year end. With that, I'll turn it over to the operator for questions.

OPERATOR - (00:19:21)

We will now begin the question and answer session. To join the question queue you may press star then 1. On your telephone keypad you will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press Star then two. We will pause for a moment as callers join the queue. The first question comes from Glenn Mattson with Ladenburg Thalman. Please go ahead.

Glenn Mattson - Equity Analyst - (00:19:59)

Yeah, hi. Thanks for taking the questions and congratulations on the result. First, wanted to get a little more detail around the home equity cash out product innovative solution that you've introduced to the market. Can you you know, it looks like you're progressing along the path of starting to do some early transactions and things, but it seems that maybe you pushed out a little bit the timing on the broader launch. Can you just give us some more understanding of what your thought process is There.

UNKNOWN - (00:20:31)

Yeah.

Nick Laiuza - (00:20:31)

Hey Glenn, how you doing? Good to talk to you again. Look, we had discussed, I think in previous course communication that we were going to launch the product in late August, early September. And we pushed that out a bit for a couple reasons. Number one, I mean, the opportunity is massive. There's so much untapped equity in the US market and the demand is in our opinion, going to be off the charts. There are a lot of individuals out there who can't qualify for a cash out refi or need liquidity or even. Qualify for a heloc. And as a result of that, we have a solution that meets their needs. And so with the Genius act passing a little more clarity in terms of, you know, how regulation is going to come down on this particular side of the business. With the cryptocurrency, we felt like it was important for us to get this product right. You know, we are very early to. The market with this. I don't see anyone else doing what we're doing here. So, you know, in our view there are a lot of moving parts primarily around turning the crypto into cash quickly at scale. And we wanted to make sure we didn't fumble, that we didn't make any mistakes at scale. You know, doing 10, 20, 30 transactions is certainly different than doing, you know, several thousand. So for the next 30, 30 to 45 days we're going to slow play it a bit. We're going to do a select number of transactions which have already been identified. We've already started the title work on those transactions and we're going to, you know, we're going to do them properly and we're going to get feedback from the customers that we do them with to make sure that when it's time to scale, we meet the mark. And that's really the key reason is just to be careful, do it right and make sure we have the consumer's best interest in mind.

Glenn Mattson - Equity Analyst - (00:22:26)

Yeah, thanks for that. Color makes sense. That big opportunities, you want to get it right. Moving on to the financials for a minute. Good progress on the profitability this quarter, especially sequentially. And you kind of highlighted, pointed to break even by, you know, late this year, early next year. Can you, I don't know this for Chris or Nick, but can you just give us some more details around your assumptions and how you think you'll get there?

Nick Laiuza - (00:22:50)

Yeah, look, I'll take that just because I like to talk and, and you know, but look, I mean, you know, we're feeling really good about a lot of things over here. Right. Our software is starting to material, starting to, you know, materialize. I mean, we're seeing the fruits of our labor pay off. We've been spending a lot of money creating a really good mousetrap, and we feel good about where we're headed. And so it just made sense to kind of buckle down a bit and make sure that we are really ready, I guess, to calm before the storm. We're expecting a better market next year. And so we put a lot of focus on getting to profitability as fast as we can. And that includes, you know, cutting about $225,000 out of our monthly recurring expense, which we've already done, will fully realize that in September. Our loan locks are way. Up and we cut our marketing budget by about $40,000 a month. And we're still seeing really strong lock performance as a result of that. Also, when you look at the Q2 numbers, we had about $500,000 in those numbers of one time, non recurring expense. So, you know, when you take that out, when you look at the fact that we're locking much higher loans, much, much, many more loans on a reduced budget, and then you take into consideration that we cut $225,000 of recurring cost out, we feel really good about the ability being profitable or net cash positive. I'm sorry. By January of 2026, interest rate cuts would just fuel the momentum. A big giant launch of our new product, Beeline Equity product will just fuel the momentum. More cattle business will just fuel the momentum. At the end of the day, we kind of took a really modest approach to those points and we feel good about it. We also will be debt free November 1st. So heading into next year, we'll be debt free, we will be cash flow positive, and we'll be positioned for greatness.

Glenn Mattson - Equity Analyst - (00:25:06)

Thanks for that color.

Nick Laiuza - (00:25:07)

Yeah.

Glenn Mattson - Equity Analyst - (00:25:07)

No one knows the future, but these new Fed candidates all seem to be outdoing each other in terms of how aggressive they want to be on the cutting rate side. So it looks like trend is going in your favor. Thanks for the color, guys.

Nick Laiuza - (00:25:18)

Appreciate that.

OPERATOR - (00:25:20)

The next question is from Derek Greenberg with the Maxim Group. Please go ahead.

Derek Greenberg - Equity Analyst - (00:25:26)

Hi. Thanks for taking my questions. I wanted to just follow up on the fractional product your team are rolling out. I was wondering if you could just remind us the economics of that business. It's similar to the core of mortgage or if it's a little bit different. And then I was wondering, once it's fully at scale, you mentioned, you know, there's a lot of difference in thousands of transactions versus, you know, dealing with 10 but I was wondering, once fully at scale, what the volumes you expect to flow through that funnel look like.

Nick Laiuza - (00:26:01)

Yeah, look, from an economic standpoint, we will. Our margins will be a little higher. Than on our mortgage products. And, you know, the amount of work that we're going to do will be a little less. So we're pretty excited about that. You know, we're underwriting the property and we're not underwriting the consumer as much. So that's the reason why there's less work. So the expense associated with the product is less, and we expect about 33%, on average, more revenue per file than we see on the mortgage side. I don't think I can just jump in. I also want to add to this that, you know, we spend heavily in marketing to bring in the loan business in this case. And I don't think it's appropriate right now to go into the details, but we basically have in the model next to no margin expense because our partner in this thing is going to drive the business. We're just processing it. So the margins are pretty high. Yeah, I don't think we're quite ready to talk about the projections of the business. But I will say this. We have denied about 1,000, you know, about 1,000 people over the last 12 months that would qualify for this product instantly. And that's not even trying to drive the business. So, yeah, look, we're not in a position to project or talk about projections at this point. I think that might be something for a later call.

Derek Greenberg - Equity Analyst - (00:27:40)

Okay, got it. Thank you. That's helpful. And then just looking into 26, you had mentioned that even without rate cuts, you're expecting significant growth. Is that largely coming from this new product or is it across all the different products? What do you think will be the main driver of growth? Exclusive of rate cuts?

Nick Laiuza - (00:28:06)

Yeah, that's a good question. You know, I think that we are going to see really strong demand for beeline equity, the equity product, because we're infusing liquidity into the market that really, you know, in a market that is where liquidity is needed. And, you know, again, the qualification is based on, you know, the equity in the home and not the individual. And as a result of that, I mean, there is just a massive amount of equity that's just sitting on the sidelines that a lot of people can't do anything with. I mean, in terms of getting a cash out refi. Right. I mean, baby boomers are living longer. They want to stay in their homes longer. A lot of them aren't working and they don't, you know, they don't want to do, necessarily do a reverse mortgage. And so, you know, when you start thinking through that and you start thinking through the fact that you know there are no payments here, right? I mean you basically are selling and sale of equity and you know, there's no repayment until the house is sold. So if you are an individual that can't qualify for a cash out refi, need cash, this is an option for you. If you don't want to do a heloc, this is an option for you. If you don't want monthly payments and interest payments, this is an option for you. If you're looking at a reverse mortgage, this is an option for you. There's just so much, so much potential for this product. So I do think this product is going to grow very quickly. At the same time, we've been in the trenches in a really bad market, perfecting our model for a long time on the mortgage side. And we are offering non qualified and conventional under one roof and we're getting better at what we do on a monthly basis. I just mentioned a second ago that our locks are way up on a $40,000 per month decrease in our budget. That's a big number and that's a high percentage decrease in budget to see an increase in locks. So we are expecting a very strong 2026 as a result of both of those two products. I'll also mention too, we have a lot of title experience over here. Our team grew and built one of the largest title agencies out there and merged it and brought it public on the TSX back in 2016. Same team. We basically have a lot of the members of the same team over here. And as the market improves, I expect our title business to grow. We don't talk about that much, but that is another big opportunity for Beeline as we get into next year. So I think when you look at it, it's really those three items and I would rank the equity product as probably being our largest generator of revenue next year with the mortgage business being second and then the title business being third. And that'll probably change, you know, when we go into 2027.

Derek Greenberg - Equity Analyst - (00:31:01)

Okay, got it. And then just my last question and this one might be a little difficult to answer, but I was wondering, obviously with rate cuts that'd be a huge catalyst for the industry overall, but I was wondering if you have like sensitivity analysis in place in terms of, you know, how much a percent basis point cut could potentially fuel growth in loan volume for you Guys and revenue for you guys or if that's kind of two in the weeds and you know, it's just broader, great opportunity. I was wondering if you quantified it at all.

Nick Laiuza - (00:31:35)

Yeah, look, I mean, I don't think we're prepared to provide that sort of information at a high level. I can tell you that, you know, a 25 basis point cut will have a significant impact on our business. You know, we are a centralized digital lender, we're not a retail lender. The retail models tend to perform better. You know, everyone performs better in a low rate environment. Right. But when rates are higher, the digital models aren't on a percentage basis, they don't perform as well as the retail models do. When rates come down, digital models tend to do very well. And so, you know, we're a digital centralized model and so a 25 basis point cut will have a big impact on our business. A one point impact will have a tremendous impact on our business. I mean we will grow incredibly fast when that happens.

Chris Moe - Chief Financial Officer - (00:32:29)

Yeah. I also just want to add a non quantitative comment to your quantitative question. So it's interesting when you think about it. You know, a 25 or 50 basis point cut in theory equals X. But the longer rates haven't reduced, the more buildup effect it has on the number. So think of it as kind of a dam and the water is filling up behind the dam. So if the dam opens up and the lake is only half full, so you have X amount of water rushing through the gate, but the dam is almost at the top and you open the dam twice, the volume rushes through the gate. So I guess what I'm trying to say is this. Rates have sort of, you know, they came down a little bit last September and nothing since then. It's been almost a year. I think a 25 basis point rate cut will be more significant than it would be otherwise.

Derek Greenberg - Equity Analyst - (00:33:21)

Yeah. That makes sense. Definitely makes sense. Yeah. Thank you. Appreciate the color.

OPERATOR - (00:33:30)

Welcome once again. If you have a question, Please press star then 1. Please stand by as we poll for questions showing no further questions. This concludes the question and answer session. I would like to turn the conference back over to Nick Liozza for any closing remarks.

Nick Liozza - (00:33:57)

Thanks operator. To wrap up, Q2 marks yet another inflection point for Beeline. We have fully transitioned into a fintech mortgage company. We operate in a 2 plus trillion dollar mortgage market. Yes, we've invested heavily, but these are intentional foundational investments aimed at capturing meaningful market share over time. We are confident the long term payoff will be significant. We improved our balance sheet and reduced our expenses at a time when our software costs are starting to pay off. We believe that Q2 of 2025 has been inspirational and productive and will set the foundation for faster growth in the future.

OPERATOR - (00:34:43)

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant.