Beeline Holdings reports 37% revenue growth in Q3 2025, driven by mortgage demand and positive cash flow from Beeline Loans, signaling a strong outlook.

OPERATOR - (00:00:00)

Thank you for standing by. This is the conference operator. Welcome to the Beeline Holdings Incorporated third quarter 2025 earnings conference call. As a reminder, all participants are in a 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 - (00:00:59)

Thank you. Good evening everyone and thank you for joining us today to discuss Beeline Holdings' financial results for the third quarter of 2025. I'm Tiffany Milton, Beeline Holdings' Chief Accounting Officer and joining us on today's call to discuss these results is Nick Liuzza, 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 and profitable and achieve other milestones within specified timeframes, expected reductions to interest rates and the impAct on our business, the anticipated Beeline equity closings, the future development and potential of our technology offerings and the introduction of new products and features. 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 2024 Form 10K and prospectus 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 Laiuza Nick. Please proceed.

Nick Liuzza - (00:03:06)

Good afternoon everyone and thanks for joining us today. I'm Nick Liuzza, Co Founder and CEO of Beeline Holdings. With me is our Chief Financial Officer Chris Moe. We appreciate you spending time with us on our third quarter 2025 earnings call. Before we jump into our Q3 performance, I would like to start with a key subsequent event. Beeline Loans Incorporated, our lending subsidiary, achieved its first positive cash flow month in October of 2025. Beeline Loans increased monthly closed loan units by 91% since January of 2025 while keeping our production payroll virtually unchanged. Underscoring the scalability and efficiency of our digital mortgage platform. This is certainly a key development. When we started 2025, we identified two critical goals related to our financials with targeted completion by Q1 2026. The first goal was to be debt free, which we accomplished in September. Our second goal was for the company to be cash flow positive by Q1 2026. Now that Beeline Loans is cash flow positive, we're very confident about achieving this goal, which will eliminate our need to raise capital in 2026 to support operations. Now let me turn to some macro points related to interest rates. As of the Federal Reserve's announcement on October 29, the effective fed funds rate is now 3.9% versus its peak of 5.3% in September 2024. The market yield on the 10 year treasury securities hit nearly 5% as of 10/19/2024 and is now eased to 4.1%. Also relevant, the spread between the 30 year fixed mortgage and 10 year treasuries has tightened from 152bps to 127bps. All of these are beneficial to the demand for mortgages as well as the margin Beeline makes on them. The market is expecting the Fed to make further cuts this December or January and then again probably in Q2 of next year for Q3 2025, Beeline Loans saw demand for mortgage loans increase substantially. That demand was driven by targeted marketing campaigns implemented by Beeline and declining rates. To illustrate, lending originations expanded from 51.9 million in Q2 to 69.8 million in Q3, reflecting quarterly growth of more than 35%. We closed 242 units in Q3 up more than 29% over Q2 loan closings of 187. We could not have accomplished this growth in mortgage originations without strong support from our warehouse banks. We expanded our warehouse line capacity from one bank with a $5 million limit to three banks with a total of $25 million of capacity. Given that we sell our loans on average in seven business days. That gives Belan a monthly origination capacity of approximately 75 million. We will certainly continue to increase our warehouse capacity to support future expansion. To restate an earlier point, we kept operational headcount flat during this growth. This is a reflection of the scale that is possible from the technology investments we made at all stages of the customer journey. What is even more exciting is that we can double our October production, which is already up 40% from September, with minimal cost to operational payroll. We are ready for much higher volumes, which is a testament to our strategic commitment in the down years to build scale and diversification. In short, we kept our foot on the gas pedal during the difficult times to ensure we would be ready when the market normalized. I'm proud to say we are ready. During the down years, from late 2021 through 2024, some lenders chose to drive volume by spending heavily on marketing. Even with industry union economics running at a negative during much of that time. Even though we've seen 91% growth in volume since January, we were doing so with a measured spend on marketing, which curtailed stronger top line growth. It did not make sense to further drive our top line at a loss. Now that unit economics are positive, our appetite to increase our marketing spend is high, which we believe will lead to much faster quarterly growth. Our lending revenue per closed file has grown From a feeble $6,400 per file driven heavily by market conditions and product mix in January, to a more robust $8,828 per file in October. We expect to see the revenue profile continue to increase and to normalize between $10,000 and $11,000 per file. This will lead to higher marketing spends and additional growth starting in Q4. Our technology edge remains one of the central drivers for our momentum. Our AI sales agent Bob, continues to deliver outstanding results. As we mentioned on our last call, we're seeing 6 times increase in lead conversion and 8 times increase in full mortgage applications, all while operating 247365 at net zero incremental cost for this portion of the business. The lift from Bob will increase as Bob becomes more integrated throughout the entire sales funnel and moves into the early stages of the mortgage production process. We also continue to see strong performance from 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. This continued growth in innovation and performance is a testament to our Australian product development and digital marketing teams Turning to our title business, we leveled out for the quarter. Q3 units were 280 versus Q2 units of 294. With that said, October was our strongest month since inception and we didn't spend any marketing dollars driving the title business. In other words, zero cac. That's going to change. Recently Beeline Title hired an experienced title sales executive to do third party marketing which should grow units substantially. After 20 years in title and and a highly successful exit, we're excited and confident in our ability to grow this vertical in a normalizing mortgage market. In my view, based on our team's significant experience, Title has been a sleeping giant for Beeline that is now just awakening. All the KPIs we monitor indicate that Q4 will comfortably exceed Q3 for both beeline Loans and Beeline Title. Finally, we have successfully launched our fractional equity sale business and are closing transactions leveraging the blockchain in unison with our partner. Our product is provisionally branded as Beeline Equity. We expect to close approximately 30 of these transactions by year end and are taking applications on our website for 2026. The average size of a sale of Equity transactions approximately $250,000 and we earn a 3.5% fee plus title fees. Since we are not underwriting the homeowner, the process is seamless. With margins at 80% or better, there is high demand for this product. We are positioned to scale quickly by mid Q1 as we work through anticipated regulatory considerations and perfect the consumer experience. Beeline may very well be the only mortgage lender with this product which is not tied to interest rates, providing strong revenue opportunity for Beeline regardless of market conditions. We are a technology driven mortgage and title provider focused on using AI and automation to reshape the home financing experience from slow and painful to fast and fun for a new generation of homeowners and investors. We are launching a business to provide near instant liquidity for homeowners who have significant locked up equity in their homes but either cannot qualify for a mortgage or are disappointed with the amount. In the coming quarters we will begin to share key metrics such as roas and NPS and other indicators to help you evaluate how our technology is driving Beeline's brand value, customer retention and earned media. We expect to show continued improvement in both revenue and our expense structure. My goal as CEO is to continue to lead Beeline towards substantial growth and profitability. The future is bright for Beeline. With that, I'll turn it over to Chris.

Chris Moe - Chief Financial Officer - (00:12:17)

Thanks Nick As a reminder, due to pro forma accounting adjustments and GAAP purchase accounting rules, our income statement and balance sheet reflect the impact of the recent Ford merger transaction which had its final closing on March 7, 2025, and as such, certain comparative 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. Lastly, our legacy spirits business, Bridgetown Spirits Corporation, was reclassified during Q2 as discontinued operations and was subsequently sold in Q3, resulting in a $718,000 loss on the extinguishment of debt. Let me now walk you through the Q3 2025 financial highlights Total net revenues were approximately $2.3 million for Q3 and 5.4 million for nine months year to date, driven primarily by Beeline's mortgage activities, which accounted for over 78% of revenue year to date, with the remainder from the Beeline title business and a small amount from other revenues. Our total net revenue growth rate was 27% for Q1 to Q2 and 37% Q2 to Q3. Preliminary results from October and now early November suggest an even stronger growth rate for Q4, spurred in part by declining interest rates. In terms of unit growth of our mortgage business. In January we closed 43 loans. In September we closed 82 loans, up 91%. In October we closed 98 loans, generating just under $863,000 in revenue, representing 44% of our total lending revenue for Q3 in terms of unit growth for our title business. In January we closed 45 titles. In September we closed 85 titles, up 89%. October was a record revenue month for title, coming in at $175,000 in revenue, representing 45% of our title Q3 revenue. The 106 title closings, turning to the expense side of the P and L operating expenses totaled approximately 5.2 million for Q3 and 16.9 million for nine months here to date. For Q3 we incurred $2 million in compensation, commission of benefits, $871,000 in general and administrative expenses, $831,000 in depreciation and amortization, $682,000 in marketing and advertising, and lastly $804,000 in other operating expenses. This resulted in a loss from operations of 2.8 million for Q3, a noted improvement over the Q2 loss from operations of nearly 4 million and much improved from the Q1 loss from operations of 4.7 million. Total other income and expense net was $746,000 for Q3 and 2.8 million year to date, which includes a Spirits loss of $718,000. We reported a net loss of 4 million for the quarter and 15 million year to date. While this loss is significant, it represents an improvement over our Q1 loss of 6.7 million and it reflects deliberate investments and one time 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 aware of rapid customer and revenue growth from our AI sales agent Spin Out Magicbox, whose operating results are not reflected in these figures. Turning to the balance sheet, we ended the third quarter with $1.3 million in cash plus restricted cash, up from $872,000 in cash on 1231 24. From 123124 to 93025 we made debt repayments of 6.5 million. Now, with the exception of our office leases and our warehouse lines of credit, I am pleased to confirm that Beeline is debt free. We have also reduced our accounts payable over 48% from 1.7 million to $864,000 and with aging and terms notably approved, total equity at period end was 51.7 million, up 6% from 49 million as of 1231 24. Regarding cash flow for the nine month period, net cash used in operating activities was nearly 11.5 million. Net cash used in investing activities was just over 1 million. Net cash provided by financing activities was nearly 13 million for a net increase in cash of $481,000 for the nine month period. So to summarize the year to date financial picture, we have rapidly grown our revenue while trimming expenses and completely delevered the balance sheet. While I can't provide firm Q4 guidance due larger to the rapid pace of transformation in this business, I am aligned with Nick that Beeline can expect to see continued robust growth from introducing new and unique products, growing existing loan and title revenues and controlling expenses with the goal of achieving operating profitability and positive operating cash flow by early in Q1 2026. With that, I'll turn it over to the operator for questions.

OPERATOR - (00:17:39)

We will 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're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press Star one again. We will pause for a moment for callers to join the queue. Your first question comes from the line of Glenn Matson of Ladenburg. Your line is open.

Glenn Matson - (00:18:14)

Hi. Yeah, thanks for taking my questions. So the might ask, the last call that is you had was before the Fed started cutting rates. Curious if the market response has matched, exceeded, you know, matched or exceeded or fell below your expectations of what demand profile would look like in a rate cutting environment. Number one and two, now that you've added this capacity to the warehouse line, is that enough to meet that demand or just kind of some color on your ability to meet that?

Nick Liuzza - (00:18:53)

Hey, Glenn, good to hear from you. I'll take the first question and Chris Miller will take a second question. But in regards to our expectations, I would say that, you know, we did expect to see that rate cut in September and then the second one that we just received. And I would say that the volume kind of was where we thought it would be. We knew that we felt pretty strongly that the rate cuts were coming. And as a result of that, we started negotiating with our warehouse line to make sure that we were, you know, we had the capacity to close the loans we needed to close. So you want to go ahead?

Chris Moe - Chief Financial Officer - (00:19:31)

Yeah, I'll just add to that. I mean, I think if we're, quite. Suffering success, our existing warehouse lenders, as well as three or four others who are clamoring for our business will be more than happy to step in and give us the ammunition, so to speak, to fight the war. Not concerned about it. Yeah, I mean, the ability for us to raise our lines will not be difficult, but the $75 million capacity that we currently have is probably a little more than what we need. Until we'll grow into it. Yeah, but we'll grow into it very quickly and we have the ability to increase it very quickly as well.

Glenn Matson - (00:20:05)

Okay, great. Thanks for that. And then on the cash out equity. Business.

Nick Liuzza - (00:20:14)

You know, can you just give a sense, Nick, as we get closer to a full launch, whenever that may be, what you're learning about the market in terms of the demand and, you know, the willingness for end customer to go after this product, which is kind of unique in the market. Yeah, yeah, listen. I mean, the demand is significant, right? I mean, you know, we're targeting initially baby boomers that maybe are outgrowing their retirement. And in the areas that we're targeting, there's about $10 trillion of available equity and we have a product that meets their needs with virtually very little competition. And so the demand is quite significant. This is leveraging the blockchain and essentially connecting the blockchain with the real estate chain, in this particular case, the public record. And, you know, we need to be a bit careful in that first, call it 50 transactions to make sure they go off correctly. We're trying to anticipate regulatory matters as well, because there's not a blueprint for what we're doing. We're kind of out ahead of this, I think. I mean, I don't see anyone else doing this except us, honestly. And so what we want to make sure is that we're being transparent, we're being quality focused, we're meeting the KPIs and the timelines that we set for the market. And I think after we get about 50 transactions under our belt, you'll see a wider launch, which means more marketing dollars behind it, more product awareness, more scale, and then we're off to the races. So I think I said in my call earlier today, we'll close about 30 transactions this year and then probably another 20 to 25 in January, and then we're off to the races. I just would. I'll just add that, you know, it's very, very important that we do this. Right. I know I'm saying that again, but not understanding the regulatory blueprint and what. And what that means to our business. We just want to proceed carefully before we launch.

Glenn Matson - (00:22:22)

Right. I guess I'll just follow up with the. You mentioned you don't think anyone else is doing. Doing this. Is this so you'll have a lead and perhaps be able to build some sort of momentum before you see competition? Is that fair to say? Yeah, let me answer that.

Chris Moe - Chief Financial Officer - (00:22:37)

I think if by, let's say, third quarter next year, if we didn't have any competition, that means we really overestimated the opportunity. We expect to have vigorous competition, but that's. I mean, the market is so huge, that's actually good for everybody.

Nick Liuzza - (00:22:51)

Yeah, the opportunity is tremendous. It's a huge market. And remember, you know, the reason why I say we don't have a lot of companies is, remember, it's a true fractional sale of equity. And we are recording a deed, not a deed of trust. A deed of trust is a mortgage or a lien. And so when you look around the. Other equity products out there, for the most part, they turn into, you know, P and I instruments and they're recording a deed of trust. Our product is a pure fractional sale of equity. It's an equity product. And again, I'm not aware of many people that are doing this, certainly not any of the lenders. There are some other fractional equity sale of equity companies out there, but it's my understanding that they're recording a deed of trust and not a deed. Big difference.

Glenn Matson - (00:23:40)

Yeah, sure. Thanks for all that color. I'll jump back in the queue.

UNKNOWN - (00:23:43)

Thank you, thank you, thank you.

OPERATOR - (00:23:48)

Once again. If you have a question, please press Star one with no further questions. This concludes the question and answer session. I would like to turn the conference back over to Nick Laiuza for closing remarks.

Nick Liuzza - (00:24:08)

Thanks Operator to wrap up, Q325 marks yet another inflection point for Beeline. We fully transitioned into a fintech mortgage company, one carefully designed to scale and compete with the largest lenders in the country. We've aimed Beeline to pursue a $2.3 trillion US mortgage market with a different technology driven strategy focused on younger digitally native borrowers and real estate investors, and now offering a fractional equity product that will provide quick cash to asset rich homeowners but may not qualify for a traditional mortgage or heloc. Looking ahead, we have exciting initiatives in the pipeline including new AI driven solutions, potential SaaS, products and expanded strategic partnerships. These initiatives reflect our firm desire to reshape borrower behavior across the industry. I want to close by thanking our executive team, our employees, our customers, the investors who buy our loans, our tech partners and our shareholders. We are grateful for the progress we've made and highly motivated by the long term value we're building. Thanks to everyone for joining the call.

OPERATOR - (00:25:22)

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