Beeline Holdings, Inc. Common Stock 2026 Q2 Earnings Call

Good evening, everyone, and thank you for joining us today to discuss Beeline's results for the second quarter of 2026. I'm Tiffany Milton, Beeline's Chief Accounting Officer. Joining us on today's call to discuss these results is Nick Liuzza, our Chief Executive Officer, Jess 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, including 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, 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 Corp., 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, which was 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 Liuzza.

Nick, please proceed. Hello, shareholders, investors, and friends of Beeline.

Before discussing the quarter, I want to highlight that yesterday I personally invested an additional $500,000 into Beeline, which will automatically convert next Wednesday into common stock at a minimum price of $1.50 per share. I made that investment because I believe strongly in the direction of the company, the progress we're making, and the opportunity that lies ahead for all of us. Our strategy is straightforward. Generate more revenue per transaction, require less incremental operating expense to grow our business, and become increasingly less dependent on the traditional mortgage cycle while continuing to improve the unit economics of our core business. With that said, let's turn to Q2. Q2 was another quarter of meaningful progress. Revenues increased 57% year-over-year. Our net loss declined by 24% from the previous quarter. Our quarterly cash burn decreased to $1.7 million.

June expenses dropped by $369,000 versus May. Our product mix continued shifting toward the higher-margin non-QM products. We completed the acquisition of MagicBlocks, an important component of our AI strategy. Subsequent to the quarter end, we announced the proposed acquisition of TYTL Corp. The mortgage environment remains challenging. Interest rates, capital markets, and geopolitical uncertainty continue to weigh on traditional mortgage and refinance activity. Against that backdrop, we're focused on what we can control. Last quarter, we discussed our increased focus on two higher-demand, higher-margin products, our bank statement loan and our DSCR loan. We're now beginning to see the impact of that shift. In July, our margins reached their highest level in the company's history. Revenues reached its highest level of the year, and monthly cash burn fell to its lowest level in years.

We certainly have a long way to go, but considering the headwinds, we're happy with the progress. Our objective is simple: grow revenues faster than expenses and create increasing operating leverage as Beeline scales. Chris will talk through the financial results in greater detail. During Q2, we completed the acquisition of MagicBlocks. MagicBlocks provides AI-driven sales and workflow technology already integrated into Beeline's customer acquisition and conversion process. Bringing that technology fully in-house gives us greater control and allows us to deploy it across all of our products, including Beeline Equity, which is supported by TYTL Corp. This was a key consideration in completing the transaction. Objectives are straightforward. Increase conversion, reduce customer acquisition costs, and automate customer communications at very low cost. For Beeline, AI is not simply about the technology. It's about improving the economics of the business.

Every improvement in conversion and every workflow we automate has the potential to increase operating leverage as we scale our business. As mentioned, we entered into a non-binding LOI for a proposed all-stock transaction with TYTL Corp. TYTL Corp. provides the underlying infrastructure supporting Beeline Equity. During the quarter, we continued advancing Beeline Equity, our fractional home equity offering developed in partnership with TYTL Corp. The transactions are recorded in the public record with details logged on the blockchain and represented by a Reg D digital security. U.S. homeowners currently hold approximately $17 trillion of home equity, and based on TYTL Corp.'s underwriting criteria, we estimate an initial addressable market of approximately $1 trillion. This represents a significant opportunity to drive new revenues for Beeline. As we mentioned, the LOI is non-binding. We continue to work with TYTL Corp. toward a closing, which is subject to shareholder approval, a fairness opinion, and a valuation analysis.

If we can close the transaction with TYTL, then there are three key elements to the transaction. First, a unique product offering. TYTL's residential equity product provides qualified homeowners access to their home equity without monthly payments or a maturity date, and with economics that are not directly tied to interest rates. Second, higher revenue per transactions. Based on the economics, we currently anticipate a TYTL transaction could generate approximately three times the revenue of a traditional Beeline mortgage transaction. That has the potential to accelerate our path toward cash flow positive operations while materially increasing the revenue potential of the platform. Third, a digital asset treasury. The combined companies expect to retain Regulation D digital securities equal to approximately 5% of each TYTL transaction, creating the potential to build a growing balance sheet portfolio backed by ownership interest in prime residential real estate.

Over time, that portfolio could become a strategic asset and potentially support non-dilutive initiatives, including acquisitions or share repurchases. The companies are in the process of engaging an investment banker to assist with the sale of TYTL digital securities to institutional investors to fund transactions and to potentially provide access to capital on more attractive terms. If we can execute successfully, Beeline can evolve from primarily a mortgage lender into a broader residential finance and real-world asset platform, combining mortgage origination, title, AI-driven technology, fractional home equity, and digital securities on a common infrastructure. We believe that creates a substantially larger, longer-term opportunity for Beeline. To summarize, we're improving the economics of our core mortgage business. We're shifting toward higher margin products. We're reducing our cost and our cash burn. We're using AI to improve conversions and operational leverage. We're expanding into products that are less dependent on interest rates.

We're building Beeline Equity into a different growth platform. Our strategy is straightforward. Generate more revenue per transaction, require less incremental operating expenses to grow, become increasingly less dependent on the traditional mortgage cycle. Q2 demonstrated meaningful progress toward the objectives, and I believe the opportunities ahead of us are substantially greater than they were at the beginning of the year. This is why I invested an additional $500,000 of my own capital in Beeline at $1.50 per share. We have more work ahead, but Beeline is becoming stronger. It's becoming different and better. It's positioned for much higher scalable growth. With that, I'll turn it over to Jess.

Thank you, Nick. Q2 was the quarter where the strategy that Nick just described, choosing economics over volume, started showing up clearly in our operating results. First, origination trends and volume. Our closed lending units were up 28% year-over-year and up 68% for the first six months versus the first six months of last year. But the more important number is this: revenue grew 57% in the quarter, meaningfully faster than unit volume, which means revenue is growing faster than volume, which is evidence that the mix of non-QM to QM is working. Turning to product mix and margin performance, mid-quarter, we deliberately shifted our origination mix towards the two higher demand, higher margin non-QM products that we discussed on the last call, the bank statement loans and DSCR loans. And we pulled back our marketing spend on the conventional products where the returns were less attractive.

That shift can now be seen in our margins. Our overall margin improved 10% from Q1 to Q2, and July margin hit a company record primarily due to that loan product mix. Revenue per loan increased 4% between Q1 and Q2. On a monthly basis, revenue built between April and June with a 19% jump from April to May and another 3.5% jump from May to June, which means we exited the quarter more than 20% from where we started the quarter. Behind that is a deliberate mix change. Conventional loans fell from about a third of our closed units in Q1 to about 20% in Q2, while bank statement volume nearly tripled. At more than twice the revenue profile of a conventional loan, DSCR remained our largest product with stable margin. We are not chasing volume at the expense of margin.