Figure Technology Raises Connect Mix Target to 70% as Take Rate Pressure Proves Structural, Not Competitive
Q2 2026 earnings call, August 13, 2026
Figure Technology Solutions used its second-quarter call to deliver a message that will likely reshape how investors model the business going forward: the migration of loan volume onto its tokenized marketplace, Figure Connect, is happening faster than management anticipated, and the medium-term target for that channel has been raised from 60% to roughly 70% of consumer loan marketplace volume. CEO Michael Tannenbaum told analysts the company now has "an updated line of sight to predict that Figure Connect is likely to approach 70% of volume in the medium term rather than our previous estimate of 60%," a revision driven by the fact that the largest new partners joining the platform are increasingly skipping Figure's own balance sheet entirely and onboarding straight onto Connect.
That dynamic cuts two ways for investors, and management spent much of the call addressing the tension directly. Take rate came in at 3.6% for the quarter, the low end of the 3.5% to 4% guided range, and CFO Macrina Kgil and Tannenbaum both signaled the metric will likely stay at the bottom of that range in the third quarter. The company was explicit that this is not a pricing concession problem. "We don't see the take rate performance in this quarter coming from price cuts," Tannenbaum said, adding that Connect structurally carries the lowest take rate of Figure's three channels even though it comes with the highest contribution margin and the least capital intensity. Analysts pushed hard on the mechanics here. KBW's Ryan Tomasello asked management to quantify where the pricing floor sits given volume-based tiered discounts for larger partners, and Tannenbaum confirmed that Figure's top-tier partners are priced at the bottom of the take-rate range by design, since pricing is set on contribution margin rather than headline take rate. Autonomous's Rob Wildhack pressed further, noting that ecosystem and technology fees are growing slower than Connect volume itself; management attributed the gap to partners climbing into higher-volume, lower-price tiers as intended, plus separate accounting treatment for servicing fee additions. Management indicated that when the Kiavi acquisition closes, it plans to introduce a contribution-margin disclosure to give investors a cleaner lens on unit economics than take rate alone provides.
Kiavi Acquisition Financed and On Track for Second-Half Close
The company confirmed it has begun receiving regulatory approvals for its acquisition of Kiavi, the residential transition loan and DSCR lender, and still expects to close by year-end. Figure has already locked in the financing: on July 14 it closed a $600 million senior notes offering at 8.5%, which Kgil described as "not just to finance the Kiavi acquisition, but an important step in expanding our capital toolkit as we continue to scale the business." Management reiterated the deal's economics — an under-four-year unlevered payback period, roughly 40% additional volume, and $100 million of incremental EBITDA — and framed the strategic logic in terms familiar from Figure's HELOC playbook: Kiavi's proprietary post-renovation valuation technology has kept it a market leader in a non-agency-eligible asset class, but Tannenbaum argued "that approach can only go so far," and that folding Kiavi's technology into the Connect marketplace will let Figure "make this technology the industry default, driving adoption at scale."
Volume Growth Remains the Standout Number
Consumer loan marketplace volume hit $4.3 billion in the quarter, up 132% year-over-year and 4% above the top end of guidance, marking a third consecutive quarter of triple-digit growth. Management said application volumes have already crossed $1 billion per week for the first time in early July, and third-quarter guidance of $4.8 billion to $5.2 billion was built off a $1.7 billion July print, which Kgil said, when overlaid with historical August-September seasonality, lands "in a narrow band around $5 billion." Notably, that guidance does not yet include any contribution from Kiavi, which management flagged as a potential upside lever once the deal closes. Partner count jumped to 489, up 102 sequentially, with growth broad-based across independent mortgage banks, servicers, depositories and fintech SMB lenders — a sharp acceleration from the roughly 250 partners Figure had at its IPO after three years in the B2B business.
The "Figure Factor" Quantifies the Platform's Pull on Partner Volume
In one of the more granular disclosures on the call, management shared results from a counterfactual analysis run across 185 partners with a full year of Home Mortgage Disclosure Act data. Figure took each partner's pre-platform HELOC trajectory and grew it forward at the broader non-Figure market's growth rate to create a baseline, then compared that to actual 2025 results. The finding: partners originated 2.6 times more HELOC volume than the baseline would have predicted, a result the company is now branding internally as the "Figure factor." It's a data point management is clearly positioning as evidence that the platform doesn't just capture existing volume but expands the market for the partners who adopt it — a claim that will matter for how investors underwrite Figure's long-term partner economics.
Margins Advance Toward the 60% Target Despite Mix Noise
Adjusted EBITDA rose 126% year-over-year to $119 million, with margin expanding to 55% from 47% a year ago, though that figure included a one-time $5.9 million gain from the sale of a minority-owned business; stripped out, margin was roughly 52%. Operations and processing costs fell to about 67 basis points of volume from 79 basis points a year ago even as volume more than doubled, evidence of the operating leverage management has promised. GAAP net income nearly tripled to $87 million, aided by a $4.4 million tax benefit tied to stock option exercises that Kgil cautioned is not representative of the underlying 26% long-term effective tax rate the company expects. Figure ended the quarter with $1.44 billion in cash.
Credit Quality Has Not Loosened Despite the Growth Rate
Anticipating investor skepticism about underwriting discipline amid triple-digit growth, Kgil walked through several years of loan-level data: weighted average FICO at origination has risen from 737 in 2020 to 756 year-to-date, combined loan-to-value has fallen to 62.1%, and average loan size has grown from $52,000 to $96,000. AAA spreads on Figure's HELOC securitization shelf have tightened from roughly 255 basis points in 2023 to about 135 basis points across 22 priced deals, even as the securitized collateral base nearly doubled to $7.7 billion year-over-year, and the unique note-buyer base has grown from a small initial group to over 100 buyers, 70% of whom are now repeat participants across multiple deals.
Democratized Prime and the AI-Driven Push Into New Asset Classes
Figure's warehouse-financing product, Democratized Prime, ended the quarter with a $392 million matched-offers balance and $170 million of third-party assets, the latter driven largely by the Agora auto partnership. Management called the third-party figure the most important number to track going forward, since it represents partners actively choosing Figure's infrastructure over a traditional warehouse line. The company also detailed a new AI adapter tool used to standardize disparate loan data across asset classes; for the Agora auto assets, the tool compressed a process that would normally take several months down to five weeks, a capability management said is now giving it confidence to bring Kiavi assets onto the marketplace later this year. Separately, Figure is expanding its use of the stablecoin yield as settlement infrastructure within Connect, which it says allows partners to get paid faster with lower fees and enables atomic settlement that reduces fraud and reconciliation costs.