Figure CEO sees IPO as a catalyst for its next phase

Figure views its upsized IPO as "fuel to expand and to be a first mover," CEO Michael Tannenbaum says.

Why it matters: The blockchain lender is betting investors will treat it less like a consumer lender and more like an exchange operator. Its shares opened today at $36, or over 40% above its $25 IPO price.

• Tannenbaum, a Brex and SoFi alum, is betting his experience will translate to consumer credit on-chain.

(This interview has been edited for clarity and brevity.)

How should investors think about your public market comps?

• "There are three sets. On the crypto side, we bring content — tokenized loans — into the ecosystem, which can be funded or borrowed against across platforms. In that sense, we're more like Circle.
• Then there are exchanges and market-infrastructure — like ICE, with Ellie Mae, Black Knight and MERS. We've built the integrated origination system and capital market on blockchain. Think 'ICE-plus-Fannie Mae,' with peers like MarketAxess and Tradeweb.
• Lastly, embedded fintechs like Affirm. But as more of our business becomes marketplace, we look less like consumer fintech."

You swung to a profit this year — what changed?

• "As we've grown into more of a pure marketplace, margins increased.
• We launched Figure Connect in June [2024], and its incremental margin is much higher. Coupled with about 40% [company-wide] growth, there's a lot of operating leverage."

Why spin out Figure Markets and then recombine it?

• "It was blockchain-heavy, and at the time, we didn't think we could go public with that inside the company, so we spun it out.
• When the environment changed, we merged it back because the businesses were meant to be together.
• For example, our 'democratized prime' DeFi market finances the tokenized consumer loans we generate. The spin had become artificial."

What's distinctive about the Sixth Street partnership?

• "It's permanent equity in the guarantor. It's set up to buy the entire marketplace flow, and homogeneity drives blockchain liquidity.
• It also forward-sells production into securitizations so that partners can reduce rate risk."

Your business is pretty synonymous with HELOC today — do you plan to expand into other types of lending?

• "Don't think of HELOC too narrowly: about 20% of what we do is first-lien, conforming-balance, competing with Fannie and Freddie volume.
• There's about $35 trillion of home equity. Customers use us to refinance higher-cost debt and for home improvement — we're in marketplaces like Houzz and at Lowe's today.
• We say we can produce a mortgage on our platform for about $1,000 versus an industry average of $12,000, which opens up greenfield use cases."

You mentioned some partners there. How is your distribution expanding?

• "We have 168 partners — banks, credit unions, home improvement, solar, and fintech — with room to run. Regionals and credit unions are big areas of growth.
• And typically, we see about 40% same-partner growth when they adopt Figure Connect."

How do you plan to use the proceeds of the IPO?

• "When Mike [Cagney] and I were at SoFi, we did a $1 billion private round in 2015, and it was a real catalyst for the company's next phase.
• We view this similarly: fuel to expand and be a first mover, and to prove the model out at public-company scale."