Summary Figure Technology Solutions earns a reiterated Buy as Figure Connect drives rapid margin expansion and accelerates adoption. FIGR's capital-light model boosts Q3 2025 adj. EBITDA margin to 55.4%, with loan volume surging to $2.4B since June 2024. The addressable market expands as FIGR's HELOCs capture refinancing demand, reducing reliance on housing cycles. The 'Democratized Prime' blockchain equity initiative offers massive upside optionality, potentially transforming FIGR into a financial infrastructure platform. Summary I gave a buy rating to Figure Technology Solutions ( FIGR ) before, with my key thesis being that FIGR has a structurally better solution to originate loans, one that is supported by its proprietary blockchain. Two months later today, the pivot to Figure Connect is driving real margin inflection, balance sheet risk is coming down, and adoption is accelerating faster than I expected. At the same time, FIGR is quietly expanding its addressable market beyond traditional HELOCs. Figure Connect is doing its job When I last wrote about FIGR, one of my key views was that the pivot to Figure Connect (a capital-light model) would derisk its balance sheet and allow margins to scale. At that time, my confidence level was not super high because we could only rely on early adoption traction. But today, I think we have a strong data point to prove that margins can indeed inflect. In the most recent quarter ( Q3 2025 ), adj. EBITDA margin went up more than 10 points to 55.4% (vs. 44.9% in Q3 2024). As for adoption, it was even more surprising. Since launching in June 2024, the platform has facilitated ~$2.4 billion in HELOC volume through September 2025. Remember that as of 1H25, the platform only processed ~$1.3 billion in loan volume (the first year). Which means in Q3 alone, FIGR processed $1.1 billion of loans, which is close to the entire first-year record. This tells me that the pace of adoption is accelerating, and the beauty is none of them requires FIGR’s capital. At the current pace, we are talking about FIGR potentially processing close to $4.5 billion of loans (and it is still growing), of which FIGR earns a high-margin transaction fee. If this momentum continues, it gives confidence that FIGR can hit management’s long-term EBITDA margin target of >60%. Redefining the TAM One of the biggest risks I highlighted back in October was product concentration. My view was that FIGR was heavily exposed to HELOCs, which meant FIGR’s performance was still linked to the housing cycle. I no longer think this is a big risk. While HELOCs still account for 99% of originations, my view has changed because I underestimated how flexible this product really is. FIGR is not just competing in home equity lending. It is also able to capture demand from refinancing. This is a very interesting dynamic that expands on what TAM FIGR addresses. What’s happening here is known as the “first-lien HELOC” use case. Instead of drawing equity for renovations or discretionary spending, borrowers are using FIGR’s HELOC to pay off their existing mortgage entirely. This is a much bigger market than I thought. To put things in perspective, based on the Nasdaq London Investor Conference and the GS Financial Conference , this use case is ~20% of total volume. I do believe FIGR can continue to capture share in this part of the market because FIGR's cost advantage works here as well. Like I have said before, traditional mortgage refinances are slow and expensive , often taking more than 40 days to close. They rely on paper-heavy processes and multiple handoffs, which drive up both time and cost. For recap, FIGR operates differently. FIGR records transactions on the Provenance blockchain and automates a significant portion of the workflow, driving down processing days to ~10 days. For the borrower, it makes a lot of sense to use FIGR since they can get the money faster. This “new” TAM angle also means that even if discretionary spending slows and the traditional HELOC (for new homes) disappears, FIGR still has a durable source of growth coming from the need to refinance mortgage debt. The "Blue Ocean" Call Option What happened was that in November, FIGR filed an S-1 to register a new class of blockchain-native equity, in which the important part is the “Democratized Prime.” The simplest way to think about it is this. The way public equity is being handled in the market today is that it just sits idle in brokerage accounts. From time to time brokers may lend it out, but for the owner, there really isn’t much of an upside during this idle period (returns not related to the value of the equity). FIGR’s proposal changes that dynamic in a good way. By issuing equity natively on the blockchain, it means that the asset itself can be used in real time (i.e., when used as collateral to borrow via stablecoins or as lendable inventory that earns yield). This upside potential is huge because the addressable market is larger than the lending market. Per the S-1 filing, the market for asset tokenization is expected to reach $16 trillion by 2030. If FIGR captures even a fraction of this volume, the revenue implications are massive. Even with a modest 50 bps take rate, the revenue opportunity for asset tokenization alone could be >$80 billion. For context, FIGR's total net revenue for the 9M 2025 was $347 million. We are talking about a revenue potential that is orders of magnitude larger than their current business. The interesting part here is the optionality this creates. If this platform launches successfully, FIGR is no longer just a capital-light lender or a loan marketplace. It effectively becomes a hybrid of an exchange, clearing system, and custodian for tokenized financial assets. I believe this warrants a massive re-rating. For comparison, lenders typically trade at single-digit earnings multiples (e.g., Synchrony Financial, OneMain Holdings, and PennyMac Financial Services), but financial market infrastructure (like exchanges) trades at much higher multiples (think MSCI, S&P Global, Intercontinental Exchange, etc.). Also, unlike new crypto startups, FIGR already holds the necessary Alternative Trading System ((ATS)) and broker-dealer licenses and has already processed more than $60 billion in transactions on the Provenance Blockchain. As such, there are fewer hurdles to clear, de-risking the path ahead. There is also a cost angle that increases the probability of success. Management noted that using the Provenance Blockchain has reduced third-party due diligence costs by ~80% because counterparties can rely on trusted data. This, then, creates a self-reinforcing loop. Lower operating friction should attract more partners to Figure Connect, which increases liquidity, which makes the ecosystem more useful, pulling in even more participants. To be clear, regulatory approval for tokenized equity is not guaranteed, and this initiative should not be underwritten as the base case. Valuation Own math The pace of Figure Connect adoption, a larger TAM, and the optionality tied to the “Democratized Prime” led me to upgrade my growth assumptions. The way I did it was to increase the exit year growth rate to 25% (it was 20% previously). As for valuations, I have upgraded to 14x forward revenue. I don’t think a compression to 10x would make sense since FIGR is evidently growing well, its products are working, processed loans from Figure Connect are scaling very quickly, and the “Democratized Prime” could drive a huge upwards multiples re-rating. Together, this led me to upgrade my share price target to $78. Investment Risk Although Figure Connect reduces balance sheet risk, it increases the risk of dependence since the model relies entirely on third-party liquidity. If institutional buyers on Figure Connect stop taking risks (i.e., don’t lend), growth could come to a halt. Furthermore, the "Democratized Prime" upside is contingent on regulatory approvals. If the SEC blocks the tokenized equity S-1, that "call option" expires worthless. Conclusion I maintain a buy rating on FIGR. Figure Connect is scaling faster than expected, margins are inflecting, and the business is becoming less exposed to housing cyclicality. On top of that, the “Democratized Prime” initiative introduces upside optionality that is not reflected in current valuation. If all things go well, in my view, FIGR is going to transition from a fintech into a broader financial infrastructure platform.
