S-1/A: Figure Tech Solutions IPO: Blockchain-Powered Capital Markets

Figure Technology Solutions, Inc. files for an initial public offering of 31.5 million Class A common shares, aiming to expand its blockchain-based lending and digital asset marketplaces.

Summary

• Figure Technology Solutions, Inc. (FTS) is offering 26,645,296 shares of its Class A common stock, with selling stockholders offering an additional 4,854,704 shares, at an estimated price between $20.00 and $22.00 per share.
• The company reported net income of $29 million and Adjusted EBITDA of $83 million for the six months ended June 30, 2025, demonstrating quick growth and profitability.
• FTS operates a proprietary Loan Origination System (LOS) that reduces home equity loan funding time to a median of 10 days from an industry median of 42 days, and average production cost per loan to $730 from an industry average of $11,230 in 2024.
• The company's technology, including DART (Digital Asset Registration Technologies), records all assets on Provenance Blockchain, accumulating over $50 billion in real-world and digital asset transactions since late 2018.
• Figure Connect, an electronic marketplace launched in June 2024, transacted approximately $1.3 billion in HELOC volume by third parties within its first 12 months.
• FTS has expanded into trading and investing products, including Figure Exchange (a digital asset marketplace) and YLDS (an SEC-registered, interest-bearing stablecoin).
• Michael Cagney, co-founder and board member, will retain approximately 68.6% of the voting power post-IPO due to a dual-class stock structure, making FTS a controlled company.
• FTS holds over 180 lending and servicing licenses, 48 money transmitter licenses, and is an SEC-registered broker-dealer with authority to operate an Alternative Trading System (ATS).
• The estimated total addressable market for FTS's LOS and Figure Connect marketplace is $80 billion annually, based on $2 trillion in consumer asset originations and a 4% take rate.
• The asset tokenization opportunity is projected to reach $16 trillion by 2030, with FTS targeting an 0.5% take rate, representing an $80 billion revenue opportunity.
• The stablecoin market is forecasted to reach $5 trillion by 2030, with FTS targeting an 0.5% take rate for YLDS, representing a $25 billion revenue opportunity.
• FTS has identified material weaknesses in its internal control over financial reporting as of December 31, 2024, related to an ineffective control environment and inadequate risk assessment/monitoring.

Sentiment

Score: 7

Explanation: The filing indicates strong financial performance with significant revenue and EBITDA growth, and a clear strategy for market expansion leveraging innovative blockchain technology. However, it also highlights substantial risks associated with a history of losses, reliance on a single product, regulatory uncertainty in digital assets, and a dual-class stock structure that concentrates voting power. The positive financial trends and market opportunities are compelling, but the inherent risks of a rapidly evolving industry and the company's early stage in some new ventures warrant a balanced, cautiously optimistic sentiment.

Positives

• Achieved net income of $29 million and Adjusted EBITDA of $83 million for the six months ended June 30, 2025, demonstrating strong and growing profitability.
• Reduced median home equity loan funding time to 10 days from an industry median of 42 days, and average production cost per loan to $730 from an industry average of $11,230 in 2024.
• Ecosystem Volume grew by an 86% compound annual growth rate from 2020 to 2024, indicating strong adoption of its blockchain-based technology.
• Figure Connect transacted approximately $1.3 billion in HELOC volume in its first 12 months (June 2024 to June 2025), with 27 marketplace participants onboarded.
• DART platform utilization for loan originations increased significantly to 80% for the six months ended June 30, 2025, up from 2% for the year ended December 31, 2024.
• Figure Exchange facilitated over $1 billion in trading volume since its August 2024 launch, with $299 million in the six months ended June 30, 2025, without meaningful marketing efforts.
• YLDS, an SEC-registered, interest-bearing stablecoin, offers a compelling value proposition in a market where most stablecoins do not yield interest.
• Maintains a strong regulatory and licensing apparatus with over 180 lending/servicing licenses, 48 money transmitter licenses, and an SEC-registered broker-dealer with ATS authority.
• Loss rates on originated loans have consistently remained less than 1%, well below the 6% rating agencies typically assume for similar securitizations.
• Third-party review expenses for securitizations are reduced by as much as 80% compared to industry samples, due to the homogeneity and transparency of Figure's loans.
• The joint venture with Sixth Street Partners, Fig SIX Mortgage LLC, is expected to significantly enhance liquidity for loans on Figure Connect with a total $210.5 million commitment.
• High partner retention, with 93% of 2023's top origination partners remaining on the platform in 2024, and 185% net volume retention in 2024.

Negatives

• Has a history of net losses, with an accumulated deficit of $292 million as of June 30, 2025, and may continue to generate losses in the future.
• Substantially all revenue is currently derived from the HELOC product, making the company susceptible to fluctuations in that market.
• Significant partner concentration, with the top 10 partners contributing 57% of origination volume for the six months ended June 30, 2025.
• Digital Asset Marketplace Volume for the six months ended June 30, 2025 ($298.8 million) is lower than for the year ended December 31, 2024 ($750.7 million), indicating potential volatility or slowdown.
• Revenue generated from Figure Exchange and YLDS was less than $1 thousand for the six months ended June 30, 2025, despite their strategic importance.
• The value of Bitcoin, Ether, and other digital assets declined steeply in 2022 and 2023, and significantly again in Q1 2025, impacting Figure Exchange's revenue concentration.
• The company relies heavily on a limited number of institutional market makers and high-transaction volume customers for Figure Exchange's trading volume (top seven customers accounted for 95% in H1 2025).
• Interest expense increased by $3.1 million for the six months ended June 30, 2025, related to a new facility agreement for out-servicing asset financing and funding debt.
• Gain on servicing asset, net decreased by $18.5 million (89.5%) for the six months ended June 30, 2025, primarily due to a decrease in the weighted average servicing fee rate.
• Unrealized gain (loss) on loans decreased by $3.0 million for the six months ended June 30, 2025, due to less HELOC loans held in the portfolio.

Risks

• History of losses and no assurance of future profitability, with expected increases in costs for growth and public company operations.
• Failure to effectively manage rapid growth could adversely affect business, financial condition, and results of operations.
• Revenue growth rate and financial performance in prior years may not be indicative of future performance due to macroeconomic conditions, interest rates, competition, and regulatory challenges.
• Limited operating history makes it difficult to evaluate current business and prospects, increasing investment risk.
• Substantial reliance on the HELOC product makes the company susceptible to market fluctuations and may limit attractiveness to partners seeking broader credit products.
• Dependence on retaining and expanding reach through both Figure-branded and Partner-branded strategies; failure to add new customers or partners could adversely affect the business.
• Significant partner concentration (top 10 partners contributed 57% of origination volume in H1 2025) poses risks if major partners reduce volume or terminate relationships.
• Underperformance of originated loans could lead to financial losses and loss of confidence from funding sources.
• Increases in borrower default rates could make the company and its loans less attractive to loan purchasers, warehouse lenders, and securitization investors.
• HELOCs and other loans are subject to federal, state, and local lending laws; non-compliance could result in unenforceability, refunds, litigation, and penalties.
• Recharacterization of HELOCs as closed-end or variable-rate credit by a court or regulator could have a material adverse effect on the business.
• Borrowers may prepay loans without penalty, reducing servicing fees and deterring partners and loan purchasers.
• Management and security of digital asset collateral presents risks of loss, customer disputes, and legal/reputational consequences.
• Declines in digital asset collateral value can trigger margin calls, leading to liquidations and financial losses.
• Reliance on automation and third-party data for loan underwriting; inaccurate data or technology failures could lead to poor loan performance or loss of customers/purchasers.
• Inaccurate credit and pricing decisions or ineffective loss rate forecasting could adversely affect the business.
• Reliance on online notaries, AVMs, and lien data may expose the company to greater risk of loss if not accepted by partners/investors or deemed invalid by courts.
• Primary gain-on-sale origination model exposes the business to the cost and availability of funding in capital markets, which can be volatile.
• Reliance on warehouse credit facilities; termination or unavailability could lead to inability to find replacement financing or curtailment of loan originations.
• Securitizations, whole loan sales, and warehouse credit facilities expose the company to risks, including inability to access markets or increased financing costs.
• Representations and warranties made in loan funding programs; inaccuracies could require loan repurchases or indemnification.
• Uncertainty regarding the status of digital assets, products, or services as securities; mischaracterization could lead to regulatory scrutiny, fines, and operational changes.
• Risks associated with depositing and withdrawing digital assets, including loss of customer assets due to errors or security problems.
• Failure to safeguard and manage customer fiat currencies and digital assets could result in financial losses, regulatory scrutiny, and reputational harm.
• Temporary or permanent blockchain forks could adversely affect the business, leading to disruptions, security attacks, or loss of assets.
• Technical issues with digital asset integration and network upgrades could adversely affect the business.
• High transaction fees demanded by miners or validators of supported digital assets could adversely affect the business.
• Uncertainty in U.S. and foreign tax treatment of digital assets could adversely impact the business and customers.
• Evolving tax information reporting obligations for digital asset transactions require substantial investment in compliance measures.
• Complexity of financial accounting rules for digital assets; significant changes could cause fluctuations in results.
• Banking relationships in the digital asset space are difficult to obtain and maintain; loss of critical relationships could adversely impact the business.
• Smart contract vulnerabilities or unexpected operations could adversely affect smart contract-based digital assets.
• Reliance on external financial and tax advisors; inaccurate advice or inability to onboard skilled advisors could be detrimental.
• Redemption risk, pricing risk, and regulatory risk associated with stablecoins could adversely affect the business.
• Concentration of trading volume on Figure Exchange from a small number of customers; loss or reduction in their volume could have an adverse effect.
• Revenue from Figure Exchange is concentrated in Bitcoin, Ether, and HASH; declines in these areas could adversely affect revenue.
• Technology disruptions, failures, cyberattacks, or security breaches could disrupt business, cause legal/reputational harm, and adversely affect financial condition.
• Collection, processing, use, storage, sharing, disclosure, and transmission of personal information could give rise to liabilities due to evolving laws and regulations (e.g., CCPA, GDPR, BIPA, GLBA, FCRA).
• Significant system interruptions or delays could result in customer loss and adversely affect service provision.
• Errors or attacks in technology could negatively affect business operations.
• Use of blockchain technology, AI, and machine learning could adversely affect products/services, harm reputation, or incur liability due to ethical concerns, data rights, or regulatory non-compliance.
• Failure to adequately maintain, protect, and enforce intellectual property rights or allegations of infringement could adversely affect the business.
• Competitors may obtain patents or other protections covering technology competitive with or critical to Figure's operations.
• Use of third-party open source software components could subject proprietary software to general release or restrict sales.
• Compliance with a variety of federal, state, and local laws (lending, mortgages, money transmission, consumer protection) is costly and complex; non-compliance could lead to severe consequences.
• Marketing practices involving third parties may expose the company to risks of alleged RESPA violations.
• Acceptance of various payment methods exposes the company to evolving rules, regulations, and compliance requirements; non-compliance could lead to fines or loss of payment acceptance.
• Failure to comply with financial services regulatory obligations (SEC, FINRA, state rules) could damage reputation and result in regulatory action.
• Being deemed an investment company under the Investment Company Act could make it impractical to continue businesses as contemplated.
• Business model and structure give rise to certain conflicts of interest; if not appropriately addressed, could result in fiduciary duty violations.
• Uncertain regulatory regime governing blockchain technologies; new regulations or policies may alter business practices or adversely impact the business.
• Characterization of HASH as a security could subject the company to operational changes, litigation, and significant liability.
• Use of Provenance Blockchain subjects the company to reputational risk if associated with illicit activity.
• Challenges to DART's validity or effectiveness could materially and adversely affect the business.
• Regulatory agencies and consumer advocacy groups asserting claims of disparate impact or unfair treatment could lead to reputational damage, fines, or penalties.
• Requirements of being a public company may strain resources, divert management attention, and affect ability to attract/retain qualified board members.
• Dual-class stock structure concentrates voting control with pre-IPO stockholders, limiting influence of new investors and potentially depressing Class A stock price.
• No assurance of an active market for Class A common stock or stable market price.
• Participation in IPO by Duquesne Family Office LLC could reduce public float.
• Broad discretion in use of net IPO proceeds; ineffective use could adversely affect business.
• Reliance on emerging growth company exemptions may make Class A common stock less attractive to investors.
• Election to take advantage of controlled company exemption to NASDAQ rules could make Class A common stock less attractive.
• Future sales of common stock or perception of such sales may depress Class A common stock price.
• No intention to pay cash dividends for the foreseeable future.
• Exclusive forum provisions in articles of incorporation and bylaws could limit stockholders' ability to choose judicial forum.
• Nevada law and corporate provisions might delay, discourage, or prevent a change of control or management changes.
• Change of control could result in assignment of investment advisory agreements and termination of investment management agreement with FCC.
• Dilution from future issuance of additional common stock in connection with equity incentive plans, acquisitions, or otherwise.

Future Outlook

Figure Technology Solutions anticipates continued growth by onboarding new origination partners, increasing penetration with existing partners, and expanding on-chain loan production. The company plans to add incremental products and markets, including residential transition loans, personal loans, and student loans, and expand Figure Connect volume by onboarding new loan buyers and replicating initiatives like the Fig SIX Mortgage LLC joint venture. FTS also aims to drive YLDS adoption through institutional sales and retail marketing, and continuously innovate its technology stack to streamline underwriting, enhance loan registration, and optimize trading efficiency. The company expects its borrowing costs to decrease over time relative to benchmark rates as its product matures and financing partners become more comfortable with its HELOCs. Digital asset cross-collateralization is anticipated to be operational by the end of 2025.

Management Comments

• "Figure is building the future of capital markets using blockchain-based technology."
• "Our application of the blockchain ledger allows us to better serve our end-customers, improve speed and efficiency, and enhance standardization and liquidity."
• "Figure aims to address these challenges by using blockchain-based technology to innovate beyond legacy processes. We built a transformative, scaled and fast growing technology platform that displaces trust with truth in the financial ecosystem."
• "We believe that we have established a regulatory and licensing apparatus which sets us apart from our competitors and enables us to continue expanding our diverse product offering."
• "We believe that developing cutting-edge technology is a core competency that allows for future growth."
• "We firmly believe Mr. Cagney’s retention is of paramount concern, with consideration given to his essential role in achieving our long-term strategy and our goal to deliver meaningful value to our stockholders."

Industry Context

The financial industry currently suffers from fragmented infrastructure and legacy systems, leading to inefficiencies in consumer credit and limited alternative marketplaces. Manual processes for asset ownership and transfer constrain liquidity, elevate costs, and are error-prone. The private credit market is growing rapidly, projected to reach $3 trillion by 2028, yet originators face challenges in accessing it. Blockchain technology, while still in early stages with less than 1% of real-world assets on-chain as of April 2025, presents a significant opportunity for cost reduction, liquidity improvement, and capital access. The stablecoin market is also expanding, with a scarcity of interest-bearing options, which Figure aims to address with YLDS. The digital asset industry is highly innovative, rapidly evolving, and characterized by significant competition and regulatory uncertainty, with new products and services constantly emerging. Figure positions itself as a vertically integrated platform leveraging blockchain to address these inefficiencies and capitalize on market opportunities in consumer credit and digital assets.

Comparison to Industry Standards

• Median time to fund a home equity loan is 10 days, significantly faster than the industry median of approximately 42 days.
• Average production cost per loan was approximately $730 for the year ended December 31, 2024, substantially lower than the mortgage industry average of $11,230 for the quarter ended December 31, 2024 (Mortgage Bankers Association).
• Loss rates of Figure's originated loans are less than 1% of volume, well below the 6% rating agencies typically assume for securitizations of similar loan products.
• Third-party review expenses for Figure's sponsored securitizations are reduced by as much as 80% compared to a sample of 2025 securitizations, which typically review 100% of the loan pool versus Figure's approximately 20% sample-based approach.
• YLDS offers a yield to token holders, differentiating it from most stablecoins in circulation (only 4% of $275 billion stablecoins yielded interest as of June 30, 2025, according to CoinGecko).
• Figure's regulatory and licensing moat (180+ lending/servicing licenses, 48 money transmitter licenses, SEC-registered broker-dealer/ATS) is presented as a competitive advantage against competitors who may operate with less stringent regulatory compliance.

Management Changes

Corporate Governance

Legal Proceedings

• The company is or may become involved in various disputes, litigation, arbitration, and regulatory inquiry and investigation matters that arise in the ordinary course of business.
• Management believes there are no known actions or threats that would result in a material adverse effect on the company's financial condition, results of operations, or cash flows.
• The company is not aware of any unasserted claims that it believes are material and probable of assertion where the risk of loss is expected to be reasonably possible.
• The company is currently not under examination by any federal or state tax jurisdiction.

Related Party Transactions

• **Recombination:** On August 29, 2025, Figure Technology Solutions, Inc. (FTS) recombined with Figure Markets Holdings, Inc. (FMH), making FMH a wholly-owned subsidiary of FTS. This followed a separation in March 2024 where FLC and FMH operated separately, and FTS became a holding company for FLC shares. Michael Cagney and June Ou, co-founders, were involved in these entities.
• **Services Provided by FT (prior to Separation):** FLC received technology, information security, HR, legal, data governance, advisory, procurement, accounting, finance, marketing, and telemarketing services from FT and its affiliates. FLC paid $18 million, $55 million, and $70 million in fees and expenses in 2024, 2023, and 2022, respectively. These services ceased after the Separation.
• **Services Provided by FLC to FT (prior to Separation):** FLC provided customer support and notary services to FT and its affiliates, receiving $3 million in fees in 2022. These services ceased after the Separation.
• **Contributions by and Dividends to FT (prior to Separation):** FT made direct and indirect cash contributions to FLC ($6M in 2024, $114M in 2023, $1M in 2022) and FLC made cash distributions to FT ($39M in 2024, $301M in 2023, $142M in 2022). No contributions or distributions were made after the Separation.
• **Loan Sales by FLC to Figure REIT Inc.:** FLC sold loans to Figure REIT, Inc. (where Michael Cagney is President) totaling $124 million (H1 2025), $99 million (2024), $22 million (2023), and $100 million (2022). Figure REIT also contributed loans to FLC securitizations ($201M in H1 2025, $43M in 2024, $57M in 2023).
• **Right of First Refusal with Figure REIT:** Figure REIT and FL LLC entered into ROFR agreements in September and December 2024 for HELOC purchases, with specific monthly volume thresholds.
• **Loan Sales and Servicing Agreements with Figure Markets Credit LLC (FMC LLC):** FL LLC sells and services Crypto-Backed Loans for FMC LLC (a subsidiary of FMH). As of June 30, 2025, $18 million of such loans were originated, sold, and serviced. FL LLC also entered a Loan and Security Agreement with FMC LFV LLC (FMC LLC subsidiary) to warehouse Crypto-Backed Loans.
• **Figure Connect Exclusivity and Fee Letter Agreement with FMC LLC:** Entered into January 2, 2025, requiring FMC LLC to use best efforts to transact crypto-backed loans through Figure Connect.
• **Provenance Foundation:** June Ou is Executive Director. FT entered into a $9.1 million interest-bearing term note with the Provenance Foundation in July 2022 (amended June 2023), with an outstanding balance of $9.7 million as of June 30, 2025. FCC entered a services agreement with Provenance Foundation in February 2025 for HASH gas fees, reimbursed in cash.
• **Expense Reimbursement Agreement with Provenance Foundation:** The company provides technology, legal, HR, and accounting services to Provenance Foundation for a fee (cost + 5%). Provenance Foundation paid $0.2 million in H1 2025 and $18 thousand, $72 thousand, and $118 thousand in 2024, 2023, and 2022, respectively.
• **Contribution Agreements (FLC and FT):** Agreements in December 2023 and March 2024 transferred assets, liabilities, and employees from FT to FLC in connection with the Separation.
• **Reflow Services LLC (Reflow):** The company holds a 17% interest in Reflow (an SEC-registered investment adviser), contributed by Mr. Cagney. Received profit distributions of $0.9 million (2024), $0.5 million (2023), and $0.2 million (2022). No distributions in H1 2025.
• **Reflow Management Agreement:** The company provides support services to Reflow for a management fee, receiving $0.6 million (2024), $0.3 million (2023), and $1 million (2022). No payments in H1 2025.
• **SOL Opportunity Fund L.P. (Domestic Solana Fund):** The company holds a 4.8% interest in this fund, managed by FIA (a Figure subsidiary), which invests in Solana tokens.
• **Tax Matters Agreement with FMH:** Entered into March 19, 2024, governing tax rights and responsibilities, terminated upon Recombination.
• **Transition Services Agreement with FMH:** Entered into March 18, 2024, for mutual administrative, HR, operations, legal, finance, IT, and information security services, terminated December 31, 2024.
• **Investors Rights Agreement:** Entered into August 29, 2025, granting certain holders of preferred and common stock registration rights for Class A common stock.
• **Term Notes Issued By Mr. Cagney:** FL LLC borrowed $10 million from Mr. Cagney on December 22, 2022, and June 7, 2023, each repaid with a $25,000 loan fee.
• **Stock Option Awards Granted to Mr. Cagney:** On March 20, 2024, Mr. Cagney was granted options for 4,559,904 Class B common stock shares under the 2018 Plan for transition services.
• **Travel Arrangements:** Incurred $0.4 million (H1 2025), $2 million (2024), $1 million (2023), and $2 million (2022) in travel costs for executive officers and directors, including Mr. Cagney.
• **DSCR Loan issued to Todd Stevens:** On May 8, 2025, a $120.7 thousand DSCR loan was issued to Todd Stevens, repaid on August 15, 2025.

Stakeholder Impact

• **Shareholders:** New Class A shareholders will experience dilution due to the IPO and the dual-class structure, which concentrates voting power with pre-IPO holders, particularly Michael Cagney. The market price of Class A common stock may be volatile. Existing shareholders (especially Class B holders) will retain significant control.
• **Employees:** The company's growth strategy and equity incentive plans (2025 Plan, ESPP) aim to attract, motivate, and retain talent. However, the identified material weaknesses in internal controls could impact employee confidence and operational efficiency. The Founder Retention Award for Michael Cagney is intended to ensure key leadership stability.
• **Customers (Borrowers):** Benefit from faster, more efficient, and lower-cost HELOC origination. New digital asset-secured personal loans and other expanding product offerings provide more financing alternatives. However, increased default rates could make loans less attractive to funding sources, potentially impacting future loan availability.
• **Partners (Mortgage Originators, Banks, Credit Unions):** Benefit from a turnkey LOS, access to a broad capital markets buyer universe via Figure Connect, and the ability to introduce new products with minimal investment. High partner retention and volume growth indicate positive impact. Non-compliance with Figure's platform or regulatory changes could adversely affect partners.
• **Loan Purchasers and Securitization Investors:** Benefit from standardized, homogeneous collateral, enhanced investor reporting, and increased liquidity through Figure Connect and the Guarantor Vehicle. However, increases in borrower default rates or adverse market conditions could reduce the attractiveness and returns on these loans.
• **Regulatory Bodies:** The company's proactive regulatory compliance and extensive licensing apparatus demonstrate engagement with regulatory requirements. However, the evolving regulatory landscape for digital assets and potential recharacterization of products could lead to increased scrutiny, fines, or operational changes.
• **Creditors:** The company's reliance on warehouse credit facilities and securitizations for funding exposes it to interest rate risk and the risk of non-compliance with debt covenants, which could impact liquidity and ability to repay obligations.

Next Steps

• Complete the initial public offering of Class A common stock on the Nasdaq Stock Market under the symbol FIGR.
• Continue to onboard new origination partners and increase penetration with existing partners.
• Expand on-chain loan production volume.
• Add incremental products and markets, including residential transition loans, personal loans, and student loans.
• Expand Figure Connect transaction volume by onboarding new loan buyers and replicating initiatives like the Fig SIX Mortgage LLC joint venture.
• Launch the Figure Certified program by Q4 2025 to integrate third-party homogeneous assets into the ecosystem.
• Drive YLDS adoption through institutional sales and retail marketing.
• Continuously innovate the technology stack to streamline underwriting, enhance loan registration, and optimize trading efficiency and portfolio monitoring.
• Address and remediate identified material weaknesses in internal control over financial reporting.
• Appoint additional members to the board of directors in connection with the Recombination.
• Implement the non-employee director compensation policy upon completion of the offering.
• File a registration statement on Form S-8 under the Securities Act promptly after the completion of this offering to register shares under equity compensation plans.

Key Dates

Keywords

Blockchain Technology, Fintech, Home Equity Line of Credit, HELOC, Digital Assets, Cryptocurrency, Loan Origination System, Figure Connect, DART, Provenance Blockchain, YLDS Stablecoin, Figure Exchange, Capital Markets, SEC Filing, IPO, Financial Services, Lending, Tokenization, Risk Management, Corporate Governance