Bernstein sees 56% upside for Figure as tokenized loan growth fuels ‘massive beat’ in Q3

Figure Technology Solutions delivered what analysts at research and brokerage firm Bernstein described as a "massive beat" in the third quarter, driven by accelerating tokenized loan growth across its blockchain-based partner channels.

On Nov. 13, Figure reported adjusted revenue of about $156 million in Q3, exceeding consensus expectations of around $119 million by 30%. Meanwhile, adjusted EBITDA reached approximately $86 million, 60% above consensus estimates of roughly $54 million.

Founded by SoFi co-founder Mike Cagney, Figure has grown into the leading independent non-bank home equity line of credit originator in the U.S., going public on the Nasdaq in September.

Total loan originations rose roughly 34% quarter-over-quarter to $2.5 billion, led by approximately $2.4 billion in home-equity lines of credit. While HELOC origination typically shows strong Q3 seasonality, Figure's consumer loan volumes were up around 70% year-over-year, compared with roughly 4% growth across the broader HELOC industry, Bernstein analysts led by Gautam Chhugani noted in a Friday report.

Newer categories — including crypto-backed loans, debt service coverage ratio loans, and small business loans — also contributed around $80 million in volume, reflecting early traction outside the company's core HELOC segment.

Partner-originated and tokenized loans remained the centerpiece of Figure's model, accounting for roughly $1.9 billion (76%) of total loan volume in Q3, while Figure-branded loans contributed the remaining 24%. The Figure Connect marketplace alone — the company's primary blockchain-based origination platform — continued to expand its share, contributing about 46% of all loan activity in the quarter, up from around 42% in Q2. Connect volumes rose to roughly $1.1 billion, up 48% quarter over quarter.

Partner channel tokenization driving profitability

Figure continues to follow its asset-light model — positioning itself as a blockchain-based platform for loan origination — with tokenized partner channels making a strong contribution to Q3 profitability, the analysts said.

Take rates (how much Figure earns per dollar of loan volume it originates) on partner-branded and intermediated loans increased by around 36 basis points to approximately 4.2% in Q3. In comparison, gross take rates on Figure-branded loans rose by about 82 basis points to roughly 7.1%. Combined with higher tokenized loan volumes, adjusted EBITDA margins expanded to nearly 55%, up from about 47% in the prior quarter. Bernstein noted that operating expenses grew more slowly than revenue, underscoring Figure's operating leverage.

The analysts also pointed to continued growth in Figure's partner ecosystem members, which expanded from around 170 to about 246 active partners quarter-over-quarter. At the same time, the number of marketplace participants on Connect rose from 27 to 33.

However, they noted that, despite "promising progress" across Figure's DeFi stack — including the rapid expansion of its YLDS stablecoin supply — it has yet to contribute to revenue materially.

Bernstein reaffirmed its outperform rating and $54 price target on Figure stock, describing the firm as the "category leading tokenization platform for credit." The target implies approximately 56% upside from Thursday's closing price of $34.59, per TradingView. FIGR is currently up 4.2% in pre-market trading on Friday. 

The analysts concluded that structural growth in tokenized loan origination, particularly through Connect, remains central to their long-term thesis for Figure, while acknowledging that macro factors, such as aggressive interest rate declines and a private-credit cycle slowdown, could influence future performance.

Gautam Chhugani maintains long positions in various cryptocurrencies. Bernstein or its affiliates may receive compensation for investment banking services from Figure.