Artemis Analytics and North Island Ventures said in a joint memo that Wall Street is still valuing Figure like a traditional specialty lender even as the company shifts toward a lighter marketplace model. The report centers on three figures: partners generated 78% of platform flow in the first quarter of 2026, Figure Connect volume rose to $1.6 billion from $8 million in the fourth quarter of 2024, and ecosystem and technology fees increased from 5% of revenue to 28%.
The authors argue that Figure, after spending six years building a home-equity lending platform designed to cut funding time and costs, is now getting a larger share of business from marketplace activity. In those transactions, Figure is neither sourcing the borrower nor funding the loan itself. Their view is that the market is still applying a balance-sheet lender framework to a business that is becoming more like a toll-collecting channel for loan flow.
Connect is the center of the thesis
Figure Connect launched in June 2024 as a marketplace linking loan originators with institutional buyers. In the memo’s description, partners originate the loans, institutional capital funds them, and Figure earns underwriting and distribution fees. The company reports all of this activity as Consumer Loan Marketplace, or CLM, volume, including every loan originated on its platform and third-party loans traded through Connect.
The model has scaled quickly. The report says Connect reached 56% of CLM volume within seven quarters of launch. Partner-originated loans now make up 78% of total flow, inventory days have fallen from 31 to 16, and ecosystem and technology fees have climbed from 5% to 28% of revenue. The authors say that means most loans coming through Figure no longer require the company to bear customer acquisition costs itself.
That leads to the core question in the memo: how much loan volume can move through Figure when the company is not doing its own customer acquisition and is not supplying the capital? Their answer is that Figure is moving away from a lender that finds borrowers and puts loans on its own balance sheet, and toward a platform that charges a fee on the flow.
Company background and current scale
Figure was founded in 2018 by Mike Cagney and June Ou, identified in the report as SoFi’s co-founder and CTO. The memo says Figure and roughly 390 partners originated $8.4 billion of loans in 2025, up 63% year over year. Annualized origination volume is now about $17 billion, up 130%, which the report says is roughly 5% of U.S. loans secured by residential real estate.
The authors say Figure’s early edge came from speed and cost. The company built an automated home-equity loan origination system alongside Provenance, a blockchain created for that purpose. According to the memo, every Figure loan is originated, recorded and ultimately securitized on that chain. Together, those systems cut home-equity loan processing from about six weeks and $11,000 in cost to less than seven days and $1,000. The report says that advantage helped Figure become the largest non-bank originator in second-lien HELOC lending.
It also explains the product split. A second lien sits behind a borrower’s existing mortgage, letting homeowners keep a lower-rate first mortgage in place while borrowing against accumulated equity. A first lien has the senior claim on the property, whether it is the original mortgage or a new loan to a mortgage-free homeowner.
From a capital-heavy lender to a marketplace operator
The memo describes Figure, as of 2024, as an excellent originator inside a structurally ordinary lending model. It used a sales team to acquire borrowers, warehouse lines to fund loans, held them on balance sheet for about a month, and monetized them on sale. In the authors’ view, that is the standard specialty lender setup: capital intensive, dependent on external funding, and exposed to both credit cycles and volume cycles. That is why the market usually gives businesses like this a 5x to 7x EBITDA multiple.
Connect changes where part of the growth comes from. Partners acquire the borrowers and originate against forward commitments already sold to institutional buyers, while Figure provides the underwriting and distribution infrastructure and collects about a 3% marketplace fee. As a result, rising Connect volume does not require matching increases in acquisition spending, warehouse funding, or credit exposure.
The balance sheet metrics reflect that shift, according to the report. Inventory days dropped from about 31 to 16 even as volume nearly doubled. Warehouse borrowing stood at just $15 million against $1.9 billion of committed funding capacity, implying utilization below 1%. Against $6.8 billion of securitization collateral, Figure disclosed maximum exposure of only $378 million.
The income statement mix is changing as well. The memo says ecosystem and technology fees are the highest-quality revenue line because those platform and marketplace fees carry nearly 100% incremental margins. Their share of revenue rose from 5% in fiscal 2023 to 28% in the first quarter of 2026.
From fiscal 2023 to fiscal 2025, revenue increased 142% while costs rose 18%, the report says. Incremental EBITDA margins reached 82% in 2024 and 91% in 2025, lifting adjusted EBITDA margin from negative 4% to 49%. On the current cost base, the authors say further volume growth should support more margin expansion toward management’s 2028 mid-term target of 60%.
Two possible sources of additional loan supply
The report argues that Connect becomes more valuable as more loan flow moves through it, and Figure may have two supply drivers arriving at the same time.
The first is the second-lien market itself. Citing industry data, the authors say balances have started to rise after about 13 years of contraction following the subprime crisis. Bank HELOC balances reached $287 billion in 2026 and returned to growth, compared with a 2009 peak of $600 billion. In 2025, the industry opened 1.2 million new HELOC lines, the highest level since 2022, though still only about half the mid-2000s peak.
The report also says homeowners currently hold 71.6% of their home value as equity, the highest level in about 35 years. Much of that equity sits behind mortgages locked at 3% to 4%, making a full refinance unattractive with rates around 7%. For homeowners who want to tap equity without giving up a low-rate first mortgage, a second lien becomes a rational choice.
That, the authors say, leaves Figure operating in a relatively thin competitive field. Capital requirements, compliance costs, and the lack of government-sponsored enterprise support have pushed many lenders out of the category, while Figure returned to growth as the largest non-bank HELOC originator.
The second supply driver is the pending acquisition of Kiavi. The memo says the deal will double Figure’s first-lien business and is expected to close in the fourth quarter. First-lien products serve borrowers outside the second-lien market, including mortgage-free homeowners, who account for about 40% of U.S. homes, and those who still have a valid reason to refinance an existing balance. Typical balances are in the $200,000 to $300,000 range, and annual origination volume is about $2 trillion, roughly 10 times the size of the second-lien market.
The report describes Kiavi as the largest originator of residential transition loans, which usually run for about 12 months and are used for purchase and renovation in fix-and-flip activity. It says 85% of Kiavi’s volume comes from RTL. Kiavi’s share of the RTL market rose from 2.1% in 2020 to 9.7% in 2025. In 2025, according to the memo, the business generated more than $7 billion in volume and more than $250 million in revenue, up 30%, with EBITDA margins around 40%.
The structure of the transaction matters too in the authors’ telling. Figure and Sixth Street are acquiring Kiavi for $717 million in cash, with Figure paying $538 million and Sixth Street contributing $179 million. Figure will keep the operating platform, while Sixth Street will place Kiavi’s loan assets into a joint venture backed by more than $3 billion of forward purchase commitments, which the report says effectively pre-locks demand for Connect.
Why the memo says the market is still misreading Figure
The authors point to three main reasons.
First, they believe the market may be underestimating the durability of Figure’s fee rates. First-lien products structurally earn lower rates than Figure’s legacy second-lien business, so a rising first-lien mix should mechanically push the blended rate lower. Yet that has not happened so far. Figure disclosed a net take rate of 3.4% in the fourth quarter of 2024 and 3.8% in the first quarter of 2026, even as the first-lien mix nearly doubled. Second-lien pricing remained around 4.5% to 5.0%. The memo says product-level pricing appears healthy enough to absorb the mix shift.
That distinction matters for valuation. Price erosion would reduce the economics of the existing business. A mix shift toward first liens, by contrast, adds incremental volume at a lower fee level. Connect then allows more of that volume to scale with less capital, almost no acquisition cost, and higher margins. The authors say consensus appears to be pricing in fee compression even though there is little sign of meaningful deterioration in product-level pricing.
Second, they argue research coverage is thin. Only four analysts currently cover FIGR, the memo says. Since first-quarter 2026 earnings, Figure has published weekly CLM volume data on its website, giving investors a near real-time revenue proxy. Yet only one sell-side analyst explicitly models CLM volume, and even that estimate is below the company’s own reported figures.
Third, they say the stock is categorized the wrong way. In their view, FIGR began trading as a crypto proxy and now trades more like a momentum stock, even though the business is increasingly resembling financial trading platforms such as Tradeweb or ICE. The memo says the market has still not fully adjusted for that shift.
On the report’s numbers, FIGR currently trades at about 12x EBITDA, the lowest multiple since listing. That is above the 5x to 7x range usually given to specialty lenders, but the authors say it remains well below what a scaled financial platform would justify.
The memo notes that Figure still has crypto-linked operations, including stablecoin YLDS and a tokenized securities market, but together they contribute less than 2% of revenue. Management, the authors say, appears to be trying to reset that perception by steering investor education away from the crypto narrative and toward two variables that now matter more for earnings power: CLM volume and fee rates.
Risks listed in the report
The memo also lays out several risks that could undermine the thesis.
- AI could commoditize underwriting. A former Figure product manager told the authors that AI may make five-day closings a baseline expectation, reducing Figure’s speed advantage and pushing competition toward price. The report says the marketplace itself may be the more durable moat, but broad improvement in underwriting speed and cost is still a key risk.
- Housing transaction volume could weaken. The memo says Connect reduces credit risk, but not volume risk. HELOC delinquencies are rising from historical lows, and a housing downturn would weigh on HELOC demand while hitting fix-and-flip lending especially hard.
- Core pricing could deteriorate. The thesis depends on healthy product-level pricing while lower-take-rate products become a larger share of the mix. Continued decline in second-lien take rates, or a net take rate falling below roughly 3.5%, would signal that competitive pricing pressure is starting to outweigh the benefit of added volume.
- Governance risk could materialize. Cagney and Ou control about 71% of voting power through a dual-class structure, leaving shareholders with limited recourse. The memo adds that alignment is a counterweight because Cagney holds a significant FIGR stake and has spent nearly a decade building the company.
Disclosures and positioning
The memo is presented as a joint view from Artemis and North Island Ventures. It describes Artemis as a digital financial research firm focused on blockchain and equity-like assets, and NIV as a New York-based investment firm focused on the intersection of blockchain, fintech, and AI.
The disclosure section says the material is for informational purposes only and is intended as educational content and general market commentary. It does not constitute an offer to sell securities, a solicitation to buy securities, investment advice, or accounting, legal, or tax advice. The authors also say that while the information is believed to be accurate, neither they nor their affiliates make any express or implied representation as to completeness or accuracy, nor do they undertake any obligation to update it.
The document adds that some statements may be forward-looking, including language using terms such as may, will, should, expect, anticipate, estimate, intend, continue, target, or believe. Actual results may differ materially because of risks and uncertainties, the disclosure says.
NIV also states that accounts it advises are currently invested in Figure and may increase or reduce that position at any time without notice. The disclosure further says the company metrics cited in the report, including revenue, earnings, EBITDA, net income, and similar figures, should not be treated as proxies for investment performance. It also notes that discussion of Figure relies on public information, while some estimates or forecasts were provided by Figure or largely sourced from the company. The authors disclaim responsibility for the accuracy and reliability of those estimates, the reasonableness of the assumptions, and the validity of the methods used.
The memo’s core conclusion is that Wall Street remains focused on two issues: whether lower-take-rate products will dilute Figure’s economics, and the fact that Figure still originates some loans itself. The authors say that framing misses the main shift. In their view, Connect is letting more loan volume move through the platform with less capital, lower acquisition cost, and higher incremental margins. As more flow travels through those channels, they argue, Figure looks less and less like the lender the market is still pricing.