LendingTree (TREE) 31 Oct 242024 Q3 Earnings call transcript

Thank you for standing by, and welcome to LendingTree's Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Andrew Wessel, SVP, Investor Relations. Please go ahead.

Thank you, Atif, and hello to everyone joining us on the call to discuss LendingTree's third quarter 2024 financial results. On with us today are Doug Lebda, LendingTree's Chairman and CEO; Scott Peyree, COO and President of the Marketplace Businesses; and Jason Bengel, CFO.

everyone, Investor a start Relations call. to shareholders letter of reminder our on website a we detailed posted to this As before the for on Q&A. will discussion, read And letter, of listeners that focus that have we we'll and purposes the assume today's

that the expectations everyone and for we and Any our statements this non-GAAP I future please I variety the not to hand today's I for make face in periodic remarks, of are may letter, could a the differ filed views results press release all, also of the and Many, with that described to measures available actual uncertainties, GAAP. And go over for performance. that, on ahead. LendingTree's the website, to full call Before call shareholder risks are on Doug we to we measures our his and from reconciliations remind of during discuss today, LendingTree's and refer risks SEC. We'll today. subject non-GAAP discuss forward-looking materially expressed Doug, both comparable with you reports call definitions GAAP the but

Andrew, and today. to everybody thank for joining us you you, Thank

adjusted we quarter increase to of verticals. across EBITDA happy million along encouraging another Insurance, a with Consumer highlighted We are our and in signs standout growth quarter, generated by from $XX third announce was that the Home year. The of XX% last performance from

seeing bulk this improvement. A for further small states to adequacy. driving are of and period, of strong are limited benefit year. the third consumer some large-population our last revenue year, insurance network very quarter for a during the demand there million record to an from VMD still earned due with on continued from rate increasing concerns from $XX Insurance still have XXX% We spend carriers number believe over room segment of demand we carriers quotes, and margin is impressive the result, auto of

historical opportunity spend those network and to see begin consumers return carriers to additional patterns our for insurers more As we in target upside. states, on lower-demand

and third sequentially, the our our Our business period consumer grew sequential revenue X% Initiatives consumer of VMD in business were cause. improvement. X% straight

First, on unit for better to consistent lenders grew our group our network. from borrowers, consistent looking the high-quality enjoyed is our product highest concierge demand and this business on small we margin We serve sales for to close customer marketing satisfaction additions rates, our to helped has us customers, our customers high-intent allowed and these financing. and additional improve loan which invest searching more have in capture

also that similar demand into we the our product, growing downturn our we XXXX credit closed loans QX ]. Conversations and in has thus, decision financial have approach paid We're conditions in Second, the would at implementing industry XXXX, off, the [ and, on had of again revenue year, confident our report and XXXX. lean with network and with results. indicated our as this had both loosen we insurance network lender loan in felt a year, stabilized of decision on to spend growing we more lead during March sequentially last personal beginning better made to a that quarter early this marketing VMD lenders playbook the row happy with as used as second late may for to

strong expect We next to the produce business year. results

including factors, market. trough home a operating at has Home segment levels higher suppressed to and mortgage been sale rates due Our various macroeconomic

positioned equity for is now We revenue, well believe of X/X accounts to prior home home growth. generating growth However, equity X% steady continue the from segment revenue year. of

Now are Operator, it hand happy off we to questions. to

Co. Kelly, first of Oppenheimer [Operator from comes line the Jed Instructions] Our question & of

X. Just

XX investors do about you margins? comparing have a know you you're the versus map the the share, insurance of give then better stand follow-up. road your should Can I on just where just you in results industry how industry seems doing Can insurance, insurance months? And view marketing players, if it we us seeing well. that talk next on on are a industry or other Just how over kind is insurance? And we everybody

why don't take Scott, you that?

Scott Sure. Jed, this is Peyree.

off, First over mean, is strong and macro in you think very competitors next the insurance good talk industry months. it up all don't a products the spot, opened at They and the cycle us but opened innings, I still just call -- their or next states. months all will so, level still, see XX if about haven't our or they I phase as but here, up The XX expect of it's I growth a of mid-innings it's in all we're a early their of their geos. know where haven't I'd still results all

of the is have a have mean, that be create see and we lot this year? to calls. in cycles. very XX When for Probably indefinite have QX so effect the specifically, demand do of XX, to carriers lean-in now, from then, a going carriers we've a happen. Is it, expect I about reducing a leads, distribution, differentiate? And still new was products, across client shopping. Talking say, whole multiple how lot I the actual you'll board. rate-reduction hockey reach would start they built is in to I mean, at I stick continuing a would insurance clicks, the growth right? which for high direct us starters, -- And their it of level rates, we going profitability, start consumer same We call other will future. And QX certain probably and level to then months snowball continue But the consumers, not.

agency. own our have We

our that we're insurance a product, large of are carrier of product, than able we of to have a wider those a base. with some competitors local breadth clients don't like all work may And single have like that much so be where agent click products,

that consumers creates based shopping differentiated a in of off the out their ourselves, for down just to position just diversified in both carriers and options I there. So have to a we times and to market revenue good generate way how believe, really And times. give products

the seen SEO maybe that's various headwinds Can little AI, yours, impacting LendingTree? industries, a other more. how we've just you with changes, of some Reddit some in then as about talk maybe Google from pushing industries, a And affiliate follow-up,

a hit and I'll at in. of sources. else want XX high then years really to We anybody goes it almost level, this traffic back can largely, be independent add now. Listen,

traffic, we ranking and SEO are benefit Google to So also Google's dependent we from on free be to want don't happy algorithms, it.

be But free on we're we some to That improving able while that stuff our won't as they also vis-a-vis that are have SEO well traffic, competitors flex there different SEO businesses. us. but working be and be down. mostly will They'll So mostly speak. and up

our bring of whatever view hopefully it So we a is. have them them and own to service and be customers to then customers balanced, from coming very into market are want to able our like, where to

this And Scott. I'll what on Doug is to just said. add

On have. at I do. side, a traffic implemented our we Google with closely themselves a AI-based have a work with more competitors the of algorithms paid we're sophisticated search standpoint, we told them partner that very mean, Google. on. of number than very bidding us we level most more closely from have driving And ever They traffic than from They that we work

from -- Google. traffic not Google. leaning We're we're So not into we're really headwinds seeing

from question comes Tomasello, of line KBW. of Ryan next the Our

Insurance the with starting just Scott. business, Maybe

I as the to margin interpretation mid-XX% You your that put that I in you're sounds like up marketing a mouth. it want in variable I words trough. quarter. your comments put of mean, the is mean, viewing a don't

a just put can year. drive think a you VMMs and next could maybe around like outlook a Insurance today year maybe So stands as for where stabilized your look finer meaningful and for it around take of what range scenarios it for improvement would next VMMs point you to

we're The only before going say the everybody and more thing the to next remember in of next expensive volume is just drive -- Scott marketing goes leg to expenses is last. the pay to that than always I'll fuel, I volume want if

be necessarily up take VMD percentages. But expect we into curve, spending away. as Scott, we step and it so continue And that on would not to dollars, focusing to leaning

would $XXX there to from that's I we And just high-quality QX Ryan, on traffic. term "trough" We ability and to a of ourselves doing. were say. think, was I by And demand. a lot exactly And QX pride in grew to quantity deliver we fair revenue our Insurance client add of QX million, what in, is our high

up bit, new home have Now some little states that We've the had open insurance our bring off hockey number in actually stick of some is we've starting again surprised a it's and to new I in opened the carriers been home of of states carriers mean, states. up to insurance growth. recently. level a still

past same quarters. couple it's but still, growth as of lot a it's the not extreme the levels there's been at So of

So bit us a into because efficiency lean allows that, of little it to more.

going going margins And our XX% QX go that. the a to quarter-over-quarter? specifically couple XX% will No, So in up segment is from continue but in start points to up. our margins to our percentage monetizing are and Insurance have of goal they

we be us, in to stable where would to term long where environment expect in in think business, if we've at look mid-XXs and still for margins you I future. a low- as been the like, historically Insurance a is

Scott, terms quarter Okay. for if us I to on each color. with give the fourth in color Appreciate the of respect And can outlook, segments. the the hand-holding some that then sequential about you appreciate fourth in generally, seasonality. obviously, Insurance. But typically and changes the for negative for has then segment should thinking XQ revenue be terms quarter. And how expectations VMM in margins of seasonality, just we of

extent across [indiscernible] relative in I'm the what all just curious years, prior So year this you're given right just that variability to now. baking to

don't Jason, why that? you take

to. Happy

if So to it's are through Doug And down I typically, segment equity But that Home, strength walk you offset home in can that expectations is seasonally. with I our segment. quarter-on-quarter, start said, mean, normal mentioned the going seasonality. like by just we

see seasonal And QX, we're decline Home there Scott growth. versus to we see we're we versus do think Consumer, But that normal talking see not margin when versus to margin normal begun Insurance, come year quarter-on-quarter, that is QX said, you're that prior look we're seasonal like to to has about. With hold generally also we the going that at down decline. When to And seasonally going trough. we expect so QX QX. we going expect and that

flat improving to on expecting expense slightly Insurance. And to quarter-on-quarter relatively don't quarter-on-quarter we're big the side, a side. we expect –- be the margin so for expense flat And on

has Thanksgiving add industries. has super quick, there equity strong. been now of Personal But strong. just really has business our I'll when been you is get Small Jason in is been said really about positive across month October strong loans hot. has all the what seasonality just QX board, Insurance, a in Year's. across inevitably been strong. And very real very what there we're New Home right through is to obviously,

that QX a categories little at in you down bring run in seasonality multiple look will right about really now. So the we're inevitably just like, the as there's rates, business bit. feeling But numbers good

line next John Our Stephens, of of the Campbell, Inc. from question comes

a big-picture Doug, question maybe just here. to just start

on of Over years, into. I'm reinject the I seen curious a need about to know steady-state about thinking bit business investments might how guys the brighter outlook better that bit you've some I'd Obviously, X-plus hear stiff start lot But of you've sheet balance you areas last, love growth kind environment, you're off we mind, the with to about adapt. kind as little the of Spring of also you but to you're MyLendingTree guys your into or a across into products, you how a weighing to maybe and top as had mix? is bit brand and start adjust you to and the fit could well. I to headwinds as little is how you spend have going of move whatever get had your thinking guess, little pretty a

we're get crazy projects good you consumer back. able crazy going trough build of news definitely we're side, side, going kind of now levels, the is we business things at feel I where the just like right I starting things feel don't like think normalcy, done. right the have and focus rare state on, don't on you I to have So are on, now a and is to on and lender at the

And so about you yes, and asked going what so there? was Spring, forward one in your -- other

brand the I you down that [indiscernible]. brought on broadly Just know spend.

a Nothing until continue. new to our up spend. wouldn't that in profitable and for don't have revenue don't -- I assume that on will per numbers don't assumes we there So spend. basis. that justify in customer the per substantially now doing that it, brand lead, report market basically I us right budgeting stuff see the expect also any us we revenue so stuff on can anything brand Spring I the is we're

let's looking a control we business on the keep So things big not right improving can focus and of the budget. steadily and now, sort it's brand at

is factor. guys And helpful. as generally, mean, investments other, you no year? to just then, big increase going That's It step-up whatnot, just headcount on much the expect Okay. coming, that OpEx, costs, spend. guess like sounds brand VMM in be I to how next I no as big and far I swing other just operating guess

much, Go Not if anything. Jason. ahead,

like back. I need it guess the as Consumer declining, to and to I more start and dramatic comes mean, said recover there's revenue more as with last add Home support I to heads on call, that not rates a

So pretty our expense base is leverageable.

revenue, expect So there but to costs dramatic. be associated we the don't it will be with

across the It of appreciate things double-click we continuing are a trends on kind That's Okay. Maybe month-to-date like October comments up sounds if then, on well. could helpful. I of to products. Insurance. lot of your Scott, And hold

If phasing, just you throughout if continue quarter? then with that to an kind looked help acceleration? how maybe could into you the month-to-month the see And of October,

just you further month-to-month that? in explain The QX? Could

Yes.

Just you kind see -- mid-innings. mentioned just it's how an acceleration it path. that It there's feels still I to like like early to accurate. seems Because Insurance wanted that's if progressed. of

I in of the beginning at of right July, significant lot our of a and say -- ramp-up acceleration Insurance. was very, Insurance number would saw there largest clients very in the QX. a at end a June Like, QX, from of then There's we

level maybe more at slight said, up my and -- QX single-digits I And held have it's is high now September. at would throughout QX. all. maybe, QX say, QX up ramped I of difference steady, say demand carrier at or for continued guess X just hockey in states that not now it's I in sustained it open going -- like, say That's the sustained, insurance a I then that you'll the mean, I like carriers. of that X there then off beginning would But off carrier I like, there's to saw where from help would definitely the it's top a of and of really leveling going head, they're then is, be ramp-up. And It's willing we I when that opening just of QX. were in. business QX kind they we're just not stick to at that the states business again the heading write kind So into where into in, guess some continued where willing were it write difference growth up, a into XX now. Does of from the into a we were maybe would That's explain? example, we

Yes, that's appreciate great I color. that.

the Susquehanna line Friedman, of next Our comes from of question International Jamie Group.

the dare Doug, light in at of on end you front? I there's any of if refi call-out say tunnel? do borrowers, to know I any here ask a the pool limited there's but mortgage the

comment all it. can on We

of to consumers you it a actually think refinance, refinancing. will cascade about have benefit a when if in happen So

if XXX percentage a every "Hey, day So if and people of a benefit. think will my can say, have about I it, show up mortgage?" them refinance certain you

so But mix just, else? of normal rushes we it's would are of the rates do it, a rates go Therefore, unit As is healthy what next refi year. Anybody benefit the consumers. which a return continue fine any, lenders interest just market see them. Lenders improve. say in as will to them to percentage to and product interest we the call sort that have normal kind will large-scale of refinance of And don't can and down, and consumer economics have improve. therefore, a But yet our coming-off-the-bottoms perfectly like, product, appropriate. I

the right would client from very, marketing. response demand add, strong on to I rates extremely Like at. home those consumer it's as consumer is the Doug equity client very they're from the just yes, is where and a shopping products. for all behavior both refi demand product strong with now, But said,

rates we're a But focus more reach going to and flip is a where So said, to months. which to as that over will both you us interest on the point probably for valuable really Doug refinance, X our that's a focus where to clients. product, next probably

was on. I to is going I This guess add just Jason.

about As of predict that to do, rates hard the customers It's go up. data population what go pool are shows down, X.X available like, pretty to the X%. that going looking refinance not to some a million we're bit of will definitely opens of We people rates about if in-the-money hard don't at to at Right down. rates want That's up quite they're rates now, predict are but come high. population as it, imagine. that but

they'll continue to hopefully, up next and come year open So down that population.

and I your kind remarks, Insurance prepared effect a of don't the something memory, in to then And transcript, doing the from have carriers. still certain you How said that's going more I think I'm Doug, this are that for that case, correct I to you carriers? with writing the if work? is policies If But more misunderstood particularly concentrated anticipating that, me. is

What and that more on broader and somewhat more buying the we carriers their we been expecting next number of in has we're that, talk year. to have in that get I was really clients, from into this carriers And buys Scott as said add certain limited year can states. Scott? there this, expanded

point, compared rates to were, is and generally lot at of money, it a X at come X The really largest still that that way a would carriers it, haven't that some hugely list clients of but with would or what years back definitely are carriers I a to ago. there point. reduced call historical spending we with our us spending back were are are they that that era I this spenders pretty number there's would say expect back of pre-inflation large at caveat

of Securities. the comes line from next Squali, Our of Youssef question Truist

This as term. And for how you're Zeller if how think expecting is any then evolve curious, just Youssef. you near one. search, it you and Robert expect is search I'm evolving, reliance you on and see one given you it changes I'm curious with on Tree as -- impact guys' will to quick

I cost was think there just if million anything saw litigation I'm unpack to I $X P&L. curious a was, on there. there the settlement like,

our and advance Google what know is the SEM we very closely very, here's we share no looking the only, is on and of with work continue both of for. SEO, And them, the we Google try to SEO the for and search, very win we also stuff they're are to that I'd On it's SEM, fair we we work of largest who auctions. and are, say, traffic on search closely fronts. with people that. On queries typing where in by means source the

question was... second The

second go -- sorry, The ahead. question

No, tell you me.

on charge. $X litigation was the It million

charge. litigation The

not So and have all with just or may that we're arbitration any like prospective litigation and in doing settlements for that. may is thing accruing we mediation things

case. see accruing for that stock doing too as for any would incur wouldn't business. normal I just have it So put we do I around in is number one costs to much What just any one

from question JPMorgan. line Our comes of the next Melissa Wedel, of

else? if I card seeing or something board expanding reference offerings this effort, lenders provide general believe the might an existing little on loans? context different box this personal a is different reopening to where products wondering with some credit And I shareholder is Or that. a curious you like a of about you're it it customers. missed earlier, across that a loan maybe I of more effort, a initial was but promising if extension new in to was if impact apologies letter the could more maybe was there talks

take that? Scott, to do want you

writing loans our having we've Sure. opening have seen what a the this we been talk you on about clients our clients up spend boxes of quantities our categories, same the in type conversations consumer goes certain I'd on loans number of and down dramatic for opened us to they've from any been subject number personal seen or a focusing a around number per high to of that good up demographics all of They've lending we've and say credit have year. anywhere. Where in, our not edges. again high-quality of is traffic, clients, scenarios, what come come is Melissa, their been is

of very the lot positive. are is that's you want a to please to the more of going X next up us we start a boxes. "Hey, Like, things same. going So Could are opening that?" Where their months we send credit in think those XX of to do more lenders change

take will every of And a swath generating consumers so that just means right wider we're day they now. much

a perfect example. Here's

loan year-over-year personal up consumer QX. Our in traffic XX% was

loan to of a up that's credit boxes can't -- revenue because we write only loans limited was just And of there's that's personal can those and X%. of we number they tight Our -- have, all about around be be of they're them because consumers. But all them, we're to to shopping. going to adding we're going database, as they and -- remarket to consumers these to able we're excited come and our

As their they're down, loans, interest be to going cetera. wanting et reshop rates go to

spot we've to that spreads got we're they lenders these. consumers. to And letter. the get to go rates, interest referring as open up are accept and do the so they'll more between get make larger credit a That's that what as all boxes interest we their down, in feel And rates going

Northland. the from of Grondahl, of comes Mike question line next Our

of cash $XXX The insurance question. cycle collection balance on of large assume companies. And AR what's I couple sheet, the kind of quick A million there? a that's the

This I'm take that is one. happy Jason. to

you seen expenses is look beginning of primarily AP change in at this related the that the and accrued significant versus roughly to our year, So see are if offsetting. year. AR Insurance this And we've you'll change those growth in the

Insurance capital working a to response the and significant lining we're that that of of just inflows so And bit up to cash a quite the manage outflows growth. pretty amount work year. like, so well we're, We've this generating that done in

percentage? cash we follow-up Got sort of should to like, it. from adjusted a as just about a free that. How And then think conversion EBITDA,

coming going your And interest you then have smooth mean, the we've Apollo we to then done be a capital are primarily paid things really around start quarter. term have quite the if original bit And next you expenditures. so a last few going be of that $X the EBITDA capital million you that's kind loan. have Roughly over And of capital. the out and to for months. EBITDA, that working I working out with to

working forward. really a shouldn't done that capital be So QX dramatic, was we've It going change that and think of and smooth bit in that work quite QX, significant out. I to

so of cash that it's couple And really EBITDA. would generate free from things flow those

Thank closing would now to you. Doug I for like to turn the conference Lebda Sir? back remarks.

thank happen. All outlook am people thrilled to and the with I all, I'm and also very these our about all grateful results, who I'm third make right. Well, you results enthusiastic quarter helped to ahead. the

Our implies XXXX. this will to updated at EBITDA financial the year midpoint guidance grow XX% adjusted compared

goals on ahead. around to you financial look the and optimistic The about company forward we the I very outlook results environment, well is economic is team aligned next quarters and current and updating from for our the Thank all positioned targets, our year. to Our you are well in benefit much.

This you Thank concludes conference for participating. today's call.

may disconnect. now You