LendingTree, Inc. Q3 FY2024 earnings call

• Generated $27 million of adjusted EBITDA in Q3, a 23% increase from last year.
• Insurance had standout performance with auto insurance quotes up 210% y-o-y and $41 million VMD (record).
• Consumer business grew 6% y-o-y in revenue and 4% in VMD sequentially, with small business having consistent high-margin demand and personal loan product showing sequential growth.
• Home segment operating at trough but home equity generating 5% y-o-y revenue growth.
• Scott Peyree discussed insurance industry growth, diversified distribution for differentiation, and ongoing carrier expansions.
• Jason Bengel provided Q4 segment expectations: home equity to offset seasonal decline, consumer to hold margin with seasonal decline, and insurance margin troughing.

Insurance: Generated $41 million of VMD during the period, a record. Segment revenue increased 210% from Q3 2023. Consumer: Grew revenue 6% and VMD 4% sequentially. Small business had consistent demand, and personal loan product saw sequential revenue and VMD growth. Home: Operating at trough due to macro factors, but home equity accounts for two-thirds of segment revenue, generating 5% revenue growth from the prior year.

• Updated financial guidance implies adjusted EBITDA this year will grow 19% at midpoint compared to 2023.
• Q4 expectations: Home equity to offset seasonal decline, so home to see growth vs prior year and no normal seasonal decline vs Q3; consumer to hold margin with normal seasonal decline; insurance margin to trough with flat to slightly improving quarter-on-quarter.

• Forward-looking statements subject to risks, with risks described in periodic reports.
• Potential SEO headwinds from Google changes.
• Insurance carrier concentration with a small number of carriers driving bulk spend and limited demand in some large population states.

Q: On insurance industry outlook and how LendingTree differentiates?

A: Scott Peyree said industry has mid-innings of growth, carriers will reach profitability and reduce rates eventually; LendingTree differentiates with diversified distribution (multiple products, direct client distribution, large local agent base).

Q: Impact of SEO changes?

A: Doug Lebda said LendingTree is independent of traffic sources, works on SEO, and partners closely with Google on paid search.

Q: Insurance VMM outlook?

A: Scott Peyree said Q3 was trough, margins to start increasing, long-term mid-30s margins expected.

Q: Q4 segment expectations?

A: Jason Bengel said home to see growth vs prior year with home equity offsetting seasonality, consumer to have seasonal decline, insurance margin to trough with flat to slightly improving quarter-on-quarter.

Q: Brand spend and OpEx?

A: Doug Lebda said no big brand budget, expenses are leverageable with no dramatic increase.

Q: Insurance phasing?

A: Scott Peyree said Q3 had early acceleration, Q4 has sustained high demand from carriers but not at extreme levels.

Q: Mortgage front?

A: Doug Lebda said refi will improve as rates drop, lenders and consumers interested, home equity is strong; Scott Peyree and Jason Bengel added on client demand and home equity focus.

Q: Search impact and litigation?

A: Doug Lebda said working on SEO, litigation charge is accrual for prospective settlements.

Q: Lender loan offerings?

A: Scott Peyree talked about lenders opening credit boxes for more consumers as interest rates drop.

Q: AR and free cash flow?

A: Jason Bengel said AR related to insurance growth, working capital managed to smooth free cash flow from EBITDA.