Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

All three business segments of LendingTree Inc (NASDAQ:TREE) generated solid revenue growth in the first quarter. The insurance segment grew revenue by 71% year over year, despite facing challenges. The small business and personal loan products in the consumer segment showed significant growth, with expectations for record revenue in 2025. Home equity lending continues to perform well, driven by increased demand from both consumers and lenders. The company has identified cost savings through a zero-based budgeting process, which will help offset unexpected expenses.

Negative Points

Adjusted EBITDA came in below forecast due to temporary regulatory headwinds in the insurance business and one-time expenses. The recovery in the insurance segment has been slower than anticipated, affecting performance. Prevailing high mortgage rates continue to suppress demand for new home buyers and refinancing. There is concern about potential headwinds to profitability from tariffs, which could impact demand for customer acquisition. The student loan business has been declining, and LendingTree Inc (NASDAQ:TREE) is not actively marketing it due to low demand.

Q & A Highlights

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Q: Can you elaborate on what you're hearing from your carrier partners regarding potential headwinds to profitability from tariffs and how this might impact demand for customer acquisition? A: Scott Perry, COO and President of Marketplace Businesses, explained that while there is concern about tariffs, carriers generally feel confident about their profitability due to past rate adjustments. They are cautious but believe they can manage potential inflationary impacts from tariffs without significantly affecting their marketing strategies.

Q: Could you provide more details on the revised guidance, particularly the top-line reduction and stronger variable margins? A: Jason Bengel, CFO, stated that the guidance does not factor in macroeconomic changes but will be monitored. The home segment is expected to continue strong growth, and consumer segments are anticipated to improve seasonally. Insurance is expected to perform better in the second half of the year, with expenses expected to decrease modestly.

Q: Regarding the small business segment, can you discuss the seasonality and whether you expect to maintain the current revenue levels throughout the year? A: Scott Perry noted that while there is some seasonality, the diversity of small business needs smooths out demand. The growth in direct sales staff and consumer lead flow has been successful, and they expect continued growth by adding more lenders to the network.

Story Continues

Q: What are your thoughts on the mortgage marketplace as a potential growth driver, given the current macro environment? A: Doug Lebda, CEO, mentioned that while the mortgage marketplace is currently limited due to high rates, home equity is performing well. A significant drop in interest rates could unlock growth, and technology advancements should facilitate more efficient loan processing in the future.

Q: How should we think about the BMM margin in the insurance segment as revenue normalizes, and what is the outlook for home insurance? A: Scott Perry indicated that they aim for a low to mid-30s VMM margin as things normalize. Home insurance is a growing product with more carrier interest, and they expect continued growth in this area.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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