Loan marketplace LendingTree saw its consumer segment somewhat offset significant losses in its mortgage and home businesses to post a middling revenue of $261 million for Q2 2022, down 3% year-over-year as the company seeks to power through a tough moment for lending—specifically mortgage loans.
WIth overall home segment revenue down 30% from last year, and mortgage-specific products down 49%, CEO Doug Lebda said on a Q2 earnings conference call that he hoped the worst was already in the rearview mirror.
“Despite these headwinds, we are forecasting that segment level profis will be roughly flat in the third quarter,” he said.
Also reporting a net loss of $8 million, LendingTree stock was down significantly in early trading, falling 8% at the opening bell.
The company had revised revenue guidance down by about $20 million in late June responding to these home loan challenges. Lebda wrote at the time that “difficult economic forces have persisted, and in many instances worsened, so far this year,” citing both interest rates as well as recession fears.
LendingTree executives had anticipated these issues with a pivot to consumer products while also trying to position themselves positively around home equity loans, with Lebda saying that the company is “actively working with mortgage partners” to increase their products around HELOC.
Refinances are dropping proportionally to other home products, according to Lebda, with home equity loans outsripping refis as part of LendingTree’s business. At the same time, he and other executives on the conference call agreed that purchase loans are a more important focus in the near and medium term as the pool of consumers who can or want to refinance shrinks.
Overall, though, the company is not expecting any significant relief this calendar year, with CFO Trent Ziegler saying in a statement that even consumer lending could be affected by further macroeconomic downturns. New guidance for the full year anticipates a revenue drop of 8% – 10% from 2021, between $985 million and $1.015 billion.
“We expect the environment to remain challenging in Home and Insurance through the remainder of the year and acknowledge the prospects for our Consumer segment are increasingly uncertain,” he said.
In response to a question from an investor specifically about how worsening market conditions could affect consumer products, Lebda posited again that some of that is already being factored in by lenders.
“In the consumer segment, lenders would be demanding less volume as they tighten up their credit spectrum and are lending less; however, a lot of that has already happened in the market,” he said.
COO J.D. Moriarty said one of the lessons the company learned from the pandemic was not to get too skittish in periods of significant uncertainty, specifically referencing those wild early months of 2020. That lesson is being applied to all segments of the company.
“You’ve gotta weather the period. You’ve gotta be making investments. Don’t freeze,” he said.
