LendingTree’s revenue continues to suffer through another quarter amidst a housing crisis for the ages, according to company executives. In spite of the vast housing market challenges, however, the company’s outlook for the future remains positive.
In their Q3 2022 earnings report, LendingTree reported a total revenue of $237.8 million, down 9% from last quarter and a significant drop of 20% from last year.
Home segment revenue for the company was reported at $64.9 million, a decrease of 42% from last quarter and 12% from last year. Within this revenue, their mortgage products revenue was $34.5 million, a decline of 63% over the prior year—but is partially offset by a large growth in home equity at 52%.
“What is a little bit different this year is that we’ve seen a genuine expansion of the Home Equity product,” said John Moriarty, president and COO of Marketplace. “And so, Home Equity is one of our best-performing products within the Home segment, and it has replaced that shift to purchase, and it’s actually bigger than purchase at this point for us. So that’s great.”
LendingTree reported $102.7 million for their consumer segment revenue, which was one of the few increases at +3% from last quarter, but a 3% decrease from last year. Personal loans revenue within this category was at $37.7 million, a growth of 12% over last year. Small business revenue offered a 9% increase from last year, however, the credit card revenue of $24.3 million was down 10% from last year.
Insurance segment revenue decreased 17% from last quarter to $70.2 million, and translated into segment profit of $22.6 million, down 15% over the same period. Additionally, LendingTree’s adjusted EBITDA clocked in at $9.8 million, 4% of the company’s Q3 2022 revenue.
Chairman and CEO Doug Lebda and CFO Trent Ziegler shared that despite elevated interest rates and inflation at 40-year highs, “we were encouraged that gross margin in all three segments held steady YoY, indicative of the value we continue to generate for our partners and the durability of our variable marketing model through all stages of the economic cycle.”
In working to not only survive but thrive in the current housing market, LendingTree has been refocusing many efforts to be as effective as possible for consumers, and control what they have the ability to control.
“We are working to transform the margin profile of our marketplace by presenting customers with the right offer for a financial product when it is most relevant to them. A key component of that strategy is reinvesting in our brand,” stated Lebda. “We returned to TV advertising this quarter with a celebrity-driven campaign. Initial results are very positive.”
Some return on this specific effort can be seen through the 23.9 million consumers who have signed up for MyLendingTree through Sept. 30.
Lebda shared that another area the company is working to control is their operating expense. “Subsequent to quarter end, we took further action to manage our fixed costs that will result in $25 million of annualized savings beginning next year. We remain well-resourced to continue this critical work for our strategic initiatives and to support our marketplace business,” stated Ledba.
In light of the state of the housing market and the industry as a whole, LendingTree offered a re-adjusted outlook for the year as a whole. For 2022, the company sees their revenue at $985 – $1,000 million compared to the prior range of $985 – $1,015 million. They predict their variable marketing margin at $330 – $340 million versus $325 – $345 million prior, and their adjusted EBITDA at $77 – $82 million versus prior range of $75 – $85 million.
Additionally, officials shared their predictions for the next quarter. In Q4 2022, the company sees revenue at $202 – $217 million, the variable marketing margin at $70 – $80 million and the adjusted EBITDA at $9 – $14 million.
When looking ahead at 2023, Ziegler stated that “we’ve not yet made a determination as to how much or the timing of brand investments headed into next year. So more to come on that front. But…we’re pleased with the early reads. We’ve seen tangible signs of improvement in several of the brand health metrics, things like awareness, consideration, impression, and we’re going to continue to unpack the results of that and formulate our plans for next year.”
Lebda and Ziegler concluded, “Despite the macroeconomic headwinds that pressure our short-term financial results, we are more encouraged than ever for the future. We know managing through this period—and getting leaner—will make our people better and our business more durable. And we see an enormous opportunity to evolve our value proposition—both for our consumers and our partners.”
