In the face of persistently challenging economic conditions, LendingTree is adapting its variable marketing model to navigate these turbulent waters effectively. Despite the rapid rise in interest rates, soaring consumer price inflation, and looming recession fears, our diverse business model and robust balance sheet are enabling us to fortify our competitive position, even as we confront short-term macroeconomic challenges.
Doug Lebda, Chairman and CEO of LendingTree, expressed his perspective on the matter: “This year, we remain focused on our key strategic initiatives to create even more useful, usable, and desirable experiences for consumers that come to LendingTree for their borrowing and insurance needs. We are pleased with the pace of execution on these plans and expect the positive impact from them to begin to manifest in the quarters ahead.”
LendingTree’s Chief Financial Officer, Trent Ziegler, weighed in on the situation: “The challenging interest rate environment that progressed through this quarter combined with annual inflation persistently running above 8% has presented additional challenges for many of our mortgage lending and insurance partners. We have seen the most significant impact in our Home segment as mortgage rates have nearly doubled over the last six months, causing a sharp decline in refinance volumes and more recent pressure on purchase activity. Although our Insurance segment continues to rebound from the trough in 4Q 2021, the recovery has been slower than expected as demand from our carrier partners remains volatile as premium increases continue to chase inflation.”
However, on a more optimistic note, our Consumer segment continues to perform admirably, with an anticipated 40% growth in the quarter. We are currently reviewing the annual guidance provided in our 1Q earnings announcement and plan to offer a revised outlook when we announce formal 2Q results next month. Despite near-term headwinds, our balance sheet remains incredibly robust, and we anticipate sustained positive cash flow generation, reinforcing our position of strength.
Preliminary Results for 2Q 2022:
- Revenue: Estimated in the range of $259 – $264 million, compared to the previous range of $283 – $293 million.
- Variable Marketing Margin: Expected to be $88 – $92 million, revised from the previous range of $100 – $106 million.
- Adjusted EBITDA: Anticipated to be in the range of $26 – $29 million, revised from the previous range of $35 – $40 million.
LendingTree uses non-GAAP measures, including Variable Marketing Margin and Adjusted EBITDA, to supplement GAAP reporting. Variable Marketing Margin, which measures the efficiency of LendingTree’s operating model by considering revenue after subtracting variable marketing and advertising costs directly influencing revenue, is a primary metric for assessing marketing effectiveness. Adjusted EBITDA, on the other hand, is a key metric used to evaluate the operating performance of LendingTree’s businesses.
LendingTree strives to provide these non-GAAP measures alongside the comparable GAAP measures and descriptions of the reconciling items, even though the company cannot offer a reconciliation of projected Variable Marketing Margin or Adjusted EBITDA to the most directly comparable expected GAAP results due to uncertainties related to legal matters and tax considerations.
For more context, LendingTree’s Principles of Financial Reporting clarify that Variable Marketing Margin is revenue minus variable marketing expense, where variable marketing expense is the cost associated with variable advertising efforts that drive traffic to our websites. On the other hand, EBITDA is defined as net income from continuing operations, excluding interest, income taxes, amortization of intangibles, and depreciation, while Adjusted EBITDA excludes various items, including non-cash compensation expense, impairment charges, gain/loss on assets, gain/loss on investments, restructuring and severance expenses, litigation settlements, acquisitions, dispositions income or expense, and one-time items.
LendingTree emphasizes that these non-GAAP measures may not be directly comparable to similar measures used by other companies.
In adherence to the Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995, LendingTree acknowledges that the matters discussed above may contain forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. These statements pertain to the intentions, beliefs, and current expectations of LendingTree and its management. Factors that could lead to actual results differing from these forward-looking statements are outlined in the “Risk Factors” section of the company’s Annual Report on Form 10-K for the period ending December 31, 2021, and its other filings with the Securities and Exchange Commission.
About LendingTree, Inc.:
LendingTree (NASDAQ: TREE) operates the nation’s leading online marketplace, connecting consumers with an array of financial choices to make confident decisions. It enables consumers to shop for financial services much like they would for airline tickets or hotel stays—by comparing multiple offers from a network of over 500 partners in a single search and selecting the option that best suits their financial needs. Services encompass mortgage loans, mortgage refinancing, personal loans, credit cards, business loans, auto loans, student loan refinancing, and insurance, including auto and homeowners’ policies. The My LendingTree platform offers members free credit scores, credit monitoring, and recommendations for improving credit health. It proactively compares users’ credit accounts against offers on its network, notifying them of opportunities to save money.