LendingTree, Inc. Q4 FY2024 earnings call

• The company finished 2024 strong with $32 million of adjusted EBITDA in Q4, well ahead of forecast. Insurance segment was the primary driver, with Home and Consumer also growing.
• Key product offerings had strong Y/Y growth in Q4: homeowners insurance +175%, home equity +48%, small business +45%, personal loans and auto loans +21%, mortgage +12%.
• Expect double-digit revenue growth to continue in Q1 2025 across products.
• Company has returned to growth after a tough period, with adjusted EBITDA outlook for 16% annual growth midpoint in 2025 driven by revenue growth across all 3 reportable segments.
• Focus on variable marketing and fixed costs for positive operating leverage.
• Balance sheet improved with net leverage ending 2024 at 3.5x trailing adjusted EBITDA, expecting leverage to trend lower.
• SEO revenue in Q4 was up 30% Y/Y, with media practice performing well across various categories.

In the fourth quarter, LendingTree's Insurance segment was the primary driver of strong results. Key product offerings saw significant year-over-year revenue growth: homeowners insurance was up 175%, home equity grew 48%, small business grew 45%, personal loans and auto loans both grew by 21%, and mortgage grew 12%. The company expects double-digit revenue growth to continue in these products in Q1 2025. The Insurance segment contributed significantly, with other segments like Home and Consumer also showing strong year-over-year growth.

• Adjusted EBITDA outlook calls for 16% annual growth at the midpoint of the range in 2025.
• Expect double-digit revenue growth to continue in each product in Q1 2025.
• Leverage is expected to continue trending lower as earnings grow and debt balance is reduced with excess cash.

• Market conditions: Lowering of interest rates or inflation could impact business. For example, high interest rates or raging inflation could make lending and insurance more difficult.
• Regulatory changes: Interpretations of laws by government agencies can impact the business, though recent court cases and regulatory shifts have had positive impacts so far.

Q: On insurance, tying back to shareholder letter's more modest growth in 2025 relative to other segments. What's the nuance?

A: Scott Peyree said insurance still has strong growth vs H1 2024, but growth will moderate as year goes on with carriers being more diligent with marketing dollars. Company also focused on returning VMM margins to historical norms.

Q: Elaborate on opportunity to take more price, especially in Insurance, and TCPA.

A: Scott Peyree said click product is market-based pricing; lead pricing related to TCPA had price increases agreed with clients as TCPA issue was resolved. Different products in insurance have different pricing dynamics.

Q: On insurance steady state historically and why not back to that level? And Google algo change impact.

A: Scott Peyree said insurance is running at all-time highs, not returning to a level. After 2016 downturn, industry stepped up. Doug Lebda said 15%-20% of traffic is organic, SEO revenue up 30% Y/Y in Q4, media practice performing well across categories.

Q: Consumer segment growth sustainability and key swing factors.

A: Scott Peyree said Consumer segment has good areas like small business with growing direct sales force, personal loans growing well. Doug Lebda said swing factors include market conditions, game-changing technology, and operational excellence.

Q: Financial impact of one-to-one consent and home equity growth driver.

A: Doug Lebda said initial expectations were short-term pain but recovery expected. Scott Peyree said home equity growth driven by lenders reorienting to focus on home equity leads and consumer demand for home equity use cases like remodels and debt consolidation.

Q: Consumer margin going forward and impact of auto demand dampening on Insurance segment.

A: Jason Bengel said consumer margin expected to normalize to mid-to-high 40s in 2025. Scott Peyree said car shoppers are a minority, but property and casualty insurance renewal reminders drive shopping behavior, and carrier profitability could lead to rate reductions in future years