LendingTree, Inc. Fourth Quarter 2024 Earnings Sharehoholder Letter

Q4 2024 Consolidated Results

Consolidated revenue of $261.5 million increased 95% over prior year, led by a 188% increase in Insurance segment revenue, 35% growth in Home, and 12% improvement in Consumer segment revenue.

On a GAAP basis, net income was $7.5 million, or $0.55 per diluted share, this compares to a net income of $12.7 million, or $0.98 per diluted share in the prior-year period.

Variable Marketing Margin of $86.7 million, representing a 33% margin, was 43% above the prior year. The Insurance segment drove most of this improvement growing 90% YoY, while the Home segment also contributed with 44% growth.

Adjusted EBITDA was $32.2 million.

Adjusted net income of $15.8 million translates to $1.16 per share.

Home

Home segment revenue of $34.0 million increased 35% in Q4 compared to the prior year period, as our Home Equity offering grew revenue by 48%. Consumer demand for home equity loans broadly increased throughout the year. Leveraging our large network of lenders against this increased demand, along with notable growth in the number of lenders offering home equity loans, has improved unit economics in the business. Many of our partners have also improved their processes to more efficiently complete customers' loan applications and move those apps to close.

Longer-term rates have remained stable at rates higher than most existing first mortgages. As a result, second lien products have become an attractively priced source of capital for homeowners. According to CoreLogic, homeowners with a mortgage in the U.S. have $17.5 trillion of equity as of 3Q24, a 2.5% increase from the year prior. We expect further growth in our home equity business this year as home values continue to hover near record levels.

The Mortgage Bankers Association forecasts total mortgage originations will increase by 16% in 2025, although Q1 is expected to remain weak and below 4Q24 levels. The forecast calls for total loan originations of $2.1 trillion, with purchase loans accounting for 69% of the total. During this prolonged trough in mortgage origination activity, we have partnered closely with a number of our lending partners through our mortgage innovation lab to improve the consumer experience and test new features to retain our leading market position when the next growth phase begins.

Consumer

In Q4 our Consumer revenue grew 12% YoY due to gains in our small business and personal loan offerings. Lenders have broadly increased their appetite for new loan originations as consumer credit performance stabilized last year. We have strategically increased our marketing spend to position the business for wallet share gains with these lenders as we enter the new year. Segment profit thus declined 2% in the quarter from last year, generating a segment margin of 51%, down from a record 58% margin in the year ago period.

Personal loan revenue of $26.5 million increased 21% YoY, and we expect continued healthy growth in the business this year. The leading consumer use case for a personal loan is the refinancing of higher-cost credit card debt. Current total revolving consumer debt of $1.38 trillion is at a record high, and interest expense on that debt has increased along with the rise in short-term interest rates. Many of our lender partners have publicly stated their intention to meaningfully grow their originations this year. We remain in a solid competitive position to grow with them.

Small business revenue grew 45% in Q4 compared to the prior year period. Lenders in our network have increased new loan originations with us as credit performance has broadly improved. We responded to this growth in partner demand by investing in our concierge sales team and targeted marketing campaigns. Our concierge sales members create a single-point of contact with us for small business owners, assisting in procuring the best loan offer, collecting documentation required for loan applications and troubleshooting any issues as they arise. Our investment in this team helped drive a material increase in approval rates for our customers, and allows us to capture lender volume bonus and renewal revenue streams.

Insurance

Our Insurance segment continued its strong growth cadence with revenue increasing 188% YoY and segment profit up 90% YoY. Carriers increased their marketing spend with us steadily throughout the year as positive underwriting results created an increased demand for new customers. This trend continued in the fourth quarter. The exceptional level of demand from carriers, however, also pressured advertising costs for the industry, which resulted in declines in our segment profit margin into the third quarter. We indicated in our Q3 earnings announcement we believed segment profit margin had bottomed, and that has indeed been the case. In Q4 we continued to optimize our search marketing campaigns and broadened our use of additional marketing channels, resulting in a four percentage point increase in segment margin sequentially.

Balance Sheet & Capital Management

The company ended the year levered 3.5x on a net basis, down from 5.3x at the close of 2023. We maintain $107 million of cash on hand and $50 million remains undrawn on our Apollo term loan. Our available liquidity will allow us to comfortably retire the remaining $115 million of convertible notes due to mature in July of this year.

We have made steady progress improving the strength of our balance sheet while avoiding the issuance of dilutive equity or equity-linked capital. Based on our forecast, leverage should continue to decline steadily from the current level. Reducing our outstanding debt balance will remain a primary use of excess cash. As our credit metrics continue to improve we will evaluate opportunities to enhance the efficiency of our capital structure, reduce our interest expense and improve free cashflow generation for shareholders.

Financial Outlook*

Today we are issuing our outlook for the first-quarter and full-year 2025.

First-quarter 2025:

• Revenue: $241 - $248 million
• Variable Marketing Margin: $75 - $79 million
• Adjusted EBITDA: $25 - $27 million

Full-year 2025:

• Revenue is anticipated to be in the range of $985 million - $1,025 million, an increase of 9% to 14% compared to 2024.
• Variable Marketing Margin is expected to be in the range of $319 - $336 million, representing growth of 5% to 10% over last year.
• Adjusted EBITDA is anticipated to be in the range of $116 - $126 million, an increase of 11% to 21% from 2024.

Our full-year 2025 outlook assumes double-digit revenue growth in both the Home and Consumer segments, with more modest Insurance segment growth following a record year.

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

LENDINGTREE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)