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Q4 2022 Shareholder Letter

Exhibit 99.2

February 27, 2023

Fellow Shareholders:

Our business was tested in 2022, in perhaps one of the most difficult operating environments we have faced in our history as a public company. Significantly higher interest rates weighed heavily on mortgage activity while persistent inflationary pressures wrought havoc on virtually all of our insurance carrier partners. Despite those challenges, we believe our performance this past year proves we have built a durable business that can successfully navigate a very difficult economic cycle, while also enabling us to invest for the future.

The diversification of our company combined with a strong balance sheet and prudent expense management produced $84.5 million of Adjusted EBITDA for the year. We were able to achieve this while maintaining investment in our discreet growth initiatives, which we believe have potential to significantly increase the lifetime value of our customers and improve the long-term margin profile of our company.

The fourth quarter was highlighted by the strong performance of our Insurance segment, as the team's focus on maximizing profitability in a depressed revenue environment led to an impressive six point increase in segment margin from the prior quarter. In Consumer, our small business and personal loan products again performed well against the backdrop of a generally tighter lending environment while driving a three point segment margin improvement sequentially. Our Home business was able to capitalize on increased demand for home equity loans, generating revenue that surpassed our purchase and refinance lines combined. The ability to quickly pivot to this evolving business opportunity is a testament to our deep integration with our lending partners. During the quarter we implemented our previously announced expense reduction efforts, and we have additional expense plans ready should business performance fall short of expectations as we progress through the year ahead.

Looking forward the company is energized by the initiatives we are executing on in 2023. Our focus on becoming the premiere digital ally for consumers, to help them win financially, drives much of our day-today work. Today's announced launch of the LendingTree Win Card, our first branded consumer credit offering in partnership with Upgrade, is a perfect example. We spent a significant portion of last year speaking with thousands of consumers, identifying key financial problems that most burdened them. This input led to designing a number of unique features for the Win Card, which offers a cashback incentive tied to regular usage of our MyLendingTree logged-in experience. We look forward to sharing more milestones in coming quarters as we build a destination for our customers to get timely advice on how to improve their financial lives, which is more relevant to them now than ever.

A summary of our fourth quarter results and future outlook follow below.

Q4.2022

1

SUMMARY CONSOLIDATED FINANCIALS

(millions, except per share amounts)

2022

2021

Y/Y

Q4

Q3

Q2

Q1

Q4

%

Change

Total revenue

(Loss) income before income taxes Income tax benefit (expense)

Net (loss) income from continuing operations

Net (loss) income from continuing operations % of revenue

(Loss) income per share from continuing operations

Basic

Diluted

Variable marketing margin

Total revenue

Variable marketing expense (1) (2)

Variable marketing margin (2)

Variable marketing margin % of revenue (2)

Adjusted EBITDA (2)

Adjusted EBITDA % of revenue (2)

Adjusted net income (loss)(2)

Adjusted net income (loss) per share (2)

$

202.1

$

237.8

$

261.9

$

283.2

$

258.3

$

(11.3)

$

(22.8)

$

(10.4)

$

(10.4)

$

60.2

$

0.9

$

(135.9)

$

2.4

$

(0.4)

$

(11.8)

$

(10.4)

$

(158.7)

$

(8.0)

$

(10.8)

$

48.4

(5)%

(67)%

(3)%

(4)%

19 %

$

(0.81)

$

(12.44)

$

(0.63)

$

(0.84)

$

3.67

$

(0.81)

$

(12.44)

$

(0.63)

$

(0.84)

$

3.57

$

202.1

$

237.8

$

261.9

$

283.2

$

258.3

$

(124.0)

$

(163.1)

$

(171.1)

$

(189.1)

$

(169.8)

$

78.1

$

74.7

$

90.8

$

94.1

$

88.5

39 %

31 %

35 %

33 %

34 %

$

16.7

$

9.8

$

28.6

$

29.4

$

24.7

8 %

4 %

11 %

10 %

10 %

$

4.9

$

(4.6)

$

7.6

$

6.1

$

(4.1)

$

0.38

$

(0.36)

$

0.58

$

0.46

$

(0.31)

(22) %

  1. %
  1. %
    (121)%
  1. %
  1. %
    (12)%

(32)%

  1. %
  1. %
  1. Represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related expenses. Excludes overhead, fixed costs and personnel-related expenses.
  2. Variable marketing expense, variable marketing margin, variable marketing margin % of revenue, adjusted EBITDA, adjusted EBITDA % of revenue, adjusted net income (loss) and adjusted net income (loss) per share are non-GAAP measures. Please see "LendingTree's Reconciliation of Non-GAAP Measures to GAAP" and "LendingTree's Principles of Financial Reporting" below for more information.

Q4.2022

2

Q4 2022 CONSOLIDATED RESULTS

Consolidated revenue of $202.1 million declined 22% over prior year, with Home segment revenue down 50% from the prior year period due to reduced demand from homeowners for refinancing transactions and a weaker overall home purchase environment.

On a GAAP basis, net loss from continuing operations was $(10.4) million, or $(0.81) per diluted share. This compares to net income from continuing operations of $48.4 million, or $3.57 per diluted share, in Q4 2021 which benefited from a significant gain on sale of an equity investment.

Variable Marketing Margin of $78.1 million was 12% below the prior year, again primarily due to the decline in Home revenue, partially offset by improving margins in Consumer and Insurance.

Adjusted EBITDA of $16.7 million exceeded the high-end of our guidance as we continued to focus on improving segment margins in a challenged revenue environment and managing operating expenses.

Adjusted net income of $4.9 million translates to $0.38 per share.

Q4.2022

3

SEGMENT RESULTS

(millions)

Home (1)

Revenue

Segment profit

Segment profit % of revenue

Consumer (2)

Revenue

Segment profit

Segment profit % of revenue

Insurance (3)

Revenue

Segment profit

Segment profit % of revenue

Other Category (4)

Revenue (Loss) profit

Total

Revenue

Segment profit

Segment profit % of revenue

Brand marketing expense (5)

Variable marketing margin

Variable marketing margin % of revenue

2022

2021

Y/Y

Q4

Q3

Q2

Q1

Q4

% Change

$

48.6

$

64.9

$

73.9

$

101.9

$

96.3

(50) %

$

16.3

$

24.1

$

26.7

$

35.9

$

33.8

(52) %

34 %

37 %

36 %

35 %

35 %

$

86.2

$

102.7

$

106.1

$

101.1

$

96.4

(11) %

$

41.7

$

45.8

$

44.6

$

42.5

$

40.8

2 %

48 %

45 %

42 %

42 %

42 %

$

67.0

$

70.2

$

81.8

$

80.0

$

65.4

2 %

$

25.6

$

22.6

$

22.6

$

21.1

$

20.8

23 %

38 %

32 %

28 %

26 %

32 %

$

0.2

$

-

$

0.1

$

0.1

$

0.2

- %

$

(0.1)

$

(0.2)

$

(0.1)

$

(0.1)

$

0.1

(200) %

$

202.1

$

237.8

$

261.9

$

283.2

$

258.3

(22)%

$

83.4

$

92.3

$

93.8

$

99.5

$

95.5

(13)%

41 %

39 %

36 %

35 %

37 %

$

(5.3)

$

(17.6)

$

(3.0)

$

(5.4)

$

(7.0)

(24) %

$

78.1

$

74.7

$

90.8

$

94.1

$

88.5

(12)%

39 %

31 %

35 %

33 %

34 %
  1. The Home segment includes the following products: purchase mortgage, refinance mortgage, home equity loans, and reverse mortgage loans. We ceased offering reverse mortgage loans in Q4 2022.
  2. The Consumer segment includes the following products: credit cards, personal loans, small business loans, student loans, auto loans, deposit accounts, and other credit products such as credit repair and debt settlement.
  3. The Insurance segment consists of insurance quote products and sales of insurance policies.
  4. The Other category primarily includes marketing revenue and related expenses not allocated to a specific segment.
  5. Brand marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related expenses that are not assignable to the segments' products. This measure excludes overhead, fixed costs and personnel-related expenses.

Q4.2022

4

HOME

Home segment revenue of $48.6 million was down 50% in Q4 over prior year. Within Home, our core mortgage business generated revenue of $22.6 million, down 72% YoY, as demand for refinancing transactions has diminished with almost no outstanding mortgages today carrying a higher rate than current loan offerings. Other Home revenue, consisting almost entirely of our home equity loan product, increased 55% from 2021, as owners benefit from near record levels of equity in their homes to borrow against for other debt repayments and to finance home improvements.

Our core mortgage unit economics were impacted by the drop in both consumer and partner demand in the quarter, with mortgage revenue per lead declining 43% YoY. Segment profit margin remained consistent at 34% in the quarter compared to 35% in the prior year. The volume mix in our mortgage business was close to evenly balanced between refinance and purchase loans as compared to an approximately 70%/30% split in favor of refi in the prior period. Home equity revenue per lead remained healthy as we captured 66% more volume than a year ago. During the quarter we discontinued our reverse mortgage offering to better focus resources on supporting our traditional lending partners going forward.

The outlook for the mortgage industry is a sustained period of lower refinance demand, with the Mortgage Bankers Association forecasting a 37% decline in refinance originations in 2023 after falling 76% in 2022. We have been actively engaged with our lending partners to increase purchase conversion rates, and we are focusing on this metric internally as a key growth priority for the segment this year. We expect home equity will continue to generate the majority of our Home revenue in 2023, as our partners have leaned on the favorable environment for cash-out transactions to maintain loan officer productivity.

CONSUMER

Our Consumer segment revenue declined 11% YoY during the seasonally slower Q4, although the improvement in segment margin grew profit by 2%. Personal loan revenue of $28.9 million declined 20% due to tightening underwriting criteria at our lender partners, which increased steadily over the second half of the year. Improvements in personal loan margin, due in part to the organic traffic we derive from our MyLendingTree customer base, helped partially offset this revenue decline. Credit card revenue continued to contract due to competitive factors, which also challenged customer acquisition cost for that business, with revenue of $18.8 million, down 29% YoY. Operational improvements are being implemented and improving credit card results is a core priority for the company in 2023.

Small business revenue was flat from Q4 2021 despite a somewhat more cautious lending environment, while product margins have continued to improve. Throughout the second half of 2022 we streamlined our customer acquisition channels and improved marketing quality. In Q4 rising delinquencies caused lenders to shift their appetite away from pandemic favored industries like construction and transportation, which had been in-demand segments for the past two years. Our ability to efficiently match borrowers to the most appropriate lender on the network with our concierge model continues to positively impact results. Going forward we are implementing technology improvements to automate capture of applicant financial data to enhance the borrower experience and increase lender match rate.

Q4.2022

5

Disclaimer

LendingTree Inc. published this content on 27 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 February 2023 12:07:32 UTC.

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