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LendingTree Remains Upbeat Despite Loss In 1Q 2022

David Krechevsky
May 05, 2022

Reported a net loss from continuing operations of $10.8 million, compared to a $48.4 million profit in the fourth quarter of 2021.

LendingTree Inc., citing “rapidly increasing interest rates and persistent inflationary headwinds,” today reported a net loss from continuing operations in the first quarter of 2022, even while noting improvement across its business units.

The Charlotte, N.C.-based online financial services marketplace reported a net loss from continuing operations of $10.8 million, compared to a $48.4 million profit in the fourth quarter of 2021 and a $19.3 million profit in the first quarter of last year.

The loss came despite total revenue in the first quarter of $283.2 million, up 9.6% from $258.3 million in the previous quarter and up 4% from $272.8 million in the first quarter of last year.

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) net income for the quarter was $6.1 million, or 46 cents per share, up from a loss of $4.1 million,  or 31 cents per share, in the previous quarter, and up 156% from $2.5 million, or 18 cents per share, in the same quarter last year.

“The diversity of our business continues to benefit shareholders as we grew revenue and VMM (variable marketing margin) this quarter despite rapidly increasing interest rates and persistent inflationary headwinds," said Doug Lebda, chairman and CEO. "We performed in line with our guidance across all metrics, while continuing to invest in our strategic growth initiatives.”

He continued, “The Home segment performed well, with improving volume and unit economics in home equity and purchase mortgage helping to offset the dramatic decline in refinance volume.”

LendingTree’s Home segment saw revenue decline 20% year over year to $101.9 million, causing the segment’s profit to fall 8% to $35.9 million, though the company noted that the first quarter of 2021 recorded a historically high refinance volume. Mortgage products revenue of $78 million declined 33% over prior year, the company said.

Still, it noted that mortgage revenue per lead increased 15% year over year, despite refinancing volume falling from 78% of total mortgage volume to 60% year over year. Home equity continued to grow as part of the company’s overall product mix, achieving record revenue with 112% growth year over year, it said.

“Persistently low home inventory and higher home prices continue to suppress purchase application volumes nationally, but revenue per lead in this category continues to expand as lenders are pivoting more towards the product with refinancing activity subsiding,” the company said in a statement.

The company said its lending partners are relying on LendingTree “even more at this point in the interest rate cycle to help meet their origination goals. In turn, we focus on optimizing higher converting products for them such as cash-out refinance and home equity loans.”

It added that, “despite the recent sharp uptick in interest rates, loans secured with home equity remain the lowest-cost source of financing for most consumers that own a home.”

In its Consumer segment, meanwhile, revenue totaled $101.1 million, up 75% year over year, with a net profit of $42.5 million, up 73% year over year, LendingTree said. Personal loans revenue rose 137% year over year to $35.2 million, and the company said it expects “this positive trend to endure with credit card balances increasing at an unprecedented rate and projected to reach a record level by the middle of the year.”

In its Insurance segment, revenue of $80 million decreased 8% from a year earlier, and translated into Insurance segment profit of $21.1 million, down 36% over the same period. The company said it believes the fourth quarter of 2021 “was the trough” for the segment, “as the challenging underwriting environment for carriers begins to ease on the back of premium rate increases.”

The company also said MyLendingTree grew “at a healthy pace,” generating $37 million in revenue, up 23% from a year earlier. It added 1.1 million new users in the quarter, bringing the total number of users to 22.1 million. Company officials said growing MyLendingTree is a top priority. 

Chief Financial Officer Trent Ziegler said LendingTree is doing better than its competitors.

"We remain in a position of strength to invest in our business, creating the premier customer financial shopping experience, while much of our competition struggles with profitability,” he said. “We are leaning into this strength, maintaining the investment in our strategic priorities and the strength of our brand despite numerous macro headwinds.”

To read the full earnings report, click here.

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