Q3 2019 Earnings Call
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Good afternoon, ladies and gentlemen, and welcome to the Linden tree Inc. stake.
18 earnings conference call I.
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I would know my could you do conference over to your host Mr. Strensiq way head of Investor Relations and Treasurer, Sir you May begin your conference.
Thank you operator, and thanks to everyone for joining this afternoon to discuss Lendingtree third quarter 2019 financial performance I'm joined in the room.
Here today, My Lendingtree is chairman and CEO , Doug Lebda.
Chief Financial Officer J.D. Moriarty.
Before I hand, the call over to JD to run through our results I'll quickly remind everyone that during today's call. We may discuss lendingtree is expectations for future performance.
Looking statements are typically preceded by words, such as we expect we believe we anticipate rather similar statements.
These forward looking statements are subject to risks and uncertainties lending trees actual results could differ materially from that he has expressed today.
Money, but not all of the risks we face are described in letting trees periodic reports filed with the FCC.
We will also discuss a variety of non-GAAP measures on the call Tonight and I refer you to todays press release available on our web site at investors that Lendingtree dotcom for the comparable GAAP measures definitions and full reconciliations of non-GAAP measures to GAAP.
And with that all trends JV.
Strengths and thanks, everyone for joining I'll spend a few minutes going through some developments since last quarter and then Doug will provide his thoughts.
We opened up the call for culinary, which we look forward to.
The team executed incredibly well and the third quarter delivering record levels or revenue variable marketing margin and adjusted EBITDA, each of which meaningfully surpassed our previously provided guidance.
As Doug reference in our press release earlier today, the top one trend across our portfolio of businesses has been exceptional throughout the year and that trend improved in the third quarter with revenue of $311 million representing growth of 58% over the prior year.
However, we also delivered substantial incremental profitability in the quarter, while continuing to remain on the offensive investing in several areas as we outlined on our on our last call three months ago.
The mortgage business continued its momentum into Q3 with revenue of $62 million up 40 up 14% sequentially and also resumed year on year growth up 12% compared to the third quarter of last year.
In addition to solid top line growth, we began to see improving margins in mortgage throughout the quarter as lender capacity began to improve as we expected it would.
The insurance business continues to impress driving revenue of $75 million, representing pro forma growth of 57%.
While the majority of the business remains in auto we're also beginning to see some solid growth in the home category.
Context revenue in home insurer in the home insurance category grew 96% year on year in nearly 20% sequentially. We're obviously very pleased with our strategic acquisitions, what wizard and value Penguin and we are encouraged by the prospects for the business and the integration opportunities that exist as we move into 2020 .
Credit card results were solid once again as revenue of 55 million grew 20% year over year.
Our efforts in card remain focused on tighter issuer integrations and more personalization for shoppers.
In personal loans revenue of 44 million represented growth of 14% year over year.
The environment personal loans remains largely unchanged relative to the first half the with lenders increasingly focused on profitability and looking for ways to differentiate their products in an increasingly competitive space as such we're we're increasingly looking to add value for our partners by launching tools to enable more sophisticated targeting.
As we discussed last quarter. This product continues to be an important entry point for bringing new users to the lendingtree ecosystem and we continue to scale into new marketing channels well beyond paid search.
And finally, a couple of stand up businesses in our other category are definitely worth mentioning.
As we've discussed in years past the third quarter is particularly important for the student loan category as lenders ramp their advertising efforts ahead of the fall enrollment season.
This year the team executed incredibly well to capture demand from both existing partners as well as new ones to drive year over year year over year revenue growth of 64%.
In the student business, we spend much of the year preparing for the busy fall enrollment period, so kudos to the team for positioning lendingtree to deliver for lenders in peak season.
Lastly, our small business offering which grew 71% in the quarter continues to emerge as a nice growth driver for the company and one where we see plenty of opportunity ahead.
Moving on to profitability, we delivered variable marketing margin in the quarter of $116 million up 50% over the prior year end up a remarkable 23% compared to the preceding quarter.
The incremental margin can be attributed several factors first we obviously get the benefit of the seasonal lift in the student loan business second as previously mentioned, we saw improving economics in mortgage relative to somewhat intentionally depressed margins in the prior quarter.
But we also saw favorable margin trends across many businesses in the portfolio in the sizable increase in the contribution from my Lendingtree.
Beneath mark beneath variable marketing margin, we reported adjusted EBITDA of $63 million up 39% year over year on a GAAP basis, we reported net income from continuing operations of 24, and a half million dollars or $1.67 per diluted share on a non-GAAP basis adjusted net income per share came in at.
25 per share.
Moving onto our revised guidance for the remainder of the year, we are acknowledging the outperformance in the third quarter and tightening or full year ranges accordingly, as we planned for and position the business for 21.
Our full year outlook increases to a range of 1.100 billion 2 billion onefifteen representing growth of 45% at the midpoint.
The range of VMM narrows to 395 to four or five and adjusted EBITDA narrows to 197 to two of five or 31% growth at the midpoint.
After adjusting our guidance at mid year to account for a slowing personal loan business. We are pleased to be delivering against those expectations and then and we look forward to outline our plans for next year at our Investor Day in December and with that I'll pass it over to Doug.
Thanks, Jay D and again, thanks to those on the phone with JD, having gone through the specifics around the financials in each of the key segments I want to Echo the theme of his remarks regarding our approach to managing the business and provide a few updates on where we're making progress.
First.
The approach, we're taking demand just managing the business I'm a firm believer that great companies effectively balance the short term demands of being a public company with the warm long term goal of building an amazing company that creates innovative products and solutions for both consumers and our partners and generates long term value for shareholders.
At the beginning of every year, we set out a plan to balance those objectives and the company has an established track record track record are doing just that.
At the beginning of 2019, we set a plan to deliver approximately 30% growth in both revenue and adjusted EBITDA and sitting here today with just two months left in the year. We're on track to deliver revenue growth of 45% and adjusted EBITDA growth of 30% and still invest in product technology.
Great and marketing to set us up for future years.
Now clearly marketing current market conditions change throughout the course of the year and as we adapt to those changes we always do our best to keep you all up to speed as we've modified our outlook, both up and down throughout the year I'm incredibly proud of our team's ability to manage across the portfolio of businesses we've assembled.
And it's that portfolio of businesses the diversification among products that fit together that enables us to weather challenges in some segments, while investing heavily in others, all while improving our marketing machine building products for the future and driving market share gains.
With that said I want to draw you back to our commentary from last quarter.
You will recall that we acknowledge the slowdown in our personal loan business. However, we didn't want to let challenges one business to track from what we were trying to accomplish in other areas of the company.
As JD mentioned, we have been previously running mortgage at thinner margins that are typical because we believe we could earn our way into better economics that positioning pay dividends in the third quarter as we began to see lenders rebuilding capacity and returning to the platform and a bigger way.
We also discussed a desire to continue marketing aggressively into personal loans. Despite some pressure on monetization.
That product gives us a unique ability to drive the quantum of new users into the ecosystem in a way that other product simply don't in just a third quarter. We added nearly 2 million new unique customers to our database who entered the platform through a personal loan inquiry.
And based on the financial profile of those users. We can tell definitively that they are most likely to engage with the tools and services.
We provide and ultimately transact more frequently over their lifetime.
And finally, we talked about marketing and engaging consumers more broadly across the platform, particularly through my Lendingtree.
In this quarter, we launched our first series of television commercials geared toward promoting logged in experience through our app and the results far exceeded our expectations not only did the campaign drive an uptick in new users to the platform with the number of App installs jumping, 45% over the second quarter, but we very clearly saw an uptick in the engage.
Shipment of existing users the uptick in engagement was a pleasant surprise and dramatically improves the ROI on that investment while also reducing the payback period I'm incredibly encouraged by the early read outs from this test and we look forward to scale. These efforts into next year.
In Q3, the revenue contribution from my Lendingtree jumped to nearly $24 million, an increase of 19% over just the second quarter.
We attribute some of that growth the heightened awareness from the AD campaign, but it was also driven by our efforts to better align my lendingtree with the credit card business, while still relatively small credit card revenue from the my from my Lendingtree increased 62% over the prior quarter, demonstrating tangible progress against a huge opportunity that.
We outlined at last year's Investor Day.
We still have lots of work to do to better align each of our businesses with the my Lendingtree member base, but the progress and credit card is clearly encouraging.
I am, particularly enthusiastic about the opportunity in insurance has the ability to deliver meaningful savings for consumers is considerable and we know this will be inefficient customer acquisition tool for carriers.
We've discussed how personal loans is among our highest margin products because it receives nearly one third of its volume for my Lendingtree.
If we can achieve a similar balance in other sizable businesses the impact on our overall margins would be profound.
These are very important initiatives as we move into 2020.
In closing I am thrilled with this quarter's results and the progress we've made this year, but more more importantly, I'm encouraged by the tracks, we're laying to transform the business for the years to come and with that operator, we can open the line for questions.
Ladies and gentlemen, if you have a question at this time, please press the star and the number one key touchstone telephone.
A question.
Are you wished we moved yourself from the Q. Please press the pound.
Your first question comes from the line of Jed Kelly from Oppenheimer.
Sir your line is open.
Great. Thanks for taking my question.
It.
It seems like you're my Lendingtree is working pretty well progressing pretty well last quarter, you talked about market again to that where the payback periods not immediately recognizable I'd rather do I mean, how are you thinking about marketing into that product I guess fourth quarter.
And into next year.
At a at a high level without without giving away too much of the secret sauce, we plan to market it.
Inside of all of our other products.
Still not in quarter payback period, but it's always it's always getting shorter in the more products we put in there.
The better it is.
And we think it stacks up very nicely competitively and we think it's a great case for investors.
And Jeff the only thing I would add to that is if you look at the year. The progress in my LT has really been on the App install side and the active user side and obviously, we don't disclose a ton of metrics around that we need to work toward that that's been a great signs of progress Q3 was really about testing some of the the.
The brand spend on that.
We got good results from that but we're probably not going into that in Q4, given the variability it's not the best time to be spending those dollars.
So I think Q3 really informs next year.
More than it really does skew more.
And then just on the guidance.
You know it does imply you're taking down your fourq VMM versus last quarter anything to call out there.
Let me take it first and then just JD I think.
Which we try to hit the year and whatever we can we want to just keep the pedal down and keep investing in product and marketing and and that's that's what we'd like to do in Q4, particularly as lenders seasonally pull back a lot. It's a good time for us to continue to do that.
And then Jed the only thing I would add is we're focused from a guidance perspective on.
Meaningful updates right. So we give you an update in in at Investor Day would give you an update in the middle of the year.
And the substantive thing there was obviously what was going on personal loans.
When you consider Q3 to Q4.
You have to consider what's going on in student and obviously.
Mortgages, we said, we're getting some incremental margin there relative to depress margins in Q2.
But the Q3 Q4, if you back out the impact of insurance the Q3 to Q4.
Progress effectively or the relativity Q3 to Q4 is actually the exact same as it was last year. So we do have some seasonality there as it relates to guidance, it's fair to say that you're seeing a bit of an evolution in the way that we think about guidance right. If there's something meaningful we're going to update it we updated in the middle of the year.
As it relates to full year were principally focused on 2020 right now.
Not incremental momentum in Q4, so I think you'd need to be mindful that seasonality of Q4 Thats. The exact same as it's been.
But but that's really the way that we thought.
Thank you.
Your next question comes from the line of Snatch Myday from Bank of America.
Hey, guys. Thanks, I think I was going to go a little bit on that guidance question, but.
Can you talk a little bit about what is.
Working and what and what more you have to do to get other products to have the same effect.
And the use on my Lendingtree.
And.
Particularly things like credit card, which are we think would be you'd be able to push in that direction pretty quickly and or refinance.
Yes, so credit card, we've made significant progress and that'll continue to build on that really is after personal loans inside of my Lendingtree. The lower end 10 products are generally easier, it's generally easier to find savings and or credit improvement. So thats why personal loans really was first.
To card was definitely next and we're leaning into that and then.
Re Fi and the other products are there, they're not as seamlessly integrated but we're working on that.
Great and just to hammer that guidance question, one more time it is pretty.
Stark where your us.
Basically not giving and pushing through as much upside from the variable marketing margin makes me think that you're looking at some more aggressive marketing channels is there any.
You were area.
That you want to highlight.
No I guess, what I'd say is.
Net I guess I would say it is not just marketing channels I think it's.
A continuation in businesses, we're not we're not going to pull back businesses just too too.
Accommodate.
Guidance, we updated the full year and we're getting there through an exceptional Q3, we think we'll have an exceptional Q4, but ultimately it was the right decision to keep investing in mortgage at lower margins in Q2. It benefited us in Q3, we're going to continue to manage the business.
For the year in many years not for anyone given quarter and that's really the philosophy right now so.
We are passing through some of it but ultimately we are focused on what Q3 indicates for 2020.
And the health in our core businesses and that's our principal focus right now.
Great that makes a ton of sense. Thanks, a lot guys.
Okay.
And your next question comes from the line John Campbell from Stephens, Inc. Your line is open.
Hey, guys. Good afternoon, congrats on great quarter.
Thanks, John Hey, I want to touch on first just from a mortgage business. That's it's great to see that return is a growth driver, but you guys kind of caught out some I guess a return to health.
In the channel for a lot of lenders. So two quick questions related to that so first.
I guess as you look at the 12% growth. If you can maybe suss out you know how much of that came from maybe price versus leads and then I wanted to check on the kind of rate of growth between purchase and refi.
Let me leave some of the specifics to these guys is at the.
At a high level.
We're actually seeing very very good growth in purchase however, the what happens and what happens in the mortgage business as rates fall as lenders get a little bit more margin, which enables them to.
To lean in a little more and.
And enables us to then market into it so that that is really we're seeing.
Increased buys across lenders.
And and lender profitability, which was a big concern last year, we're not concerned about that is nearly as much as we work.
John I guess, the only thing I would add as Judy I would say.
Most of it is in refinance that's not surprising in light of the rate environment.
You got you and others have done a good job of of.
Understanding the.
Sequential orientation of mortgage relative to capacity right I think the understanding of that today versus year ago in the marketplace is far better than it was the questions. We get from investors are park smarter on this topic.
Q1 in Q2.
We're very good for lenders in terms of lender health. We worked all last year to do our part effectively for wind or health right trying to manage cost per funded loan.
Q1, and Q2 in this rate environment was far better for those refinance oriented lenders.
And in Q and so we operated we you they had a lot of organic volume in Q2.
And so we were not able to monetize our volume the way that we would have liked.
We continue to lean into that business to take market share in here in Q3, what we're seeing is to two things. One is we're seeing an improved.
Cost environment, we're able to we've been able to acquire our traffic far more efficiently in Q3.
And then too we're definitely seeing.
We're definitely seeing increased interest in our product, meaning that the capacity is kind of catching up with with the volume and the interest on the part of borrowers to refinance. So this is the natural progression of the mortgage business and we're thrilled to see it playing out the way that it is after the decisions that we made in Q2.
Okay, that's great color and then back to personal loans I mean, obviously.
I'm, sorry, my Lendingtree, obviously personal loans, that's a pretty big driver.
But if you look at my Lendingtree Route I mean that was up 19% sequentially. It looks like personal loans only up about seven.
So clearly you guys are seeing some other products ramp there Doug I think you called out credit card.
You are expecting the others to come along but I, just mainly want to check on kind of integration efforts I mean, obviously, you're trying to build in insurance and other products, where do you guys said I mean, if you want to use the baseball analogy kind of where do you where do you feel like you are currently what inning.
As far as an area.
Probably second or third.
And everybody is kind of hedging I think beds.
Thats I think thats right and.
As you can't over alert or over you know.
Male people too much so you've got to be very smart about what you're doing you got to do it as it relates to their credit in there and what's best for them.
But it's getting better and better and the thing as I called out.
I'm most excited for his insurance as part of that.
And John .
That has not even gotten started yes right. So we started talking about integrating card in Q2 of last year right and started talking to investors I would say back half of last year started actually working on that in Q2 of last year and so we're really seeing that benefit now and it does take time, you've got to have something of value you've got to you've got to get the provider.
For the partner or whether it's an insurance carrier or a credit card issuer to value that user base and actually come up with unique offers for my Lendingtree consumer and that just takes time, it's both selling effort in the product effort and so we set out to we set out to make progress in card. We've made great progress. There is still a lot of progress in front of.
Yes, I think second thing is a good characterization.
Okay Super Thanks, guys.
Q.
Thank you next question comes from the line of Man Tandon from Needham and company. Your line is open.
Hey, good evening sex like how Peterson on from my own.
Thanks for taking the questions.
Just a quick question on mortgage.
Obviously the.
Trends and the commentary on the improving margins are good to hear.
Have you guys noticed the improved margins.
Continuing for Q or kind of how kind of where are the mortgage market margins and where do you think they can go if lender health continues to be pretty good.
Sure.
Right.
First of all we're not.
I think specifically in mortgage.
We're probably happy with where they are today, we want to take market share. We will always manage the business to go after the maximum market opportunity you've heard us talk about managing for BMD not VMM.
And so.
It's not a matter of driving incremental margin in mortgage it's a matter of taking market share with lenders, giving them products that that.
Product solutions within mortgage that works so.
Fourth quarter is always a little bit trickier.
Just in terms of.
The environment in mortgage and so im reluctant to guide.
On anything specific there, but what I would focus on his more than our other businesses because of this unique capacity aspect mortgages very much a sequential business look at the trend in mortgage looked at the fact that we finally got some cost benefit in.
In Q3, and those are very good indicators moving forward.
I think I'd add is acute the only thing I'd add is a Q4 in mortgages a seasonally.
In a tougher one given holidays and rising AD cost et cetera, and given the more labor intensive nature typically comes out of the shoot in Q1.
Okay. That's that's helpful color.
And then I'm just a bigger picture question on as a follow up I know one of your competitors we noticed a.
Made some hey, launching a kind of a cobranded.
It's kind of savings account cannot get some people into the ecosystem type of thing is is a product that does something you guys have looked at as a way to expand out your my Lendingtree well bore where you guys still kind of just sticking to the kind of personal loans card and build out kind of in that order.
No.
Our.
Great question, our our deposits product is is very very good and I think.
Maybe the difference would be the difference between choice and having your own product. We think if we can provide consumers array of choice, we get hopefully always save the money by getting them. The best deal and then we're also not sitting inside of the actual account, but we think choice really matters in comparison shopping helps and save money.
Yes. This is its certainly interesting to see that you've heard us say before that we like the deposit for the asset side of the consumers balance sheet, because the consumer tends to engage more with that right and so as we've grown our deposits business and you've heard us talk about we are.
Likely to are very interested in the what I'll call marketplace for investments into like it's because it does drive engagement and we think thats largely be intent.
There that you're speaking about so it's certainly something that would be on our on our roadmap, but as Doug said fundamental to our business is choice and we have an awful lot of deposit.
Customers that we care great deal about providing good marketplace for them as is the most important part.
All right that's helpful color, thanks, guys good quarter.
Thank you.
Thank you next question comes from the line of Stephen Sheldon from William Blair. Your line is open.
Hi, guys. Thanks for taking my questions.
First on the small.
On the small business offering here, you're you're clearly seeing good trends there.
What's driving that have you may be done anything to focus more on that business and increase the investments into it just anything you can provide on and then anything you can pride on how large that might be at this point.
I think Steve and I guess I'd say it is a classic example.
Of the business that is benefiting from being part of the Lendingtree platform and diversifying their marketing mix over time.
Most of the company that we acquire keep my we acquired staff cap in the fourth quarter of.
Yes and 17.
And most of the or sorry, the third quarter 2017, and most the companies that we've acquired have more one dimensional marketing than than we do and the benefit from an increased marketing mix over time.
In the case of so we were already in small business. We had one approach staff cap had a somewhat different approach to that market place.
Some time to integrate the to the team is just executed exceedingly well, but essentially expansion of the marketing funnel and then leverage off the platform.
Has been has been a real driver. So we're thrilled with the progress I think we've also learned a lot more out that market.
Overtime, and it's a market that we continue to be really interested in and.
It's got some great dynamics, I think you're adding a lot of value for the small business owner.
And there is a renewal aspect to the business that we like very much.
Much like our personal loan business as a repeat orientation, there's a great opportunity to reengage with a small business owner and that's something that we like.
Got it that's helpful. And then in personal loans, you know revenue held up relatively well both year over year in sequentially, but can you maybe talk about profitability, there and whether profits held up too and then how are you thinking about potential growth in that business. You know as we look into the fourth quarter and then to maybe early 2020 give.
In trends, you're seeing more recently.
But JD hit on on maybe some specifics of what we can tell but profitability and personal is is high.
Look at each channel, it's obviously getting a big draft as I mentioned from my Lendingtree is a very engaging more product.
It.
And on the on the paid marketing it is also equally profitable.
We've talked about some lenders pulling in horns in getting tighter in their credit models over time and that'll happen in any one product here in there but.
I think.
Personal has got a great great future ahead of it.
Not a whole lot to add there I guess I'd say right.
Right now you've got a lender base, it's very focused on getting to profitability that has influenced.
The way that we have interacted with lenders throughout the year.
We will set out growth rates for respective businesses at Investor day.
Clearly we enjoyed great.
Great topline growth and profitability last year. This year, we've seen deceleration in personal loans, but it has so much value for the platform and we want to continue to grow that business because inherently it's a good business for us for a lot of reasons. So we've continued to lean into it but I think it's fair to say that our growth assumptions for next year will be.
Somewhat conservative given the current 10 or in the marketplace.
We'll set up those growth rates at Investor day, as we always do.
Great. Thank you.
Thanks, David.
Next question comes from the line of Abby glasses swung from.
Okay.
Okay. Thanks very much.
Maybe just a follow up on a couple of the topics that been raised thanks very much for a for giving us some.
Some clarity around the dynamics of the of the other category, but JD would you mind, just helping me understand a little bit more how much of the the improvement there.
Which was obviously very substantial how much of that you view as being either cyclical or seasonal versus how much of it we should consider to be structural.
Yes, it's interesting so we talked about this a little bit Eric at the second quarter, where we do have businesses there in that other category that.
Okay and candidly into second quarter were just kind of there was a confluence of freight home equity was struggling during that period.
Obviously in the rate environment that we had a business like our deposits business wasn't growing.
At the same rate that it had been so recognize that sometimes there is just timing of certain businesses that are going to not have a strong of a quarter I think when you look at other you have to consider what went on in student do we always get this benefit in the third quarter and benefit was exceptional here, we had exceptional performance.
There.
So thats in student small businesses the stand out.
Also in other.
No I wouldn't necessarily think that those businesses. When you say structural those are typically businesses that are benefiting disproportionately from my lendingtree.
If I think about student or deposits or small business those businesses are not really so.
Thats that would be incremental those businesses started to benefit the material way from organic traffic, they're not yet so that's kind of how I take your structural point and I think it's fair to say that we just candidly the other performance in Q3, which is great execution of the core business.
And.
And just on the insurance business.
I think the during the period or about 75 million I think in the prior there were somewhere around 72, so should we consider sort of like that piece of sequential growth to kind of be the the run rate level.
[laughter].
I won't be giving any segment level forward guidance in this in this call, but thank you for that try.
No listen we're thrilled with the performance of the insurance team. It's obviously on a revenue basis and actually on the contribution basis exceeded our expectations through great execution will set that out at at Investor Day.
In terms of what run rate is there you can see that clearly in our opinion, taking market share in insurance and.
And there's a lot in front of us in our opinion in terms of the opportunity to integrate that with the overall platform.
Great. Thanks very much.
Thank you.
Your next question comes from the line of Mark Mahaney from RBC capital markets. Your line is open.
Hi, guys. This is Ben on for Mark Thanks for taking the questions.
Two.
In terms of I think you shared some interesting stats on like engagement of the my Lendingtree.
Just from a user perspective is there any like one standard feature that Youve added that you think is really like.
Contributed to that other than of course, you mentioned.
The marketing spend kind of giving that a boost and then too is just I think last quarter you called out.
The competitive dynamics and personal loans. This quarter, you said that I think the cost dynamics for like a little bit better from marketing perspective, but just from a competitive perspective has anything changed thank you.
Let me take most of that and then handed JD on the marketing piece on my Lendingtree that was more in test mode. We feel really really good about the results that that was not a necessarily a significant driver in terms of anyone feature.
Yes, it's interesting I feel really good about even more people who have challenged credit and we're seeing people are actually able to improve their credit through the product so that credit recommendation.
Tool is definitely a really helps.
I don't think it's driven substantial growth, but it definitely drives a lot of engagement.
And we've seen as we've said continued monetization through a credit cards and insurance into a lesser extent mortgage but.
Still very very early innings.
Yes, the only thing I would add is we have not we have not set out a a series of my LT metrics, we're tracking that were externally, providing quarterly or otherwise as you might imagine there are number of them that we're tracking internally and what we're focused on his repeat behavior, but we're focused on it repeat.
Engagement, you're asking what's driving that I think a big part of it is the discipline that Doug was talking about before not.
Not spamming people to drive revenue, but rather actually making sure that what we're offering them as something of value and on a rally.
It's a competitive marketplace with a lot of people, providing more apps and we're trying to differentiate the product offering and I think that is contributing to very good metrics with respect.
Thank you Doug Thank you Judy.
Thank you.
Next question comes from the line, it's Jamie Friedman from.
Your line is open.
Hi, Jason Hi, Doug Congratulations on the strong results I wanted to ask one on insurance first so Doug So JD in your prepared remarks, I think you said that.
So let's see we had.
Sure. Its overall at 57, but you said some of that growth was from home, which was up 90% I guess, we could use some eligible to figure out how big home is relative to us, but but yeah. I mean, how would it how big is home and and what are the relative yeah, that's what I'm trying to get it.
Yes, no absolutely it's still listen it's still small because the base. The overall denominator continues to grow very very fast right. So we're thrilled to see home growing we're thrilled to see any business is growing at a clip at that level, but it's off of small numbers and if you go back to our Investor day, we talked about 80% of the business being an auto the overall percent.
Page of auto is still roughly the same.
Look at our aggregate insurance business.
But we're we're because while home is growing group.
90 something percent.
The rest of the business is growing exceptionally well also so it is still small it is still sub Jamie to give you some perspective, it's still single digit percentage.
But we're we're excited about the progress and we think Thats a natural area, where we will have a competitive advantage given our mortgage breast.
Got it and then if I could just get one more in on the personal side in your prepared remarks, JV you said.
You talked about a dynamic with.
Paid search.
But I also remember you, saying something about expanded beyond paid search to other marketing.
Tools, if you could elaborate on that and if I heard that wrong I apologize, but.
I thought you were making okay.
Marketing that yes, it's not just picked argument that business benefit disproportionately from organic or near organic traffic, whether that's my lendingtree or just to repeat engagement.
A personal and consumer we have had made great progress this year across the platform.
In social and display which were challenges a year ago.
And so those are channels that that for all the core businesses were really trying to optimize.
That's it from a marketing perspective, one of our goals for all our businesses, but in particular, a big businesses is to is to get to and at the optimal marketing mix there and so those are two examples of channels that were that we're trying to evolve.
Great. Thank you.
Thank you.
And your next question comes from the line of Mike Grondahl from Northland Securities. Your line is open.
Yes, just kind of a follow up if you back out your big four business line.
The other category kind of outperform expectations I think you're seeing it did with student loans, but I just want to make sure.
It definitely.
Outperformance student loans, I think JT hit on the other other category.
Which is also done very well you agree.
Yes, yeah. The other big contributor means that the business as we called out.
Students while business.
So overall, yeah, Okay, and then Doug do you think the rate cuts are acting as a tailwind for your business at all.
I'm, sorry, so that again.
Do you think the fed interest rate cuts are acting as a tailwind for your business at all.
Yes, and no we JT hit did a very good description of the sort of the mortgage dynamics.
That's where you see it the most and that's where you see the opt setting.
Experience of when you know fed cuts rates, we see a lot of volume and that's just the same time that our lenders see it as well so you see.
You see marketing and revenue moving effectively in tandem and that's why we just keep trying to gain share. So definitely helps in the definitely helps from lender health, but it's not as much as you think.
Got it okay. Thank you.
Thank you next question comes from the line of Rob.
From autonomy.
Your line is open.
Hi, guys.
More on insurance I wanted to ask about the pro forma growth rates there 57 this quarter.
73 last quarter and 63 in the first all really solid numbers, obviously, but can you just talk little bit more about what's contributing to the volatility there.
[noise].
Sure Yeah.
Honestly, what I, what I think you're seeing in insurance is.
One I think we acquired the right teams portal right, we come and so what was your team is executing valued Penguin team is executing they're executing in tandem and that's a competitive advantage that I think we have in the marketplace in an environment, where more and more insurance carriers and agents are moving online.
So the analogy that we used in Investor day was comparing it to credit card and the movement of spend on line that is playing out candidly on top line basis that that environment for insurance is playing out probably ahead of our expectations. So we're certainly in a very good market environment, there and with the right.
Beyond that.
I don't think I'd necessarily pointed to volatility as much as I would just point to really good execution on the part of our yes, I agree with that these things all move independently you try to maximize your.
VM D.
Every single day, and depending on a carrier demand new carriers coming in and marketing dynamics and then you overlay the CIO stuff, which takes a little bit longer to build obviously.
It'll it'll bump around but we're thrilled with all that growth.
All right and then.
Mortgage in the capacity that came back on this quarter, how does that compare to your expectations a little bit faster basically in line and then you have a sense that lenders are continuing to add capacity you know kind of through October have they kind of backed off of it.
I would say it is as expected and I would say maids.
Modest the trends modest in continue in in October .
Okay. Thanks.
Thank you.
And once again.
Question at this time.
And then number one key Touchstones Atlas.
Your question everything.
So from the can you please press the pound.
Next question comes from.
Sam the from BW.
Right.
Hi, Thank you for taking my question.
Is the small business loans still success based revenue and if so was Q3 performance purely timing of loans or is this sustainable as far as business performance is concerned.
It's a it's a hybrid pricing model and we think it's very sustainable trend you want at any specifics that are JT.
So its price a hybrid of leads and close loans and his JD called out the recurring nature, which is still just beginning to build is also very attractive here as well. So yes, that's right I mean, I wouldn't call out any.
Any timing nuances so to speak in the third quarter I mean, if that's that's a good healthy structurally healthy business.
We get paid a little bit on.
Depending on where the consumer goes in and what their experience is we may or may not get paid on the front end from atrophy or on the Bakken foreclose on c., but to Doug's point.
One of the interesting things that weve.
Got it out of that business had its much where it is.
Renewal stream at kind of builds on itself over time.
Okay, and then Hubspot.
Yes.
Sorry, I had always going to say.
Unlike the student business, which was exceptional in the third quarter.
Small business has been a star all year long.
So its I don't like to date timing.
Okay and as far as the guidance is concerned it's quite a bit of a step down.
Is this most of the step down just purely related to student loans or was there any other factors.
And your guidance for Q4.
Well the actual the actual Q3 to Q4 backing out insurance is the same as it was a year ago just to be clear there is that seasonality in our business.
So most of that is student for sure.
Okay.
Thank you.
Thank you.
Right.
Two questions at this time I would now like to Cheney conference back CEO , Doug Lebda. Sir. Please go ahead.
Thank you all for attending the call and thank you to our employees and and partners for making such great results happen I.
I view Q3 is a real prove it quarter and it was great to see our team stepped up and I think it really proved once again, the resiliency of our business model and what diversification can actually bring to this and we look forward as everybody said to Investor day in December or we will lay out our plans for 2000.
20, and beyond thank you very much we look forward to season.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may disconnect.