Q4 2020 LendingTree Inc Earnings Call

[music].

Good afternoon, ladies and gentlemen, and welcome to the Lendingtree, Inc. Fourth quarter Conference call. At this time, all participants are on a listen only mode.

Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance during the conference call. Please press Star then zero on your Touchtone phone.

As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Trent Ziegler.

<unk> of Investor Relations. Please go ahead.

Great. Thank you and thanks to everybody for joining the call. This morning to discuss Lendingtree, Inc. Fourth quarter 2020 financial results on the call with me. This morning are Doug Lebda, Lendingtree, Chairman and CEO and J D Moriarty Chief Financial Officer.

As a reminder.

Once again, we posted a detailed letter to shareholders on our Investor Relations website earlier this morning, and with that we will keep our prepared remarks relatively brief and spend the bulk of our time addressing your questions.

Rod had havoc on public health and safety at broad massive unemployment and economic strain.

Part countered by unprecedented fiscal and monetary policy.

We've seen far reaching changes in the way people live work and consume and manage their money.

The past is also prevented many challenges and it has created great opportunity.

Despite headwinds in certain continues areas or aspects of our business. In 2020, we were able to maintain a healthy and productive workforce along with our strong balance sheet sustained positive cash flows thanks to our diversified portfolio of businesses.

Because of that we were able to remain focused on execution and serving our customers and our partners without losing sight on our broader strategic objectives around innovation and scale.

Our fourth quarter's results reflect increasing momentum.

Strength in our home and insurance segments combined with sustained recovery in consumer drove sequential growth in both revenue and adjusted EBITDA. During what is typically a seasonally slower quarter.

As we head into 2021.

And the World begins to return to normal as.

As we all hope.

We are focused on a broad range of strategic objectives.

Across.

Each and every one of our business segments that all serve to accomplish the greater objective of growing engaging and delighting our customers.

While serving our partners in a more integrated and automated fashion.

We look forward to hide it highlighting those initiatives and our continued momentum as the year unfolds and with that we'd love to take your questions.

Yeah.

Okay.

And gentlemen, if you have a question at this time, please press the star and the number one for <unk>, our new touch tone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

The first question is from the line of yourselves Squali with true Securities. Please go ahead.

Great. Thank you very much and good morning, cooks. So a couple of questions. One maybe Doug just stepping back and look at the looking at the competitive front just curious to know how you think about it you know competition, particularly in the auto insurance home on industries et cetera.

And maybe how you think about competitors like credit Karma now that they're part of Intuit and what advantages you guys see yourself having as.

Tissue ramps up from a larger scale players and then J D. Can I I know you guys are obviously not guiding to 2021 that can you maybe just flesh out for us the biggest areas of investment you're planning for this year, because if I look at your margin guide for Q1, it looks like it's much low.

For then then you guys have for have posted in a few years. So maybe if you can just flesh that out for us that will be terrific. Thanks, guys.

Perfect.

So on competition, we are obviously very very mindful.

We always want to be winning.

Even if the market is growing we don't want to just take credit for tailwind.

On a couple of it obviously.

Talking about the one that you focused on.

Credit Karma.

We think we are at least now the good news is.

Now everybody has seen numbers.

And I think it's safe to say.

Were about our size and I think it's safe to say, we're more diversified in their more concentrated.

And so we feel really solid on our position there.

Now will they have a great product and we have a great product.

Ours is better we think ours is on them.

We think our brand name is exceedingly strong.

And and Theres, a lot of things going on in that area, but that will expand and products even from just.

Loans and alerts as you've seen us.

It'll go beyond free credit scores into cash management, and how you're doing budgeting, which we've done already so on them.

So I was honestly really happy.

To see our pacing versus them.

And the first on the public numbers.

The other one that I would say that just move to another subject would be ever quote, which now we've got obviously, they're a public company.

And at times in the past few quarters from what we know they are but they're a little bigger than us, we're a little bigger than them.

And but but I can tell you as our as our company's biggest shareholder.

I am thrilled with where they're going and the things that they're doing and expanding the agency business expand into new lines of insurance on their integration with my Lendingtree.

That's all really coming together.

So I think unless you're a diversified.

<unk> set in Fintech.

It's going to be really hard to.

Compete with a company that is.

More diversified across loans insurance.

And all of the partnerships, we've gotten investing et cetera et cetera. So it's just beginning or J D. You want to take the next day.

Yes sure.

Houston and they're both good questions. So let me just expand a little bit on the competitive landscape because when you're talking about auto insurance, specifically relative to ever quote and obviously they've been public since the middle of 18.

We have businesses that on a revenue scale basis as Doug points out we can't trade quarters on who is bigger.

We do enjoy better be on margin.

Margins generally.

We also do admittedly have a little bit more dependent on S. E M.

And we're diversifying that as with all of our acquisitions. The strategy has been to acquire really good business and make it better through diversification of marketing channels and so within our quote Wizard business, which is our insurance business. That's exactly what we're doing and that's not the only diversification going on we're actually expanding our agent business for it.

Expanding our Medicare business, and so I think as 'twenty, one goes on you're going to see US continue the diversification within insurance and that we'll just we're going to take a very good business and make it even better through diversification. So when you ask the question about investments that's absolutely one of the areas, where you're going to see us invest.

Until that will tie into the next answer as it relates to true margin.

We certainly as Doug points out now interestingly, we have some public comparable.

Competitors out there karma being one of them.

We see what they're doing in for instance, auto insurance and they've talked about some of those initiatives.

That's not new information to us, it's just newly public information. So the strategy is not tremendously different.

When we think about insurance and specifically auto insurance, we look to whatever quote is doing we look to a couple of other players in the space and we think we're a real leader in that space. We know, we're a real leader in that space.

So we're really happy with the diversification efforts in insurance specifically.

And we see some great growth areas I mentioned agency in Medicare specifically.

But that's what you're going to see throughout 'twenty one.

As it relates to the margin question that you're asking about investments recognized that our guide is informed not just by investments that will go on throughout the year, but I think what's going on in Q1, specifically.

Is really mix and one other things that we make an effort to do since we run.

A diversified portfolio of businesses is let them all operate independently with regard to strategy in the moment. So right now in mortgage as you've seen from us time and again.

There's a great opportunity to drive BMD growth, but that V. N D is going to come at probably lower V. M. M percentages as we enjoy great revenue growth.

That's happening at the same time as we are rebuilding certain of our consumer businesses.

So we highlighted pretty exceptional percentage growth in credit card in the fourth quarter and we expect some of that growth to continue in the first quarter as we rebuild that business.

Yeah.

But I made the point on the last call, but that card business may not contribute at all to the bottom line as we rebuild it.

And so recognize that you've got a mortgage business, where you're getting incremental revenue growth at lower percentage margin.

Card business that we're rebuilding at very modest margin because that's the right strategy for the business at the time.

So it's really mix, but it's also our.

As I or to let each business do the right thing strategically to grow.

And so as you look at debt card business I need to remind everybody in 2019 that was $212 million business for us.

And it was down at the trough 85 per cent and we're growing it back.

But at small margins initially.

And we're really happy with the progress in Q4, but as we pencil that out in Q1 net contributions can be very modest and when you combine that with the trend in mortgage you can understand the guide. So that's that's really what's going on with Q1 for a number of investments we're going to make throughout the year really.

About the strategic plan for all other businesses My Lendingtree included.

But in terms of in terms of the margin in the Q1 guide that's really the influence.

Okay very helpful. Thank you for.

Your next question is from the line of Jeff Kelly with Oppenheimer. Please go ahead.

Great. Thanks for taking my question two if I may one just circling back on my Lendingtree I think at your analyst day and in 2019, you admitted that's the key to sort of expanding your terminal margin. So just where are we with the my lendingtree on strategy and how do you see driving.

Increased consumer engagement is there any way to take advantage of sort of some of the enthusiasm we've seen where the retail investing and then just on the home segment J D.

You said, it's expected to accelerate in <unk> I mean, how should we see that trending throughout the balance of the year.

Yeah.

So I'll take my Lendingtree for on a.

From a product standpoint, we feel very very very good.

For me strategic standpoint, we also feel very good and the reason is because just like how lendingtree diversified.

And when we were 90 per cent mortgage and 10% every other loan type.

We brought in other loan types.

It was not only add to the individual like credit card business or the personal loans business day.

<unk> adds to the overall.

On my Lendingtree. The same thing is happening so while we don't have the largest source of revenue for my Lendingtree users, which is personal loans.

Yes.

During the pandemic.

Appropriately so people took their stimulus money paid down their balances and so they weren't necessarily shopping for credit cards and personal loans.

Totally fine, but were seeing members do well, we're seeing engagement do well.

And we see a lot of new products that we can slot in there. So any we're looking at a number of individual product apps.

That could be folded into something even more broader everything from identity theft, obviously credit repair and we think that is a powerful source in that base as we can help improve people's credit, even if interest rates rise, which they will that we can refinance people as they move up.

For credit sector.

So I'm very happy with where that's growing right now.

Yeah, Yeah, so again part of.

It was kind of two parts of my Lendingtree question right. One is are we happy with the progress on the product answer that yes, absolutely. When we look back however in 2020, our strategy for sign ups for driving members to my Lendingtree has been dependent on personal loans as Doug pointed out and when personal loans goes backwards.

There are new sign ups who's going to flatten.

We're happy with the with the fourth quarter sign ups right, that's a pretty meaningful jump from 15, 7% to $16 six.

And and certainly the most meaningful jump that we've had now how is that happening in an environment, where personal loans are still weak.

We've you've heard us talk about syndicating our platform.

And working with partners and we've mentioned H&R block and there are many other partners actually there are other partners that are on board and some that are in the pipeline, but effectively what we're talking about is the syndication of my Lendingtree.

Managed marketplaces.

And right now between H&R block and one other key partner, we've driven $1 5 million new sign ups.

So.

That strategy that we've been talking about for well over a year is starting to bear fruit, which we're really excited about.

And then there's got to be the engagement of the product and we talked about plaid.

And the plant integration and we've got to drive people to connect with their accounts there.

But the product is unquestionably much much better than it was a year ago and we're really excited about the new features that will add this year.

So we we actually look at the growth in sign ups in Q4 amid an environment that was tough for personal loans is a real bright spot for my LT.

And I think it suggests that that strategy of syndicating the platform is a good one.

In terms of your question around mortgage.

We've made a real effort to make sure that people understand the mortgage cycle for our mortgage lenders and our mortgage cycle right and that earlier in 2020, when there was tons of organic volume, that's a tough environment for us.

When lenders are flushed with organic volume well as the year has progressed our services have been more dearly valued and you see that in our Rps.

Hard to say what inning. We're in obviously, we're very mindful of this increase in rates, which is going to make the value proposition of a refinance a bit more challenging.

Right now, we're certainly seeing a good RPM environment, and we need to work with our lenders to make sure that our leads convert and that's really what's been going on under the Hood, we talked about different products that lenders can choose from an exclusive matches and the like those are all intended to drive conversion.

And that's the subtle thing that's been going on within our own business. So we're really excited about because we think our product is just working better for our lenders.

Certainly better than it was in in the last cycle, where it was kind of one product that you can either succeed with or not.

We think we've really evolved.

Our home products, specifically, so hard to call the cycle.

But we're certainly seeing that there is you know as we've talked about in the past.

As the refi cycle progresses for our lenders, we tend to lag that a bad.

And you're seeing our outperformance right now.

So that was evident in Q4 and as we said it's accelerating here in Q1, which is great to see.

Thank you and all other Hollywood add there is.

As people have heard in the past in a refi boom lendingtree.

Low rate interest rate environment in mortgage lending tree will tend to underperform.

Because lenders don't need us.

Because of the product changes and all the stuff on neighborhood. The J D said talked about we've been able to dramatically increase lender capacity through this.

We have a strong indications of that volume is going to fit their needs for their volume is going to stick. In addition to that you've now got new mortgage companies, who are springing up.

And the first place they are calling to get volume.

As us.

And you've also talked to other even startups, who are trying to go build a brand for any brand new thing inside of mortgage and their biggest problem.

As you know you go to your customers that trust you we've already got them.

So.

We can now leaned into marketing.

Lower percentages.

We maximize the dollars and now with knowing also that my Lendingtree Ltvs, we can not only be marketing against the volume.

The pay off today that we can be marketing.

As we know it in terms of the payoff tomorrow and whether tomorrow is a.

A day, a month a quarter or six months.

We've now got the ability to do that.

Your next question is on the line of Stephen Sheldon with William Blair. Please go ahead.

Good morning, Thanks, I wanted to follow up on my my.

One other follow up on my Lendingtree clear clearly great sequential number growth.

Monetization there it's been lower for the last three quarters I think that's an almost entirely from the pullback in personal loans.

Do you think about this year 2022 potentially into 2023.

It's stronger monetization, they're highly dependent upon personal loans recovering or with some of the added member touch points product integration is better monetization, they're becoming much less dependent upon personal loans could we be hitting that point over the next couple of years.

So.

The short answer is yes.

Absolutely not going to be dependent on personal loans.

We're working on them.

New feature not I won't I don't want to say features but even consumer experiences like inside of mortgage and insider purchase mortgage.

Inside of a more longer term.

Alerts so we can give to people. So so the answer is we're definitely not going to be per cent.

Depending on the personal loans.

Personal loans happens to be the easiest thing right that you can say to a consumer you've got a bunch of credit card debt and we can tell you right now we can consolidate that.

Paying.

This percent interest youre going to pay a lot less over here consolidated get it done right like that's an easy thing to do.

And as I said during Covid a lot of consumers did that on their own did.

Did that on their own.

Seven years ago, none of us would ever have been talking about personal loans.

The other was sort of this was something that day.

Was done by sort of subprime finance companies.

Any time people are providing financing we're going to provide a market for it.

And so were right there and so while the my Lendingtree revenue share.

Yeah.

In the cycle, we have seen is dependent on personal loans.

With everything else in the conversion and the after and the after application touch points.

The engagement is very very good and I'm happy with it.

I wish everybody in America had on my Lendingtree account.

And some day, we're going to get there.

On because it will just tell you wanted to save money across every financial institution in the United States across an interest in lending.

Clearly we're not there.

But we're definitely on what J D.

Yeah, Let me Steven Let me give you a good example of so many answer to your question is no as you look out to 'twenty. One 'twenty. Two later in 'twenty, one and 'twenty two dependent on personal lines should reduce fairly significantly, but one other things that we're focused on.

Obviously, we want each of our businesses to drive new sign up that's one one thing, but we're really focused on making sure that we can actually have the consumer ever really good experience within my LT and across our products.

So there are some foundational things you have to build first.

So one big question, we often get is insurance integration.

And that's not just driving sign ups, but that's saying, okay, here's somebody who's in market.

Great.

Insurance platform that we have.

What are we doing to make that.

That work with my LT well.

The agency initiative that we have.

Within insurance.

When we talked in our letter in our shareholder letter about.

The app that.

In the in auto dealer App.

On the agency technology is the key to that okay. So we.

We have built this technology for the agency that supports the dealership app, but guess what it also supports the ability to show rate within my LT.

And any other cross sell opportunities and being able to fill a REIT is really important so as we build out that agency.

Within insurance it will not only help diversify our insurance business, which is wonderful but it it supports the cross sell opportunity. It supports the integration with my LT.

And so.

We're really happy with that when does that manifest itself in terms of results.

Probably the timeline that youre talking about later 'twenty one 'twenty two.

In terms of my LT results, but I think if we're sitting here a year from now talking about my LT that dependent on personal loans is quite a bit lower.

And you should see actually insurance.

In card and other businesses is far better integrated with my LT.

Which will be which will be awesome and obviously as you pointed out that should actually really help on natural margin profile.

And J D hit on.

The b to B aspects of this a little bit.

The co branded with other partners is definitely working and that is that will work not only with one day. It also works with insurance.

Auto dealer App for example.

While it's only in a few auto dealers. It is have a great impact and when we look at the unit economics on the future of that.

It works at three auto dealers it will work at 300.

And there are things coming behind that and that auto dealer App. For example, can give instant quoting with fully viable quotes for auto insurance that we will.

We're much more integrated on lendingtree, but those types of products and they'll migrate across.

Everything else, we have as we build on our ecosystem.

Yeah.

Great I appreciate all the color. Thanks.

Thanks Steven.

Your next question is for the line of John Campbell with Stephens. Please go ahead.

Hey, guys good morning.

Hey, John.

Hey, So I know this is probably impossible to directly piece out but day to your dog I'm just curious about your bigger picture thoughts around stimulus and how much that might be playing a factor kind of on the pace of recovery in consumer.

So I think I alluded to it before.

Think it's definitely having a major impact.

We've got lenders ready to land and we've got consumers that arent necessarily.

And numbers they were before needing or wanting to borrow.

And.

As much as that might not.

Not have her EBITDA higher than a year.

From a company that's trying to help that.

Our mission is really to help consumers get their helped everybody get their finances right.

That's okay.

So I'm fine with it if people are paying down debt because the government is giving them a free money, that's certainly better than borrowing from our credit card company is that hurts our business for a few months lag.

Yeah, that's fine because it's going to put them in a position where their net they now can become homeowners.

They can start small businesses, they can engage with us and much more valuable products for the future.

Yeah, John I guess I, Yeah, I would just say.

It's really the stimulus is if it if it helps people get through wonderful, but the uncertainty around it is what we need to get past it for our partners right. So let's talk about each business, if you're a credit card issuer and you're trying to you're looking at credit card balances, but you're trying to assess the impact on the consumer.

And how credit worthy RMA rate that influences, how aggressive youre going to be in growing credit card a.

New new card issuance right and so we're definitely seeing a number of our credit card issuers. We have I think two now back to pre COVID-19 underwriting standards. Okay. So they obviously pulled back quite a bit but we're now seeing finally, a couple of them get back to the same underwriting standard and Thats great.

Starting to see in credit card.

Better offers better product right. So instead of 12 months balance transfer at 18 months and so more inducement for the consumer so we're seeing a little bit more aggressive.

Aggressive behavior on the part of the credit card issuer, which is which is great to see and certainly a sign of confidence.

In personal loans as we point out if people don't have credit card balances, they're not going to they're not going to have as much desire for a personal loan and the stimulus obviously has definitely impacted that business Inc.

Interestingly in.

In small business, which had a great fourth quarter that we were very happy with.

We definitely see the.

The P P P.

Impact what we see is a lot of small businesses enquiring about loans, but the conversion rates impacted by the uncertainty of P. P. P. Right. So what are they going to get from the government impacts the follow through of a small business owner to per.

Proceed with a non PPP loan because they don't know what they're going to what's going to be available to them.

So I think the common ground on each of these is is really a little bit of uncertainty personal loans, a little bit different every every lender who was on the network.

Pre COVID-19 is back on and I think we disclosed that last quarter, we were thrilled with that but really on the personal lines a little bit unique just because there's not as much consumer desire for that product right now given the stimulus. So it's certainly having an impact but as Doug pointed out if it is helping our consumers.

Get through this debt, it's gonna be great for us long term.

Okay. That's great color on a quick follow up here on the brand spend.

I think lastly, if I recall correctly you guys had some committed spend and then obviously a portion of those kind of.

You were able to flex, but just curious for this year you guys have kind of earmarked for particular level of spend and if so how much of that is fully committed versus truly variable.

Yeah. So we we kind of went into this year, assuming it would be similar to last.

We've taken steps so that we can flex it higher based on how certain businesses print.

And so you might see us later in the year stepping that up.

It certainly it stepped up a little bit quarter on quarter.

Here in the first quarter relative to the fourth reflective of our business.

But as the year progresses, you might see a step that up a little bit.

Okay.

And the only thing I would add to that as well.

We're always going to deliver.

We're always going to do our best to deliver profit to our shareholders.

And if we've got opportunities to invest for the future.

Are truly investments not just spending money for it.

J D Moriarty, here's somebody from our finance teams is yes, let's go spend this much money on this.

Above and beyond what we were thinking about because were seeing new numbers.

And it's gonna have a return we're going to do it and we're going to tell you about it.

Makes sense thanks, guys.

Thanks, John.

Your next question is from the line of Melissa for Dow with J P. Morgan. Please go ahead.

Good morning, guys. Thanks for taking my questions today.

And then for Phil.

Yes.

Thank you I wanted to focus on for as well and I'm trying to reconcile some other kind of see me out.

Particularly in our day, having sort of a lower margin on that business out party here some backing.

And I'm trying to reconcile that with actually what was a pretty strong margin in this game on category as a whole Inc.

For Q4, I'm wondering what sort of all right. Thanks.

Oh Wow.

In that segment and then I guess.

Second question would be around forever.

With Westlake and sort of understanding on how that differs from current offerings in auto and how each day.

Thank you.

Yes.

J D you on and take that.

Yeah, absolutely so.

Most of the overall the consumer category.

Does carry high margin because it also includes our.

Our big businesses, our personal loan business is our highest margin business.

So that business normally is weak in the fourth quarter relative to the third.

Because typically people run up credit card balances.

And in the fourth quarter and then it's strong in the first quarter Okay.

So that seasonality did not play out and actually personal loan was modestly bigger in the fourth quarter than it was in the third.

And card obviously grew now the card business as we look at each of our businesses and we've been doing this since you know on it.

Daily basis in light of Covid.

One of the nice things about our model is obviously when the revenue opportunity goes down so does our cost structure and so we've watched each of our businesses and you saw that in our mortgage business for instance in the.

Second and third quarter when that margin expanded well the card business is the only business that had days in 2020, where it actually lost money.

Where the cost to deliver volume true to our card issuers exceeded the revenue opportunity.

So as payouts compressed in card.

That was a tougher business to manage that wasn't losing money on a daily basis, but I'd say every fifth day throughout 2020, it would seem to have a day, where it might lose a little bit of money.

And.

Recognize that with card.

It's a month to month business.

And as issuers want to profile new cards.

And we get certain payouts for those cards and we learned about those for the months ahead and what their goals are.

We're trying to meet their volume goals.

And the cost environment has been high and we've had two in the fourth quarter, we've got competitors in card.

Who are driving that cost out, but now I would say that we are probably I mentioned that a couple of issuers are back to free.

Pre COVID-19 levels with respect to underwriting that's the first sign if their underwriting criteria is back.

That's great what should follow from there is enthusiasm to grow.

And when it when the <unk> or pardon me when their payouts I should say move up a little bit and when we get I'd say, a couple more one or two more issuers who want to grow.

That should flip meaning.

That the revenue opportunity will exceed the cost environment, we are strategically deciding to grow that business right now meeting volume targets for issuers to take more of their market share is the month to proceed.

And recognizing that it might be a breakeven proposition in the card business as we try to build it back right. So with any one issue, where we're saying to them. Okay. In January how much of your spend can we get.

Okay, Great maybe we did that at a breakeven level for us in January what can we do on February can we grow it that's the strategy.

And when the network gets a little bit more robust, we'll start to be a profitable business there, but card specifically is going to drag on margin in Q1 relative to what consumer is typically the personal loan business continues to enjoy pretty good margin profile would you need revenue growth there.

So it's really a mix of business is now the other thing I would point out I'm, sorry, Oh, sorry go ahead.

<unk> sorry.

Are good.

Yeah, No I mean, if you look at those businesses that's card personal loans small business was very strong in the fourth quarter, but we're preparing for that that card business is going to grow with modest contributions.

Sorry go ahead.

Yeah, the only other thing I would add.

To sort of the conundrum of why you can have like the comments and card and then still have very good margins in consumer.

Is it goes back to in my Lendingtree.

Even with consumer balance sheets being better.

Can get a lot of.

Quote unquote free are already paid for on transactions are happening later in there and theyre engaged on us so.

These longer term on my Lendingtree strategy.

With which is why you're seeing consumer margin is little bit higher, but you're also not seeing isn't yet, saying come to lendingtree and get a personal loan right like that would be a direct thing around personal loans and does that comes on and is that those economics work we.

Prove those.

But in the meantime, you've got you still have a lot of my Lendingtree traffic that is fed from all of those are the other loan types coming through and that's what what's enabling us to.

To be able to still say is there you said, let's grow the credit card debt.

For lenders are paying us enough money that we can go market on grades.

We're certainly not going to lose money, but if we make a dollar instead of losing dollar.

And we're going to get sign ups and lifetime value and more customers are in the front door and daydream. So that's that's the plan.

Okay.

Your next question is from the line of Robert well Heck with Autonomous Research. Please go ahead.

Good morning, guys I wanted to follow up on my L. T and engagement there I'm wondering if you can share any additional color around usage and interactions I'm on my LTE users interacting with the platform more and more and if so how fast does that increase.

Right.

J D. Do you want to give like numbers and then I'll hit overall.

Sure.

Lisa signs goodness in there.

Perfect.

It is the biggest thing Rob is really this plant integration getting people to become connected accounts. So over those who are connecting their accounts and the real thing that we've got to drive. This year is that what's the call to action to get somebody to connect their comps were glad we're seeing their engagement up almost 30%.

That's great and then and then we're seeing revenue per active user as a result of that connected that's up 20%.

So.

Strategically we want to drive people to engage their accounts that that's really important to us.

Uh huh.

But the monthly active users we've got to get them to collect accounts, we think that that's really the driver strategically throughout the year. So we're not we were not we don't have a new set of like public metrics that we're going out with but that strategy is certainly working on.

And we're really happy to see that.

And then the reason for that is if we can get you to connect your accounts.

We have more opportunities to give you a alerts.

So the more we know about you the more we can tell you how to save money.

But weird and we have to get consumers to sort of take that next step.

So the beautiful thing about our business model is.

We can drive you in to say come and get a mortgage come get a personal loan come get a credit card comparison drop for this.

And.

We can also say get a free credit score if you want we can say get.

Identity theft insurance.

And we can say get it altogether.

So we've got many different marketable opportunities, but ultimately we want you to whether you engage with whether you complete that first transaction or not.

We want to make sure that we've got an account for you. So that we can engage with you over other other transactions and an average star.

Moving to grip.

Yes.

Got it that's really helpful.

Yes, just a follow up you've talked in the past about expanding the product set and the offering on the asset side of the consumer balance sheet, but also.

As highlighted on.

A lot of current investment in existing businesses, so where does that asset side of the consumer balance sheet rank as a priority for you guys and just any updated thoughts you might have on the opportunity there.

So right on on deposits.

Our deposits business is obviously not doing great because deposit rates are low right now.

So it doesn't make sense to say, hey, you know deposit here versus there.

However.

Longer term I think that the trends there are very good J D. Do you want to add on.

Yeah, I mean right now if you think about the asset side for us rabbit.

It started with deposit that's a modest business at this point it.

You've talked about two things around investments one is you know on.

Obviously, you've got.

On the ownership stake and stash and we will continue to evolve how we partner with them.

We're happy with some other partnerships, thus far but they haven't yet manifested themselves in opportunities for my LT customers, that's a little bit more complicated.

But we over time, we think there will be the opportunity to offer investment products to the my LT base.

Through that partnership which will be great.

We also have and we've talked about this a M.

Our business around investments and so we've been developing content around investments.

We're in the early stages on it but we actually have partners, who are engaging with us in and in the fourth quarter.

We had a small amount of revenue and net investments vertical so that think about that as provide.

Providing.

Customer acquisition services for the RA channel, Okay. So that will be a growing business at lendingtree over time as well, but we're early days, but we think it's important and we think it is something it's a natural extension of our business.

But that's the way to think about it it's kind of there's the.

Stash, which as you know.

A product for free.

First time person to save and invest that's a specific product and we'll partner with them for that and then kind of the marketplace experience for the registered investment investment advisor community and we've talked about that that's not a new opportunity, but we think it's a very natural extension of what we do.

And and I would just add on.

By saying the stash integration is going very well.

On both us helping them monetize their users and help them in their investment product, helping us or are you just got engaged.

<unk> product, while it's to insurance.

Could very quickly.

Moving to helping you buy a car which is also obviously an asset.

The overall cash.

Cash flow analysis on that we're doing on my Lendingtree will get very strong interest savings and then as J D pointed out the RIAA busy.

Yes.

We think the.

Net.

For a certain segment of customers.

Should be using a robo adviser.

For another size customers day can be.

Working with somebody.

On a different a very high end and for the middle There's a lot of people who want registered investment advisors to help them for retirement.

They get very good earnings from those accounts and it's a brand new channel for us that is.

Early stages, showing very very good signs for boys.

Yeah.

That's great. Thank you guys.

Thank you.

Your next question is on the line of Jamie Friedman.

What day Sasha Hanna. Please go ahead.

Hey, Jamie.

Hi, good morning, guys.

So you mentioned in the second page of the shareholder shareholder letter.

On that the the strength that you saw.

I'm trying to find here ahead of.

The trend that is persisting into the new year in terms of the strength that you saw earlier.

I was hoping you could just elaborate on what it is that you may have seen quarter to date.

Yeah.

I believe you.

Yeah, I believe you're referring to the mortgage segment as that.

So let's see it's salaries.

Yeah.

You go on the segment.

So on J D.

Yeah.

Oh, Yeah, Oh, I'm sorry, it's in the second paragraph so it says.

As previously mentioned the fourth quarter outperformance was driven by strength in the home segment I'm, sorry, it's specific to them yet.

Yeah. So it's it's listen it's specific to home. It's played out as we expected it would right and we've talked about that the effectively.

As the year of 2020 progressed with rates and organic volume in the beginning of the year.

We knew that there would be more desire for our services year progressed, and we knew that we would be able to drive revenue per lead right. So.

Increased capacity as we say.

Among our lenders we expanded capacity.

And when we expand capacity what do we see we see increase in RPM. Okay. So our mortgage revenue per lead was up 35 per cent over the prior year and then volume was up 15%. So how are we getting that rate that's year over year growth in the business of 51 per cent that has continued in the first quarter.

And we're really happy with the performance.

And so.

That's the mortgage cycle I think we.

Evolved the product over the last year and we came into this cycle well prepared for it and we're trying to make the most of it and work with our partners to be you know.

More critical partner.

So as I said before hard to say, where we are in that cycle. We've obviously seen rates tick up recently.

That will make it a little bit harder for our lenders if they continue to be higher.

But we you know what he does in the short run is obviously make our services that much more valuable.

Okay, and if I could just follow up with one on card I know a lot of the questions are focused on card but.

We generally in a.

Balance transfer environment or are we more in our rewards driven environment how would you.

<unk>, what's going on right now.

Yeah, I think what you will see as card issuers come to the for is more of a balance transfer focus.

Having said that credit card balances themselves are not high at the moment right. So.

But they can make a lot of money on that product when they grow to expand their portfolios now the reward programs have been probably challenged a bit because of the absence of travel range. So much of that is travel the same thing.

Having said that I would expect that when people get back to more normalized travel God Bless you know what let's all hope.

Does that debt the card issuers will be focused on reward cards. So it's sort of hard to say right now Jamie we're principally focused on right on helping them grow again.

And on underwriting criteria.

In product so we're starting to see as I mentioned before the balance transfer card that moves from 12 months to 18 months.

Zero interest that's that's the beginning of we want to grow cards, that's what we need to see that the anecdotal or pardon me the anecdotal signs of.

Desire to grow.

And I think it will probably beat balance transfer at the outset.

Got it I'll jump back in the queue. Thank you.

Thank you.

On your final question is from the line of Kunal model car with Deutsche Bank. Please go ahead.

Hi, Thanks for squeezing me in.

One <unk> been on.

Longer term bigger picture why don't understand sales was done in the in the competitive landscape collect for.

For the marketing spend from financial services firms.

Most of them have been spending on line for the longest time you've been around for the bus over 20, almost 25 years. So it's not as if there is a lack of a bad news. So how do you get a bigger share of the advertising spend from the financial services firms.

Then second.

And this is something more from personal experience is.

I see a lot of like Lendingtree ads, all the time wherever I go on line.

And most of them are basically about key financing, but I just keep on Oh I'd just be fired on that if I had to lendingtree. So you should know that I'm no longer in the market for you for them.

Why am I still getting towards that.

So on.

So let me so here's why and let me check out the advertising works on your sort of experiencing there in the short run the.

On the marketplace. So.

Our ads will.

Let's take online and offline a little bit separately.

So in the on line space, we are because of our economics and because of the long tail of all of those lenders.

Those ads.

Hey al.

And there are.

You're you're seeing there.

Generalize as not necessarily targeted because your prior lendingtree customer.

And they're more general.

And we do them because they were in right now they'd be more refi focused Vega is that's what our lender demand alright, and then when they're not demanding that you would see those gen rise to something.

Hopefully what you would also be seeing in addition to ads on the Internet.

Is that now that your customer and your refi through US you should be getting hopefully more targeted alerts and lasse.

Of that.

I will tell you that the ability to know a customer.

It was already there and they're not and then show them either more highly targeted ads. So for example, you could go all the way to saying.

Hey, you don't need to theaters to refinance.

No youre refinanced customer, but you might be interested mess.

It gets a little sort of previous and we so we don't necessary.

Go there so current customers will see ads.

Across the Internet and they definitely work. So that's that's how that works for that.

Does that makes sense.

Yeah.

I'll take your word for it.

So no.

It's J D. Let me just the only thing I would expand on there and there's other parts of your question as well so I'll maybe address that.

Yeah.

We've just we're constantly trying to develop channels and I think what you are for reflecting is when youre seeing display ads, we've seen great success in display over the last year and we certainly wish that every.

But that all of our channels became more become more personalised, we're principally focused on making sure that the my LT experiences more personal lines right. So they are we should have more control over showing you. An AD then we're going to necessarily in display display it's going be a function.

Most often of what Youre reading when you see it right. So that's just the display channel and we've seen great success there.

We tried to grow every channel as.

As the year goes on and that's what you're seeing is our is our when we you see us have more presence and display it means that it's working as Doug points out now again, not as personalized as we like we have longer term goals, that's one of them.

The other question you asked is how do we get.

Bigger we're committed spend from partners.

And over time that should be one of our great opportunities given our diversification and we have certain partners, where they are structuring themselves certain big bank partners, but where they're structuring themselves to be more more holistic and more comprehensive right. So they want to talk about deposits combined with mortgage.

Combined with personal loans, but they are few and far between we're trying to drive them there, but they tend to have.

People, who are responsible for customer acquisition byproduct. They tend our partners tend to be more siloed.

So we try to drive change and we tried to get to more committed spend but it's just you have to have organizational change on the partner side to get there. We also tend to have partners, who exceed in one product more than another right, but the biggest opportunity exists within those big financial institution partners and actually if you look at our company.

Five years ago to today.

What your what you'd find is the top 10 customer base is a much healthier base than it was five years ago five years ago, and our top 10 customer base you would have seen some non bank mortgage originators that you know the average investors never heard of them today.

Everybody is pretty much a brand name financial institution, whether its an insurance carrier or a credit card issuer.

You know, obviously, the rockets and low depots of the world that are newly public. So you know, we've certainly seen our top 10 customers become bigger more stable organizations over time and the next leg of that should be the ability to drive to more holistic relationships with them.

And and the only thing I would add among those big customers.

Youre going to see those companies whether they're bad.

Banks mortgage companies are seeing more of that.

Credit card companies et cetera, if their advertising both on and offline.

That is both.

It will reduce our marketing cost because they want to build their brands to and we also see that when they do that.

It helps their conversion rates on Lendingtree, just like when we're doing brand advertising on TV.

Buzz inside of Google.

So for the search engine for money.

We're gonna have.

Some companies that are going to be.

More on.

Let's say reliant on a negative way on Lendingtree called.

Called partnered and you're Gonna have companies, where we're in their business and they're also gonna do their own advertising.

And.

What we hear for them.

Mortgage side right now because of the improvements in product that J D talked about and we've talked about in the past.

We've got a lot of capacity from lenders.

And we just need to be able to deliver it to them.

And so youre seeing more marketing because we're marketing into that demand that they've got from us.

Thanks, Doug.

Thank you.

And I'm showing no further questions at this time I would like to turn the conference back to Doug Lebda for closing remarks.

So just a couple of closing thoughts.

These are all coming from your.

Questions and just reflections as we've had this call.

I am thrilled with how our team has come through Covid.

During this past year, we have had ups and we've had downs and we've got people working very very hard at.

And we've come out of a better company.

We've come out leaner, we've come out with much more understanding of.

The right ways to do things in that we're a company that's on a continuous improvement cycle.

Second thing I would say the core businesses are solid.

What are you where you can run every individual loan type that you could add on my Lendingtree everything is solid.

Some will do better in times and some will do worse in times and that is merely the supply and demand economics.

What's going on.

Expect to see us.

Continue to hopefully deliver and also invest because at the end of the day you don't end up with 10 marketplaces in any industry, you end up with one or two.

Next thing I would say.

Somewhat boring.

But it's really impactful is that throughout this last year and throughout the planning process, we went through.

And the processes that we have laid in place.

I think that we are now at a place where we've got the team and the processes the brand and the capabilities to scale. This company to a much larger company.

And we intend to do that and then the last day I would say to you all as always please no.

Debt.

Particularly now that Liberty media is not our largest shareholder.

I'm always talking to you as a CEO.

And I'm also talking to you as a shareholder.

Who has my entire net worth and that's basically.

And it has a passion to succeed.

And more importantly than me.

Every single employee at Lendingtree sees the mission.

Same way.

So you've got.

1200 fired up shareholders, who are waking up every day trying to not only increase the value of our enterprise, but to do it the right way by helping consumers save them money and by helping our partners build big and enduring businesses around them.

And I am really happy with where we are so thank you all very much for your time. Thank you for your attention to our company.

And we look forward to talking to you soon.

Yeah.

Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and have a wonderful day you may all disconnect.

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