Q4 2021 Lendingtree Inc Earnings Call

Good day, and thank you for standing by welcome to the Lendingtree.

Fourth quarter 2021 earnings conference call at this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please.

Press Star Zero.

I would now like to hand, the conference over to your Speaker today, Andrew Wessel, Vice President of Investor Relations. Please go ahead.

Thanks, Don and good morning to everyone joining us on the call. This morning to discuss <unk> fourth quarter 2021 financial results.

On the call today are Doug Lebda lending <unk>, chairman and CEO J D Moriarty, president of marketplace, and CLO and Trent Ziegler CFO .

As a reminder to everyone. We posted a detailed letter to shareholders on our Investor Relations website earlier today and for purposes of today's call. We will assume that listeners have already read that letter and we'll focus on Q&A.

Before I hand, the call over to Doug to give his remarks I want to remind everyone that today's during today's call. We may discuss lending trees expectations for future performance.

Forward looking statements that we make are subject to risks and uncertainties and lendingtree as actual results could differ materially from the views expressed today, many but not all of the risks. We face are described in our periodic reports filed with the SEC.

We will also discuss a variety of non-GAAP measures on the call today.

For you to today's press release and shareholder letter both available on our website at investors that Lendingtree dot com for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP and with that Doug. Please go ahead.

Thanks, Andrew and thank you. Thank all of you for joining US today. Following our recent Investor day event, I am going to forego some of the normal quarterly items and focus my comments on how we are positioning the company to become the ultimate consumer champion in the financial services space.

The strategy process, we completed in the second half of last year was a deeply meaningful exercise for Lendingtree we.

We engaged employees from all levels of management across the organization and the feedback from our team was clear.

We want to create fantastic customer experiences that build trusted and lasting relationships with our customers throughout their financial lives.

The Fintech space has created a multitude of digital digitally enabled lenders and insurers <unk>.

Established companies have responded with increased investment in digital fulfillment channels to defend their market share.

Tumors clearly enjoy the convenience that these advances are generated the ability to take care of all of their personal financial needs digitally has been well received and the adoption curve has been swift.

But the market lacks a shopping experience to differentiate between ever increasing number of financial products offered.

There is no trusted digital adviser that leads with.

With choice and best pricing for the consumer across the entire range of financial products in one easy to use experience as.

As we execute on our strategy, we are well positioned to continue our leadership in the consumer finance space. We are harnessing the incredible power of our brand with its consistently high levels of aided awareness and combining it with our unmatched depth of partner relationships to be the ultimate resource for consumers want.

To take control of their financial lives.

This is the next iteration of Lendingtree, but it remains firmly rooted in the core reasons I founded the company 25 years ago.

In that time, we've helped over $100 million customers shop, and compare financial products and facilitated billions and funded loans yet. We believe this is just the beginning.

We're building on our legacy strengthening our routes and investing for growth. We are energized by the path. We have ahead of us in 2022 will be a critical year as we execute on this vision I look forward to sharing our progress with you in the coming quarters now operator, we're happy to open up for questions.

If you have a question. Please press star one on your telephone keypad. Your first question comes from Jed Kelly with Oppenheimer.

Hey, great. Thanks for taking my question just.

Two if I may one is was an insurance just just going through the shareholder letter.

Can you update us on the Medicare strategy and then my second question.

It goes into.

Just on capital management shored up measuring share buybacks I saw you made an investment in a payment processing company.

Then just given the valuations out there how are you thinking about M&A. Thank you.

Yes, Jed I'll take the first of all on Medicare I mean look we.

Obviously, we invested a fair amount into scaling up the capability there on the Medicare agency throughout last year.

Like like many of the other players in that space.

<unk>.

There was a fair amount of competitive pressure in the sense that you saw.

A lot of folks chasing that opportunity and you've got a lot of.

Agents selling those policies, where there's very little differentiation and so there was some competitive intensity in terms of just getting to the customers that leads to.

Kind of lower policy, persistency, which does impact the.

It impacts the revenue streams that you expect to collect on those policies now in our case.

We're uniquely positioned in that space and that we're not at the same level of scale not nearly as dependent as many of our competitors on that product, but b, we're actually recognizing the cash flow from those policies upfront.

And so we feel good about the progress we've made certainly on that business. Obviously the environment that we saw in the fourth quarter will inform.

How aggressively we intend to scale that business in 'twenty two.

Right now we're more focused on kind of the unit economics in that business and how we think we can improve them. So don't expect that the scale that too aggressively.

In 'twenty two.

So thats kind of what we learned from the fourth quarter and how we're approaching it.

Going into this year.

Said.

You saw at the Investor Day, we think there is some opportunity to scale on the P&C side the agency capabilities, because thats really how you can improve.

The customer experience and ultimately tie that into my Lendingtree and create kind of a holistic cross sell opportunities that we're going after and then do you want to talk about buybacks too and then J D can talk about M&A.

Yes, so on the buyback front as you saw we did $40 million.

In the fourth quarter.

We remain in the market as we said on Investor day here in the first quarter and.

So look for us to continue.

Be opportunistic with the buyback we're fortunate that we've got 250 million of cash on the balance sheet, we continue to generate cash and we will look for ways to.

We're talking on that so shareholders effectively.

David do you want to take and then the M&A piece.

Yes.

Thanks.

We're excited about our investment in earn out.

Earn up as a San Francisco based Fintech focused on on payments. They have a borrower pay solution that enables the consumer to pay their mortgage.

And and other debts, but initially mortgage.

And they are transitioning to an enterprise model, where originators and Servicers can provide this for their consumers.

And thus be better tied to their consumers. So it's very consistent with our strategy to work toward a better consumer experience.

And a natural fit with our home with our home business right. So you could envision.

Our consumer and my lending tree down the road being able to pay their mortgage.

Through lending tree and it removes a lot of the inefficiency when a mortgage transitions from the initial originator to another servicer.

So thats really the opportunity we think it's great for the consumer.

And we think it can be great for our originator customers and servicers as well. So that's what we're excited about where they are and have them more broadly on M&A.

And under told story over the last year is how much our balance sheet has improved and so we find ourselves in a really good position.

Both to execute on.

The M&A that you've seen us do over the last several years.

But also buy back our stock and so we're really happy with the refinancing that we did we're very happy obviously with the convert that we did in 2020, the refinancing that we did over the last year.

And where we find ourselves in terms of free cash generation.

And quite obviously multiples have come down quite a bit so we've been disciplined for the last two years.

With a very good opportunity to be acquisitive going forward.

That will remain a key part of our strategy and we're happy with the discipline that we've had over the last couple of years.

Thank you.

Your next question comes from the line of John Campbell with Stephens incorporated.

Hey, guys good morning.

Good morning.

Hey on the combined credit cards personal loans small business Rev.

So thats moving along really nicely for you guys I'm thinking that the bulk of that ramp is probably pretty similar to credit Karma just overall.

And it looks like you grew that kind of at the same rates sequentially and then on the credit card side, it looks like Youre fairing better than <unk> wallet.

There's obviously been some kind of share loss narrative out there with some investors. So I think at least with this quarter it seems to that.

It seems to be defeated but with all that said can you guys talk to just kind of the main changes in the business that supported that type of recovery and then maybe bigger picture how youre feeling just where you guys sit competitive position wise versus your market shares.

Sure and it's a little different story with each of the three verticals or sorry, John It's J D I'll take it.

Small business has been a great business for us recovered really nicely, we're really happy with the solution that we provide for not only small business owners, but for lenders as well personal loans and small business had something in common which is we used the opportunity presented by the difficulties of 2012.

<unk>.

I think our network is just improved.

And so if you look at the diversity of the lenders on the network.

Dramatically improved from 2019 levels. So while we've talked to you about revenue.

On a monthly basis, and how personal loans in the fourth quarter.

Back to 2019 levels and small business.

Back to and exceeded 2019 levels credit card is still not there, but youre seeing nice improvement.

I think in credit card, our biggest challenge as we've talked about in the past has been driving.

The margin. So we can track revenue improvement and clearly issuers are back which is great to see.

But it's very competitive on the cost side.

So the way I think about it for a credit card is there is improving the business, which we can do from marketing wins, we clearly need less dependence on.

On paid search okay. So that is improving the business.

You could see the benefit of that in 2022, and we're pretty confident that we will see the benefit of that in 'twenty two.

Then there is what I would call fixing the business or building moats around it and that's where we talk about treat quality <unk> quality will initially benefit credit card and personal loan most profoundly.

If you think about what we want to do for our credit card issue or a personal loan lender.

It is not only bring them.

Volume, but also bring them the customer that they want right.

And credit card in particular is focused on don't just bring me.

Card holders don't just bring the customers bring me the right customer and so <unk> is going to enable us to do that in a way that is friendly to the issuer.

And it's hard to do and so it will improve the quality of that business.

We're working through it right now we're really excited about the enthusiasm of our <unk> partners. So those are the credit card issuers in personal loan lenders, who are enthusiastic to work with us we're working with axiom, we're working with the bureaus and we think it's going to build a great.

A great barrier to entry for US, we think we're doing it the right way.

Business that it will improve first as I said, it's credit card and personal loan, but it really is extensible to our other verticals.

At the end of the day, it's really about taking that marketing efficiency and delivering it to our partners, but also on the consumer side of things.

We don't want a consumer in my lending tree.

Looking on a credit card and go into the issuer and getting turned down in my Lendingtree, we want to present them with the card that's right for them and it's available for them. So <unk> prequalification and pre approval is key to that so it's very corridor strategy over time, if we're doing better than if you see us.

Doing better than nerd wallet.

In card.

It's wonderful, but we're focused on the long game and Thats fixing the business prequels part of that.

Okay, that's fair and the only thing I'd add.

Yes, and the only thing I'd add to that from the competitive environment.

As you look at the Fintech universe broadly.

The great thing that Lendingtree has always been able to do versus competitors and I think it's showing itself more and more now.

Is the.

Solidity, if you will of the business model.

If we were able to operate the consumer business profitably last year.

<unk>.

A tough monetization environment because of what our partners were going through.

We can do obviously much better as things go forward as Youre already seeing but at the end of the day you need a business model that can regardless of your product that can bring customers to you.

In a sustainable way that's actually.

Lower than what your revenue is and I think the Lendingtree brand and our marketing execution.

Shown that and that gives us the ability to weather.

Many different markets and still do it very profitably.

Okay. Thanks, Doug and then one more here on mortgage.

Industry refi I think it was down 50% year over year or so in the quarter you guys.

Because business was kind of flat I think down 2% or so.

Revenue per lead I think that was up over 50%, so that's definitely providing support but.

I guess I'm curious is that just coming off a low comp or how that look on kind of a two year basis and then.

A couple of quarters or even longer term, how should we think about the upside potential of our revenue.

For per lead and then your kind of ability to stave off lower volumes.

So on the.

On the mortgage front and you've been around here a long time. So you are well aware of.

People not getting this as lenders.

Need us more as rates are rising or just regardless of rates when their volumes are dropping.

They opened filters the increased bids.

They expand to more states.

Think differently take additional types of volume may also extend into purchase they expand to home equity all of that raise.

Raises natural horizon makes your RPM naturally rise, which enables you to go market and.

We were just talking about this yesterday.

Our board meeting given the fact that we're originating roughly 2% of the mortgages in the United States.

We would see that go up in a.

In a more purchase environment.

And Thats, what Youre seeing happening now we're also getting some client wins. The other thing I'd say is that at times like these.

Anders are willing to innovate with us which goes to how you continue to push <unk> higher which is really through conversion rates from lead to fund and also through our site I've seen some really exciting work, we talked about a number of the initiatives at Investor day, and those are all aimed at improving conversion rates and those are lenders improve.

Their conversion rates than they are more profitable and then they can get even more so thats our intent to get through this environment Youre seeing its already outperformed the broader mortgage environment is working with our partners, helping consumers close more loans and if we do that RPM rises and then we can market into it.

Sure.

Thank you guys.

And your next job.

I'm sorry.

Your next question comes from the line of Ryan Tomasello with <unk>.

Good morning, everyone. Thanks for having me on the call today.

I guess just following up on the mortgage.

I mean, certainly understanding the counter cyclicality that lendingtree can converted from benefit from as lenders partner.

To backfill these pipelines that are declining but.

Just looking at some of the recent results across the Street for example, rocket recently indicated with its guidance that it's actually choosing not to chase volumes given.

Uneconomic margins as gain on sale of compresses. So I'm just trying to understand how you're thinking through the puts and takes of the guardrails. This year and what data points, you're really focused on for the mortgage business relative to the conviction in the guidance range. Thanks.

Yes, I'll start and then J D can add.

Add in as well.

Or trend.

A mortgage company really operates through obviously its profitability and its margins, but also through the capacity of its loan officers and its processors. So it's not as much about there and pipeline as much as it is about their marketing efficiency.

And their pull through so mortgage companies will operate up to the breakeven point. If you will then they'll go slightly negative they start to reduce their capacity I always compared to airlines at some point of airfares go down low enough putting another person on the plane isn't good enough you need to take a plane off.

Line.

And that's.

That's the way they work so.

The indicators that we look at is our lender profitability.

Cost per ton and cost per funded loan for our lenders and how that then relates back to.

Our <unk>.

Marketing machine and what we can do there and the big driver is the fact that Lendingtree is look the big the big.

The reason that I know that that we can.

So through this is one we've done it before several times and and two if you look at just the millions of people who are coming through Lendingtree.

But then relate to roughly be eight or 9000 loans that get closed every month and mortgage there is a whole lot of drop off between visiting our sites starting a form finishing a form pressing submit and then importantly pressing submit getting phone calls.

Picking a lender and closing and that 8000 9000 loans a month could be 15000 loans a month could be a lot higher.

Based on you just simply improving your funnel conversion.

You don't need to do much more than that now to improve.

Conversion would go back to our strategy and you see we're doing with.

With the marketplace CRM and you see the same thing on <unk>.

On the consumer side and when you as you execute those as you are better for the consumer and as I said before our lenders are now more willing to adopt.

Changes to their process and working with US more closely now that theyre not just a wash in volume and now they really got to be sharp to win in the marketplace.

That's what gives us confidence that we can improve conversion rates and then monetization.

Anything to add.

Sure.

No.

Brian first of all good to have you on the call and good to have you.

As part of our coverage group.

Hi.

I guess, the only thing I would add is.

We spend a lot of time talking about the cycle for our lenders and then our cycle.

And recognize that it's pretty dynamic and we have to work with them to understand cost per funded loan as Doug pointed out if we can drive better conversion. So it's not unlike it's not unlike a credit card, but when I was talking about the right customer for them. That's about conversion right. So if we can drive better conversion, we can manage that cost per funded loan.

Effectively even in an environment, where as you say theyre not stretching we acknowledge this next next 12 months for many of our refi centric.

Originators is going to be harder.

What you're going to see us and you've seen it already in the <unk> for purchase which we talked about at Investor Day, we're going to see is more focus on purchase.

More focus on home equity.

And more focus on us getting the right consumer efficiently. The other thing that you are going to eventually see is the cost.

Our marketing expense our cost to acquire drop.

And so we've been in the high RPM environment.

But you got to recognize that the way this cycle will play out we have to manage it on both the RPM side and the cost side. So that that is the next leg of this and we have a lot of experience obviously navigating these cycles. When we go through these cycles. Our goal is to help our lender partner.

But also just grow our business right and so if we look back at the last five years and you look at periods like 2018, which is the most recent comparable period, where rates rose and lenders.

And lenders went through a difficult time with and we're laying off loan officers et cetera.

We worked with them through that period, and we grew our business right. So that's that's the way that we're going to manage it and we've planned for it this year and you think about our numbers this year they've already they've already.

Been set with an expectation that refi would be down.

And we're just executing through that period.

Great I appreciate that and then I guess follow on question would be 2022 guidance seems to imply.

A normalization in brand marketing expense.

By my math back to 2019 levels.

So I guess as you continue to focus.

And on the consumer centric strategy, including with mild team is there a way to put any guideposts around the time and amount of brand marketing spend that you think will be necessary to drive that next leg of brand awareness of the platform.

Any of that starting to come through at all in 2022 year.

Let me start and then hand, it off to trend in terms of numbers of our view on when we say brand we think of.

We think of that as television advertising.

The highest cost per CPA cost of customer acquisition.

But it's also the most enduring and.

You would never.

The television advertising, we view TV just like we view every other AD source from the standpoint that what does it cost us to get a customer to take a certain action.

And you only are on television when your monetization is high enough and your demand is high enough. Obviously in the last couple of years.

TV spend has been relatively modest.

That's because monetization was pretty much down across the board.

From where you need to be on television I would expect as monetization increases that we have some TV spend in the budget.

But again for us that will pay off certainly within year and in the past it's been call. It six months.

And as we do something like that we would certainly let everybody know, but its really baked in we have a great handle on it and what I would also say is I wouldn't expect us to see us on television until some of the consumer.

<unk> experienced issues, which are right up on our strategy get fixed to the point that we have.

On a consumer experience that we think is best in class and then we think that that we can be on TV again marketing into <unk>.

<unk> one thing I've said to investors in the past is when you see us on television you know that we are.

The business is the monetization side of the business is incredibly healthy trend what else would you know Ryan I would just say.

Your assumptions are right. We did allow in the guidance for the brand budget to be up.

It will be up over 2020 , one levels closer to 19 levels.

That said, we've got a CMO at six weeks into the job right and so we're going to we had to put a placeholder into the budget, but we're going to be flexible with it and we're going to be intentional about how we how we use those dollars in.

The business will dictate whether we flex up or flex down from there.

Okay, great. Thanks for taking the questions.

Thanks Ryan.

Your next question comes from the line of Rob <unk> with Autonomous research.

Good morning, guys.

Good morning, Ryan.

Just a quick question on <unk>.

<unk> I know you are live with three credit card issuers are you live with anyone on the personal loan side or any new partners trialing that that products on personal loans.

Okay.

We have we have a couple lenders testing it.

But not yet fully lives.

So.

But it will be in tandem, it's not going to be a phased approach of credit card and personal loan. It will be intent that we have some lenders who are actually engaging in bulk.

J D you might want to comment on the.

On the on the presentment and representing the fact that it's a little more complicated to get up and running here, but it also creates a barrier.

Yes.

Rob So we.

There are some subtleties in terms of when we work with axiom and we worked with the bureaus each of our each of our.

Each of our <unk> partners.

Has a different bureau, transunion equifax experience.

<unk> want to work with so we're working with those bureaus.

As to what is permissible.

Using there.

Their data store, so effectively there their list of preapproved customers.

At axiom.

And when we can present, a new offer to a consumer that is initial presentment versus re-present, meaning something that they otherwise get through direct mail. So there is some complexity here that we're working through.

Which as I said is is work that im happy that were doing because I think it is.

Complicated.

Bids us more with our partners.

And that's what we're focused on.

As I said, the initial deployment as card and personal loan for some of our lenders it will be actually in both products.

And then we have certain certain issuers in card, who who don't want to work in that fashion. They have their own API that they want us to hit so we're working with them as well the good news is that.

Universally there is great receptivity to this pre approval notion right because ultimately, we're just delivering that marketing efficiency to our partners.

And so we're really excited about the response to it and I think also you think about the dynamics in both personal loan and credit card as we go into 'twenty. Two we're in the right market to be presenting something new and interesting tour issuers right as opposed to <unk>.

Click out model without a whole lot of qualification of the consumer so.

We're really excited about it we think it's a great opportunity and we think we will see some results in 'twenty, two but results will be.

We'll be lenders and issuers engaging with us.

And financially it should really impact us in the out year, but it's one of our most important projects this year for sure.

Thanks, that's really helpful. One more on the Medicare business to how did the competitive intensity your results in the quarter and the results from some competitors compare to your expectations. When you set out and decided to invest and expand this business.

Yes, Rob I mean to be totally transparent, we came up a little bit short of kind of what we have modeled out going into the going into the open enrollment period.

It seems like we were not alone in being kind of surprised by the level of competitive intensity.

But look for us that was that was a bet that we were placing and we'd feel really good about the progress that we made there and kind of the infrastructure that we've built out that we can leverage across the rest of the business. So.

That's going to inform us to make us smarter as we progress throughout this year and what I My comment on Medicare would be and we've seen this in personal loans, when we restarted that and made a marketplace there than we've seen in some of the other businesses. We've been in that we've had to exit.

If there if there are a number of companies who want to <unk>.

Reach consumers in an insurance product or a lending product we can create a marketplace.

If the underlying.

Companies.

Have the issues or the industry has issues, it's harder to create a marketplace and if you see more competitors in creating noise.

Then you really then it gets your cost of customer acquisition goes up and the unit economics get more difficult and then but we do in all of our businesses then we just adjust so.

It's not like we laid down a huge bet in Medicare we we're building it slowly we made our investments there we think it's still a business that is sound.

And it's also not one we're betting the farm on.

Because but at the same time.

The whole notion and insurance if you think about it in J D referred to this in credit card.

The thing there is moving beyond simply calls clicks and leads.

To an agency business, where you have a lifetime relationship with that customer, whether it's home insurance auto insurance Medicare insurance.

Or whatever other kind of insurance you can see.

And then when you stitch together, the lending side and the insurance side, which.

It is still a still a dream is not fully realized.

And then you can share the data between your agency in your lending side, and if Youre getting auto insurance will maybe you need a car loan refinance with that.

And vice versa. So that's the.

I wouldn't view Medicare as much as a standalone business more its lending trees.

Pivot to the agency model. So we have a very very competitive mode of differentiation from our competitors in that space.

Got it thank you for that.

And your next question comes from the line of Melissa Gorham.

J P Morgan.

Good morning, guys. Appreciate you taking my question Marni.

I was hoping to touch on the.

Revenue.

No.

I would say even restate anything it was just a shift in methodology.

For attributable revenue from my Lendingtree.

<unk>.

The current methodology, which incorporates transaction.

Right.

Jumping to the yeah, it was really thinking.

A lot of activity happening.

Alright and has been happening.

As users.

He was there a strong backbone.

Wow.

Curious to get your thoughts on sort of what would drive consumers to transact outside of my ALC and <unk>.

How you interpret that just sort of inform the strategy going forward.

It's a great. That's a really good question. So if you think about our user experience lets say you have signed up for my Lendingtree, but then you see.

A display ad.

And you click on that.

Today, when you come in you could.

You come in and you go and you might be looking for a refinance and you've come in.

Get dropped into our normal flow in.

In the future, we would obviously hope to be able to identify you, but we need some information first as a my lendingtree user and as J D talked about and Jorge talked about in my Lendingtree. We will also have unique user experiences such that such that yield youll want to go.

<unk> in the same way in my Amazon, but Amazon knows that I have an Amazon prime customer and all my information is there and can make recommendations if perhaps I just went to Amazon Dot com. That's the that's the way that I would think about it but the thing that it tells me.

Is that there is a lot of.

Of my Lendingtree is repeat business with that change in methodology and that revenue shows you is that you've got people, who have signed up for my Lendingtree use us for something and they want to come back for something else and so for me that's incredibly rewarding to see that repeat usage that is all of that is what we're at.

After which is surrounding the customer with all of the financial products such that you don't need to go anywhere else because you can trust us to get you the best deal because everybody in the market is on our marketplace and if youre a logged in user.

Even better.

Melissa.

J J O or get them back in January can you hear me, Okay, sorry, sorry about that we'll get some feedback I apologize.

The only thing I would suggest is.

Internally, we found it pretty confusing.

Talk to our teams.

<unk>.

Okay.

About two numbers.

And so we just sort of simplified and said this is the revenue from the base of my LTE users that we are looking to generate and obviously, we wanted to know how productive those users are now we historically tracked something called the optimal revenue and what we did there was we backed out the incremental marketing expense to effectively.

Or a customer.

We still can track that obviously internally and thats, a marketing efficiency that we're looking to deliver but but honestly. There is a part of this where we're just trying to simplify.

How we track the importance of those users to the overall platform.

And then externally it's much more simple thing to track as well. So that's really the idea now the other thing I would just say about my Lendingtree.

When we look back at 2021.

<unk>.

We're really happy with the progress of the growth.

But more importantly, we started to see some real growth in users coming from our mortgage funnel.

One of the things that we've talked about is that is the linkage between personal words in my Lendingtree and about 70% of our base today.

Was generated through a personal loan funnel and that has its own implications right in terms of the credit quality of the consumer so.

We as we open up our other funnels, which is one of our objectives in 'twenty one to drive my LTE usage to drive my own team membership.

You will see a change in the credit quality of the base that will in turn benefit.

Our marketplace business right. So if you think about our credit card business.

The best.

Our if our basis entirely generated by personal loans. It has implications for our credit card business as that base becomes more diversified our credit card business will benefit more from the my Lendingtree base. So that is one of our objectives as we grow that my Lendingtree base in.

'twenty two.

Is not only to grow it but to diversify it.

In terms of where it's originating from.

There's a lot that we can do just in terms of directing consumers from our marketplace business to my LT, we don't do that uniformly today, but we have every intention of doing so as the year progresses.

Okay that makes a lot of sense.

Follow up question.

You touched on the shareholder letter about.

Getting some increased adoption.

Plaid integration.

Consumers to opt in King packaged bank accounts can you.

For that piece of the strategy, how important battle getting higher conversion rates and how you can some of that performance and yes. Thanks so much.

Absolutely and Jorge Castro presented at our Investor day in one of the P&I. We're just discussing actually just yesterday was.

We've done the hard.

The hard part of integrating Plaid we.

Don't have sufficient value prop to a consumer to a my lendingtree user.

Why they should do it right.

We've historically talked to the consumer and said you want to see your cash flow.

Well.

Senior cash flow is great, but what we're finding is that's not really engagement.

People are excited about.

So we need to transition from using that plant integration to deliver something of value meaning.

If you are spending a lot of money on groceries or gasoline, we want to present, you with a credit card that is aligned with your spend.

So it is going to be tied to.

Something of value for the consumer from a shopping perspective from a savings perspective, not simply look at your cash flow.

So we've had good success getting new my LT sign ups to link their client accounts.

We've had.

Frustrating.

Times trying to go back to the existing base and give them a reason to link their accounts, we need to have a very clear value prop as to the why.

And as we work on transitioning my lending tree from a free credit score App to a digital adviser that is part of the strategy. It's all about that value prop and making sure that somebody understands what's in it for them to link their accounts.

So it can be very much tied to what theyre going to see.

Yes.

That's helpful. Thanks, so much.

Thanks.

The only thing I would add to that is is all of that Plaid integration.

And a lot of that call. It plumbing work that those are all part of.

Prior year investments and now as J D talked about we're talking about.

Value props marketing and more consumer facing things which are.

Which you can test into it a lot lower cost than building foundations and do in plumbing work now we always still have plumbing to do.

But.

A large part of that is over.

And your next question comes from the line.

With Northland Securities.

Yes, thanks, guys.

At a high level could you kind of talk about revenue visibility you have today versus sort of the historical visibility you've had for revenue has it changed much.

Yes, Mike I'll take that one.

One of the things I would say is.

Okay.

One of the things that helps us greatly with regard to visibility for each of our businesses is the <unk>.

Diversity in the health of the network and J D hit the subtly earlier, but one of the things we're seeing as we kind of ebb through.

Cycle in mortgage over the last couple of years, certainly a cycle on a rebound in the consumer segment on that we're dealing with a bit of a different cycle in insurance is.

Coming out of each of those cycles.

The diversity of partners on our network and kind of the health of the network. The lack of concentration risk in any of those businesses greatly improves our visibility and thats something we feel really good about it and something we've seen.

In each of those businesses as we move through cycles.

Obviously, there's.

Macro risk in different cycle risk in each of these segments that you've got to be mindful of.

But the health of the network is something that we.

Our proud of and it does really give us greater visibility and less volatility in the numbers.

And then in addition to that the only thing I would add is the business has always been very fairly predictable.

In the short run.

The medium term.

But the cash flow or EBITDA visibility.

While your revenue can sometimes be volatile based on what's going on in the market your marketing cost to acquire customers typically moves in tandem sometimes with a little lag sometimes a little forward.

But your customer acquisition costs also move with that which enables the model to be very durable and resilient during during whatever market we see.

Yeah.

Got it and then.

Secondly.

As you think about your outlook for 'twenty two.

What are the two items that may be you have the most uncertainty about where that caused you a little bit of stress something else to fall into place for it.

Any two things stick out there.

Yes, Mike.

Obviously, we've been conservative with regard to our expectations in mortgage.

The guidance I think sufficiently allows for refi to be down as expected in our business will be down it'll be down less than the market is.

And we have pretty strong conviction in that at the same time, we do expect purchase on home equity to kind of pick up some of the slack as it relates to the home segment. So we feel good about that.

The insurance business obviously.

The speed of recovery in that business.

There is some variability.

In that that said.

We're already seeing pretty good trends here in the first quarter that business, we expect to bounce back really nicely from a revenue standpoint.

Q4 into Q1.

And so we feel pretty comfortable about the about the plan there and then the consumer businesses continue to home and get better every quarter.

Candidly if anything what I would tell you is that our guidance does not assume.

Any massive incremental improvement from a lot of the strategic initiatives that we've been talking about and that's where our focus is and so to the extent, we can get those things to start clicking and humming.

<unk>.

We feel like there could be some upside if those things hit.

Yes, I think <unk> hit it with the insurance come back but thats.

As we've looked at it and dug into it it's a timing issue so could it be a little later sure.

Then.

You were talking about guidance, but at the same time the business is still really healthy.

And it's coming back so whether it comes back in one month or two months or three months.

Somewhat dependent on insurance carriers getting approvals from states, but what we're hearing from the from the market from our carriers is that they are chomping at the bit once their new rates get approved that they want to be back.

<unk> with us and we've got just even the last couple of weeks, we've got a couple of significant client client.

Sort of win backs in terms of volume and so we're starting to see it already and it's really just a matter of time, but from a guidance perspective, I think thats probably the biggest.

What unquote uncertainty.

Got it Okay, hey, thanks for the insight.

Thank you Mike.

And there are no further questions.

Great. So I'll just give some closing remarks and then we'll look to see you all next quarter first of all thank you all for your <unk>.

Time and attention, we really appreciate and cherish the relationship with our shareholders and with our analysts and we appreciate your support and we also appreciate your comments and you all pushing us.

What I'd say is this they think about our quarter and where we are and particularly coming off of <unk>.

Two years of Covid.

I feel that our strategy is incredibly solid and sound. We took a lot of time doing it. We spent did a lot of research and we have a United company behind it.

The execution of that strategy is working it's working at all levels. It's working all across the company from process to how we're changing the way, we do things to a commitment to the customer.

Third I would say that our employees are energized.

People are ready to get back to work they are ready to continue to build great products, we're ready to.

See this market continue to evolve we feel very confident in our leadership position and our employees are fired up and then fourth our brand is strong.

Believe it has never been stronger and as we've seen other companies come and go over the years and we've got another recent spam.

<unk> of those it just shows you the strength of the Lendingtree brand that's been built up over 25 years and billions of dollars in ad spend.

All of that adds up to us winning and who are we waiting for we want to win for our partners to grow with us to grow your business with us to build an enduring business around us we want to win for consumers to save money through us to give you the right and quick answer to save you money to help you build a better financial.

Life and if we do both of those things. We think there is tremendous shareholder value to be added.

For all of you and for our shareholders. Thank you very much for your time, we look forward to talking to you soon and have a fantastic day.

Thanks.

Thank you for participating in today's conference call you may now disconnect.

Thanks Al.

Thank you.

Yeah.

[music].

[music].

Good day and thank you for standing by welcome to the Lendingtree, Inc. Fourth quarter 2021 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your chair.

The phone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.

I would now like to hand, the conference over to your Speaker today, Andrew Russell Vice President of Investor Relations. Please go ahead.

Thanks, Don and good morning to everyone joining us on the call. This morning to discuss one increased fourth quarter 2021 financial results on the call today are Doug Lebda, Lendingtree as chairman and CEO J D Moriarty, president of marketplace, and CLO and Trent Ziegler CFO .

As a reminder to everyone. We posted a detailed letter to shareholders on our Investor Relations website earlier today and for purposes of today's call. We will assume that let's say as I've already read that letter and we'll focus on Q&A.

Before I hand, the call over to Doug to give his remarks I want to remind everyone that during today's call. We may discuss lending trees expectations for future performance.

Forward looking statements that we make are subject to risks and uncertainties and lemon trees actual results could differ materially from the views expressed today, many but not all of the risks. We face are described in our periodic reports filed with the SEC.

We will also discuss a variety of non-GAAP measures on the call today and I refer you to today's press release and shareholder letter both available on our website at investors that lending tree dot com for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP and with that Doug. Please go ahead.

Thanks, Andrew and thank you. Thank all of you for joining US today. Following our recent Investor day event I'm going to forego some of the normal quarterly items and focus my comments on how we are positioning the company to become the ultimate consumer champion in the financial services space.

Our strategy process, we completed in the second half of last year was a deeply meaningful exercised for lendingtree we engaged.

Aged employees from all levels of management across the organization and the feedback from our team was clear.

We want to create fantastic customer experiences that build trusted and lasting relationships with our customers throughout their financial lives.

The Fintech space has created a multitude of digital digitally enabled lenders and insurers established companies have responded with increased investment in digital fulfillment channels to defend their market share.

Consumers clearly enjoy the convenience that these advances are generated the ability to take care of all of their personal financial needs digitally has been well received and the adoption curve has been swift.

But the market lacks a shopping experience to differentiate between ever increasing number of financial products offered there is no trusted digital adviser that leads with choice and best pricing for the consumer across the entire range of financial products in one easy to use experience as.

We executed on our strategy, we are well positioned to continue our leadership in the consumer finance space.

We are harnessing the incredible power of our brand with its consistently high levels of aided awareness and combining it with our unmatched depth of partner relationships to be the ultimate resource for consumers wanting to take control of their financial lives.

This is the next iteration of Lendingtree, but it remains firmly rooted in the core reasons I founded the company 25 years ago.

In that time, we've helped over 100 million customers shop, and compare financial products and facilitated billions and funded loans yet. We believe this is just the beginning.

We're building on our legacy strengthening our routes and investing for growth. We are energized by the path. We have ahead of us in 2022 will be a critical year as we execute on this vision I look forward to sharing our progress with you in the coming quarters now operator, we're happy to open up for questions.

If you have a question. Please press star one on your telephone keypad. Your first question comes from Jed Kelly with Oppenheimer.

Hey, great. Thanks for taking my question just.

Two if I may one was an insurance just just going through the shareholder letter.

Can you update us on the Medicare strategy and then my second question.

It goes into.

Just on capital management shored up measuring share buybacks I saw you made an investment in a payment processing company.

And just given the valuations out there how are you thinking about M&A. Thank you.

Yes, Jed I'll take the first of all on Medicare I mean look we.

Obviously, we invested a fair amount into scaling up the capability there on the Medicare agency throughout last year.

Like many of the other players in that space.

<unk>.

There was a fair amount of competitive pressure in the sense that you saw.

A lot of folks chasing that opportunity and you've got a lot of.

Agents selling those policies, where there's very little differentiation and so there was some competitive intensity in terms of just getting to the customers that leads to.

Kind of lower policy, persistency, which does impact the.

It impacts the revenue streams that you expect to collect on those policies now in our case.

We're uniquely positioned in that space and that we're not at the same level of scale not nearly as dependent as many of our competitors on that product, but b, we're actually recognizing the cash flow from those policies upfront.

And so we feel good about the progress we've made certainly on that business. Obviously the environment that we saw in the fourth quarter will inform how.

How aggressively we intend to scale that business in 'twenty two.

Right now we're more focused on kind of the unit economics in that business and how we think we can improve them. So don't expect that the scale that too aggressively.

In 'twenty two.

So thats kind of what we learned from the fourth quarter and how we're approaching it.

Going into this year.

Ted.

As you saw at the Investor Day, We think there is some opportunity to scale on the P&C side. The agency capability, because that's really how you can improve the customer experience and ultimately tie that into my lendingtree and create kind of a holistic cross sell opportunities that we're going after and then do you want to talk about buybacks too and then J D can talk about M&A.

Yes, so on the buyback front as you saw we did $40 million.

In the fourth quarter.

We remain in the market as we said on Investor day here in the first quarter and.

So look for us to continue to.

Be opportunistic with the buyback we're fortunate that we've got 250 million of cash on the balance sheet. We continue to generate cash and we will look for ways to return on that so shareholders effectively.

David do you want to take and then the M&A piece.

Yes Jed.

Thanks.

We're excited about our investment in earn out.

Earn out business San Francisco based Fintech focused on on payments they have a borrower pay solution that enables the consumer to pay their mortgage.

And and other debts, but initially mortgage.

And they are transitioning to an enterprise model, where originators and Servicers can provide this for their consumers.

And thus be better tied to their consumers. So it's very consistent with our strategy to work toward a better consumer experience.

And a natural fit with our home with our home business right. So you could envision.

Our consumer and my lending tree down the road being able to pay their mortgage.

Through lending tree and it removes a lot of the inefficiency when a mortgage transitions from the initial originator to another servicer.

So that's really the opportunity we think it's great for the consumer.

And we think it can be great for our originator customers and servicers as well. So that's what we're excited about where they are and have them more broadly on M&A.

And under told story over the last year is how much our balance sheet has improved and so we find ourselves in a really good position.

Both to execute on the M&A that you've seen us do over the last several years.

But also buy back our stock.

So we're really happy with the refinancing that we did we're very happy obviously with the convert that we did in 2020, the refinancing that we did over the last year.

And where we find ourselves in terms of free cash generation.

And quite obviously multiples have come down quite a bit so we've been disciplined for the last two years, but it presents us with a very good opportunity to be acquisitive going forward. So that will remain a key part of our strategy and we're happy with the discipline that we've had over the last couple of years.

Thank you.

Your next question comes from the line of John Campbell with Stephens incorporated.

Hey, guys good morning.

Good morning.

Hey on the combined credit cards personal loans small business Rav.

Thats moving along really nicely for you guys I'm thinking that the bulk of that rather is probably pretty similar to credit Karma just overall.

It looks like you grew that kind of at the same rate sequentially and then on the credit card side, it looks like a fair better than <unk> wallet.

There's obviously been some kind of share loss narrowed about there was some investors. So I think at least what this quarter it seems to.

It seems to be defeated but with all that said can you guys talk to just kind of the main changes in the business that supported that type of recovery and then maybe bigger picture how youre feeling just where you guys sit competitive position wise versus your market shares.

Sure and it's a little different story with each of the three verticals or sorry, John It's J D I'll take it.

Small business has been a great business for us recovered really nicely, we're really happy with the solution that we provide for not only small business owners, but for lenders as well.

Personal loans and small business had something in common which is we used the opportunity presented by the difficulties of 2020.

I think our network is just improved.

And so if you look at the diversity of the lenders on the network.

Dramatically improved from 2019 levels. So while we've talked to you about revenue.

On a monthly basis, and how personal loans in the fourth quarter.

Got back to 2019 levels and small business.

Got back two and exceeded 2019 levels credit card is still not there, but youre seeing nice improvement now I think in credit card our biggest challenge as we've talked about in the past has been driving.

The margin. So we can track revenue improvement and clearly issuers are back which is great to see.

But it's very competitive on the cost side.

So the way I think about it for credit card is there is improving the business, which we can do from marketing wages, we clearly need less dependence.

On paid search okay. So that is improving the business and you could see the benefit of that in 2022, and we're pretty confident that we will see the benefit of that in 'twenty two.

Then there is what I would call fixing the business or building moats around it and that's where we talk about <unk> and <unk> will initially benefit credit card and personal loan most profoundly.

If you think about what we wanted to do for our credit card issue or a personal loan lender.

It is not only bring them.

Volume, but also bring them the customer that they want right and credit card in particular is focused on don't just bring me.

Card holders don't just bring the customers bring me the right customer and so <unk> is going to enable us to do that in a way that is friendly to the issuer.

And it's hard to do and so it will improve the quality of that business.

We're working through it right now we're really excited about the enthusiasm of our <unk> partners. So those are the credit card issuers in personal loan lenders, who are enthusiastic to work with us we're working with axiom, we're working with the bureaus and we think it's going to build a great.

Great barrier to entry for US, we think we're doing it the right way.

That it will improve first as I said, it's credit card and personal loan, but it really is extensible to our other verticals and at the end of the day, it's really about.

Taking that marketing efficiency and delivering it to our partners, but also on the consumer side of things.

We don't want a consumer in my Lendingtree clicking on a credit card add going to the issuer and getting turned down in my Lendingtree, we want to present them with the card that's right for them and it's available for them. So <unk> prequalification and pre approval is key to that so it's very core to our.

<unk> over time.

If we're doing better than if you see us doing better than nerd wallet.

In card.

Wonderful, but we're focused on the long game and Thats fixing the business prequels part of that.

Okay, that's fair and the only thing I'd add yes.

Yes, and the only thing I'd add to that from the competitive environment.

As you look at the Fintech.

Universe broadly.

Great thing that Lendingtree has always been able to do versus competitors and I think it's showing itself more and more now is the is the.

The solidity if you will of the business model. If we are able to operate the consumer business profitably last year.

<unk>.

A tough monetization environment because of what our partners were going through.

We can do obviously much better as things go forward as Youre already seeing but at the end of the day you need a business model that can regardless of your product that can bring customers to you.

In a sustainable way that's actually.

Lower than what your revenue is and I think the Lendingtree brand.

And our marketing execution.

<unk> shown that and that gives us the ability to weather.

Many different markets and still do it very profitably.

Okay. Thanks, Doug and then one more here on mortgage.

Industry refi I think it was down 50% year over year or so in the quarter you guys mortgage business was kind of flat I think down 2% or so.

Revenue per lead I think that was up over 50%, so thats definitely providing support but.

I guess I'm curious is that just coming off a low comp or how that look on kind of a two year basis and then.

A couple of quarters or even longer term, how should we think about the upside potential in our revenue per lead and then your kind of ability to stave off lower volumes.

So.

On the mortgage front <unk> been around here a long time, so you are well aware of.

People not getting this as lenders.

Need us more as rates are rising or just regardless of rates when their volumes are dropping.

They opened filters the increased bids.

They expand to more states.

Take different may take additional types of volume may also extend into purchase they expand the home equity all of that raise.

Raises natural horizon makes your RPM naturally rise, which enables you to go market and.

We were just talking about this yesterday.

Our board meeting given the fact that we're originating roughly 2% of the mortgages in the United States.

We would see that go up.

In a more purchase environment.

And Thats, what Youre seeing happening now we're also getting some client wins. The other thing I'd say is that at times like these.

Anders are willing to innovate with us which goes to how you continue to push our <unk>, which is really through conversion rates from lead to fund and also through our site I've seen some really exciting work we've talked about a number of the initiatives at Investor day, and those are all aimed at improving conversion rates and those are lenders improve.

Their conversion rates than they are more profitable and then they can bid even more so thats our intent to get through this environment Youre seeing its already outperformed the broader mortgage environment is working with our partners, helping consumers close more loans and if we do that RPM rises and then we can market into it.

Thank you guys.

And your next job.

I'm sorry.

Your next question comes from the line of Ryan Tomasello with <unk>.

Good morning, everyone. Thanks for having me on the call today.

I guess just following up on the mortgage.

I mean, certainly understanding the counter cyclicality that lendingtree can.

<unk> from benefit from as lenders partner.

To backfill these pipelines that are declining but.

Just looking at some of the recent results across the Street for example, rocket recently indicated with its guidance that it's actually choosing not to chase volume just given.

Uneconomic margins as gain on sale of compresses. So I'm just trying to understand how you're thinking through the puts and takes of the guardrails. This year and what data points, you're really focused on for the mortgage business relative to the conviction in the guidance range. Thanks.

Yes, I'll start and then J D can.

Add in as well.

Or trend.

A mortgage company really operates through obviously its profitability and its margins, but also through the capacity of its loan officers and its processors. So it's not as much about there and pipeline as much as it is about their marketing efficiency.

And their pull through so mortgage companies will operate up to the breakeven point. If you will then they will go slightly negative they start to reduce their capacity I always compare it to airlines at some point of Airfares go down low enough putting another person on the plane isn't good enough you need to take a plane off.

Line.

And that's.

That's the way they work so.

The indicators that we look at is our lender profitability.

Cost per ton and cost per funded loan for our lenders.

And how that then relates back to <unk>.

Our.

Marketing machine and what we can do there and the big driver is the fact that Lendingtree is look the big the big.

The reason that I know that week that we can grow through this is one we've done it before several times and and two if you look at just the millions of people who are coming through Lendingtree.

But then relate to roughly the eight or 9000 loans that get closed every month and mortgage there is a whole lot of drop off between visiting our sites starting a form finishing a form pressing submit and then importantly pressing submit getting phone calls.

Picking a lender and closing and that 8000 9000 loans a month could be 15000 loans a month could be a lot higher.

Based on you just simply improving your funnel conversion you don't need to do much more than that now to improve your final conversion you can go back to our strategy and you see we're doing with.

With the marketplace CRM and you see the same thing on <unk>.

On the consumer side and when you as you execute those as you are better for the consumer and as I've said before our lenders are now more willing to adopt.

Changes to their process and working with US more closely now that theyre not just awash in volume and now they really got to be sharp to win in the marketplace. That's what gives us confidence that we can improve conversion rates and better monetization.

Yes.

Sure.

No.

Brian first of all good to have you on the call and good to have you.

As part of our coverage group.

Aye.

I guess, the only thing I would add is.

We spend a lot of time talking about the cycle for our lenders and our cycle and.

And recognize that it's pretty dynamic and we have to work with them to understand cost per funded loan as Doug pointed out if we can drive better conversion. So it's not unlike it's not unlike credit card, but what I was talking about the right customer for them well that's about conversion right. So if we can drive better conversion, we can manage that cost per funded loan.

Effectively even in an environment, where as you say theyre not stretching we acknowledge this next next 12 months for many of our refi centric.

Originators is going to be harder.

What you're going to see us and you've seen it already in the RPM for purchase which we talked about at Investor day, we're going to see it.

Is more focus on purchase.

More focus on home equity and.

And more focus on us getting the right consumer efficiently. The other thing that you are going to eventually see is the cost.

Our marketing expense our cost to acquire drop.

And so we've been in the high RPM environment.

But you got to recognize that the way this cycle will play out we have to manage it on both the <unk> side and the cost side. So that that is the next leg of this and we have a lot of experience obviously navigating these cycles. When we go through these cycles. Our goal is to help our lender partner.

But also just grow our business right and so if we look back at the last five years and you look at periods like 2018, which is the most recent comparable periods where rates rose and lenders.

And lenders went through a difficult time with and we're laying off loan officers et cetera.

We worked with them through that period, and we grew our business right. So that's that's the way that we're going to manage it and we've planned for it this year and you think about our numbers this year they've already they've already.

Been set with an expectation that refi would be down.

And we're just executing through that period.

Great I appreciate that and then I guess follow on question would be 2022 guidance seems to imply.

A normalization in brand marketing expense.

My math back to 2019 levels.

So I guess as you continue to focus.

And on the consumer centric strategy, including with mild team is there a way to put any guideposts around the time and amount of brand marketing spend that you think will be necessary to drive that next leg of brand awareness of the platform.

Any of that starting to come through at all in 2022 year.

Well, let me start and then hand, it off to trend in terms of numbers of our view on when we say brand we think of.

We think of that as television advertising.

The highest cost per CPA cost of customer acquisition.

But it's also the most enduring and.

You would never.

The television advertising, we view TV just like we view every other ads orders from the standpoint that what does it cost us to get a customer to take a certain action.

And you only are on television when.

When your monetization is high enough and your demand is high enough. Obviously the last couple of years, our TV spend has been relatively modest.

That's because monetization was pretty much down across the board.

From where you need to be on television I would expect as monetization increases that we have some TV spend in the budget.

But again for us that will pay off certainly within year and in the past it's been call. It six months.

And as we do something like that we would certainly let everybody know, but its really baked in we have a great handle on it and what I would also say is.

Wouldn't expect us to see us on television until some of the consumer.

Experienced issues, which are right up on our strategy get fixed to the point that we have.

A consumer experience that we think is best in class and then we think that we can be on TV again marketing into high Rps, One thing Ive said to investors in the past is when you see us on television you know that we are.

The business the monetization side of the business is incredibly healthy trend what else would you know rod I would say.

Say.

Your assumptions are right. We did allow in the guidance for the brand budget to be up.

To be up over 'twenty, and 'twenty, one levels closer to 19 levels.

That said, we've got a CMO six weeks into the job right and so we're going to we had to put a placeholder into the budget, but we're going to be flexible with it and we're going to be intentional about how we how we use those dollars in.

The business will dictate whether we flex up or flex down from there.

Okay, great. Thanks for taking the questions.

Thanks Ryan.

Your next question comes from the line of Rob WOMAC with Autonomous research.

Good morning, guys.

Good morning, Rob.

Just a quick question on <unk>.

<unk> I know you are live with three credit card issuers are you live with anyone on the personal loan side or any new partners trialing that that products on personal loans.

Okay.

We have we have a couple lenders testing it.

Not yet fully lives.

So.

But it will be in tandem, it's not going to be a phased approach of credit card and personal loan. It will be intent that we have some lenders who are actually engaging in bulk.

J D you might want to comment on the on the on the.

Presentment and representing the fact that it's a little more complicated to get up and running here, but it also creates a barrier.

Yes.

Rob so.

There are some subtleties in terms of when we work with axiom then we work with the bureaus each of our each of our.

Each of our <unk> partners.

<unk> has a different bureau, transunion equifax experience that they want to work with so we're working with those bureaus.

As to what is permissible.

Using there.

<unk> data store, so effectively there their list of preapproved customers.

At axiom.

And when we can present, a new offer to a consumer that is initial presentment versus representative meaning something that they otherwise get through direct mail. So there is some complexity here that we're working through.

Which as I said is is work that im happy that were doing because I think it's complicated embeds us more with our partners.

And that's what we're focused on.

As I said, the initial deployment as card and personal loan for some of our lenders it will be actually in both products.

And then we have certain certain issuers in card, who who don't want to work in that fashion. They have their own API that they want us to hit so we're working with them as well the good news is that.

Universally there is great receptivity to this pre approval notion right because ultimately, we're just delivering that marketing efficiency to our partners.

And so we're really excited about the response to it and I think also you.

About the dynamics in both personal loan and credit card as we go into 'twenty two we're in the right market to be presenting something new and interesting tour issuers right as opposed to.

Click out model without a whole lot of qualification of the consumer so we.

We're really excited about it and we think it's a great opportunity and we think we.

We'll see some results in 'twenty, two but results will be.

We'll be lenders issuers engaging with us.

And financially it should really impact us in the out year, but it's one of our most important projects this year for sure.

Thanks, that's really helpful. One more on the Medicare business to how did the competitive intensity your results in the quarter and the results from some competitors compare to your expectations. When you set out and decided to invest and expand its business.

Yes, Rob I mean to be totally transparent, we came up a little bit short of kind of what we had modeled out going into the going into the open enrollment period.

It seems like we were not alone in being kind of surprised by the level of competitive intensity.

<unk>.

But look for us that was a that was a bet that we're placing them and we feel really good about the progress that we made there and kind of the infrastructure that we've built out so that we can leverage across the rest of the business. So.

Kind of inform us and make us smarter as we progress throughout this year.

My comment on Medicare would be and we've seen this in personal loans, when we restarted that and made a marketplace there than we've seen in some of the other businesses. We've been in that we've had to exit if there. If there are a number of companies who want to.

Reach consumers in an insurance product or a lending product we can create a marketplace.

The underlying companies.

The issues or the industry has issues, it's harder to create a marketplace and if you see more competitors in creating noise.

Then you really then it gets your cost of customer acquisition goes up and the unit economics get more difficult and then but we do in all of our businesses then we just adjust so.

It's not like we laid down a huge bet in Medicare we we're building it slowly we made our investments there we think it's still a business that is sound.

And it's also not one we're betting the farm on.

Because but at the same time.

The whole notion and insurance if you think about it in J D referred to this in credit card.

The thing there is moving beyond simply calls clicks and leads.

To an agency business, where you have a lifetime relationship with that customer, whether it's home insurance auto insurance Medicare insurance or whatever other kind of insurance you can see.

And then when you stitch together, the lending side and the insurance side, which.

It is still a still a dream is not fully realized.

You can share the data between your agency in your lending side, and if Youre getting auto insurance will maybe need a car loan refinance with that.

And vice versa. So that's the.

I wouldn't view Medicare as much as its standalone business more its lending trees.

Pivot to the agency model. So we have a very very competitive mode of differentiation from our competitors in that space.

Got it thank you for that.

And your next question comes from the line of Melissa Wedel from Jpmorgan.

Good morning, guys I appreciate you taking the question Martin.

I was hoping to touch on the.

Revenue.

No.

You didn't.

Restate anything it was just a shift in methodology.

For <unk>.

<unk> revenue from my Lendingtree.

Sure.

The current methodology, which incorporates transaction.

Right.

I'm going to be out it would really thinking.

A lot of activity happening.

Alright and has been happening.

He is there a stronger happening.

And I'm curious to get your thoughts on sort of what would drive consumers to transact outside of my ALC.

How you interpret that just sort of inform our strategy going forward.

It's a great. It's a really good question. So if you think about our user experience lets say you have signed up for my Lendingtree, but then you see.

A display ad.

And you click on that.

Today, when you come in you could.

You come in and you go and you might be looking for a refinance and you come in.

Get dropped into our normal flow in.

In the future, we would obviously hope to be able to identify you, but we need some information first as a my lendingtree user and as J D talked about and Jorge you talked about in my lending tree. We will also have unique user experiences such that such that yield you'll want to go.

And the same way in my Amazon, but Amazon knows that I'm, an Amazon prime customer and all my information is there and can make recommendations if perhaps I just went to Amazon Dot com. That's the that's the way that I would think about it but the thing that it tells me.

Is that there is a lot of.

Of my Lendingtree is repeat business with that change in methodology and that revenue shows you is that you've got people, who have signed up for my Lendingtree use us for something and they want to come back for something else and so for me that's incredibly rewarding to see that repeat usage that is all of that is what we're at.

After which is surrounding the customer with all of the financial products such that you don't need to go anywhere else because you can trust us to get you the best deal because everybody in the market is on our marketplace and if you are logged in user.

Even better.

Melissa.

J J EMEA Regifting back in January can you hear me, Okay, sorry, sorry about that we got some feedback I apologize Melissa.

The only thing I would suggest is.

Internally, we found it pretty confusing.

Talk to our teams.

<unk>.

Okay.

About two numbers.

And so we've just sort of simplified and said this is the revenue from the base of my LTE users that we are looking to generate and obviously, we wanted to know how productive those users are now we historically tracked something called the optimal revenue and what we did there was we backed out the incremental marketing expense to effectively.

Or a customer.

We still can track that obviously internally and thats, a marketing efficiency that we're looking to deliver but but honestly. There is a part of this where we're just trying to simplify.

How we track the importance of those users to the overall platform.

And then externally it's much more simple thing to track as well. So that's really the idea now that the other thing I would just say about my lendingtree.

When we look back at 2021.

<unk>.

We're really happy with the progress of the growth.

But more importantly, we started to see some real growth in users coming from our mortgage funnel.

One of the things that we've talked about is that as the linkage between personal words in my Lendingtree and about 70% of our base today.

Was generated through our personal loan funnel and that has its own implications right in terms of the credit quality of the consumer so.

We as we open up our other funnels, which is one of our objectives in 'twenty one to drive my LTE usage to drive my LT membership.

You will see a change in the credit quality of the base that will in turn benefit.

Our marketplace business right. So if you think about our credit card business.

The best.

Our if our basis entirely generated by personal loans. It has implications for our credit card business as that base becomes more diversified our credit card business will benefit more from the my Lendingtree base. So that is one of our objectives as we grow that my Lendingtree base in 'twenty two.

Is not only to grow it but to diversify it.

In terms of where it is originating from.

There's a lot that we can do just in terms of directing consumers from our marketplace business to my LT, we don't do that uniformly today, but we have every intention of doing so as the year progresses.

Okay that makes a lot of sense.

Follow up question.

Touched on the shareholder letter about.

Sure.

Getting some increased adoption.

Flat integration.

Many consumers to opt in King packaged bank accounts can you.

For that piece of the strategy, how important battle, given the higher conversion rates and how you can some of that.

Performance in <unk>. Thanks, so much.

Absolutely and Jorge Castro presented at our Investor day in and one of the P&I. We're just discussing actually just yesterday was.

We've done the hard.

The hard part of integrating Plaid.

Don't have sufficient value prop to a consumer to a my lendingtree user.

Why they should do it right.

We've historically talked to the consumer and said you want to see your cash flow well.

Well see.

Senior cash flow is great, but what we're finding is thats not really engagement.

People are excited about.

We need to transition from using that plant integration to deliver something of value meaning.

If you are spending a lot of money on groceries or gasoline, we want to present, you with a credit card that is aligned with your spend.

So it is going to be tied to.

Something of value for the consumer from a shopping perspective from a savings perspective, not simply look at your cash flow.

So we've had good success getting new my LT sign ups to link their product counts.

We had.

Frustrating.

At times trying to go back to the existing base and give them a reason to link their accounts, we need to have a very clear value prop as to the why.

And as we work on transitioning my lending tree from a free credit score App to a digital adviser that is part of the strategy. It's all about that value prop and making sure that somebody understands what's in it for them to link their accounts.

So it can be very much tied to what theyre going to see.

That's helpful. Thanks, so much.

Thanks.

The only thing I would add to that is is all of that Plaid integration.

And a lot of that call. It plumbing work that those are all part of <unk>.

Prior year investments that now as J D talked about we're talking about.

Value props marketing and more consumer facing things which are.

Which you can test into it a lot lower cost than building foundations and do in plumbing work now we always still have plumbing to do.

But.

A large part of that is over.

And your next question comes from the line from the line of Mike.

Paul.

Securities.

Hey, Thanks, guys.

At a high level could you kind of talk about revenue visibility you have today.

Versus sort of the historical visibility you've had for revenue has it changed much.

Yeah, Mike I'll take that one.

One of the things I would say is.

Okay.

One of the things that helps us greatly with regard to visibility for each of our businesses is.

The diversity and the health of the network and J D hit the subtly earlier, but one of the things we're seeing as we kind of ebb through.

Our cycle and mortgage over the last couple of years, certainly a cycle on a rebound in the consumer segment on that we're dealing with a bit of a different cycle in insurance is kind of coming out of each of those cycles.

The diversity of partners on our network and kind of the health of the network the lack of concentration risk in any of those businesses.

Really improves our visibility and thats something we feel really good about it and some of them we've seen.

In each of those businesses as we move through cycles.

Obviously, there's macro risk in the <unk> in each of these segments that you've got to be mindful of.

But the health of the network is something that we.

We are proud of and it does really give us greater visibility and less volatility in the numbers.

And then in addition to that the only thing I'd add is.

Business has always been very fairly predictable.

At least in the short run in the medium term.

But the cash flow or EBITDA visibility.

While your revenue can sometimes be volatile based on what's going on in the market your marketing cost to acquire customers typically moves in tandem sometimes with a little lag sometimes a little forward.

But your customer acquisition costs.

So move with that which enables the model will be very durable and resilient during during whatever market we see.

Got it and then.

Secondly.

As you think about your outlook for 'twenty two.

What are the two items that maybe you have the most uncertainty about where that caused you a little bit of stress that something has to fall into place for it.

Any two things stick out there.

Yes, Mike.

Obviously, we've been conservative with regard to our expectations in mortgage.

The guidance I think sufficiently allows for <unk> to be down as expected in our business will be down it'll be down less than the market is and.

And we have pretty strong conviction in that at the same time, we do expect purchase on home equity to kind of pick up some of the slack as it relates to the home segment. So we feel good about that.

The insurance business, obviously were.

The speed of recovery in that business.

There is some variability.

And that that said.

We're already seeing pretty good trends here in the first quarter that business, we expect to bounce back really nicely from a revenue standpoint.

Q4 into Q1.

And so we feel pretty comfortable about the about the plan there and then the consumer businesses continue to home and get better every quarter.

Candidly if anything what I would tell you is that our guidance does not assume.

Any massive incremental improvement from a lot of the strategic initiatives that we've been talking about and Thats, where our focus is and so to the extent, we can get those things to start clicking and humming.

<unk>.

We feel like there could be some upside if those things hit.

Yes, I think <unk> hit it with the insurance come back but thats.

As we've looked at it and dug into it it's a timing issue so could it be a little later.

Sure.

Then.

You were talking about guidance, but at the same time the business is still really healthy.

And it's coming back so whether it comes back in one month or two months or three months.

It's somewhat dependent on insurance carriers getting approvals from states, but what we're hearing from the from the market from our carriers is that they're chomping at the bit once their new rates get approved that they want to be back.

<unk> with us and we've got it.

You'll see them in the last couple of weeks, we've had a couple of significant client client.

Sort of win backs in terms of volume and so we're starting to see it already and it's really just a matter of time, but from a guidance perspective, I think that's probably the biggest.

Quote unquote uncertainty.

Got it Okay, hey, thanks for the insight.

Thank you Mike.

And there are no further questions.

Great. So I'll just give some closing remarks and then we'll look to see you all next quarter first of all thank you all for your.

Time and attention, we really appreciate and cherish the relationship with our shareholders and with our analysts and we appreciate your support and we also appreciate your comments and you all pushing us.

What I'd say is this I think about our quarter, and where we are and particularly coming off of.

Two years of Covid.

I feel that our strategy is incredibly solid and sound.

We took a lot of time doing it we did a lot of research and we have a United company behind it.

Second the execution of that strategy is working it's working at all levels. It's working all across the company from process to how we are changing the way, we do things to a commitment to the customer.

Third I would say that our employees are energized.

People are ready to get back to work they are ready to continue to build great products, we're ready to.

See this market continue to evolve we feel very confident in our leadership position and our employees are fired up.

And then fourth our brand is strong.

Believe it has never been stronger and as we've seen other companies come and go over the years and we've got another recent.

Spat of those it just shows you the strength of the Lendingtree brand has been built up over 25 years and billions of dollars in ad spend.

All of that adds up to us winning and who are we waiting for we want to win for our partners to grow with us to grow your business with us to build an enduring business around us we want to win for consumers to save money through US give you the right and quick answer to save you money to help you build a better financial.

Life and if we do both of those things. We think there is tremendous shareholder value to be added for.

For all of you and for our shareholders. Thank you very much for your time, we look forward to talking to you soon and have a fantastic day.

Thanks.

Thank you for participating in today's conference call you may now disconnect.