Q2 2022 Lendingtree Inc Earnings Call

July 28, 2022

Good day, and thank you for standing by and welcome to the Lendingtree second quarter 2022 earnings Conference call. At this time, all participants are in a listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

As a question during the session you will need to press one on your telephone keypad. Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Andrew Russell Vice President of Investor Relations. Please go ahead.

Thank you Lee and good morning to everyone joining us on the call. This morning to discuss <unk> second quarter 2000, <unk> financial results on the call today are Doug Lebda, Lendingtree as chairman and CEO J D. Moriarty president of marketplace, MCR trends Ziegler, CFO and Scott Perry.

Net of insurance.

Minor to everyone. We posted a detailed letter to shareholders on our Investor Relations website earlier today and for the purposes of today's call. We will assume that listeners have read that letter and I'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 finally increased expectations for future performance any 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 are available on our website at investors stopped lending tree dot com for the comparable GAAP definition.

Full reconciliations of non-GAAP measures to GAAP.

Doug. Please go ahead, thanks, Andrew and thank you all for joining us today.

Current volatility in the economy has obviously caused pressure on consumer demand for loans and lender demand for new borrowers. Our company has operated through difficult stretches like this in the past and consistently emerged as a stronger and more profitable business. We are in a much better positioned today than ever before to manage our day to day business in this cycle and <unk>.

Also be able to make strategic investments that we committed to earlier and earlier in the year, including to dramatically improve our customer experience drive higher brand awareness and drive new customers to our platform at a time when others are scaling back our updated guidance acknowledges the financial impact of the slowdown in borrower lender an insurance carrier demand.

Despite these headwinds we are forecasting that segment level profit X brand spend will be roughly flat in the third quarter compared to the second quarter, which speaks to the resiliency of our business model.

Our leadership team has remained focused on managing expenses, having reduced head count since the peak of mid 2021 by nearly 15% through targeted workforce reduction a restricted hiring plan and back filling vacant positions sparingly when they occur.

These actions helped to limit operating expense growth to 3% over last year. Despite the current inflationary environment.

This is a unique period for us as a company when two of our three segments are generating trough like revenue due to significant macroeconomic headwinds. However, we are managing the business with a focus on helping our partners when they needed the most while taking purposeful steps to position ourselves to win on the other side of this cycle.

For example, in our homes segment and we are actively working with our largest part mortgage partners to rollout home equity loan products.

Historically have not been a high priority for them.

We know homeowners with historically high levels of equity today are looking to efficiently borrow against it we see that desire and the 62% increase in consumer volume for quotes in the second quarter.

By helping our partners pivot during a challenging point in the cycle, we're improving outcomes for both constituencies.

Handout performer again for us during the quarter was the consumer segment as personal and small business loans grew revenues 68, and 81% over the prior year, respectively. Our pipeline of New <unk> partners continues to grow and we expect to expect to have a few new partners to announce that are going live with us in the third quarter.

The insurance business has been negatively impacted as carrier partners continue chasing inflationary trends with premium increases while.

While the business performed relatively flat quarter over quarter based on ongoing discussions with our partners. We are dialing back our expectations for material growth through the end of this year. However, when insurance companies finally believe they've repriced their policies appropriately for the economic environment, we expect to see a super cycle of consumer shopping emerge here.

Storage and such periods, our business tends to generate returns well above normal for a period of time, we thus remain very often optimistic about the future at quote Wizard.

Finally, I'm very excited about our new Omnichannel marketing campaign, we launched recently, we chose this time to draw attention to the ongoing work of improving the customer experience as we laid out in our Investor day, our financial resilience has allowed for this investment while the steep decline in advertising rates has allowed us to return to brand advertising at a time when it.

It is much more efficient to do so it is still early but we're seeing promising signs of engagement driven by the campaign and we look forward to benefiting from this investment in the months and quarters ahead now operator, please open the line for questions.

Thank you Sir your first question comes from the line of Ryan Tomasello from Keybanc. Please go ahead and ask your question.

Hi, everyone. Thanks for taking the questions.

I appreciate the comments to help contextualize the earnings power of the business.

Was hoping you put a finer point around that specifically when you talk about <unk> being trough earnings capacity does that comment still holds if the macro backdrop weekends and the implications that that would have.

For the consumer segment beyond just the current headwinds in mortgage and insurance and I guess.

Taking a bigger step back.

Realizing the company is operating through numerous cycles, but the business in its current form with.

We added.

Diversification is.

More on testing so it will be helpful to get.

Your thoughts around the puts and takes.

Of a recession performance from the business in its current form.

We're going to trend JD start on the first one and we can all sort of comment on.

On a recession posture and unfortunately, we've lived through that a few times.

Yeah, Hey, Ryan.

I guess, what I'd say is.

So as we thought about as we thought about guidance three months ago right. When we obviously revised our initial guide down a little bit.

At that point, we retained some optimism with regard to the macro and I think our posture around yes.

The outlook for the remainder of the year as.

Sort of removed any any sense of optimism from.

From a macro outlook standpoint, and so we feel like we've got mortgage insurance sort of already operating at near trough levels.

And admittedly consumer has continued to perform well throughout the first half of the year, but I think we've obviously got to be mindful of.

The risks that are that are present, as we think about the recessionary outlook for the rest of the year and so yes.

<unk> certainly done our best to account for that in our outlook for the remainder of the year I think as it relates to what we're seeing in the consumer segment.

Yes first of all I was in particular its interesting alright, what we're seeing is.

Balance sheet lenders in that space continue to.

Okay.

Continue to be active right and desirous of origination.

Some of the lenders in that space that are more reliant on external capital partners.

Our starting to dial back a little bit with regard to their appetite for credit risk and so we're starting to see some of that.

And I guess, what I'd say is we're conscious of that.

Yes.

The possibility for that to get a little bit.

Harder is reflected in our in our current outlook.

What I don't think we're going to see is what we saw in the heat of the pandemic, where basically the appetite for risk just evaporate overnight.

We feel like we've got a little bit better line of sight into sort of how that will trend over the next six months.

In terms of size.

Advertising for risk.

Yes, Ryan I think trend summarized it well as we said at the outset two of three sector is going through a historically bad time.

Shouldnt be lost on everybody that this consumer segment, having a very good year right each of personal personal loan credit card and small business up.

Quarter revenue year on year up $4 22 up 81.

These are having a good year, but as we think about the prospect of a recession in light of the dynamic the credit tightening dynamic that Frank was just talking about we have to adjust our forecast for that segment and thats kind of the only one that doesn't have.

That doesn't have quite the headwinds right. So we've tried to adjust our expectations to put this in context, if a personal loan lender increases their apr's as some of them have recently.

What's going to happen. There is just our close rates will go down because the consumer pull through the borrower borrow a pull through will not be there and as a result, our economic opportunity will shrink a bit.

So that's what we're adjusting for in that guide it doesn't mean that the business is not a healthy business. We're just adjusting as we look at the back half of the year and we think that's the right thing to do.

As it relates to.

As it relates to home, we're thrilled with progress in something like home equity, it's just really hard when the refi pool eligible refi pool is as small as it is we're trying to push on purchased because thats a good opportunity, but it's hard to make up for the paucity of refi.

And then in insurance and Scott can certainly speak to this we.

We just know that.

For the remainder of the year given the inflation struggles.

Not likely to recover and so we're just got to execute and try to do all the right things to be in a better position when that spend comes back.

As you think about as you think about each of home and insurance, we do spend a lot of time internally trying to compare it to previous periods.

The most recent period for for home would be 2018.

Our lenders were laying off loan officers, but certainly the spike in rates was not as significant.

And so it's not a perfect comparison.

And Scott can expand on the last time, the carriers had difficulty here, but it wasn't necessarily tied as much to inflation as it was the operating performance.

And the only thing I'd add on the recession stuff and Scott you if theres anything as you've been through.

Cycles, and recessions and insurance loved to hear.

What happens with typically what you would see us.

In the consumer segment lenders would be demanding less volume.

As they tighten up their credit spectrum.

And our lending less however, a lot of that has already happened in the market as you look at the digital lenders, who have been adjusting underwriting criteria and you see that reflected even though theyre doing that our numbers are obviously doing well. So I think that would hold up better than it normally would and then in home.

In a recessionary environment, you see a huge spike in consumer demand because rates go down and you get a huge refi bonds at the same time, our lenders will moderate.

Their need for us a little bit, but your cost per lead if you will.

<unk> staying the same in your cost per leads going down dramatically and the volume chugging through the system is up dramatically. Your home business typically does very very well and then the thing I would add that JD alluded to in conversion rates. That's why our initiatives are so important the strategic initiatives are so important and just hitting on to there.

<unk>.

At scale and our ongoing digital initiatives to interface more with the.

Major personal loan and credit card lenders if that works. So that's going to have a dramatic improvement in conversion rates. We will just have dramatic pull through to the unit economics and then on mortgage the marketplace 24 project, which we had laid out at the beginning of the year that now being mostly done.

And being optimized from here on out it makes our consumer experience and mortgage much much better and I'm actually proud to say I don't normally say this to folks like you, but go check it out it's actually really good.

If you could our homepage and a lot of times in the past, we haven't been able to be as is proud of our of our mortgage experiences we are right now.

Yes to hit on hit on insurance real briefly insurance industry, it's much more resilient against recession than it would be against inflation you look at the major product lines, whether it's auto or home or help the.

The government <unk> lenders require consumers to have have insurance on all of those products.

So those keep keep going even in a recessionary environment inflation is just where we're at right now and Thats. The top one where the carriers just did not have a lot of confidence and the rates that they are charging consumers and whether those rates are profitable or not wish they have not been for quite some time. So that's the current environment.

As the trough point for insurance.

Thanks, I appreciate all that detail and then on home equity is there a way to frame how much upside there could be there.

Relative to <unk> levels based on the existing partners that you are mentioning that you are working with to onboard and I guess for purchase.

With mortgage rates trickling down from their near 6% high in late June has there been any incremental signs of strength there.

As homebuyers settle into the new environment.

Sure. So Ryan we spend a lot of time internally just talking about home equity just to put this in context, the most recent quarter.

Recent two quarters they are at levels for us that we've just not seen hit.

Historically, so we've seen a real spike there and so then when we look under the Hood, we say, okay. How many of our partners are buying home equity.

And that's up that's up meaningfully in the last two quarters, which is great to see now as we've talked about in the past, we certainly have some lenders.

Who buy a home equity lead meaning a consumer who is enquiring about home equity and they may try to actually.

Talk them into a different product, we recognize that they may try to talk about the merits of cash out refinance and that is some of what is going on it makes it a little bit more challenging to identify the size of the market opportunity. There now certainly I think what is going to occur what is a little bit different about this cycle is the amount of equity.

That people have in their homes and so we are seeing examples of lenders who are in other product lines, who are adding a home equity product, adding a second lien product things like that.

That that would be a great development for us because it's a better product for the consumer or might be a better product for the consumer.

It's just very hard to identify a size of the market for you. There are a bunch of traditional home equity lenders credit unions et cetera, who are not typically our core customer.

They don't do quite as well with with those customer introductions.

We are already at levels.

That I don't think.

Two years ago, we would have thought we would have we would've seen in home equity. So just to give you some sense, we're not forecasting it.

Can't grow to the Sky, we're being somewhat conservative there now they're now as it relates to purchase.

The revenue per lead and purchase is very very strong so we're thrilled with that.

We need to deliver more.

<unk>.

Volume side right now.

In previous cycles, we've done a better job of getting too.

Volume in purchase so that is something that we need to work on and Doug just talked about the improved consumer experience. We think that will be part of it you go through that experience is intended to be.

A bit of a more of a advisory experience what you should expect in the next stage of this process and so we're putting a little bit of friction into the process of filling out your form to make the consumer think about it a little bit more and understand what's coming up next we think thats a better consumer.

Variance, we think it will lead to a better purchase experience.

One of the headwinds that we've had in purchase.

Is declining inventory alright, and so recognize that even though the purchase market is strong.

If inventory is low the ultimate conversion rate will be weak for our purchase lenders.

And so that has been a headwind so as you see signs of inventory loosening up in the housing market.

Probably net a good thing for us in our purchase business.

And the only thing I would add on the JD made the point about RPM increasing lend.

Lenders will switch from refi to purchase as refinance volume goes down, but we're also obviously.

Making concerted efforts there and as that RPM goes up then at some point youll be able to actually market.

Come to Lendingtree for purchase because it won't be profitable today most of that traffic.

Comes in largely.

Sort of drafting off of mostly.

Just broader mortgage stuff and then on home equity.

As JD alluded to with these lenders getting back into it I'm old enough to remember a time when home equity in.

As big as refinance on our business and the Rps, where significantly higher now that was in two.

2005 to eight when obviously credit was sloshing around a little bit, but importantly, it was more related to automation and the fact that these lenders had sunk a lot of money into automating and to be able and which improve conversion rates dramatically, which improved our PL. So.

I would expect that as it comes back.

With the automation Thats happened in the last 10 years. These lenders just need to.

Depots and others just need to remember how to do that but they did that highly highly successfully in the past cycle.

I appreciate all the detail thanks, guys.

Thank you.

Thank you so much and your next question comes from the line of Youssef Squali of Tim.

<unk> Securities. Please go ahead.

Couple of questions I guess in the letter Doug I think you talked to that consumer segment prospects are increasingly uncertain.

That's one of the three businesses that continues to do well for you. So I'm just trying to get a sense of are you seeing anything tangible.

And your business quarter to date or is that just based on the macro concerns that we're all aware of and then.

Maybe stepping back and.

Looking at the.

Kind of the gist of all of the pressures on the.

On the home insurance. So I was wondering if maybe you can help us delineate between macro pressures and perhaps any kind of competitive pressures that are out there and any kind of sense of weather.

How are the market share is kind of being.

Moving at least in the last call it six to nine months. Thank you.

These other guys handle the market share one I'll just start with the <unk>.

Consumer segment.

And I alluded to is a little bit and we know this you can see it from the public.

Personal loan lenders.

They have all pulled in their horns, so to speak bye bye.

By want as they changed their underwriting criteria.

To make up for past sins and by the way you see that and.

And that will happen time to time in all lenders are not the same and that's what makes a marketplace, but as they pull their horns and they raised their APR they raise their rates that theyre going to charge.

And they reduce the.

The increase.

The FICO score that it requires for example, and they up the credit quality.

And all of that then is the negative pressure that you would allude to in that business. If people were running it wide open filters.

Giving subprime borrowers 6% loans it.

It would be a different story. So you just see that at the margins as lenders adjust our underwriting criteria once they get certain of things and as their outlets for loans are there than than they they open up.

They want to all just originate profitably.

And we want to help them, but basically as they pull in the.

The increase in price and the decrease in people that they are willing to offer it to.

And that's the pressure, but by the way.

I think you are you are seeing it now and I think we've mostly seen it and Thats why I said, even in a recession I'd be.

It wouldn't surprise me that things would come in more.

And at times in personal loans, you had the entire capital markets are shut off and then obviously.

<unk> story, but even then the business is pretty resilient to weather through that but I don't see anything like that necessarily happens J D.

All I would add is I mean, if we look for.

We look for the signs of it right. We've seen some tangible signs as Trent pointed out theres some behavior differences between type of lender.

So as <unk> pointed out there is a little bit of tightening of credit box with a couple of key lenders.

They are still active they are still looking to grow it just.

Theyre going to tighten the credit box for you to take up the pricing and keep in mind in personal loans. The majority of our compensation is on the back end based off of our close rates. So we have to prepare for that close rate to be worse. That's that's one and credit card, we watch approval rates.

<unk>.

That's not quite as transparent.

But we watch the approval rates and Thats something we will look at there.

Thats implied certainly in our in our guide as well and I guess I should just emphasize.

Late in the second quarter early here in the third that we have seen this.

At the beginning of that it is not at all.

Trent pointed out I think well earlier.

Like the last time that business went through difficult period because of capital markets concerns. It is it is a very rational kind of tightening which is pretty healthy.

But we have to prepare for how that rolls through our our mix right. The consumer business has been positively affecting our mix. It is a high margin business for us for the most part.

And so we have to prepare for that.

And on the on market share on just.

I don't have specific information at my fingertips, maybe somebody else does.

A couple of anecdotes, obviously in mortgage the market shrinks, we're going to have a rising share of the overall market. However, we don't like to take that to the bank.

And Pat ourselves on the back too much more but what we.

Do like are seeing the signs when for example, one of our major lenders recently cut off all of their other all of our other competitive aggregators slash marketplace sourcing except for Lendingtree.

Which also which goes to show that.

If we can provide enough volume at the right price.

And can they can actually convert it and make money, they're going to as they shrink their marketing budget is just like in times, we shrink hours, we love to be the place that they shrink to last.

And that not only helps our competitive position massively and I think thats, where youll see the share gains now we've got to wait and see how some other companies report but.

And in addition to that when Youre driving volume through.

Through television.

And a.

Our new brand campaign that has amazing not only are you driving high quality volume there, but it also has a halo effect on search which is also high quality, which means that converts for the lenders and that's where our brand enables us to do those things where some of our competitors because of their unit economics arent that high they can't go do that so then they're stuck in.

<unk> land and a little bit of search.

And Doug I'll hit on in insurance real quick just to comment because we're very confident that debt.

In a world, where the marketing dollars pie is shrinking and property and casualty insurance that our piece of the pie is growing by quite a bit our paid search traffic is up 78% year over year.

Traffic is up year over year some of the initiatives I talked about in Investor Day, Our agency business is up 140% year over year are directly quite product is way the volumes way up year over year inbound calls product volumes way up year over year. So we are highly confident in we've been gaining a lot of market share in this environment.

We're set up very well that when the pie starts increasing which inevitably will.

We will have a much bigger piece of that pie.

That's great. Thanks, a lot maybe just one.

Last one if I may in terms of capital allocation can you speak to.

The buyback.

Buyback potential.

How much of it can you do at this point and any any.

Interests, and even having some insider buying to kind of send the right signal down here.

And I'll, let <unk> handle that one.

We're not thrilled with it because we'd love to be buying back stock with takeaway trends, yes, I would just say.

I think we alluded to this a little bit last quarter, but we.

Obviously.

Struck a new credit agreement last fall that enabled us to.

The term loan and pay back the convert maturity that we took care of in the second quarter.

As part of that credit agreement.

There are certain restrictions around things like buybacks and other investments that.

We basically have unlimited capacity buying back the stock if and when our net leverage is sub four times.

As of the end of the quarter were a little bit above that threshold and so we get into sort of a restricted payments bucket that would enable us to be buying back the stock and we have exhausted that capacity in Q4 of last year in Q1 of this year and so our hands are a little bit tied with regard to the buyback now that said.

Yes.

We're happy with the fact that we're sitting here today with nearly $300 million of cash on the balance sheet, where we're actively looking at ways to deploy that cash.

Unfortunately, the buyback option is not really available to us, but we're exploring ways to think about how to how to deploy that cash whether it's M&A whether it's.

Delevering, a little bit and so stay tuned on that front.

Okay. Thanks, guys.

Thank you so much. Your next question comes from the line of Jeremy Jed Kelly.

Oppenheimer. Please go ahead.

Hey, Jed. Thanks, Thanks for taking my question I guess can you talk about the strategic decision.

To invest in brand and you're kind of looking at the numbers it kind of implies youre going to spend about 20.

$25 million or so.

Which I guess given the net leverage with EBITDA is a pretty pretty big decision. So can you talk about the strategic.

The strategy behind that and then when should we expect that TV spend to start to benefit the revenue and.

Margin.

I'll take the first part and then <unk>.

<unk> take the second part.

And just I'll hit the second part a little bit whenever you spend money on TV you have an expected return.

Over a period of time.

And.

We're tracking that now it's too early to know.

But we will I think we will keep you posted but it's typically a six month period as it builds.

And but on the strategic reason I've said in the previous call and you guys have probably heard me say, a 100 times in investor meetings that when we have a customer experience that we're proud of.

And the economics support it but we're going to that we're going to go tell the world about it.

One of our major initiatives. This year was called marketplace, 24, which was a complete revamp of our mortgage experience on the marketplace side.

And we got it done we tested it consumers loved it.

Did a lot more than what we had it was a really interesting thing in that it embraced our phone calls and help consumers negotiate as opposed to trying to eliminate them, which I thought was.

Which was a really interesting.

Innovation.

Product design, the product looks great and so we said alright can we afford it.

And we can.

And AD rates were.

Strawberry low and as we as we all looked around it. We said now is the right time and in addition to that is.

It hits all of the other strategic levers too because I already mentioned the high quality volume for lenders and then in addition to that on the consumer side as rates go up.

The notion of comparison shopping is even that much more important so it's highly highly relevant.

Rising rate environment.

And.

The media buying as I said, it was favorable and when we tested these ads they scored as high as anything.

We've ever run and then interestingly we tested <unk>.

50 different taglines and banks compete you win.

Came out on top so youll see that.

On the.

And they're doing really really well so.

We think that.

It's a breakthrough campaign as monetization improves we think it's a great basis to do more and inside of that $20 million.

About half of it give or ish, maybe a little less is fit.

Fixed cost that you expense one time, so I wouldn't expect that our production cost will be as high in the future and we also have a personal loans bought out of this too.

At a time when.

That business is doing pretty well so.

That was it wasn't a huge number right, but we also wanted to do it at a level of when you run media you got to do it at all you can't just tricking let you got it we have to do it at a level over a period of time, which we're doing.

That you can measure it and see it have an impact and we thought that roughly $10 million in media spend was.

The right number and if it works, we'll keep doing it but it will <unk>.

<unk> go up at some point that did back in the old days. All we did was TV and it made us money every month. So you just got to get your RP.

<unk> to a point where it.

Where it's profitable all we did was TV and it made us money every month. So you just got to get your Rps to a point where it.

Where it is profitable and we.

Nice thing is when you look at all the other fintech.

Doing TV advertising and losing money over it.

We only do it and we're confident that it's actually going to hopefully pay a baffling payback at least breakeven and help all of our other channels and and so we can do that way profitably than any other fintech.

Okay, and then just just as a follow up how much brand should we expecting in <unk>.

Yes, so jed we're.

Doug said right I mean the.

The number of Thats affecting Q3 is about $20 million nearly half of which is really onetime in nature to produce the adds and some of the launching launch expenses and some of the ancillary media around the launch.

The media itself.

Is.

Intended to be very heavy in July and August where we think we're going to get the biggest bang for the Buck around it and then we'll back off of it into Q4 right.

Very intentional in the period of time in which where we're spending the media.

Q4.

Do you think historically about when we've when we've been on air with with campaigns.

It's very light in the fourth quarter because of the cost of media tends to go up because youre competing with retail and other things around the holidays.

And so the current guide doesn't contemplate much if any media spend at all in the fourth quarter currently don't run them out of TV in Q4 for exactly is transit.

Got it thank you.

Thank you so much and your next question comes from the line of John Campbell from Stephens. Please go ahead.

Okay back to the mortgage business.

I think you guys said.

Purchase maybe 6%, that's obviously, implying that refi was down pretty sharply.

I think we can probably back into this but I'm, hoping maybe you could shortcut it but what is the overall mix of purchase versus refi today, maybe what that looked like last year and what you guys expect that makes it look like going forward.

Thank you Ana.

I have it in front of me I'm, just not sure how much we give away.

Okay.

Little bit challenging job because we don't.

To give you a sense.

Closed that number.

The reason I'm pausing is that 6% number.

Yes, what's the 6% John Alright.

That was at a purchase mortgage growth I think that you guys called out in the shareholder letter.

Yeah, so purchase up up 6% year on year, that's right.

But yes, I think we are.

Okay, sorry, I apologize there are two different 6%.

We're talking about 6% of our at home equity RPM, but youre right purchase revenue grew despite volumes being down from a year ago and thats. The ellman scarcity that we've talked about that's right, yes, I think John the declines and the weakness that we're seeing in mortgages, obviously driven by refi right the purchase business remains.

Reasonably resilient relative to obviously the activity that we're seeing in refi, we think the opportunity going forward.

As in purchase for obvious reasons right the rate environment is not going to do us any favors.

I'm, a refi standpoint, and so we've got to lean in on purchasing on home equity.

And that's what you've heard us talk about so far okay.

Okay.

Sorry, we can't be more precise there if we get a little more precise you can back into all kinds of fund numbers that we wouldn't want our competitors.

Understood.

At one point, there was something I cannot remember from the analyst day or maybe in a filing but it seemed like it was obviously very very very refi heavy couple of years ago. I guess the question is do you think you can take purchase over 50% of the mix going forward.

So yes refi is still roughly.

Roughly I believe three X what purchases, but that and that is because the <unk> is roughly <unk>.

Twice as much but as I said.

RPM.

In refi is will come down as J D said, because fewer and fewer borrowers are going to qualify.

And the RPM and purchases going up is a combination of both lenders switching over.

Plus it getting better.

Plus we think.

Then you layer on that we hope our new mortgage experience help that even more.

That's for the future, but yes, you could.

I would want to see that though on growth of purchase as opposed to reduction in refi.

And so they operate somewhat independently, but when you can advertise you pick them up you pick up both.

But it really comes down to is Rpm's climb and that's why we're in our strategic initiatives conversion rates go up and then we can advertise like then we can drive a lot more volume and it's profitable we're going to do it to give you a sense, though we're happy that purchase our pls are where they are they have increased nicely, which is great to.

To give you a sense Q1 refi was approximately three times purchase.

Okay Q2.

<unk> was call it two times purchase overall now the more notable thing is that home equity with.

Was actually bigger than refi.

And so we would love to see purchase.

Move in that direction.

And become the contributor that home equity is.

That's actually an opportunity.

But thats.

That scarcity of inventory.

Headwind that we've been managing.

Okay makes a lot of sense I appreciate that and then on the higher investment spend and obviously a little bit of a reset on the EBITDA.

Given where the kind of investor sentiment is and given I think.

Doug what you mentioned about the cost of immediate seems like now is the time to kind of bounce from that so I totally get that but maybe for trend how should we be thinking about the free cash flow from here I don't know if you've maybe free cash flow conversion off of your adjusted EBITDA as a way to kind of frame that up.

Yes.

No.

Our adjusted EBITDA that we report is actually a really good representation of cash flow.

Starting on adjusted EBITDA back out.

Capex, which is a pretty small number right sub sub $5 million a quarter and that gives you a pretty good proxy for free cash flow.

So.

I mean again as we look into the back half of the year.

Based on that math Q3 might be closer to two.

<unk>.

Breakeven, but as we get back into Q4 with in the absence of the onetime brand spend.

We expect them to continue to generate positive free cash flow.

So basically a reset in EBITDA, but youre still pretty cash generative.

That's right Okay. Thanks, guys.

Thanks, John .

Thank you and your next question comes from the line of Rob Pollock from Autonomous Research. Please go ahead.

Okay.

Robert Your line is now open you can now ask your question.

Hey can you guys hear me.

Now we can yes, okay. Good.

John .

Fantastic. Thank you.

Great. Good morning, just to start on credit card I saw that revenue per approval was up 26%, but.

<unk> itself was only up 22 that implies.

Approvals were down is that an inflection into.

A decline in this quarter and then how do you think about both the volume and the price side of that business going forward.

Or.

I wouldn't read too much into that we mentioned earlier, though that we obviously are watching approvals we've seen.

A bit of an approval.

Approval rate dip in certain with certain of our issuers recognize it as we go into the third quarter, we've got to make sure who tried to.

Launched new travel centric cards and that opportunity is something that is a big trend. So.

That does tend to when there is a launch of a new card or a new orientation for an issuer with a card that has real merit that will be more contributory than just the straight read through of Okay revenue grew 22, 22%, but but but.

<unk> was up 26.

I would focus a little bit more on.

<unk>.

On the.

Opportunity to grow with our.

With our issuers in our key issuers.

It's more important to us.

We did mentioned there have been a couple.

Instances of approval rates.

They've been a bit lower and so that does factor into our guide.

That and what we've seen in personal loans that is.

That is accounted for here.

Okay got it and then.

Yes, yes, and bigger picture I'm hearing that the strategy is one of.

Continued investment to come out better on the other side when trends are better in home and insurance in yes.

In consumer you kind of did that when you spent through the pandemic and that business has definitely been growing but also hasnt really gotten back to 2019 levels.

Im wondering if theres anything that you learned or can take away from the decision and strategy in consumer during the pandemic that you can apply to home and insurance, which are maybe having a tougher time right now.

Okay.

Let me start.

Yes.

So it's interesting we talk about investment in.

I think that word gets tossed around and not by you or us hopefully, but by some other people.

When we're talking about an investment it actually means typically that we're going to lose money on something for a period of time and we expect that to have a return.

And by the way like you can break it down to each of our key strategic initiatives Untack are all investments.

Our chew up a large amount of our tech and product spend that you see on the on our income statement and by the way at some point some of that work ends and then.

Hopefully new ideas come in.

So, but then through the pandemic and all of our marketplaces, you market to the last profitable dollar.

That typically gets you to that 30% overall margin. So if lenders are asking for borrowers and we can source them profitably from any of our marketing channels.

That's what happened so it's not like we went negative and personal loans.

<unk> two <unk>.

Through that because through the pandemic.

There might have been times, where we will go slightly negative on marketing and some particular area and some particular subsegment, but it's really not our practice, we will run the marketplace too.

Every customer and that we can profitably and deliver the volume to lenders that they can actually closed does that make sense.

Yes.

Rob part of the question.

We're happy with the recovery in our consumer segment, there are a bunch of businesses under the Hood, there and you have to.

Recognize as I go through them.

The progress in personal loans, and small business and credit services.

Pretty extraordinary we're actually really thrilled with you look at those businesses on a monthly basis. When you look at the size of the network, we're really happy there.

Card is the one big business that is having it is having a good year, we're on better footing, but when you compare it to 2019 of these tough comparisons.

And by the way that's true of some of our competitors as well.

The environment for card and then the other business.

That's materially behind 2019 at student and that's for reasons that are candidly related to.

Government intervention in student debt situation right. So.

What have we learned from that experience of spending through the pandemic we've learned that.

<unk> got a whether the period you got to be making investments.

Freeze that's whether it's a good business, we knew that the personal loan business the credit card business and small business in particular, where good businesses and we're thrilled with the investment that we put behind them. That's what we're doing in home and that's what we're going to and we're doing it in insurance.

And honestly gas what we learned it is don't get rattled when the market goes away. If you think about what happened in the second quarter of 'twenty. We had every reason to be very concerned about those businesses and the investment has paid off.

Yes.

One other learning as I always got to think about it here, which is during the pandemic.

This is somewhat boring, but operationally, we got better at managing each individual marketplace of whatever loan type and sub segment. It is like when we talked to you guys about home underneath that is purchased mortgage refinance mortgage and home equity and underneath home equity.

<unk> purchased you have found a home and not found a home in underneath refi, you've got different sub segments of that and the ability for us in choppy waters in any one of those things whether it's credit card and so lets take credit card with <unk> with J D was just talking about the marketplace. There is literally down to the card so the J D.

He said somebody wants to put more travel rewards cards out then.

Then we make a market for those cards.

And managing that on a minute by minute day by day basis.

Not entirely automated but much of it is with a great analytics group.

Lot of communication and process, that's what's helping us and insurance by the way Scott can talk to it does that extraordinarily well and I think that marketing and.

And marketplace discipline between the two sides. I think is has enabled us to do better than others in this environment and maximize our earnings and by the way that's how marketplaces work or you just got to keep finding.

You've got to manage each of those areas. So that you can grow the whole grow the whole pie.

Scott anything to add on that.

Yes, I would just say the focus in downturns like what did you.

Really want to control as many high intent consumers as possible.

That are searching for the products that our clients are buying and Thats what were really focused on doing that to get advantage of being part of lendingtree compared to other competitors that maybe single lane products.

You can make these decisions of like I'm going as my monetization has gone down I'm going to make some sacrifices on gross margins to make sure I am continuing to control more and more high intent traffic and that Sam positioned extremely well with the clients because.

That's what they want to spend their money on and then investing in and building the products and improving the products that the clients want to spend money on over the long run.

And I think that's what we're very good at focusing on.

So yes.

Thank you guys that was really helpful.

Thank you so much thanks, Rob.

Your next question comes from the line of Christopher Kennedy with William Blair. Please go ahead and ask your question.

Good morning. This is mark on for Chris just wanted a little more clarity with treat treat qual. So during the analyst day, it was kind of alluded to that.

End of this year early 2023, <unk> was going to be the main form of interaction between our nutrient lenders. So I just wanted to see what is the current progress if that remains on track and if not what's preventing that would put the company on track to accomplish it.

Yes.

So a couple of things, we still have three insurers onboard I'm hopeful that by.

Labor day, we should have three more two of whom are in personal loan.

Emphasize hopeful it tends to be lumpy, we have to work through contracts with issuers.

Ways of working with issuers.

And so I think the most notable thing is that suddenly we will unlock capacity there in the personal loan space not just in credit card now we've also talked about.

Pre qual as mining our base of my Lendingtree consumers, but it needs to be more than that it needs to actually affect cross sell so for instance.

We're testing some things right now where it wont be entirely dependent on my LT, there could be a consumer who comes in for personal loan.

They are either under matched or the match that they get with the personal loan lender is not.

As attractive as they would like and we might be able to say a credit card.

Payable to you through <unk>.

As a better alternative that's that's the promise of it.

I think that we have to the current solution with <unk>.

Where we work with both the issuer and a third party is one solution I think as we go through 2023, youre going to see other methods to better authenticate who that consumer is for the issuer. We have many issuers in the pipeline some of whom have said to us we'd rather work this way.

Direct with you.

And that's fine that's the way the product is going to evolve.

So I think it is.

On track with respect to.

Our internal roadmap it is slightly behind with regard to issuer count.

But I think going into the year, we knew that the Lumpiness was one of the biggest challenges with it.

And Thats fine.

It is a multiyear strategy.

To better identify who the consumer is and there is a theme here right, which is as Scott just referred to high intent traffic with <unk>. What are we doing we're increasing that intent.

By saying to a consumer you are preapproved for this this is available to you don't just come shop, we have already shopped for you.

So if you think on a multiyear basis. This is part of improving that intent and improving what we deliver for our partners. We have no shortage of partners, who want higher intent traffic. It shifts the method of working with them that is what we're working through.

Great. Thank you for that and then one follow up with the.

New experience regarding insurance.

<unk> check up I, just wanted to see how thats driving.

Insurance volumes for the business overall.

Scott why don't you take that.

Yes, yes.

We're in the process of implementing a number of things I would say, it's just very early innings in that it is we are proactively engaged in it and driving the insurance checkups and it is driving volume into our both our call centers that were distributing out both of our internal agency and to our external client call centers carrier call centers as well.

So.

It's been a pretty smooth implementation, but it's very rare.

Early in the Snowball Rolling base.

And JD alluded to cross sell earlier and this was one where.

For better for worse, I think I had this idea, but it was built on something that we had done years ago in the mortgage space.

Basically when we're thinking about our new experience and thinking about how we can integrate insurance like why wouldn't you just say to add somebody going through the homeowners are auto flow would you like a free.

Insurance checkup by the lending tree insurance agency and even if somebody doesn't end up closing a transaction with us.

At least.

Might get.

Get an insurance policy from our agency. So we move that direction instead of down the integration of rates and that stuff, which will happen as well but.

We thought this was a really great flow, but it's honestly, it's so early days.

I have nothing to report yet.

Great. Thank you.

It should but it should be cool.

Alright next question.

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

Hi, Melissa are you with my question.

A lot of them have already been asked but I was hoping to circle back on insurance.

And given some of the optimistic comments that you've made.

About.

Sort of a rebound in that cycle I'm curious I guess my question would be for Scott.

It would seem that the cycle is a bit different.

Particularly impacted by persistent inflation and some of the supply chain issues that could take a couple of years to shake out I guess I'm curious how you think this cycle compares to previous cycles and does this impact sort of the level of confidence that you can have the.

Timeline.

A significant rebound.

Thanks, so much.

Yes, Thanks, Melissa, Yes, I will.

Start just.

Bearing to previous cycles, the last big cycle of 2016 in a big downturn in the insurance industry.

And I would say, yes. This is officially.

Way worse than 2016 was and it's mainly just due to the inflation of 2016, the specific catastrophic catastrophic events.

Around some major weather events that persisted 12 to 18 months that just.

They were able to work through those losses in infants short pulled back short term on marketing and then it was right back to normality.

Worthy inflation has just been a real shock.

<unk> to the industry I would say and they have just.

Late last year, when the driving behavior returned back to normal much quicker than the industry was expecting and they needed to increase the rates back to pre pandemic levels. They went through that and then they just weren't prepared for the inflationary metrics that have now hit in the first half of this year.

Some of the key metrics like cost of used cars cost of car parts labor cost of repair shops time to repair cars.

All of those things are just.

Increased very heavily now is it going to take two years for that to normalize its more of the carriers being comfortable that they are.

Increasing the rate at a similar level to the cost of repairs, increasing so it's more of being comfortable with that they are staying in line with things rather than inflation has to stop.

Get back to normal so.

It's bad right now.

For most of most of what our carriers are telling us is one or two levels.

Carriers are just being very cautious through the end of the year and saying, it's probably into 2023 before they start increasing budgets again and then we've got another category of carriers that are more they're looking at.

The weather this storm season, right now whether youre looking at Hurricanes or forest fires assessed so theres a lot of what the inflation combined with <unk>.

Hopefully no catastrophic events happened. This summer there has taken a really cautious approach and hoping that don't.

Don't have any major catastrophic events the summer and then they would come back maybe even a little bit earlier, maybe even in the fourth quarter, if major whether it doesn't happen, but I don't think.

We're looking at a two year recovery here, but.

But I do think it's going to take some time six plus months before carriers are comfortable that they are that their premiums are consistently running at profitable levels for the consumers are bringing on.

Did that answer your question on Florida.

It does thank you Scott.

Alright, and Thats all the questions rehab.

I would now like to turn the conference back to Doug Lebda for closing remarks.

Thank you very much.

For your time today, and just to close I just want to say that we really pride ourselves of Lendingtree as a company that can both walk and chew gum.

Operationally, we are navigating in one heck of a storm it is.

Not often that you see demand from our partners down across almost all of our products.

However.

The stuff that we've done operationally in our marketing and brand and brand advantage that helps us win in digital and offline channels enables us to keep making money even as some of our competitors.

Might get more challenged and in addition to that at the beginning of the year, we were able to lay out a strategy that several key initiatives that we.

Committed to as a team and committed to our shareholders.

Heard about marketplace 24 in the last couple of weeks and Thats, a big win for our company.

We.

The process was at times cantankerous.

But it got done and we're going to continue to improve that process as we move into our other our other major projects tree quality, you've heard a lot about today is moving in <unk> hosting a three hour meeting after this.

To.

Go even deeper on it you heard a little bit about the insurance agency from Scott.

That is the unit economics are solid it makes sense.

Now, it's a matter of scaling, which obviously takes time.

And making sure that the volume is there and my lending tree and a couple others youre going to hear about shortly.

As we committed to so there's a lot more to come for US. We thank you for your support of Lendingtree. Please know that you've got a.

Team of 1000 people here, who are grinding and working hard every single day too.

To operate this business as efficiently as we can and commit to with our promises to you and we look forward to talking to you in the next quarter.

Thank you presenters and thank you participants for joining US today. This concludes today's conference call you may now disconnect.

Central team.

To raise Johan during Q&A, you can dial one one.

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Good day, and thank you for standing by and welcome to the Lendingtree second quarter 2022 earnings Conference call. At this time, all participants are in a listen only mode.

The speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press one on your telephone keypad. Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Andrew Russell Vice President of Investor Relations. Please go ahead.

Thank you Leila and good morning to everyone joining us on the call. This morning to discuss lending tree second quarter 2020 to financial results on the call today are Doug Lebda, Lendingtree as chairman and CEO J D. Moriarty president of marketplace in CLO Trent Ziegler CFO and Scott.

Ari President of insurance.

As a reminder to everyone. We posted a detailed letter to shareholders on our Investor Relations website earlier today and for the purposes of today's call. We will assume that listeners have read that letter and I'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 funding increase expectations for future.

Any 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 and I refer you to today's press release and shareholder letter both available on our website at investors Dot lending tree dot com for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP.

Doug. Please go ahead, thanks, Andrew and thank you all for joining US today. The current volatility in the economy has obviously cause pressure on consumer demand for loans and lender demand for new borrowers. Our company has operated through difficult stretches like this in the past and consistently emerged as a stronger and more profitable business. We are in a much better.

Our position today than ever before to manage our day to day business in this cycle and also be able to make strategic investments that we committed to earlier and earlier in the year, including to dramatically improve our customer experience drive higher brand awareness and draw new customers to our platform at a time when others are scaling back our.

<unk> guidance acknowledges the financial impact of a slowdown in borrower lender an insurance carrier demand. Despite these headwinds we are forecasting that segment level profit X brand spend will be roughly flat in the third quarter compared to the second quarter, which speaks to the resiliency of our business model.

These actions helped to limit operating expense growth of 3% over last year. Despite the current inflationary environment.

For example in our home segment, we are actively working with our largest part mortgage partners to rollout home equity loan products that historically have not been a high priority for them.

We know homeowners with historically high levels of equity today, our loan to efficiently borrow against it we see that desire and the 62% increase in consumer volume for quotes in the second quarter by helping our partners pivot during a challenging point in the cycle, we're improving outcomes for both constituencies.

The standout performer again for us during the quarter was the consumer segment as personal and small business loans grew revenues 68, and 81% over the prior year respectively.

Our pipeline of new <unk> partners continues to grow and we expect to expect to have a few new partners to announce that are going live with us in the third quarter the.

The insurance business has been negatively impacted as carrier partners continue chasing inflationary trends with premium increases.

Storage and such periods, our business tends to generate returns well above normal for a period of time, we thus remains very often optimistic about the future at quote Wizard.

Thank you. So your first question comes from the line of Ryan Tomasello from Keybanc. Please go ahead and ask your question.

Hi, everyone and thanks for taking the questions.

I appreciate the comments to help contextualize the earnings power of the business.

I was hoping you put a finer point around that specifically when you talk about <unk> being trough earnings capacity does that comment still holds if the macro backdrop weakens and the implications that that would have.

For the consumer segment beyond just the current headwinds in mortgage and insurance and I guess.

Taking a bigger step back.

Realizing the company is operating through numerous cycles, but the business in its current form with.

The added.

Diversification is.

Bit more untested, so it will be helpful to get.

Your thoughts around the puts and takes.

Of a recession performance from the business in its current form.

We're going to trend J D start on the first one and we can all sort of comment on.

On a recession posture and unfortunately, we've lived through that a few times.

Yeah, Hey, Ryan.

I guess, what I'd say is.

As we thought about as we thought about guidance three months ago right. When we obviously revised our initial guide down a little bit.

At that point, we retained some optimism with regard to the macro and I think our posture around.

The outlook for the remainder of the year.

Sort of removed any any sense of optimism from.

From a macro outlook standpoint, and so we feel like we've got mortgage insurance sort of already operating at near trough levels.

And admittedly consumer has continued to perform well throughout the first half of the year, but I think we've obviously got to be mindful of.

The risks that are that are present, as we think about the the recessionary outlook for the rest of the year and so we've certainly done our best to account for that in our outlook for the remainder of the year I think as it relates to what we're seeing in the consumer segment.

Yes first of all I was in particular its interesting right. What we're seeing is.

Balance sheet lenders in that space continue to.

Continue to be active and desirous of origination.

Some of the lenders in that space that are more reliant on external capital partners.

Our starting to dial back a little bit with regard to their appetite for credit risk and so we're starting to see some of that.

And I guess, what I'd say is were conscious of that.

<unk>.

The possibility for that to get a little bit.

<unk> is reflected in our in our current outlook.

What I don't think we're going to see is what we saw in the heat of the pandemic, where basically the appetite for risk just evaporate overnight.

We feel like we've got a little bit better line of sight into sort of how that will trend over the next six months.

In terms of.

Appetite for risk.

Yes, Ryan I think <unk> summarized it well as we said at the outset two of three sector is going through a historically bad time.

Shouldnt be lost on everybody that this consumer segment, having a very good year right each of personal personal loan credit card and small business up.

Second quarter revenue year on year up $4 22 up 81.

Businesses are having a good year, but as we think about the prospect of a recession in light of the dynamic the credit tightening dynamic that trend was just talking about we have to adjust our forecast for that segment and thats kind of the only one that doesn't have.

That doesn't have quite the headwinds right. So we've tried to adjust our expectations to put this in context of our personal loan lender increases their apr's as some of them have recently.

So that's what we're adjusting for in that guide it doesn't mean that the <unk> business is not a healthy business. We're just adjusting as we look at the back half of the year and we think that's the right thing to do.

As it relates to.

<unk>.

As it relates to home, we're thrilled with progress in something like home equity, it's just really hard when the refi pool eligible refi pause as small as it is we're trying to push on purchased because thats a good opportunity, but it's hard to make up for the paucity of refi.

And then in insurance and Scott can certainly speak to this we.

We just know that.

For the remainder of the year given the inflation struggles.

Not likely to recover and so we're just got to execute and try to do all the right things to be in a better position when that spend comes back.

As you think about as you think about each of home and insurance, we do spend a lot of time internally trying to compare it to previous periods.

The most recent period for for home would be 2018.

When our lenders were laying off loan officers, but certainly the spike in rates was not as significant and so it's not a perfect comparison.

Scott can expand on the last time, the carriers had difficulty here, but it wasn't necessarily tied as much to inflation as it was the operating performance.

And the only thing I'd add on the recession stuff and Scott you if theres anything as you've been through.

Cycles, and recessions and insurance loved to hear.

What happens, but typically what you would see us.

In the consumer segment lenders would be demanding less volume.

As they tighten up their credit spectrum.

And our lending less however, a lot of that has already happened in the market as you look at the digital lenders, who had been adjusting underwriting criteria and you see that reflected even though theyre doing that our numbers are obviously doing well. So I think that would hold up better than it normally would and then in home.

In a recessionary environment, you see a huge spike in consumer demand because rates go down and you get a huge refi bonds at the same time, our lenders will moderate.

Their need for us a little bit, but your cost per lead if you will.

<unk> staying the same in your cost per leads going down dramatically and the volume chugging through the system is up dramatically. Your home business typically does very very well and then the thing I'd add that JD alluded to in conversion rates. That's why our initiatives are so important strategic initiatives are so important and just hitting on to there.

<unk>.

At scale and our ongoing digital initiatives to interface more with the.

Major personal loan and credit card lenders if that works. So that's going to have a dramatic improvement in conversion rates, we'll just have dramatic pull through to the unit economics and then on mortgage the marketplace 24 project, which we had laid out at the beginning of the year that now being mostly done.

If you could our homepage and a lot of times in the past, we haven't been able to be as is proud of our maury.

Mortgage experiences we are right now.

Yes to hit on hit on insurance real briefly.

It's much more resilient against recession than it would be against inflation you look at the major product lines, whether it's auto or home or health.

The government <unk> lenders require consumers to have have insurance on all of those products.

So those keep keep going even in a recessionary environment inflation is just where we're at right now and Thats. The top one where the carriers just did not have a lot of confidence and the rates that they're charging consumers and whether those rates are profitable or notwithstanding not been for quite some time. So so so the current environment.

As the trough point for insurance.

Thanks, I appreciate all that detail and then on home equity is there a way to frame how much upside there could be there.

Relative to <unk> levels based on the existing partners that you are mentioning that you are working with to onboard and I guess for purchase.

With mortgage rates trickling down from their near 6% high in late June has there been any incremental signs of strength there.

As homebuyers settle into the new.

Environment.

Sure. So Ryan we spend a lot of time internally just talking about home equity just to put this in context, the most recent quarter.

No.

Recent two quarters they are at levels for us that we've just not seen.

Historically, so we've seen a real spike there and so then when we look under the Hood, we say, okay. How many of our partners are buying home equity.

And that's up that's up meaningfully in the last two quarters, which is great to see now as we've talked about in the past, we certainly have some lenders.

To buy a home equity lead meaning a consumer who is enquiring about home equity and they may try to actually.

That people have in their homes and so we are seeing examples of lenders who are in other product lines, who are adding a home equity product, adding a second lien product things like that.

That that would be a great development for us because it's a <unk>.

Better product for the consumer or might be a better product for the consumer.

It's just very hard to identify a size of the market for you. There are a bunch of traditional home equity lenders credit unions et cetera, who are not typically our core customer.

They don't do quite as well with with those customer introductions.

We are already at levels.

That I don't think.

Two years ago, we would have thought we would have we would've seen in home equity. So just to give you some sense.

We're not forecasting it as if it can grow to the sky, we're being somewhat conservative there now they're now as it relates to purchase.

The revenue per lead and purchase is very very strong so we're thrilled with that.

We need to deliver more on the.

Volume side right now.

In previous cycles, we've done a better job of getting too.

A bit of a more of a advisory experience what you should expect in the next stage of this process and so we're putting a little bit of <unk>.

<unk> into the process of filling out your form to make the consumer think about it a little bit more and understand what's coming up next we think thats a better consumer experience. We think it will lead to a better purchase experience one of the headwinds that we've had in purchase.

Is declining inventory right and so recognize that even though the purchase market is strong.

If if inventory is low the ultimate conversion rate will be weak for our purchase lenders.

And so that has been a headwind so as you see signs of inventory loosening up in the housing market.

Probably net a good thing for us in our purchase business.

And the only thing I would add on the J D made the point about RPM increasing.

Lenders will switch from refi to purchase as refinance volume goes down, but we're also obviously.

Making concerted efforts there and as that <unk> goes up then at some point youll be able to actually market.

Come to Lendingtree for purchase because it won't be profitable today most of that traffic.

It comes in largely.

Drafting off of mostly just broader mortgage stuff and then on home equity.

As J D alluded to with these lenders getting back into it im old enough to remember a time when home equity was as big as refinance on our business and the Rps where significantly higher now that was in <unk>.

2005 to eight when obviously credit was sloshing around a little bit, but importantly, it was more related to automation and the fact that these lenders and sunk a lot of money into automating and to be able in which improve conversion rates dramatically, which improved RPM. So.

I would expect that as it comes back.

With the automation Thats happened in the last 10 years. These lenders just need to.

Loan depots and others just need to remember how to do that but they did that highly highly successfully in the past cycle.

I appreciate all the detail thanks, guys.

Thank you.

Thank you so much and your next question comes from the line of Youssef Squali of <unk> Securities. Please go ahead.

Couple of questions I guess in the letter Doug I think you talked to that consumer segment prospects are increasingly uncertain.

One of the three businesses that continues to do well for you. So I'm just trying to get a sense of are you seeing anything tangible.

And your business quarter to date or is that just based on the macro concerns that we're all aware of and then.

Maybe stepping back.

And looking at the.

Kind of the gist of all of the pressures on the.

On the home insurance. So I was wondering if maybe you can help us delineate between macro pressures and perhaps any kind of competitive pressures that are out there and any kind of sense of weather.

How market share is kind of being.

Moving at least in the last call it six to nine months.

These other guys handle the market share one I'll just start with the <unk>.

Consumer segment.

Alluded to as little bit and we know this you can see it from the public.

Personal loan lenders.

They have all pull than narrow horn, so to speak bye bye.

By want as they changed their underwriting criteria.

To make up for past sins and by the way you see that in.

And they reduce the.

The increase.

The FICO score that it requires for example, and they up the credit quality.

And all of that then is the negative pressure that you would allude to in that business. If people were running it wide open filters and <unk>.

Giving subprime borrowers 6% loans it.

It would be a different story. So you just see that at the margins as lenders adjust their underwriting criteria once they get certain of things and as their outlets for loans are there then.

They open up.

They want to all just originate profitably.

And we want to help them, but basically as they pull in.

The increase in price and the decrease in people that they are willing to offer it to.

And that's the pressure, but by the way.

I think you're you're seeing it now and I think we've mostly seen it and Thats why is that even in a recession and it'd be.

It wouldn't surprise me that things would come in more.

And at times in personal loans, you had the entire capital markets are shut off and then obviously.

Different story, but even then the business is pretty resilient to weather through that but I don't see anything like that necessarily happens JD, yes, all I would add is I mean, if we look for.

We look for the signs of it right. We've seen some tangible signs this trend pointed out theres some behavior differences between type of lender.

As <unk> pointed out there's a little bit of tightening our credit box with a couple of key lenders.

They are still active they are still looking to grow it just.

We're going to tighten the credit box is going to take up the pricing and keep in mind in personal loans. The majority of our compensation is on the back end based off of our close rates. So we have to prepare for that close rate to be worse. That's that's one and credit card, we watch approval rates.

<unk>.

That's not quite as transparent.

But we watch the approval rates and Thats, something we will look at there and so thats implied certainly in our in our guide as well and I guess I should just emphasize.

Late in the second quarter early here in the third that we have seen this.

At the beginning of that it is not at all.

Trent pointed out I think well earlier.

Like the last time that business went through a difficult period because of capital markets concerns. It is it is a very rational kind of tightening which is pretty healthy.

But we have to prepare for how that rolls through our our mix right. The consumer business has been positively affecting our mix. It is a high margin business for us for the most part.

And so we have to prepare for that.

And on the on market share on just.

I don't have specific information at my fingertips, maybe somebody else does.

Couple of anecdotes, obviously in mortgage market shrinks, we're going to have a rising share of the overall market. However, we don't like to take that to the bank.

And Pat ourselves on the back too much more but what we.

Do like are seeing the signs when for example, one of our major lenders recently cut off all of their other all of our other competitive aggregators slash marketplace sourcing except for Lendingtree.

Which also which goes to show that.

If we can provide enough volume at the right price and can.

They can actually convert it and make money, they're going to as they shrink their marketing budgets just like in times, we shrink hours, we love to be the place that they shrink to last.

And that not only that helps our competitive position massively and I think thats, where youll see the share gains now we got to wait and see how some other companies report but.

And in addition to that when Youre driving volume through.

Through television.

In a new brand campaign that has amazing not only are you driving high quality volume there, but it also has a halo effect on search which is also high quality, which means a converts for the lenders and that's where our brand enables us to do those things where some of our competitors because of their unit economics arent that high they can't go do that so.

And they are stuck in affiliate land and a little bit of search.

And Doug I'll hit on insurance real quick just to comment because we are very confident that debt.

In a world, where the marketing dollars pie is shrinking and property and casualty insurance that our piece of the pie is growing by quite a bit our paid search traffic is up 78% year over year.

Seo traffic is up year over year some of the initiatives I talked about at Investor Day, Our agency business is up 140% year over year are directly quite product is way the volumes way up year over year inbound calls product volumes way up year over year. So we are highly confident in we've been gaining a lot of market share in this environment.

And that we're set up very well that when the pie starts increasing which inevitably will.

Have a much bigger piece of that pie.

That's great. Thanks, a lot maybe just one last one if I may in terms of capital allocation can you speak to.

Two.

The buyback.

Buyback potential.

How much of it can you do at this point and any any.

Interests, and even having some insider buying to kind of send the right signal down.

Down here.

And I'll, let <unk> handle that one.

<unk>.

We're not thrilled with it because we'd love to be buying back stock with takeaway trends.

Yes, I would just say.

I think we alluded to this a little bit last quarter, but we.

Obviously.

Struck a new credit agreement last fall that enabled us to.

The term loan and pay back the convert maturity that we took care of in the second quarter as part of that credit agreement.

There are certain restrictions around things like buybacks and other investments that.

Sure.

We basically have unlimited capacity buying back the stock.

And when our net leverage is sub four times.

As of the end of the quarter were a little bit above that threshold and so we get into.

Have a restricted payments bucket that would enable us to be buying back the stock and we have exhausted that capacity in Q4 of last year in Q1 of this year and so our hands are a little bit tied with regard to the buyback now that said.

We're happy with the fact that we're sitting here today with nearly $300 million of cash on the balance sheet.

We're looking at ways to deploy that cash.

Unfortunately, the buyback option is not really available to us, but we're exploring ways to think about how to how to deploy that cash whether it's M&A whether it's.

Delevering, a little bit and so stay tuned on that front.

Okay. Thanks, guys.

Thank you so much. Your next question comes from the line of Kelly Jed Kelly.

From Oppenheimer. Please go ahead.

Hey, Jed. Thanks, Thanks for taking my question I guess can you talk about the strategic decision to.

To invest in brand and kind of looking at the numbers it kind of implies youre going to spend about <unk>.

$25 million or so.

Which I guess given the net leverage with EBITDA is a pretty pretty big decision. So can you talk about the strategic.

The strategy behind that and then when should we expect that TV spend to start to benefit the revenue and.

Margin.

I'll take the first part and then let <unk>.

<unk> take the second part.

And just I'll hit the second part a little bit whenever you spend money on TV you have an expected return.

Over a period of time.

<unk>.

We're tracking that now it's too early to know.

But we will I think we will keep you posted but it's typically a six month period as it builds.

And but on the strategic reason I've said in the previous call and you guys have probably heard me say, a 100 times in investor meetings that when we have a customer experience that we're proud of.

And the economics support it but we're going to that we're going to go tell the world about it and one of our major initiatives. This year was called marketplace 24, which was a complete revamp of our mortgage experience on the marketplace side.

And we got it done we tested it consumers loved it.

Liked it a lot more than what we had it was a really interesting thing in that it embraced our phone calls and help consumers negotiate as opposed to trying to eliminate them, which I thought was.

Which was a really interesting.

Innovation.

Product design, the product looks great and so we said alright can we afford it.

And we can.

And AD rates were extraordinarily low and as we as we all looked around it. We said now is the right time and in addition to that as it hits all of the other strategic levers too because I already mentioned the high quality volume for lenders and then in addition to that on the consumer side is <unk>.

Rates go up.

The notion of comparison shopping is even that much more important so it's highly highly relevant.

Rising rate environment.

The media buying as I said, it was favorable and when we tested these ads they scored as high as anything that we've ever run and then interestingly we tested.

50 different taglines and when banks compete win still came out on top so youll see that on the ads and they are doing really really well so.

We think that.

It's a breakthrough campaign as monetization improves we think it's a great basis to do more and inside of that $20 million.

I'll, let half of it give or ish, maybe a little less is.

Fixed cost that you expense one time, so I wouldn't expect that our production cost will be as high in the future and we also have a personal loans bought out of this too.

At a time when.

That business is doing pretty well so.

That was it wasn't a huge number right, but we also wanted to do it at a level of when you run media you got to do it at all you can't just trickle that you got it we have to do it at a level over a period of time, which we're doing.

That you can measure it and see it have an impact and we thought that roughly $10 million of media spend was the right number and if it works, we'll keep doing it but it will.

As Rpms go up at some point that did back in the old days. All we did was TV and it made US money every month. So you just got to get your Rps to a point where it.

Where it's profitable all we did was PV and it made us money every month. So you just got to get your Rps to a point where it.

Where it is profitable and we.

Nice thing is when you look at all the other fintech doing TV advertising and losing money over it.

We only do it more confident that its actually going to hopefully pay baffling payback at least breakeven and help all of our other channels and and so we can do that way profitably than any other fintech.

Okay, and then just just as a follow up how much brand should we expecting in <unk>.

Yes Jed.

As Doug said I mean the.

The number that's affecting Q3 is about $20 million nearly half of which is really onetime in nature that produced the adds and some of the launching launch expenses and some of the ancillary media around the launch.

The media itself.

Is.

Intended to be very heavy in July and August where we think we're going to get the biggest bang for the Buck around it and then we'll back off of it into Q4 right.

Very intentional in the period of time in which where we're spending the media.

Q4.

You think historically about when we've when we've been on air with with campaigns.

It's very light in the fourth quarter, because the cost of media tends to go up because youre competing with retail and other things around the holidays.

And so the current guide doesn't contemplate much if any media spend at all in the fourth quarter. Currently don't run a lot of television in Q4 for exactly is transit.

Got it thank you.

Thank you so much and your next question comes from the line of John Campbell from Stephens. Please go ahead.

Okay back to the mortgage business.

I think you guys had.

Purchased maybe 6%, that's obviously, implying that refi is down pretty sharply.

I think we can probably back into this but I'm, hoping maybe you could shortcut it but what is the overall mix of purchase versus refi today, maybe what that looks like last year and what you guys expect that mix to look like going forward.

I have it in front of me I'm, just not sure how much we give away.

It's a little bit challenging job because we don't.

To give you a sense.

We disclosed that number.

The reason I'm pausing is that 6% number.

Yes, what's the 6% John Alright, the 6% that was the purchase mortgage growth I think that you guys called out in the shareholder letter.

Yeah, so purchase up up 6% year on year, that's right.

But yes, I think we are.

Okay, sorry, I apologize there are two different 6%. So we are talking about 6% or at home equity RPM, but youre right purchase revenue grew.

Despite volumes being down from a year ago and Thats the element scarcity that we've talked about that's right, yes, I think John the declines.

Weakness that we're seeing in mortgages, obviously, driven by refi right the purchase business remains.

Reasonably resilient relative to obviously the activity that we're seeing in refi, we think the opportunity going forward.

As in purchase for obvious reasons right.

Rate environment is not going to do us any favors from from.

From a refi standpoint, and so we've got to lean in on purchase and on home equity.

And that's what you've heard us talk about so far okay.

Okay.

Sorry, we can't be more precise there if we get a little more precise you can back into all kinds of fund numbers that we wouldn't want our competitors.

Understood.

At one point, there was something I cannot remember from the analyst day or maybe in a filing but it seemed like it was obviously very very poor.

Very refi heavy couple of years ago. I guess the question is do you think you could take purchase over 50% of the mix going forward.

Well, yes, refi is still rough.

Roughly I believe three X what purchases, but that and that is because the RPI was roughly <unk>.

Twice as much but as I said, but the RPI.

In refi will come down as J D said, because fewer and fewer borrowers are going to qualify.

On the and the RPM on purchases going up is a combination of both lenders switching over.

Plus it getting better.

Plus we think.

Then you layer on that we hope our new mortgage experience something even more but that's for the future, but yes, you could.

I would want to see that though on growth of purchase as opposed to reduction in refi.

And so they operate somewhat independently, but when you can advertise you pick them up you pick up both.

But it really comes down to is rpm's climb and Thats why were in our strategic initiatives conversion rates go up and then we can advertise like then we can drive a lot more volume and it's profitable we're going to do it to give you a sense, though we're happy that purchased Rps are where they are they have increased nicely which is great.

To give you a sense Q1 refi was approximately three times purchase.

Okay Q2.

Refi was call it two times purchase overall now the more notable thing is that home equity with.

It was actually bigger than refi.

And so we would love to see purchase.

Ill move in that direction.

And become the contributor that home equity is.

That's actually an opportunity.

But thats.

That.

Inventory.

Wind that we've been managing.

Okay makes a lot of sense I appreciate that and then on the higher investment spend and obviously a little bit of a reset on the EBITDA.

Given where the kind of investor sentiment is and given I think.

Doug what you mentioned about the cost of media. It seems like now is the time to kind of bounce from that so I totally get that but maybe for trend how should we be thinking about the free cash flow from here I don't know if you've maybe free cash flow conversion off of your adjusted EBITDA as a way to kind of frame that up.

Yes.

No.

<unk>.

Our adjusted EBITDA that we report is actually a really good representation of of cash flow.

Starting with adjusted EBITDA back out.

Capex, which is a pretty small number right sub sub $5 million a quarter and that gives you a pretty good proxy for free cash flow.

And so.

Many.

Again, as we look into the back half of the year.

Based on that math Q3 might be closer to two.

Breakeven, but as we get back into Q4 with in the absence of the onetime brand spend.

Fully expect them to continue to generate positive free cash flow.

Basically a reset in EBITDA, but you are still pretty cash generative.

That's right Okay. Thanks, guys.

Thanks, John .

Thank you and your next question comes from the line of Rob Pollock from Autonomous Research. Please go ahead.

Robert Your line is now open you can now ask your question.

Hey can you guys hear me.

Now we can yes, okay. Good.

John .

Fantastic. Thank you great.

Great. Good morning, just to start on credit cards I saw that revenue per approval was up 26%, but revenue itself was only up 22 that implies.

The approvals were down is that an inflection into.

A decline in this quarter and then how do you think about both the volume and the price side of that business going forward.

Or.

I wouldn't read too much into that we mentioned earlier, though that we obviously are watching approvals we've seen.

A bit of an approval.

Approval rate dip in certain with certain of our issuers recognize that as we go into the third quarter, we've got to make sure who tried to.

Launched new travel centric cards and that opportunity is something that is a big trend. So.

<unk> was up 26.

I would focus a little bit more on.

<unk>.

On the.

Opportunity to grow with our.

With our issuers in our key issuers.

It's more important to us.

We did mentioned there have been a couple.

Instances of approval rates.

There's been a bit lower and so that does factor into our guide.

That and what we've seen in personal loans that is.

That is accounted for here.

Okay got it and then I can answer your question.

Yes, yes, and bigger picture I'm hearing that the strategy is one of.

Continued investment to come out better on the other side when trends are better.

Home and insurance in.

In consumer you kind of did that when you spent through the pandemic and that business has definitely been growing but also hasnt really gotten back to 2019 levels.

Sure.

Let me start.

Yes.

So it's interesting we talk about investment in.

I think that word gets tossed around not by you or us hopefully, but by some other people.

When we're talking about an investment it actually means typically that we're going to lose money on something for a period of time and we expect that to have a return.

And by the way like you can break it down to each of our key strategic initiatives on Tac are all investments.

<unk>.

<unk> Chew up a large amount of our tech and product spend that you see on the on our income statement and by the way at some point some of that work ends and then.

Hopefully new ideas come in.

So, but then through the pandemic and in all of our marketplaces.

To the last profitable dollar that typically gets you to that 30% overall margin. So if lenders are asking for borrowers and we can source them profitably from any of our marketing channels that that's what happened. So it's not like we went negative in person.

Loans.

Two.

Through that because through the pandemic.

There might have been times, where we will go slightly negative on marketing and some particular area and some particular subsegment, but it's really not our practice, we we run the marketplace to get every customer and that we can profitably and deliver the volume to lenders that they can actually closed does that make sense.

Yes.

Rob part of the question.

We're happy with the recovery in our consumer segment, there are a bunch of businesses under the Hood, there and you have to.

Recognize as I go through them.

The progress in personal loans, and small business and credit services.

Pretty extraordinary we're actually really thrilled, but if you look at those businesses on a monthly basis and you look at the size of the network. We are really happy there card is the one big business that is having it is having a good year, we're on better footing, but when you compare it to 2019 of these tough comparisons.

And by the way that's true of some of our competitors as well.

Just because the environment for card and then the other business.

That's materially behind 2019, and student and that's for reasons that are candidly related to.

The government intervention and student debt situations right. So.

What have we learned from that experience of spending through the pandemic we've learned that.

You've got to weather the period, you got to be making investments.

Don't freeze that's whether it's a good business, we knew that the personal loan business credit card business and small business in particular, where good businesses and we're thrilled with the investment that we put behind them. That's what we're doing in home and that's what we're going to and we're doing an insurance and.

And so.

Honestly, what we learned it is don't get rattled when the market goes away. If you think about what happened in the second quarter of 'twenty. We had every reason to be very concerned about those businesses and the investment has paid off.

I have one other learning as I always got to think about it here, which is during the pandemic and this is somewhat boring, but operationally, we got better at managing each individual marketplace of whatever loan type and sub segment. It is like when we talked to you guys about home underneath that.

Is purchased mortgage refinance mortgage and home equity and underneath home equity underneath purchased you have found a home and not found a home in underneath refi, you've got different sub segments of that and the ability for us in choppy waters in any one of those things whether it's <unk>.

Credit card and so lets take credit card with Jay with JD was just talking about the marketplace. There is literally down to the card. So as J D said somebody wants to put more travel rewards cards out than then we make a market for those cards and managing that on a minute by minute day by day basis.

Not entirely automated but much of it is with a great analytics group and a lot of communication and process, that's what's helping us and insurance by the way Scott can talk to it does that extraordinarily well and I think that marketing and.

And marketplace discipline between the two sides I think is has enabled us to do better than others in this environment and maximize our earnings.

And by the way, that's how marketplaces work or you just got to keep finding.

You've got to manage each of those areas. So that you can grow the whole grow the whole pie.

John anything to add on that.

Yes, I would just say the focus in downturns like what did you you just really want to control as many high intent consumers as possible.

That are searching for the products that our clients are buying and that's what we're really focused on doing that to get an advantage of being part of lendingtree compared to other competitors that may be single Lane products is you can make these decisions of like I'm going as my monetization has gone down I'm going to make some sacrifices on gross.

To make sure I'm continuing to control more and more high intent traffic and Thats I am positioned extremely well with the clients because.

That's what they want to spend their money on and then investing in and building the products and improving the products that the clients want to spend money on over the long run.

And I think that's what we're very good at focusing on.

So yes.

Thank you guys that was really helpful.

Thank you so much thanks, Rob.

Your next question comes from the line of Christopher Kennedy with William Blair. Please go ahead and ask your question.

Good morning. This is mark on for Chris just wanted a little more clarity with treat treat qual showed during the analyst day, it was kind of alluded to that buy.

End of this year early 2023, <unk> was going to be the main form of interaction between lendingtree and lenders. So I just wanted to see with the current progress if that remains on track and if not let's preventive added while we put the company on track to accomplish it.

Yes.

So a couple of things, we still have three insurers onboard I'm hopeful that by.

Labor day, we should have three more to houma and personal loan.

Emphasize hopeful it tends to be lumpy, we have to work through contracts with issuers.

Ways of working with issuers.

And so I think the most notable thing is that suddenly we will unlock capacity there in the personal loan space not just in credit card now we've also talked about.

At <unk> as mining our base of my Lendingtree consumers, but it needs to be more than that it needs to actually affect cross sell so for instance.

We're testing some things right now where it wont be entirely dependent on my LT, there could be a consumer who comes in for personal loan.

They are either under matched or the match that they get with the personal loan lender is not.

<unk>.

As attractive as they would like and we might be able to say.

Card.

Available to you through <unk>.

As a better alternative that's that's the promise of it.

I think that we have to the current solution with <unk>.

Direct with you.

And that's fine that's the way the product is going to evolve.

So I think it is.

On track with respect to.

Our internal roadmap it is slightly behind with regard to issuer count.

But I think going into the year, we knew that the Lumpiness was one of the biggest challenges with it.

And Thats fine.

It is a multiyear strategy.

To better identify who the consumer is and there is a theme here right, which is as Scott just referred to high intent traffic with <unk>. What are we doing we're increasing that intent.

By saying to a consumer you are preapproved for this this is available to you don't just come shop, we have already shopped for you.

Great. Thank you for that and then one follow up with the.

New experience regarding insurance and the insurance checkup I just wanted to see how thats driving.

Insurance volumes for the business overall.

Scott why don't you take that.

Yes.

We're in the process of implementing a number of things I would say, it's just very early innings in that it has we're proactively.

Engaged in it and driving the insurance checkups or it is driving volume into our both our call centers that were distributing out both of our internal agency and to our external client.

All centers carrier call centers as well so.

It's been a pretty smooth implementation, but it's very rare.

Early in the Snowball Rolling base.

Yes, and Jamie alluded to cross sell earlier and this was one where.

For better for worse, I think I had this idea, but it was built on something that we had done years ago in the mortgage space.

Basically when we're thinking about our new experience and thinking about how we can integrate insurance.

Why wouldn't you just say to add somebody going through the homeowners are auto flow would you like a free.

<unk> check out by the lending tree insurance agency and even if somebody doesn't end up closing a transaction with us.

At least the might get.

Get an insurance policy from our agency. So we move that direction instead of down the integration of rates and that stuff, which will happen as well, but we.

We thought this was a really great flow, but it's honestly, it's so early days.

I have nothing to report yet.

Great. Thank you for that but it should but it should be cool alright next question.

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

Hi, Melissa My question.

A lot of them have already been asked but I was hoping to circle back on insurance.

And given some of the optimistic comments that you've made.

About.

Sort of a rebound in that cycle I'm curious I guess my question would be for Scott.

It would seem that the cycle is a bit different.

This particularly impacted by persistent inflation and some supply chain issues that could take a couple of years to shake out I guess I'm curious how you think this cycle compares to previous cycles and does this impact sort of the level of confidence that you can have the.

Timeline.

A significant rebound.

Thanks, so much.

Yes, Thanks, Melissa Yes, I'll start just comparing to previous cycles. The last big cycle of 2016 in a big downturn in the insurance industry.

And I would say, yes. This is officially.

Worse in 2016 was and it's mainly just due to the inflation of 2016.

Specific catastrophic catastrophic you've been.

Around some major weather events that persisted 12 to 18 months that just.

They were able to work through those losses and input short pull back short term on marketing and then it was right back to normality.

Worthy inflation has just been a real shock.

<unk> to the industry I would say and they have just.

Some of the key metrics like cost of used cars cost of car parts labor cost of repair shops time to repair cars all of those things are just.

Increased very heavily now is it going to take two years for that to normalize its more of the carriers being comfortable that they are increasing.

Increasing the rates.

Similar level to the.

The cost of repairs, increasing so it's more of being comfortable with that they are staying in line with things rather than inflation has to stop or to get back to normal so.

It's bad right now in for most of it most of what our carriers are telling US. This is one of two levels certain carriers are just being very cautious through the end of the year and saying, it's probably going be 2023 before they start increasing budgets again and then we've got another category of carriers that are more they are looking at.

The weather this storm season right now whether you are looking at hurricanes or forest fires assessed so theres a lot of what the inflation combined with.

Hopefully no catastrophic events happened this summer that we're taking a really cautious approach and hoping that we're not don't have any major catastrophic events the summer and then.

It would come back maybe even a little bit earlier, maybe even in the fourth quarter, if major whether it doesn't happen, but I don't think.

We're looking at a two year recovery here, but but but I do think it's going to take some time six plus months before carriers are comfortable that they are that their premiums are consistently running at profitable levels for the consumers are bringing on.

Did that answer your question. It does thank you Scott.

Alright, and Thats all the questions Rehabs.

I would now like to turn the conference back to Doug Lebda for closing remarks.

Thank you very much.

Thanks for your time today.

Just to close I, just want to say that we really pride ourselves of Lendingtree as a company that can both walk and chew gum.

Operationally, we are navigating in one heck of a storm it is.

Not often that you see demand from our partners down across almost all of our products How's.

However.

The stuff that we've done operationally in our marketing and brand vans brand advantage that helps us win in digital and offline channels enables us to keep making money even as some of our competitors.

Might get more challenged and in addition to that at the beginning of the year, we were able to lay out a strategy that several key initiatives that we.

Committed to as a team and committed to our shareholders.

Heard about marketplace 24 in the last couple of weeks and Thats, a big win for our company.

We.

The process was at times cantankerous.

Good to.

Go even deeper on it you heard a little bit about the insurance agency from Scott.

That is the unit economics are solid it makes sense and now it's a matter of scaling, which obviously takes time.

And making sure that the volume is there and my lending tree and a couple of others youre going to hear about shortly.

As we committed to so there's a lot more to come for US. We thank you for your support of Lendingtree. Please know that <unk> got a team of 1000 people here, who are grinding and working hard every single day too.

To operate this business as efficiently as we can and commit to with our promises to you and we look forward to talking to you in the next quarter.

Thank you presenters and thank you participants for joining US today. This concludes today's conference call you may now disconnect.

Q2 2022 Lendingtree Inc Earnings Call

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