Q3 2023 LendingTree Inc Earnings Call
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Good day, and thank you for standing by and welcome to lending tree Incorporated's third quarter 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone you will then hear an automated.
It binds in your hand as race to withdraw your question. Please press star one again, 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 Investor Relations. Please go ahead Sir.
Thank you Donna and good morning to everyone joining us on the call to discuss Lendingtree third quarter 2023 financial results on the call today are Doug Lebda lend increased chairman and CEO Scott Perry.
<unk> and president of marketplace businesses and tried to Ziegler CFO.
As a reminder to everyone. We posted a detailed letter to shareholders on our Investor Relations website earlier today and for the purposes of the call. We will assume that listeners read that letter and we will focus on Q&A before I hand, the call over to Doug for his remarks, I'll remind everyone that during today's call. We may discuss while 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 and I refer you to today's press release and shareholder letter both available on our website for the comparable.
GAAP definitions and full reconciliations of non-GAAP measures to GAAP, but that Doug. Please go ahead.
Thank you Andrew and thank you to all of you who are joining us today.
We earned $22 million of adjusted EBITDA in the third quarter generating a 14% operating margin, which was at the high end of our forecast. We again generated strong segment margins in both consumer and insurance and continued to benefit from our focus on operating efficiency, we remain soundly profitable with a strong balance with a strong balance sheet.
Despite the significant revenue challenges, we've been navigating over the last few quarters.
We have made significant changes at the company.
Notably, including our senior leadership positions, our operating expenses have decreased by 30% from peak from.
From peak levels, thanks to proactive cost initiatives taken by management, which should generate strong operating leverage in a recovering revenue scenario.
We have redesigned our product function with dedicated project project staffing and clearly defined quarterly goals.
By group that are tracked and published internally so that all employees can follow them.
Finally, we focused our resources on optimizing our core marketplace business and remove distractions from our employees to accomplish targeted BMD improvements.
For example, during the quarter, we identified areas, where we can increase monetization of consumer traffic through more effective routing and cross selling.
Also we began recently live testing with six credit card issuers for a redesigned <unk> platform.
It is the first service to offer full credit prequalification to <unk>.
<unk> consumer traffic with complete fraud protection enabled by our partnership with the top credit Bureau.
<unk> has received significant interest from top credit card issuers in combination with them with the margin enhancements, we've seen from our Lightspeed implementation. We are quite optimistic about how our credit card business can improve going forward as we work and grow share in this very large market.
Our outlook for insurance has improved significantly over the last quarter. We know from publicly available data that we are taking share from competitors over a year ago, our team committed to delivering the highest quality volume in the face of reduced demand from carriers that focus on quality and meeting each one of our insurance partners, where they needed us most drove those mark.
Share gains.
Recent conversations with the marketing teams at large carriers reinforced that we are accounting for an increased portion of their budgets.
<unk> also have indicated that underwriting results are supportive of increased marketing for customer acquisition, which we expect will be in the very near term.
We aim to continue increasing our share of their growing budgets, which would provide a material uplift to our earnings profile.
Operator: Today, and thank you for standing by.
We are also acutely aware of the pressure our July 2025 convertible note maturity has on our share price.
Operator: Welcome to LendingTree Inc, third quarter, 2023 Ernie's conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session to ask a question during the session. You'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To author your question, please press star 11 again. Please be advised that today's conference is being recorded.
The management team continues to explore a variety of paths to replace this debt with capital those extended that has an extended maturity profile, providing with providing us with an additional time.
There are numerous actions to improve the business to take hold and now operator I'd be happy to open up for questions.
Operator: I would now like to hand the conference over to your speaker. [inaudible] you. Thank you. [inaudible] Thank you. Thank you.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone to withdraw.
Question. Please press Star one again, please wait for your name to be announced please standby, while we compile the Q&A roster one moment for your first question. Please.
Okay.
Our first question comes from the line of Jed Kelly with Oppenheimer <unk> Company. Your line is now open.
Hey, great. Thanks, Thanks for taking my question just two if I may just just digging into the consumer segment I think personal loans were down.
Can you just talk about the competition in that segment I mean, one of your one of your competitors reported last week had pretty strong results in that product. So can you talk about the competition and then just circling back to.
The convertible can you talk about the cash flow the cash flow profile I think <unk> is typically your strongest free cash flow profile, how much cash you need to run the business I think you said $50 million historically and where we are in terms of wanting to get the debt refinance.
Yes, Scott if you could take the first one there and then trying to if you could take the second one.
Yes, yes sure absolutely.
Good morning.
Starting off on the consumer side with.
With the personal loan.
Yes.
Or is there a credit card small business loans.
Over the past 18 months.
Great.
Our client with our clients monetization has come down we've done a good job of maintaining our traffic levels and controlling our marketing expenses to make equal to and often greater margins on the traffic. So I would say.
You will look at our consumer volume has generally remained fairly steady over that time period.
<unk> seen a drop in revenue tied to the monetization for consumer so where we're focusing now.
Is it improving our monetization per consumer we've historically been a very specific product search focused company.
I would say that what I mean is if you are searching for a personal loan we're going to try really hard to give you a personal loan.
Now shifting to more of a solution based model, where if you are looking for a personal loan we're going to try to get your personal loans, but maybe a home equity loan is a better option, maybe you can't get a personal loan, but you can get a credit card maybe your debt relief candidate if you own a car maybe you can get a cash out refi on your car loans et cetera et cetera.
We have a lot of ways to help solve consumer problems.
The problem being seeking seeking money, we have distinct advantages in the industry being that we have.
Douglas Lebda: [inaudible] Tree Qual has received significant interest from top credit card issues. In combination with the margin enhancements we've seen from our light speed implementation, we are quite optimistic about how our credit card business can improve going forward as we work and grow share in this very large market.
Direct client relationships and distribution in so many different financial industry. So we just need to be better as solution Inc.
Cross the board and cross selling into other products and that will be a win win win across the board, which will provide a better options to consumers being more high quality leads for our clients and see increased monetization and most importantly for us which lets us.
Cranked up the marketing flywheel to start increasing the traffic coming through through our network of sites.
I think as.
Maybe one of the Big key gas is where there is a lot of consumer demand out there, we just need that marketing flywheel to kick back in to start driving more of those consumers to our sites specifically.
Douglas Lebda: Our outlook for insurance has improved significantly over the last quarter. We know from publicly available data that we are taking share from competitors. Over a year ago our team committed to delivering the highest quality volume in the face of reduced demand from carriers. That focus on quality and meeting each one of our insurance partners where they needed us most throughout those market share gains. Recent conversations with the marketing teams at large carriers reinforce that we are accounting for an increased portion of their budgets.
Alright.
Yes.
I guess on your question around cash flow.
Yes.
Yes, obviously.
Remained solidly profitable right and the ZIP code of 15 to $20 5 million of EBITDA every quarter are that EBITDA converts to cash flow at a really healthy clip and save for.
Douglas Lebda: Carriers also have indicated that underwriting results are supportive of increased marketing for customer acquisition which we expect will be in the very near term. We aim to continue increasing our share of their growing budgets which would provide a material uplift to our earnings profile.
A little bit of capitalization expense and then obviously our ongoing interest burden.
That EBITDA basically converts one for one and so we feel really good about our cash flow position.
Douglas Lebda: We are also acutely aware of the pressure our July 2025 convertible note maturity has on our share price. The management team continues to explore a variety of paths to replace this debt with capital that has an extended maturity profile, providing us with an additional time for our numerous actions to improve the business to take hold.
And are optimistic that we're sort of at the bottom here and are positioned for things to get better as we head into next year.
Okay. Thank you.
Thank you one moment for our next question. Please.
And our next question comes from the.
Operator: Now operator, I would be happy to open it for questions. Thank you. As a reminder to ask a question you will need to press star 11 on your telephone. To withdraw your question please press star 11 again. Please wait for your name to be announced. Please stand by when we compile the Q&A roster.
The line of Ryan Thomas <unk> with <unk>. Your line is now open.
Good morning, everyone. Thanks for taking the questions.
Was hoping you can put a finer point just elaborating on the comments from your prepared remarks around what youre seeing from carriers regarding the 2020 for their 2024 growth plans.
Operator: One moment for our first question please.
Jed Kelly: Our first question comes from the line of dead Kelly with Oppenheimer and company. Your line is now open. Hey, Greg, great. Thanks for taking my question. Just two if I may. Just just digging into the consumer segment. I think personal loans were down. Can you just talk about the competition in that segment? I mean, one of your competitors that reported last week had had pretty strong results in that product.
Obviously, a recovery in the insurance business seems like the area you have most visibility around so I guess it would just be helpful. If you could provide some guardrails around the different scenarios for that business next year.
How fast it could inflect.
Scott Peyree: Can you talk about the competition and then just circling back to the convertible? Can you talk about the cash flow profile? I think 4Q is typically your strongest free cash flow profile. How much cash you need to run the business? I think you said 50 million historically and where we are in terms of wanting to get the debt refinance. Thanks.
The margin profile, whether that's sustainable is as.
As competition increases for that traffic and just generally how you feel about the competitive positioning.
The ability to take share.
Sure as wallets increase.
So I'll just hit the high level, and then hand, it off to Scott.
He and his team.
<unk> just done a magnificent job.
Sure.
We think the margin profile can while probably not stay.
As you as your marketing flywheel starts going you've got to spend into demand but.
Douglas Lebda: We're going to let this guy if you could take the first one there and then trying if you could take the second one. Yeah, yeah, sure. Absolutely. I did. I did this morning.
But our team has really done a remarkable job there as.
As I mentioned, we've had some carrier meetings.
Scott Peyree: So starting off, you know, on the consumer side with the personal loan. You know, you know, you know, over the past 18 months, set a price for this tighten and our clients with our clients monetization has come down. We've done a good job of maintaining our traffic levels and controlling our marketing expenses to make equal to an often greater margin on traffic. So I was there, you know, you would look at our consumer volume has generally remained fairly steady over that time period. And you've seen the drop and revenue tied to the monetization for consumer. So when we're focusing now is improving that monetization for consumer.
That have given us some early indications Scott wants to take the rest of that.
Yes sure.
Yes.
We've had a lot of good conversations and there is definitely the wins.
Our changes in the insurance industry and really over the past two or three months, we've gotten a lot of positive indications from a lot of our clients.
Including our historically largest client.
That we're currently working on budget planning with 24, but.
The short of it is they've made pretty clear the budgets are going to be increasing significantly starting in January and we will continue.
As they will continue to snowball as far as growth.
Scott Peyree: We've historically been a very specific product search focused company. So when I say that, what I mean is if you're searching for a personal loan, we're going to try really hard to get you a personal loan. We're now shifting to more of a solution based model where if you're looking for a personal loan, we're going to try to get you personal loans, but maybe a home equity loan is a better option.
Throughout the year.
Not just them, though I mean, we've had.
Other big client of ours that.
Two to three months ago, we thought there was going to be no budget until January and now it looks like we're going to get a decent amount of budget for November and December. This year. So that just shows the indication that these carriers are just feeling better and better by the day that they are more consistently profitable.
Scott Peyree: Maybe you can't get a personal loan, but you can get a credit card. Maybe you're a debt relief candidate. If you own a car, maybe you get a cashout refi on your car loan, et cetera, et cetera week. We have a lot of ways to help solve the consumer problems, the problem being seeking money. We have distinct advantages in the industry, being that we have direct client relationships and distribution in so many different financial industries, so we just need to be better as solutioning across the board and cross-selling to other products, and that will be a win-win-win across the board, which will provide a better option to consumers, be more high-quality leads to our clients, and see increased monetization most importantly for us, which lets us crank up the marketing flywheel to start increasing the traffic coming through our network of sites.
I would say another four pretty big carriers of ours have all either increase budget and or reopened states that they had previously previously shut down over the past three months.
Nothing crazy significantly at this point.
But it just shows that overall macro trends shifting away from tightening up and shutting things down.
Getting back in expansion mode.
From a quality and market share perspective, we've gotten.
<unk> very specific feedback from a number of carriers that we are.
Outperforming both from a market share standpoint, and a quality perspective as far as the product, we're delivering compared to competitors. So we're feeling really good about getting outsized piece of the budget is the money comes back.
Scott Peyree: Which I think is maybe one of the big key gaps is where there is a lot of consumer demand out there. We just need that marketing flywheel to kick back in to start driving more of those consumers to our sites specifically.
Great. Thanks, Thanks for all that color and then separate question on just typical seasonality maybe maybe for trend.
How are you thinking about that heading into the fourth quarter does the <unk> guidance assume that typical seasonality plays out.
Scott Peyree: Greg?
Trent Ziegler: Yeah, I guess on your question around cash flow. I mean, we, obviously, remain solidly profitable in the zip code of 15, 20, 25 million of EBITDAI recorder are of that EBITDAI converts to cash flow at a really healthy clip.
Or maybe some different assumptions variables, you're assuming given just the nature of the current environment.
Trent Ziegler: I mean, save for a little bit of capitalization expense, and then, obviously, our ongoing interest burden, that EBITDAI basically converts one for one, and so we feel really good about our cash flow position, you know, and our optimistic that we're sort of at the bottom here and our position for things to get better as we head into next year.
Yes.
Okay.
Yes, Thanks, Brian.
Yes look I mean, the guidance assumes kind of typical seasonal patterns that we've that we've observed historically.
Operator: Thank you.
What I would tell you is baked into the guidance for the rest of the year is.
Kind of a stabilization in fundamentals, but it really is just those seasonal trends that we've that we've seen kind of applied over the top.
We've had a lot of debate internally about given.
Given where the trends have been well the seasonality be as pronounced as it has been in prior years.
We obviously don't know the answer to that yet, but we've taken a pretty conservative stance with regard to what's baked into the into the guide for the rest of the quarter.
Operator: One moment for our next question, please.
Great. Thanks, guys.
Thank you.
Ryan Tomaselo: And our next question comes from the line of Ryan Tomaselo with KBW Your Line is now open.
One moment for our next question please.
Our next question comes from the line of John Campbell with Stephens. Your line is now open.
Hey, guys good morning.
Douglas Lebda: Morning, everyone. Thanks for taking the questions. We're hoping you can put a finer point, just elaborate on the comments from your prepared remarks around what you're seeing from carriers regarding the 2024 growth plans. Obviously, a recovery in the insurance business seems like the area you have most visibility around. So I guess it would just be helpful if you could provide some guardrails around the different scenarios for that business next year, how fast it could inflect, you know, the margin profile, whether that's sustainable as competition increases for that traffic, and just generally how you feel about the competitive positioning and the ability to take shares as well as increase.
Hey, good morning, Hey for insurance I wanted to touch back on Ryans question. There just based on the channel commentary does it feels like the arrows are certainly pointing in the right direction for recovery next year, but just on the segment DMM outlook I'm thinking maybe we should think about it like a seesaw effect, maybe next year like you get the revenue rebound in the margin comes back in a bit or.
Alternatively revenue remains somewhat sluggish and Vms kind of stays at current levels is that generally the right way to think about it for next year.
Okay.
I'm going to let these other guys comment too, but the way I like to think about it is is in BMD not as not as much on the percentage.
And as your demand kicks in.
Douglas Lebda: So I'll just hit the high level and then hand it off to Scott, who he and his team have just done a magnificent job. We think the margin profile can, while probably not, you know, stay at, you know, as your marketing flywheel starts going, you got to spend into demand. But our team's really done a remarkable job there. As I mentioned, we've had some carrier meetings that have given us some early indications.
You are able to go obviously advertise while your cost of acquisition might go up a tad as you.
Let's just keep it simple bid higher in search terms.
That.
Obviously, it might crimp, a percentage margin, but it would drive a lot more dollars trend Scott.
Yes, yes, I'll jump in quick too and I would echo what Doug said.
We look at total DMD, so as your clients budgets start significantly increasing.
Scott Peyree: Scott, why don't you take the rest of that? Yeah, sure. Yeah, I would say we've had a lot of good conversations and there's definitely the wins are changing in the insurance industry and really over the past two or three months, we've gotten a lot of positive indications from a lot of our clients, including our historically largest clients that we're currently working on budget planning with for 24, but the short of it is they've made pretty clear the budgets are going to be increasing significantly starting in January and we'll continue, you know, the plan is they will continue to snow ball as far as growth throughout the year.
As it spending into more traffic <unk> margins will typically come down but your overall BMD will go up pretty pretty significantly and so when we're limited budget environment is easy to target the types of traffic that the high quality of traffic to the clients wanted make good margin.
As the budgets move more towards what you would call. It an unlimited budget at like CPA targets for clients, that's where youre more aggressively extending into areas trying to generate revenue and traffic.
Yes.
Oftentimes lower <unk> margins, but higher overall BMD.
Okay that makes sense I appreciate that and then to what extent you guys can I'm, hoping maybe you could run us through the strategic shifts and credit card.
Scott Peyree: Not just them though, I mean, we've had that there's another big coin of ours that, you know, two or three months ago, we thought there was going to be no budget until January and now it looks like we're going to get a decent amount of budget for November and December this year. So that just shows it in the indication that these carriers are just feeling better and better by the day that they're more consistently profitable.
While youre looking to partner how that partnership economics work, maybe just at a high level and then what do you think that could it be a partnership can do for the business in the years ahead.
Scott.
Yes, I would say.
The partnership what I'm really excited about the partnership with a third party and being.
Scott Peyree: You know, I would say another four pretty big carriers of ours have all either increased budget and or reopen states that they had previously shut down over the past three months. You know, nothing crazy significant at this point, but it just shows that overall macro trend shifting away from tightening up and shutting things down just to getting back in expansion mode. You know, from a quality and market share perspective, we have gotten specific, very specific feedback from a number of carriers that we are outperforming both from a market share standpoint and the quality perspective as far as the product we're delivering compared to competitors. So we're feeling really good about getting outside pieces of budget as the money comes back.
The consumers ability to get great.
Subprime and near Prime card and from a business perspective.
Ryan Tomaselo: Great. Thanks for all that color.
It's probably the most significant impact this will have is where a lot of our card presentation right now on our sites focus on more prime consumers.
Which which throws out.
Lot of consumers that don't qualify for those cars. So now bye bye.
By doing this partnership and bringing more options that consumers and allows us to onboard a lot more issuers.
And make for a very smooth and easy process for those consumers to get preapproved for those cars that would be otherwise a little nervous about filling out a full application on a card.
So a lot a lot more consumer choice means you know for every 100 consumers coming through the site you are finding a solution for a lot more of them than we are today.
Trent Ziegler: And then separate question on just typical seasonality, maybe for Trent. How are you thinking about not heading into the fourth quarter? The four few guidance assume that typical seasonality plays out or, you know, maybe some different assumptions, variables you're assuming given just the nature of the current environment.
Alright, I think again getting to that marketing flywheel, what will help us increase traffic a lot there.
Okay makes sense to me thanks, guys.
Thank you.
Our next question.
Our next question comes from the line of Chris Kennedy with William Blair. Your line is now open.
Trent Ziegler: Yeah, thanks, Ryan. Yeah, look, I mean, the guidance assumes kind of typical seasonal patterns that we've, you know, that we've observed historically. You know, what I'd say is baked into the guidance for the rest of the year is kind of a stabilization in fundamentals, but it really is just those seasonal trends that we've seen kind of applied over the top. We've had a lot of debate internally about, you know, given given where the trends have been, will the seasonality be as pronounced as it has been in in prior years? You know, we obviously don't know the answer to that, yeah, but we've taken a pretty conservative stance with regard to what's baked into the into the guide for the rest of the quarter.
Good morning, Thanks for taking the questions, Doug you've seen a lot of <unk>.
Ryan Tomaselo: Great.
Cycles in this business over time can you just talk about your competitive position today relative to prior cycles.
Operator: Thanks, guys.
As the markets improve.
Talk about the earnings power of the business.
Operator: Thank you.
So I think our position is better than this one as if it were not for the for the debt that we did.
Debt.
Financing that we're facing.
Operator: One moment for our next question, please.
I'd say were in a much stronger position.
In the past several cycles that I have been to really that I have been through this.
Your monetization went down we did not have the balance sheet that we had we were getting we were and most importantly, we were concentrated in.
John Campbell: Our next question comes from the line of John Campbell with Stevens. The line is now open. Hey, well, good morning. Hey, morning. Hey, for insurance, I want to touch back on Ryan's question there, just based on the channel commentary. It does, I mean, it feels like the arrows are certainly pointing in the right direction for recovery next year, but just on the segment VMM outlook, I'm thinking maybe we should think about it like a seesaw effect maybe next year, like you get the revenue rebound and the VMM margin comes back in a bit or alternatively, you know, remains somewhat sluggish and then VMM kind of stays at current levels. Is that just generally the right way to think about it for next year? Good.
95% mortgage.
This business with the diversification that we've pulled off.
Certainly at a cost.
Has enabled us to weather the mortgage downturn and then you can weather the personal loan downturn. This is the first time that I've experienced where literally everything has pulled back at once in every category and we've still been able to make.
Good amount of money and Thats, what I think differentiates this one from all the others.
Douglas Lebda: I'm going to let these other guys comment, too, but the way I like to think about it is, is in VMD, not as much on the percentage. And as your demand kicks in, you're able to go, obviously, advertise, while your cost of acquisition might go up a tad as you, you know, let's just keep a simple bid hire in search terms. That obviously might crimp a percentage margin, but it would drive a lot more dollars.
From a competitive standpoint.
From a competitive standpoint, I would only add that there's fewer competitors today. The lendingtree brand name is obviously very well known.
And we got to improve our product that we bring to consumers, but that is underway I'm thrilled that <unk> that's.
Thats finally made it out of the gates after talking to you all about it for the last couple of years.
It's going to be a knife fight amongst some other competitors, but we're up for it and ready.
Scott Peyree: Trent Scott? Yeah, I'll jump in quick, too. I would echo what Doug says. I mean, we look at total VMD. So as your client's budget starts significantly increasing, you know, as you're spending into more traffic, your VMM margins will typically come down, but your overall VMD will go up pretty significantly. And so when we're in limited budget environment, it's easy to target the types of traffic. So the high quality traffic is the clients want to make good margin off it.
Got it. Thank you and then just.
Can you talk about the margin profile, you've taken a lot of expenses out of the business.
The macro improves kind of talk about the long term margin profile. Thank you.
Yes, Chris this is trying to I'll hit on that one yes.
Yes look I mean, obviously, you've seen us take margins from mid to high teens EBITDA margin too.
<unk> to the mid teens.
Scott Peyree: As the budgets move more towards what you would call, you know, an unlimited budget at like CPA targets for clients. That's where you're more aggressively spending in the areas, trying to generate revenue and traffic, but you know, at yes, and oftentimes lower VMM margins, but higher overall VMD. Okay, that makes sense. I appreciate that.
I'm, sorry mid to high single digits to mid teens, just over the course of the last year or so.
I think as we as we've unpacked, our cost structure and continued to chip away at it right. We've done a lot of really good work and as we sit here today.
We feel like we are so perfectly well resource to continue to run this business in place a few focus bets right. We're not strapped for resourcing in such a way that we can't continue to innovate and drive dry product improvement, we're adequately staffed for that.
Scott Peyree: And then to what extent you guys can, I'm hoping maybe you could run us through the strategic shifts in credit card, you know, while you're looking to partner how that partnership economics work, maybe just at a high level. And then what do you think that could appear a partnership and do for the business in the years ahead? Got.
As the macro continues to improve there's not a lot of variable expense that we have to layer on top right and so we feel really good about our ability to.
Scott Peyree: Yeah, I would say, you know, with this partnership, what I'm really excited about the partnership with third bar, part of your own in being is the consumer's ability to get free time for subprime in your prime cards. And, you know, from a business perspective, that's probably the most significant impact this will have is where a lot of our card presentation right now on our site, it's focused on more prime consumers, which, which throws out, you know, a lot of consumers that don't qualify for those cards.
Maintain and improve upon kind of that that mid teens EBITDA margin profile that youre seeing today.
Thanks for taking my questions. Thank you.
One moment for your next question.
Our next question comes from the line of Youssef Squali with <unk> Securities. Your line is now open.
Awesome. Thank you so much.
Quick question for Doug and maybe what trends so Doug just.
As you look at that.
The potential turnaround.
Scott Peyree: So now by doing this partnership and bringing more options, the consumers that allows us to onboard a lot more issuers and make for a very smooth and easy process for those consumers to get pre approved for those cards that that would be otherwise a little nervous about filling out a full application on a card. So a lot, a lot more consumer choice means, you know, for every hundred consumers coming through the site, you're finding a solution for a lot more of them than we are today. And that's where I think, again, getting to that marketing flag will help us increase traffic a lot there. Okay, makes sense to me. Thanks guys.
2024 across the businesses.
What are the indicators are you tracking to identify the reversion maybe underwriting standards by lenders across.
The consumer segment and home segment that if my insurance I think you discussed that and then trend.
Operator: Thank you.
Can you just help us think.
The Q4 guide and what's implied across growth across the three segments.
Operator: One moment for our next question.
Consumer insurance please.
Okay.
So in terms of metrics and Scott or try and feel free to add in when it from a client's perspective, you need to look at their cost per funded loan what is it getting what is it costing them too.
Chris Kennedy: And next question comes from the line of Chris Kennedy with William Blair. Your line is now open.
Get what they're looking for which is a new loan we look at that across all of our clients.
Douglas Lebda: Good morning. Thanks for taking the questions. Doug, you've seen a lot of cycles in this business over time. Can you just talk about your competitive position today relative to prior cycles and, you know, as the market to improve the earnings talk about the earnings power of the business. So I think our position is better in this one. If we're not for the debt that we, the debt refinancing that we're facing, I would say we're in a much stronger position.
In mortgage.
Prior quarters.
Been too high.
That's merely because consumers don't get as much of a benefit.
From refinancing obviously at much higher rates.
So you look at your cost per funded loan are or your cost per policy in insurance.
And then it's really the CPA, what's it cost us to get somebody to.
Come in once a transaction and then your RPM what is your revenue that youre getting from that introduction on the other side and then that times volume is what drives the whole thing.
Douglas Lebda: And the past several cycles that I've been to, really that I've been through this, your monetization went down. We did not have the balance sheet that we had. We were getting, we were and most importantly, we were concentrated in like 95% mortgage. This business with the diversification that we pulled off, certainly at a cost, has enabled us to weather the mortgage downturn. And then you can, you know, whether the personal loan downturn, this is the first time that I've experienced where literally everything is pulled back at once in every category.
That's that's the marketing flywheel that Scott talked about and then the only other thing I would add on top of that.
With the launch of spring on the web and with the upcoming.
Launch of it.
New name for my Lendingtree and with the launch of the App.
Think in November plus three call. We think we can move those numbers up appreciably.
Yes, Jeff.
And then.
Douglas Lebda: And we've still been able to make a good amount of money. And that's what I think differentiates this one from all the others. From a competitive standpoint, from a competitive standpoint, I would only add that there's fewer competitors today. The lending tree brand name is obviously very well known. And we got to improve our product that we bring to consumers, but that is underway. I'm thrilled that TREEQAL has finally made it out of the gates after talking to you all about it for the last couple of years. And, you know, it's, it's going to be a knife fight among some of the competitors, but we're up for it and ready. Got it.
Go ahead Scott.
Okay, Yeah, just throw in another key metric as I alluded to earlier that we're going to be looking at.
Trent Ziegler: Thank you.
Call it the leaky bucket, but at the end of the day, it's like yes.
That are falling out of our funnel currently a quick easy example of someone comes looking for a personal loan.
Looking for a personal loan to go on a vacation to the Bahamas 18 months ago, you could get at 10000 per dollar personal loan for that today, it's hard to get a personal loan to that but they may be a homeowner with.
Good credit perfect home equity candidates, so really really identifying how large is the leaky bucket and how good are we at matching them to other products that can that can get them. The money they are seeking.
Trent Ziegler: And then just, can you talk about the margin profile? You know, you take a lot of expenses out of the business. And as the macro improves, kind of talk about the long-term margin profile. Thank you.
And then on the Q4 guide Youssef I mean, I guess, just framing it up kind of sequentially relative to Q3.
We expect insurance to be pretty stable.
Trent Ziegler: Yeah, Chris, this is Trent. I'll hit on that one. Yeah, look, I mean, obviously you've seen us take margins from mid-to-high teens, deep-to-high margin to mid-teens. I'm sorry, mid-to-high cycle digits to mid-teens, just over the course of the last year or so. You know, I think as we unpacked our cost structure and continued to chip away at it, right, we've been a lot of really good work. And as we sit here today, you know, we feel like we are still perfectly well-resourced to continue to run this business and place, you know, a few focus bets, right?
Q3 into Q4, we do expect some softness to come from both home and consumer and consumer.
That's where we've typically seen the most pronounced seasonality historically volumes just tend to kind of drop off in Q4, and then begin to ramp back up in Q1.
And then at home right I mean, we've all seen what's going on in sort of in the rate environment.
Trent Ziegler: We're not strapped for resourcing in such a way that we can't continue to innovate and drive, drive product improvement, where we're adequately staffed for that. And as the, you know, as the macro continues to improve, there's not a lot of variable expense that we have to layer on top, right? And so we feel really good about our ability to, you know, maintain and improve upon kind of that, that mid-teens, deep-to-high margin profile that you're seeing today.
We've seen home equities slowed down a little bit as a source of strength given given the rate environment and just the conversion.
Aspects of that product and so little bit of weakness in both on the consumer pretty stable on insurance.
And the only thing I'd add is over the last $25 27 years I think I've said this pretty much every year. The Q4, the consumer behavior on the lending side.
In particular is.
Not in the borrowing mind mindset, there more on a spending mindset and then typically wake up in January and say Oh shoot what do they do.
Operator: Thanks for taking the questions. Thank you.
And then they start to get their financial house in order and Thats when we see.
Operator: One moment for our next question.
Youssef Squali: Our next question comes from the line of UCF Squally with two of security. The line is now open. Awesome. Thank you so much. So a little question for Doug and maybe one for Trent.
Call It normalcy.
Color. Thank you thank.
Thank you.
One moment for our next question please.
Douglas Lebda: So Doug, just as you look at the potential turnaround in 2024 across the businesses, maybe what are early indicators are detracting to identify the reversion, maybe in underwriting standards, by lenders across, but the consumer segment and home segment, not as much insurance, I think you've discussed that.
Our next question comes from the line of Robert <unk> with Autonomous Research. Your line is now open.
Good morning, guys I wanted to go back to an earlier question can you speak to how the changes youre, making to treat <unk> will leave the physician to physician.
Position relative to competing products out there.
I'll, let Scott.
Chime in on some of the details of it and some of the stuff, we're not going to want to give out for competitive reasons, but we think this will be.
Douglas Lebda: And then Trent, can you just help us think through the Q4 guide and what's implied across growth across the three segments home consumer insurance? So in terms of metrics and Scott or Trent, feel free to add in. From a client's perspective, you need to look at their cost-per-funded loan. What is it costing them to get what they're looking for, which is a new loan? We look at that across all of our clients.
As good and probably better than any of the competing products out there.
The notion and credit card.
Scott referred to the leaky bucket has a hugely leaky bucket because credit card companies, particularly in subprime and near Prime only approve about one in 10 of the people that we send them because theyre coming because they're they're self grading their credit and they don't always self grade themselves.
Douglas Lebda: In mortgage, like prior quarters, that's been too high. That's merely because consumers don't get as much of a benefit from refinancing obviously at much higher rates. So you look at your cost-per-funded or your cost-per-policy in insurance. And then it's really the CPA. What's it costing us to get somebody to come and want a transaction? And then your RPL, what is your revenue that you're getting from that introduction on the other side? And then that times volume is what drives the whole thing. And that's the marketing flywheel that Scott talks about.
Accurately so this is going to.
Enable us to.
Drive that number up.
In terms of the approval rate, but it also enables us to give the consumer a much much better experience Scott you want to talk about the competitive.
I think we stand versus competitors.
Yes, I would treat.
Yes, two things with our product that I would really highlight which I think is advantageous for us I mean, the first off the fact that we're working through a third party credit Bureau.
A lot of our classic consider kind of an.
<unk> party in this transaction that by the way all the issuers are already working with so it makes integrations way easier way easier to onboard with us.
Douglas Lebda: And then the only other thing I would add on top of that is with the launch of spring on the web and with the upcoming launch of it. This is the new name for my LendingTree. With the launch of the app, we think in November plus three, while we think we can move those numbers up appreciably. Yeah, and I've got it.
Have to onboard with us with a custom system.
We have built in house.
Scott Peyree: And then who's got it?
We're both working with the mutual third third party there.
There is that level of trust of like we're not necessarily going to.
Take specific information from the from the credit boxes in underwriting criteria and use it for our own purposes. So I think at that level it will.
Scott Peyree: Okay, yeah, I just wrote that in another key metric as I alluded earlier, that we're going to be looking at what I, you know, I like to call it the leaky budget. But at the end of the day, it's like looking at consumers that are falling out of our funnel currently. A quick, easy example, if someone comes looking for a personal loan, they may be looking for a personal loan to go on a vacation to the Bahamas.
Allow us to bring on issuers that are really rapid pace until like they like this model and how to spend money with us and then on the other side.
You don't just can be a life product if someone just on the website. They can actively go through this it does not have to be a logged in user definitely something that we can use for logged in users and we will use for our login users, but this is just a lie.
Scott Peyree: You know, 18 months ago, you could get a tent out of a personal loan for that. Today, it's hard to get a personal loan for that. But they may be a homeowner with, you know, good credit and perfect home equity candidate. So like really, really identifying how large is the leaky bucket and how good are we at matching them to other products that can, that can get them the money they're seeking. Okay. Yep.
Pre approval in real time, these consumers can get what your wishes.
It feels really advantageous component to this.
That's great. Thanks, and then can you just give us some more detail on the investment impairment in the quarter what was that in relation to.
Yes, Robert.
So there were two one was related to our investment in dash.
Trent Ziegler: And then on, on the Q4 guide, use of, I mean, I guess just framing it up kind of sequentially relative to Q3. We expect insurance to be pretty stable. Q3 and the Q4, we do expect some softness to come from both home and consumer. I mean, a consumer. That's, that's where we've typically seen the most pronounced seasonality historically. Volumes just tend to, to kind of drop off in Q4 and then, and then begin to ramp back up in Q1.
There was an observable event that caused us to re look at that valuation and that shouldnt come as a huge surprise to anyone if you've followed the consumer fintech space at all right I mean clearly.
We marked that up very considerably when we sold our position.
So part of our position.
I think it was fall of 'twenty one.
And now multiples in that space have just come crashing back down to reality and so that's what's being reflected in our mark.
Trent Ziegler: And then at home, right, I mean, that we've all seen what's gone on sort of in the rate environment. We've seen home equities slow down a little bit as a source of strength, given given the rate environment and just the conversion aspects of that product. And so, you know, a little bit of weakness in both home and consumer are pretty stable in insurance. And the only thing I'd add is over the last 25, 27 years, like I've said, this pretty much every year, the Q4, the consumer behavior on the lending side in particular is not in the borrowing, mind, front mindset.
The other write down was related to our carrying value of goodwill.
And that is really just a function of Av.
Kind of what we've observed in the market right, it's not really a call on our long term outlook for any of our various businesses.
It's really just the stock price support the level of goodwill that you've got on the books.
Trent Ziegler: They're more in a sending mindset and then typically wake up in January and say, oh shoot, what did I do? And then they start to get their financial new house in order. And that's when we see a resumption of, call it normalcy.
In our scenario. Unfortunately, it doesn't so we again have a third party come in and look at the different segments.
In this case the impairment was was attributed to the insurance business, that's largely because we built up goodwill as we did all those acquisitions from 2015 through 2019.
Operator: Let's have a little color.
When we moved from one reportable segment to three reportable segments insurance got the brunt of the carrying value of that goodwill and so we'd have a higher bar to.
Operator: Thank you all. Thank you.
Kind of justify the Kerr.
Operator: One moment for our next question please.
Carrying value and so again, we have to test that goodwill annually. When we went through that process with a third party and took a modest write down.
Robert Wildhack: Our next question comes from the line of Robert Wildhack with autonomous research. Your line is now open. Good morning, guys. I wanted to go back to an earlier question. Can you speak to how the changes you're making to tree-qual will leave a position to or position relative to competing products out there? I'll let Scott chime in on some of the details of it and some of the stuff we're not going to want to give out for competitive reasons, but we think this will be as good and probably better than any of the competing products out there.
Against the reinsurance segment.
Okay. Thanks, just just on that last piece is it safe to assume that the majority of the goodwill impairment didn't come from your long term outlook or projections for the business, but more from maybe the comparables are discount rates things like that.
That's right so it's.
There will be more details in the 10-Q when it comes out but it's like 50% based on a long term outlook, 30% based on observable sort of market events right and as you pointed out clearly the discount rate has gone up stock prices come down multiples across the space have come down and so that's really what.
Robert Wildhack: The notion in credit card, Scott referred to the leaky bucket, has a hugely leaky bucket because credit card companies take it in sub-prime and near-prime only approve about one in ten of the people that we send them because they're coming because they're self-grading their credit and they don't always self-grade themselves accurately. So this is going to enable us to drive that number up in terms of the approval rate, but it also enables us to give the consumer a much, much better experience.
It's reflected.
Got it thank you guys.
Thank you one moment for our next question.
Our next question comes from the line of Jamie Friedman with Susquehanna International Group. Your line is now open.
Hi.
<unk>.
So hey, there.
Good morning.
So it's helpful to have these comments early comments on <unk>.
Robert Wildhack: Scott, you want to talk about the competitive? Where do you think we stand versus competitors? Yeah, I would say there's two things with our product that I would really highlight which I think is advantageous for us. I mean, the first thought, the fact that we're working through a third party credit bureau, you know, which a lot of requirements to consider, you know, kind of an independent party in this transaction that, by the way, all the issuers are already working with.
2020 for insurance.
I'm just.
Looking to the letter.
Sounds like you're optimistic about potential growth in that segment.
Robert Wildhack: So it makes integrations way easier, way easier to onboard with us, if they don't have to onboard with a custom system that we built in house, you know, because we're both working with the mutual third party there and be either that level of trust of like we're not necessarily going to, you know, take specific information from their credit boxes on a writing criteria and use it for our own purposes. And so I think at that level it will allow us to bring on issuers that are really rapid pace and they'll like, they like this model and how to spend money with us.
I know, it's early but I was just wondering if you have any high level comments on the potential for.
For the other segments as well.
I don't think for 2020 for anything that we're willing to reveal yet.
However, I do think cards will be better and Scott you should add on trend feel free to.
Cards will be better because of recall.
Personal loans and the other ones will be better because of the.
Cross selling that Scott referred to.
And that all of the obviously all depends on client demand and you just heard the early stuff about client demand.
I'm not expecting much.
Robert Wildhack: And then on the other side, it's, you know, you don't, this can be a live product. If someone just on the website, they can actively go through this. It does not have to be a logged in user. It's definitely something that we can use for our logged in users and we will use for our logged in users, but, but this is just a live free approval and real time these consumers can get, which is a, which I feel is a really advantageous component to this.
Much tremendous growth out of home.
Scott Peyree: That's great. Thanks.
Has until the log jam.
Home market really abates, you've got people, who don't want to sell homes and people don't want to buy it now there's always a market to make.
But in home the consumer there's just not as much of a consumer benefit.
<unk> they can't afford what they see so you have a leaky bucket in home.
Trent Ziegler: And then can you just give some more detail on the investment impairment in the quarter. What was that in relation to.
That said from a product standpoint.
We've planned out our product pipeline through Q4 and Q1.
Trent Ziegler: Yeah, Rob is Trent. So there were two. One was related to our investment in stash. You know, there was an observable event that caused us to relook at that valuation and that shouldn't come with a huge surprise. Anyone if you've followed the consumer fintech space at all. Right. I mean, clearly, we marked that up very considerably when we sold a position of sold part of our position. And I think it was fall of 21. And now multiples in that space have just come crashing back down to reality. And so that's what's being reflected in in our mark.
And we are making some improvements and hope to grip and doing a lot of testing.
Around that product to come up with new consumer experiences and.
So that is that is very helpful for that one Scott what else would you add.
Yes, I'll just hit on.
Very large categories SMB in personal loans being I would start with there's a lot of remained part of consumer demands.
For those products.
And a high level of client demand, even though the credit criteria tightened.
Loans, they are writing they're happy to write.
Trent Ziegler: The other right down was related to to our carrying value of goodwill. And that is really just a function of. It's kind of what we've observed in the market, right? It's not really a call on our long-term outlook for any of our various businesses. It really does the stock price support the level of goodwill that you've got on the books. And, you know, in our scenario, unfortunately it doesn't. And so we again had a third party come in and look at the different segments.
They're indicating they want to write more and more of those loans would that felt like as.
As we get better.
And that leaky bucket in cross selling effectively increasing our monetization I think we can definitely see growth in those categories next year.
Just based off of high consumer demand for those products.
Okay. Thanks for that and then.
I was interpreting some of your prior comments about margin.
Trent Ziegler: In this case, the impairment was was attributed to the insurance business. That's largely because, you know, we built up goodwill as we did all those acquisitions from 2015 through 2019. I mean, when we moved from one reportable segment to three reportable segments, insurance got the brunt of the carrying value of that goodwill. And so we had to have a higher bar to kind of justify the carrying value. And so again, we have to test that goodwill annually. We went through that process with a third party and took a modest write down against the insurance segment. Okay.
So.
You've gone actually from the low single digits into the teens in terms of adjusted EBITDA margin.
Is do you view that as this is structurally sustainable for the company or asked another way is there any reason why that where you are now would not be structurally sustainable.
We have no reason to believe that it is not sustainable.
I mean as I said, we've done a lot of thoughtful work on our cost structure, we've gotten that.
Very good place and we think it's scalable as the topline kind of influx and moves in the right direction as we get into next year.
Trent Ziegler: Thanks. Just on that last piece. It's safe to assume that the majority of the goodwill and impairment didn't come from your long-term outlook or projections for the business, but more from maybe the comparable or discount rates, things like that. That's right.
Got it okay. Thank you.
Thank you.
One moment.
Our final question will come from the line of Melissa Wedel with JP Morgan. Your line is now open.
Trent Ziegler: So it's there will be more details in the 10 queue when it comes out, but it's it's like 50% based on long-term outlook, 50% based on observable sort of market events, right. And as you pointed out, you know, clearly discount rate has gone up stock prices come down multiple across the space has come down. And so that's really what's reflected. Got it.
Good morning, Thanks for taking my call.
Good morning.
I was hoping to circle back to.
Some of your comments about shrink wall, you talked I think Scott talked about expanding.
Operator: Thank you, guys.
Product offering to additional customers, providing a subprime and near prime.
Operator: Thank you.
Product or solution for customers through that <unk> initiatives I. Just wanted to clarify is that something that is entirely focused on subprime and near prime or would that extend into the prime offering as well.
Jamie Friedman: One moment for our next question.
Douglas Lebda: Our next question comes from the line of Jamie Friedman with Susquehanna in the national group. The line is now open. Hi. So in a good morning. So it's it's helpful to have these comments early comments on 2024 insurance. I'm just looking through the letter. And it sound like you're optimistic about potential growth in that segment. I was I know it's early, but I was just wondering if you have any high level comments on the potential for the other segments as well.
Yes, no. It is not entirely focused on subprime and near Prime.
Where the biggest opportunity is in let's call. It the biggest leak in the credit card bucket.
Yeah, and I would add.
Our customers are very very interested in integrating with us we've just kind of had to focus like.
As we line people up we wanted to get the subprime and near Prime in first because that's a new product offering for our customers but.
And customers definitely want to integrate with this and I would also say a lot of our personal loan customers want to integrate with us as well for the personal loan product.
Okay. That's helpful. And then I think the shareholder letter you mentioned that it is being tested right now with a handful of partners on the platform.
Douglas Lebda: Um, I don't think for 2024 anything that we're willing to reveal yet. However, I do think cards will be better and Scott, you should add on front feel free to cards will be better because of three qual. Personal ones and the other ones will be better because of the cross selling that Scott referred to. Um, and that all the obviously all depends on client demand and you just heard, you know, the early stuff on about client demand.
You give us a sense of what that testing timeline is like and when that might be rolled out more broadly.
Scott you want to take that.
Yes, I mean, we're rolling out where do we have we have four clients.
On the initial rollout that is happening.
<unk> here and we will we will be doing a lot of testing throughout the fourth quarter.
Douglas Lebda: I wouldn't I'm not expecting much tremendous growth out of home as until the, you know, log jam in the home market, you know, really abates. You've got people who don't want to sell homes and people don't want to buy them. Now there's always a market to make. But in home, the consumer benefit, there's just not as much of a consumer benefit. And or they can't afford, you know, what they see. So you have a leaky or bucket in home that said, from a product standpoint, we've planned out our product pipeline through Q4 and Q1.
Our hope is if all goes well, we start really expanding where all.
All of the places the consumer could potentially be seeing that as early as the beginning of the first quarter and then it will just be at.
Continual flow of Onboarding.
New issuers SaaS as we can again one of the advantages of this product as it is easy it is pretty easy for issuers to onboard with this product. It's not a lot of work, which is which is great. So we should be able to.
To grow the number of issuers rapidly and again, assuming the testing goes fine in the fourth quarter, we should be exposing it to a lot more traffic in the first quarter.
Douglas Lebda: And we are making some improvement that hope to grip in doing a lot of testing around that product to come up with new consumer experiences. And so, so that is, that is very hopeful for that one.
Okay. Thanks for that.
Follow up on.
D rebranding and re launch my Lendingtree or announced spring.
I had always had the impression that that was particularly focused or particularly.
Scott Peyree: Scott, what else would you get? Yeah, I would just hit on, you know, two very large categories, SMB and personal loans being, I would start with, there's a lot of, there's a lot of consumer demands for those products and a high level of client demand, even though the credit criteria is tightened, you know, the loans they are writing, they're happy to write, and they're indicating they want to write more and more of those loans with us.
Had particularly good engagement with personal loan consumers.
There is something that we should be thinking about differently with the re launch of the app.
At your.
Planning shortly.
<unk>.
So.
The hope with spring is it is so right now a lot of the largest source of new members are people coming from our personal loan product Thats. What you are.
Scott Peyree: So like, as we get better at fixing that leaky bucket and cross selling, effectively increasing our monetization. I think we can definitely see growth in those categories next year, just based off of high consumer demands for those products.
Referring to but the hope with spring is as the product evolves.
We can actually habits have its own traffic.
Trent Ziegler: Okay, thanks for that. And then Trent was interpreting some of your prior comments about margin. So, you've gone actually from the low single digits into the teens in terms of adjusting the margin.
And that you can be advertising for downloading the app.
And we just need to make our alerts much better and one thing that I'm, just thrilled with and the change that's happened over the last three months as our product organization I referred to that somewhat.
Trent Ziegler: Is, do you view that as this as structurally sustainable for the company or asked another way, is there any reason why that where you are now would not be structurally sustainable? We have no reason to believe that it's not sustainable. I mean, as I said, we've done a lot of thoughtful work on the cost structure. We've gotten it in a very good place. And then we think it's scalable as the top line kind of inflex and moves in the right direction as we get into next year. Got it.
But.
We have a completely redone.
They are doing product.
And it's really starting to work so we're starting to see.
Much better and faster progress on the tech and product front.
Operator: Okay.
Thanks, Doug.
Thank you.
I would now like to turn the conference back to Mr. Doug Lebda for closing remarks.
Yeah.
Thank you I want to thank everybody on this call for your continued faith in our business. The outlook is beginning to turn positive largely due to the operational improvements we have implemented but also due to the inflection we expect in our insurance business. Our team is properly focused on the core of our marketplace working on numerous discrete initiatives to drive additional BMD.
Operator: Thank you all. Thank you.
Melissa Wedel: One moment. I found a question will come from the line of Melissa Widow with JP Morgan. Your line is now open. Good morning. Thanks for taking my question. Good morning. Hi.
Scott Peyree: I was hoping to circle back to some of your comments about tree quality. You talked, I think Scott talked about expanding product offering to additional customers, providing a subprime and near prime product or solution for customers through that tree quality initiative. I just wanted to clarify, is that something that is entirely focused on subprime and near prime or would that extend into the prime offering as well? Yeah, no, it's not entirely focused on some prime and near prime.
From our existing base of customers, who come to US every day looking for the financial product that is right for them. We are leaning into our entrepreneurial culture by testing ideas quickly and inexpensively and that helps to optimize the business.
Our team is leaner and better.
Our operationally faster our client relationships are strong and we are very optimistic about the future.
You so much and we look forward to talking to you in three months.
This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
Scott Peyree: That's just where the biggest opportunity is and let's call out the biggest leak in the credit card bucket. Yeah, I would add, you know, our prime customers are very, very interested in integrating with this. We've just kind of had to focus like, you know, as we line people up, we want to get the subprime and near prime in first because that's a new product offering for our customers, but prime customers definitely want to integrate with this. And I would also say a lot of our personal loan customers want to integrate with this as well for the personal loan product. Okay, that's helpful.
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Scott Peyree: And then you did, I think the shareholder letter mentioned that it is being tested right now with a handful of partners on the platform. Could you give us a sense of what that testing timeline is like and when that might be rolled out more broadly? Yeah, I mean, we're rolling out where do we have we have four clients on the initial rollout that is happening? We'll be doing a lot of testing throughout the fourth quarter.
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Scott Peyree: Our hope is, if all goes well, we start really expanding where all the places the consumer could potentially be seen as early as the beginning of the first quarter. And then it will just be a continual flow of onboarding new issuers as fast as we can. It is pretty easy for issuers to onboard this product. It's not a lot of work, which is great. So we should be able to grow the number of issuers rapidly. And assuming the testing goes fine in the fourth quarter, we should be exposing it to a lot more traffic in the first quarter. Okay, thanks for that.
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Scott Peyree: If I could follow up on the rebranding and relaunch of my LendingTree or now spring. I had always had the impression that that was particularly focused or particularly had particularly good engagement with personal loan consumers. Is there something that we should be thinking about differently with the relaunch of the app that you're planning shortly? No, so the hope with spring is it is so right now a lot of the largest source of new members are people coming from our personal own product.
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Scott Peyree: That's what you are referring to. But the hope with spring is as the product evolves that we can actually have its own traffic. And that you can be advertising for download in the app. And we just need to make our alerts much better. And one thing that I'm just thrilled with in the change that's happened over the last three months is our product organization. I refer to that somewhat. But you know, we have a completely redone way of doing product. And it's really starting to work. So we're starting to see much better and faster progress on the tech and product front.
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Operator: Thank you.
Yes.
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Douglas Lebda: I would now like to turn the conference back to Mr. Doug Lebdiff for closing remarks. Thank you. I want to thank everybody on this call for your continued faith in our business. The outlook is beginning to turn positive largely due to the operational improvements we've implemented. But also due to the inflection we expect in our insurance business. Our team is properly focused on the core of our marketplace working on numerous discrete initiatives to drive additional VMD from our existing based of customers who come to us every day looking for the financial product that is right for them.
Douglas Lebda: We are leaning into our entrepreneurial culture by testing ideas quickly and inexpensively. And that helps optimize the business. Our team is leaner and better. We are operationally faster. Our client relationships are strong. And we are very optimistic about the future. Thank you so much.
Douglas Lebda: And we look forward to talking to you in three months.
Operator: This concludes today's conference call. Thank you for your participation.
Operator: You may now disconnect everyone, have a wonderful day. Thank you very much. .
Thanks.
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John Campbell: [inaudible] John Campbell, John Campbell, John Campbell, John Campbell, John