Q2 2024 LendingTree Inc Earnings Call
Good day, everyone, and thank you for standing by.
Operator: in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 1-1 on your telephone. You will then hear a message advising that your hand is raised. To withdraw your question, simply press star 1-1 again.
Speaker Change: Welcome to LendingTree Inc. Second Quarter 2024 Earnings Conference Call.
Speaker Change: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To participate, you will need to press star-one-one on your telephone. You will then hear a message advising your hand is raised.
Operator: Please be advised that today's conference is being recorded. I will hand the call over to the Senior Vice President of Investor Relations and Corporate Development, Andrew Wessel. Thank you, Carmen, and good afternoon to everyone joining us on the call to discuss LendingTree's second quarter 2024 financial results. With us today are Doug Lebda, LendingTree's Chairman and CEO, Scott Peyree, CEO and President of Marketplace Businesses, Trent Ziegler, our CFO, and Jason Bangle, our incoming CFO.
Speaker Change: To withdraw your questions, simply press star 11 again. Please be advised that today's conference is being recorded. I will hand the call over to the Senior Vice President of Investor Relations and Corporate Development, Andrew Wessel.
Andrew N. Wessel: As a reminder to everyone, we posted a detailed letter to shareholders on our investor relations website earlier this afternoon, and for purposes of today's call, we will assume that listeners have read that letter and will focus on Q&A. Before I hand the call over to Doug for his remarks, I remind everyone that during today's call, we may discuss LendingTree's expectations for future performance. Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's actual results could differ materially from the views expressed today.
Andrew N. Wessel: Thank you, Carmen, and good afternoon to everyone joining us on the call to discuss LendingTree's second quarter 2024 financial results.
Speaker Change: With us today are Doug Lebda, LendingTree's Chairman and CEO , Scott Peyree, COO and President of Marketplace Businesses, Trent Ziegler, our CFO , and Jason Bangle, our incoming CFO .
Speaker Change: As a reminder to everyone, we posted a detailed letter to shareholders on our Investor Relations website earlier this afternoon, and for purposes of today's call, we will assume that listeners have read that letter and will focus on Q&A.
Speaker Change: Before I hand the call over to Doug for his remarks, I remind everyone that during today's call we may discuss LendingTree's expectations for future performance.
Andrew N. Wessel: 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 the shareholder letter, both available on our website, for the comparable gap definitions and full reconciliations of non-gap measures to GAAP. With that, Doug, please go ahead.
Speaker Change: Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's actual results could differ materially from the views expressed today.
Speaker Change: Many, but not all, of the risks we face are described in our periodic reports filed with the FEC. We will also discuss a variety of non-GAAP measures on the call today, and I refer you to today's press release.
Cheryl: and the shareholder letter both available on our website for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP. With that, Doug, please go ahead.
Douglas R. Lebda: Thank you, Andrew, and thank you to everyone for joining us this evening. Our company generated exceptional revenue growth this quarter, led by the insurance business more than doubling from the second quarter last year. Our overall revenue outlook continues to improve into the third quarter. As you all know, we operate the business on a day-to-day basis with a laser focus on generating positive incremental variable margin dollars. We seek to attract as many high-intent consumers to our marketplace as we can at Positive Unit Economics while at the same time driving wallet share gains with our insurance and lending clients, to both deepen our relationships and expand demand on the network.
Doug: Thank you, Andrew, and thank you to everyone for joining us this evening.
Speaker Change: Our company generated exceptional revenue growth this quarter, led by the insurance business, more than doubling from the second quarter last year. Our overall revenue outlook continues to improve into the third quarter.
Doug: As you all know, we operate the business on a day-to-day basis with a laser focus on generating positive incremental variable margin dollars.
Speaker Change: We seek to attract as many high-intent consumers to our marketplace as we can and positive unit economics while at the same time driving wallet share gains with our insurance and lending clients to both deepen our relationships and expand demand on the network.
Douglas R. Lebda: During the past two years in insurance, we successfully executed our plan to drive high-intent traffic despite limited budgets to grow our share with carriers. Now is the time to execute the same strategy in lending. Ultimately, we expect this gain in share at partners will be rewarded when interest rates decrease or lending conditions begin to loosen. We're also encouraged by the increased consensus that the Federal Reserve may be ready to lower its target rate at one of its next two meetings, although we do not assume any rate change in our financial outlook. Looking at segment performance, insurance grew revenue 109%, and VMD grew 47% from the same time last year.
Speaker Change: During the past two years in insurance, we successfully executed our plan to drive high-intent traffic despite limited budgets to grow our share with carriers.
Speaker Change: Now is the time to execute the same strategy in lending. Ultimately, we expect this gain in share at partners will be rewarded when interest rates decrease or lending conditions begin to loosen.
Speaker Change: We are also encouraged by the increased consensus forming that the Federal Reserve may be ready to lower its target rate at one of its next two meetings, although we do not assume any rate change in our financial outlook.
Speaker Change: Looking at segment performance, insurance grew revenue 109% and VMD grew 47% from the same time last year.
Scott Peyree: Demand from carrier partners continued to build throughout the period. At one level, competition for market share has strengthened within the auto insurance care category as very good underwriting results have allowed carriers to invest more in customer acquisition. And we expect that this trend will continue throughout the rest of the year. But to put our insurance growth into context, two years ago, we were the third largest insurance aggregator in the US market. Today, based on comparable results, we are the second largest and believe our continued market share gains will propel us into first. Our partnerships with carriers are stronger than they have ever been.
Speaker Change: Demand from carrier partners continued to build throughout the period.
Speaker Change: On one level, competition for market share has strengthened within the auto insurance category. As very good underwriting results have allowed carriers to invest more into customer acquisition, and we expect that
Speaker Change: trend will continue throughout the rest of the year. But to put our insurance growth into context, two years ago we were the third largest insurance aggregator in the US market.
Speaker Change: Today, based on comparable results, we are the second largest and believe our continued market share gains will propel us into first.
Douglas R. Lebda: We could not be more excited for the future or more appreciative of those relationships. Our consumer segment grew revenue by 9% sequentially. However, we are still lapping a period of looser underwriting standards in the first half of last year, which resulted in a decline from a year ago.
Speaker Change: Our partnerships with carriers are stronger than they have ever been. We could not be more excited for the future or more appreciative of those relationships.
Speaker Change: Our consumer segment grew revenue by 9% sequentially. We are still lapping a period of looser underwriting standards in the first half of last year, which resulted in a decline from a year ago.
Scott Peyree: During the quarter, we leaned into stable lending demand at many of our partners with a particular focus on the personal loan. Our strategy drove a 44% sequential increase in high intent consumer traffic, which helped to improve the number of loans we closed for our partners by 34%. The home segment performed as expected, with higher mortgage rates and a lower supply of homes for sale limiting the number of consumers shopping for refinance and purchase.
Speaker Change: During the quarter, we leaned into stable lending demand at many of our partners with a particular focus on the personal loan business.
Speaker Change: Our strategy drove a 44% sequential increase in high-intent consumer traffic, which helped to improve the number of loans we closed for our partners by 34%.
Scott Peyree: Home equity continues to be the bright spot of the segment as revenue grew 6% sequentially. Finally, I'd like to extend my sincere gratitude to our CFO, Trent Ziegler. He started 12 years ago as an analyst in our finance department.
Speaker Change: The home segment performed as expected with higher mortgage rates and lower supply of homes for sale, limiting the number of consumers shopping for refi and purchase loans.
Speaker Change: Home equity continues to be the bright spot of the segment as revenue grew 6% sequentially.
Douglas R. Lebda: In his time at the company, he's helped build our financial planning and analysis team, built an award-winning investor relations function by himself, and took on the role of treasurer as well. His work the last three years as our CFO helped us to improve our operating efficiency and recapitalize our balance sheet with a loan from Apollo we closed in March. Jason Bengal will be taking over the job from here.
Speaker Change: Finally, I'd like to extend my sincere gratitude to our CFO Trent Ziegler.
Trent Ziegler: He started 12 years ago as an analyst in our finance department.
Speaker Change: In his time at the company, he's helped build our financial planning and analysis team, built an award-winning investor relations function by himself, and took on the role of treasurer as well.
Speaker Change: His work the last three years as our CFO helped us to improve our operating efficiency and recapitalize our balance sheet with a loan from Apollo we closed in March.
Jason Bangle: Jason is truly one of the most respected people at LendingTree, and last year, he partnered with Trent to remove over $60 million of fixed costs from the business. Jason has built out and led a team of professionals tasked with driving ongoing improvements in operations. He also co-led our internal strategy process, which has resulted in us becoming much more responsive and agile. I am excited and thrilled for him to take over this expanded role. And with that introduction, Jason would like to say a few words as well. Thank you, Doug.
Speaker Change: Jason Bengell will be taking over the job from here. Jason is truly one of the most respected people at LendingTree and last year he partnered with Trent to remove over 60 million dollars of fixed costs from the business.
Speaker Change: Jason has built out and led a team of professionals tasked with driving ongoing improvements in operating efficiency.
Speaker Change: They also co-led our internal strategy process which has resulted in our becoming a much more responsive and agile company.
Jason Bangle: Trent and I have worked very closely over the last six years, and we've made huge progress fixing our balance sheet and right sizing our expense base. So we're very happy with where we are; we now have an expense base that's highly leverageable. And going forward, my priority is going to be, you know, continuing to make strides and focus and discipline. Focus, you know, not trying to do everything all at once but placing thoughtful bets, being disciplined about resource allocation and being disciplined about measuring our progress with KPIs and making sure we pivot where it makes sense.
Speaker Change: I am excited and thrilled for him to take over this expanded role. And with that introduction, Jason would like to say a few words as well.
Jason: Thank you, Doug.
Jason: Trent and I have worked very closely over the last six years, and we've made huge progress fixing our balance sheet and right-sizing our expense base.
Jason: So we're very happy with where we are. We now have an expense base that's highly leverageable. And going forward, my priority is going to be, you know, continuing to make strides and focus and discipline.
Jason: focus, you know, not trying to do everything all at once but placing thoughtful bets.
Jason Bangle: So I'm very excited about the opportunity LendingTree has before it, and I'm also very excited about my new role at it. So, thank you, Trent, and thank you, Doug. I really appreciate the opportunity here. And with that, Operator, we'll take questions. Thank you so much. And as a reminder, press star 1-1 to get in the queue and wait for your name to be announced. To withdraw the question, simply press star 1-1 again.
Jason: and disciplined about resource allocation and disciplined about measuring our progress with KPIs and making sure we pivot where it makes sense.
Jason: So I'm very excited about the opportunity LendingTree has before it and I'm also very excited about my new role in it. So thank you Trent and thank you Doug, I really appreciate the opportunity here.
Speaker Change: And with that, Operator, we'll take questions. Thank you so much. And as a reminder, press star 1-1 to get in the queue and wait for your name to be announced. To withdraw the question, simply press star 1-1 again.
Operator: One moment for our first question. It comes from Jed Kelly with Oppenheimer. Please proceed. Hi, thanks for taking our call. This is Josh on behalf of Jed.
Speaker Change: One moment for our first question. It comes from Jed Kelly with Oppenheimer. Please proceed.
Operator: Thanks for taking our questions. Just had to ask how much of the insurance margin compression is due to the higher demand versus some of the competition from other operators, and then you get concerned with how long this period of earnings can continue going forward. If I don't include that, yeah, this is Scott Peyree. Scott Peyree, I'll answer that question.
Speaker Change: Hi, thanks for taking our call. This is Josh for Jed. Thanks for taking our questions.
Josh: How much of the insurance margin compression is due to the higher demand versus some of the competition from other operators, and then do you get concerned with how long this period of earning can continue going forward?
Scott Peyree: Yeah, I would say, as far as the margin compression, you know, I would start with by saying overall VM, and VMD dollars continue to increase, and that's, and that's our primary concern as we grow with our clients in providing the highest quality product to the clients possible while at the same time growing VMD as much as possible. So the incremental revenue growth, which has been extreme right now, has come at a lot lower margins, but it has come with a positive VMD. So, you know, if I look at the long-term history of the insurance business, when you're in an extreme growth mode, which we are right in the middle of an extreme growth mode right now, you'd probably expect your margins to be as low as the high 20s. And when you Long-term normality, which honestly, we haven't been at before COVID.
Speaker Change: If I don't include that, yeah, there's a Scott Brute.
Scott Peyree: Scott Peyree, I'll answer that question. Yeah, I would say as far as the margin compression, you know, I would start with by saying overall VM, VMD dollars continue to increase and that and that's our primary concern as we grow.
Scott Peyree: with our clients to provide A, the highest quality product to the clients as possible, and at the same time grow BMD as much as possible. So the incremental revenue growth, which has been extreme right now, has come at a lot lower margins, but it has come at positive BMD margins.
Scott Peyree: So, you know, if I look at the long-term history of the insurance business, when you're in extreme growth mode,
Scott Peyree: Which we are right in the middle of extreme growth mode right now. You'd probably expect it to be as low as the high 20s. Your margins.
Scott Peyree: When you're in extreme downturns, like we were a year ago, with a lot of cap budgets, you would expect margins to be up in the low to mid-40s. Long-term normality?
Douglas R. Lebda: But I think we could probably be in extreme growth for a while now. But say, a year from now, things start normalizing, you're probably looking at low to mid-30s, our historical average margins in the insurance business, which that's where I would expect to level out once we reach more of a normal state in the insurance business. The only thing I'd add to that, Doug, is that as you're getting so much more demand coming into the marketplace, whether it's price, quantity, or volume and coverage, you want to go fulfill that. Because as you're growing your share and growing your revenue per lead, that share that you take from the market makes you that much more competitive in the auction-based advertising markets, particularly search.
Scott Peyree: Which, honestly, we haven't been at before COVID, but I think we could probably, I think we'll be in extreme growth for a while now, but say a year from now, things start normalizing, you're probably looking at low to mid-30s as our historical average margins in the insurance business.
Scott Peyree: which that's where I would expect to level out once we reach more of a normal state in the insurance business.
Scott Peyree: And the only thing I'd add to that is, Doug, is that, you know, as you're getting so much more demand coming into the marketplace, whether it's price, quantity, or volume and coverage,
Speaker Change: You know, you want to go fulfill that, because as you're growing your share, and growing your revenue per lead, you know, that share that you take from the market makes you that much more competitive in the auction-based advertising markets, particularly search.
Scott Peyree: And the ability to drive that high quality, high conversion, high intent volume to customers is really where we differentiate. Great. And then for the personal loans, there was some good improvement there. Just trying to get an idea of how much is from, you know, better conversion versus, you know, better macro background.
Speaker Change: And the ability to drive that high-quality, high-conversion, high-intent volume to customers is really where we differentiate.
Speaker Change: Great. And then the last one for the personal loans, there was some good improvement there. Just trying to get an idea of how much is from, you know, better conversion versus, you know, better macro background and if there's any color you can give us on the consumer segments benefit if the Fed does lower rates.
Scott Peyree: And if there's any color you can give us on the consumer segment's benefit if the Fed does lower rates. Yeah, I'll start at a high level just on consumer lending in general, overall lending in general. I would say, as Doug mentioned at the top of the call, We reached a level of stability for a while that we saw in Q2. Like I would say, you know, Q1 was probably the trough as far as the tightening of underwriting standards from clients, and then it's kind of been a level of stability.
Speaker Change: Yeah, I'll say I'll start at a high level just on consumer lending in general, overall lending in general. I would say, as Doug mentioned at the top of the call, we reached a level of stability for a while that we saw in Q2. Like I would say, you know, Q1 was probably the trough as far as...
Scott Peyree: And we were able to grow through that level of stability, mainly by focusing on gaining market share in the high-intent marketplaces, which we've done a very successful job of doing. So that drove revenue growth in personal loans, whereas BMD was relatively flat overall in consumer.
Speaker Change: The tightening of underwriting standards from clients, and then it's kind of been a level of stability, and we were able to grow through that level of stability.
Speaker Change: Mainly by focusing on gaining market share in the high-intent marketplaces, which we've done a very...
Scott Peyree: Quarter over quarter, we were able to grow revenue with high-quality, high-intent traffic, and having better positioning in those marketplaces sets us up extremely well for when rates start coming down. And more importantly, our clients are starting to open up their underwriting criteria again, which will be the biggest domino to fall, honestly, in the consumer lending segment when rates start coming down. So, you know, that's imminently in front of us at this point, more clearly in front of us than it's been in years. So I'm really, really happy, personally, with our positioning right now.
Speaker Change: successful job of doing so that that drove revenue growth in personal loans whereas BMD was relatively
Speaker Change: Overall on consumer, quarter over quarter, we were able to grow revenue with high quality.
Speaker Change: High Intent Traffic, and having better positioning in those marketplaces sets us up extremely well.
Speaker Change: for when rates start coming down, and more importantly, our clients start opening up their underwriting criteria.
Speaker Change: Again, which will be the biggest domino to fall, honestly, in the consumer lending segment when rates start coming down. So, you know, that's imminently in front of us at this point, you know, more clearly in front of us than it's been in years. So.
Operator: We put a lot of focus on personal loans in Q2, but honestly, we did a lot of similar work in the mortgage space, where you saw revenue growth there from high-intent consumers. Towards the end of the quarter, we started putting our efforts into small business, and our high-intent consumers are growing there. So I think we're showing lots of success across the board to drive more of those consumers and improve our mix. And that's going to set us up really well for when the lending market starts to turn in the near future. Thank you. Please take a moment for our next question. And it's from Ryan Tomasello with KBW.
Speaker Change: So, I'm really, really happy, personally, with our positioning right now. We put a lot of focus on personal loans in Q2, but honestly, we did a lot of similar work in the mortgage space, which you saw revenue growth there in high-intent consumers.
Speaker Change: Towards the end of the quarter, we started putting our efforts into small business, and our high-intensity consumers are growing there, so I think we're showing lots of success across the board to drive more of those consumers.
Speaker Change: in improving our mix and that's going to set us up really well for when the lending market starts to turn in the near future.
Speaker Change: Great, thank you.
Speaker Change: Thank you. One moment for our next question.
Operator: Please proceed. Hi everyone, thanks for taking the questions. I guess just taking a step back on the margin front, guide for the year is calling for EBITDA margins of around 10%, and the second half implies that guidance is, I think, you know, high single-digit margins. You know, how should we think about all the moving pieces here, you know, insurance being the biggest one near term, around how that impacts the timing, your ability to get back to structural EBITDA margins closer to the mid to high teens that you've previously shown an ability to achieve?
Speaker Change: And it's from Ryan Tomasello with KBW. Please proceed.
Ryan John Tomasello: Hi, everyone. Thanks for taking the questions.
Ryan John Tomasello: I guess just taking a step back on the margin front, it looks like the revised guide for the year is calling for EBITDA margins of around 10%. The second half implied
Speaker Change: God is, I think, you know, high single-digit margins.
Speaker Change: You know, how should we think about...
Speaker Change: All the moving pieces here, you know, insurance being the biggest one near term.
Speaker Change: around how that impacts the timing and...
Speaker Change: your ability to get back to
Operator: Is that going to take this massive insurance cycle, you know, maturing a bit, and also seeing consumers come back? You know, just trying to understand the moving pieces around what drives the margin. Yeah, so this is Doug. Let me just start off and echo something that Scott said earlier, which is, The entire laser focus of the company has to be maximizing variable margin dollars every single day.
Speaker Change: structural EBITDA margins, you know, closer to the mid to high teens that you've, you know, previously shown an ability to get to.
Speaker Change: Is that going to take, you know, this massive insurance cycle, you know, maturing a bit and also seeing consumer, you know, come back, you know, just trying to understand the moving pieces around what drives the margin expansion on a consolidated basis.
Speaker Change: Yeah so this is Doug, let me just start off and echo something that Scott said earlier which is
Operator: So if we can make an incremental $100 in margin, and it costs us 97 bucks to do it, we're going to do that at times when our clients are demanding more customers from us than we actually have.
Doug: The entire laser focus of the company has to be maximizing variable margin dollars every single day. So if we can make an incremental...
Speaker Change: [inaudible]
Douglas R. Lebda: So then we're going out and trying to get more and more demand. And as that demand is building, then it enables us to invest in marketing. So we don't. A percentage margin at the end of the day is more of an output than it is a target for us, and marketing expense is fuel rather than an expense.
Speaker Change: So, you know, then, you know, we're going out and trying to get more and more demand. And as that demand is building, that enables us to invest in marketing. So we don't really, so we don't.
Speaker Change: A percentage margin at the end of the day is more of an output than it is a target for us, and marketing expense is fuel rather than an expense.
Douglas R. Lebda: And so I think the revenue and the BMD is where we like to focus. And with that, I'll hand it over to Jason to talk about the numbers or Scott. Yeah, it's Jason.
Speaker Change: And so I think the revenue and the VMD is where we like to focus. And with that, I'll hand it over to Jason to talk about the numbers or Scott.
Jason Bangle: I can frame out some of the assumptions in the guide here, and I think the easiest way to think about it is just relative to Q2. And so I'll go piece by piece here. So just starting with insurance, you know, we expect continued strength and insurance for the rest of the year. This market has a long runway, so we expect sequential growth in both revenue and VMD from here relative to Q2, but with some margin compression for all the reasons we just talked about. Again, it is focused on driving VMD dollars, though.
Speaker Change: Yeah, it's Jason. I can frame out some of the assumptions in the guide here, and I think the easiest way to think about it is just relative to Q2.
Jason: And so I'll go piece by piece here. So just starting with insurance, you know, we we expect continued strength and insurance the rest of the year. This is
Jason: This market has a long runway, so we expect sequential growth in both revenue and VMD from here relative to Q2, but with some margin compression for all the reasons we just talked about.
Jason Bangle: As it relates to insurance on the expense side, we are gradually investing in some headcount to drive some of that VMD and insurance. So as the unique economics work out, and we're able to drive VMD, we'll see some increase in expense for the rest of the year. And then moving along home and consumer, really, the guide is assuming just a generally steady state from where we are with some normal seasonal decline in Q4.
Jason: Again, focused on driving VMD dollars, though. As it relates to insurance on the expense side, we are...
Jason: Gradually investing in some headcount to drive some of that VMD and insurance. So as the unit economics work out and we're able to drive VMD, we'll see some increase in expense for the rest of the year.
Jason Bangle: The big unknown is obviously rates. It seems like it's increasingly imminent that that will happen and we will benefit from it, but we're not assuming any benefit in the guide for home and consumer at this point. So those are really the key assumptions to talk through. Great, that's really helpful.
Jason: And then moving along home and consumer, really the guide is assuming just generally steady state from where we are with some normal seasonal decline in Q4.
Jason: The big unknown, obviously, is rates. It seems like that's increasingly imminent, that that will happen, and we will benefit from it, but we're not assuming any benefit in the guide for home and consumer at this point. So those are really the key assumptions to talk through.
Douglas R. Lebda: And you already kind of touched on what was gonna be my second question here, but maybe just help us, you know, unpack the magnitude and timing of the potential uplift that businesses could see from Fed rate cuts. I mean, do you feel like the Fed finally getting on a cut, a trend of cuts here is more of an emotional type of response you'll see out of your network partners, or will it take time for several rate cuts to actually play out in terms of benefiting, you know, you know, loosening credit boxes and driving more volume on the consumer side, and also more of an understanding of that might take more time? Yeah, I think you hit the nail on the head with the word benefit.
Speaker Change: Great, that's that's really helpful and you already kind of touched on what was gonna be my second question here but maybe just help us you know unpack the magnitude and timing of the potential uplift that the business could see from from Fed rate cuts I mean it is do you feel like
Speaker Change: The Fed finally getting on a cut, a trend of cuts here is more of a
Speaker Change: emotional type of response you'll see out of your your network partners or it will take time for several rate cuts to actually play out in terms of benefiting
Speaker Change: You know, you know, loosening credit boxes and and driving more volume on the consumer side and off and also more Might take more time
Douglas R. Lebda: So, you know, structurally in the mortgage business right now, 70% of customers have rates that are 5% or below. So, the time when there's going to be a large change in consumer benefit is probably a ways off. However, the change in shopping behavior will be, we think it's always been, dramatic.
Speaker Change: Yeah, I think you hit the word right with the word benefit.
Speaker Change: So...
Speaker Change: Structurally, in the mortgage business right now, 70% of customers have rates that are 5% or below.
Speaker Change: So, the time when there's going to be a large change in consumer benefit
Speaker Change: is probably a ways off. However, the change in shopping behavior.
Scott Peyree: And so we expect to see, or we hope to see when that happens, a large, you know, a decent increase in inflows just due to the market. And then we're going to have to work with our lenders to soak up all of that extra demand or all that extra supply that we're going to have coming in. And the other thing I would note is that we're working right now on preparing for that, just because there will be a change in shopping behavior.
Speaker Change: will be, we think it's always been dramatic. And so we expect to see.
Speaker Change: We hope to see when that happens, we would expect to see a large, you know, a decent increase in inflows just due to the market.
Speaker Change: And then we're going to have to work with our lenders to sop up all of that extra demand or all that extra supply that we're going to have coming in. And the other thing I would note is that we're working right now on preparing for that.
Scott Peyree: So, you called it, I think, you know, more of a psychological change than a benefit change, but there will be that psychological change because it'll be everywhere in the news that, you know, the Fed. And yeah, this is Scott. I'll add a few things.
Speaker Change: Just because there will be a change in shopping behavior, so you call it, I think, you know, more of a psychological change than a benefit change, but there will be that psychological change because it'll be everywhere in the news that, you know, the Fed cut rates.
Scott Peyree: I mean, as Doug said, the first domino to fall would be consumer shopping behavior. The next domino will be the loosening of underwriting requirements, and I'll be honest, without getting into any specific client negotiations, we've had multiple clients we're working with right now, not just one, multiple clients that are already talking about loosening underwriting requirements and accepting more consumers from us, a wider swath of consumers across multiple product And it is very similar to Q3 last year when insurance was in its trough.
Speaker Change: Yeah, this is Scott. I'll add on a few things. I mean, as Doug said, the first domino to fall would be consumer shopping behavior.
Speaker Change: The next domino will be loosening up of underwriting requirements, and I'll be honest, without getting into any specific line negotiations,
Speaker Change: We've had multiple clients we're working with right now, not just like one, multiple clients that are talking already.
Speaker Change: about loosening underwriting requirements and accepting more consumers from us.
Speaker Change: and a wider swath of consumers.
Scott Peyree: It was around Q3 last year when we started having similar conversations with carriers about them loosening their underwriting requirements and opening up geographies. And then refinance will probably skyrocket. That's probably going to be the third domino.
Speaker Change: across multiple product lines, and it echoes very similar.
Speaker Change: to Q3 last year when insurance was in its trough. It was around Q3 last year when we started having similar conversations with carriers about them loosening their underwriting requirements and opening up geographies, and then it
Speaker Change: It started actually happening in Q4, and then it started snowballing in Q1. So, you know, I would say a combination of increased shopping and then even the bigger domino of loosening underwriting requirements, it could really snowball.
Doug: The lending side, you know, getting into early 25, you know, and then the final domino, as Doug said, is when that rate benefit, especially for refinance, when that reaches that tipping point.
Operator: Great, thanks for all the coverage. Thank you. One moment for our next question, please. And it's from the line of John Campbell with Stevens. Please proceed. Hey guys, it's Jonathan on for John.
Doug: refinance will probably skyrocket. That's probably going to be the third domino.
Speaker Change: Great, thanks for all the color, guys.
Speaker Change: Thank you. One moment for our next question, please.
Operator: I was wondering if you could give some more color on the trajectory of insurance revenue throughout the quarter. Did it sort of ramp up as more and more carers got off the bench and increased marketing dollars? You know, what did that look like, and what was the trajectory like exiting the quarter?
Speaker Change: And as from the line of John Campbell with Stevens, please proceed.
John Robert Campbell: Hey guys, it's...
Jonathan: Jonathan on for John .
Jonathan: I was wondering if you could give some more color on the trajectory of insurance revenue throughout the quarter. Did it sort of ramp up as more and more carers got off the bench and increased marketing dollars? You know, what did that look like and what was the trajectory like exiting the quarter?
Scott Peyree: Yes, so yes, it continued ramping up throughout the quarter on it, like, and that's why our revenue beat was so significant on that versus what we estimated going into the quarter. I would say we had strong, we had strong positioning going into the quarter. And then there was a significant step change at the beginning of June, which I basically give a lot of credit to my insurance team for doing a lot of significant negotiations with our top clients and securing major budget increases from those clients.
Speaker Change: Yes, so, yes, it continued ramping up throughout the quarter, and that's why our revenue beat was so...
Speaker Change: Significant on that versus what we estimated going into the quarter. I would say we had strong positioning going into the quarter and then there was a significant step change.
Speaker Change: at the beginning of June , which was basically to give a lot of credit to my insurance team, doing a lot of significant negotiations with our top clients and securing major budget increases from those clients.
Scott Peyree: So we did a big step change in June and we have, you know, honestly, heading into July, we've been running slightly hotter than we even were in June. So, you know, I would argue our current Q3, revenue, and VMD forecasts are probably pretty conservative for insurance, the way the insurance market is going right now. Now, obviously, with this extreme growth, you want to be a little conservative, but it's just...
Speaker Change: So we did a big step change in June , and we have, you know, honestly heading into July , we've been running slightly hotter than we even were in June . So, you know, I would argue our current Q3...
Speaker Change: Revenue and VMD forecasts are probably pretty conservative for insurance, the way the insurance market is going right now. Now, obviously, with this extreme growth, you want to be a little conservative, but it's just...
Scott Peyree: These carriers, especially the ones that have reached rate adequacy, have an extreme appetite for bringing on consumers right now. Okay, thank you for that. And then, as a follow-up. You know, it's like at this point. Is it pretty broad-based, or is it still, you know, a couple players, are there still players on the bench, any color you can provide there?
Speaker Change: These carriers have, especially the ones that have reached rate adequacy, have an extreme appetite for bringing on consumers right now.
Speaker Change: Okay, thank you for that, and then as a follow-up...
Speaker Change: You know, at this point, is it pretty broad-based, or is it still, you know, a couple players, are there still players on the bench, you know, any color you can provide there?
Scott Peyree: I would say yes to both of those. It is extremely broad-based. We're seeing very significant budgets from a number of carriers. Obviously, at our revenue levels, we're seeing some long-term clients spending way more than they ever have with us. That said, there are a few carriers that historically spend a lot more money with us that haven't even come back at any significant level yet. So that's still an opportunity. There are still certain geographies that have very limited coverage still, but it's going to be that they will eventually open up. The home insurance industry has still not achieved rate adequacy as an industry.
Speaker Change: I would say I would say yes to both of that it is extremely broad-based we're seeing
Speaker Change: Very significant budgets from a number of carriers. Obviously our revenue levels, we're seeing some long-term clients spending way more than they ever have.
Speaker Change: with us. That said, there are a few carriers that historically spend a lot more money with us that haven't even come back at any significant level yet. So that's
Speaker Change: Still an opportunity. There are still certain geographies that have very limited coverage still. That's going to be that. They will eventually open up. The home insurance industry has still not achieved rate adequacy as an industry.
Scott Peyree: So that's pretty suppressed still, and that will open up with a lot of demand. So, I mean, you just logically look at it.
Scott Peyree: There's a lot of runway left in this growth phase of insurance. That's great. Thank you for taking my question. Thank you. One moment for our next question. And it comes from the line of Youssef Squali.
Speaker Change: So that's pretty suppressed still, and that will open up with a lot of demand. So, I mean, you just logically look at it, there's...
Speaker Change: There's a lot of runway left in this growth phase of insurance.
Operator: With tourist securities, please proceed. All right, thank you. Trent, all the best for you in your new role, and Jason, congratulations, and I'm looking forward to working with you. So maybe just.
Speaker Change: That's great. Thank you for taking my questions.
Speaker Change: Thank you. One moment for our next question. And it comes from the line of Youssef Squali with Truist Securities. Please proceed.
Youssef Houssaini Squali: All right, thank you. Trent, all the best for you in your new role, and Jason, congratulations, and looking forward to working with you.
Operator: I guess as you look at your prior guidance for the year relative to the new guidance, is it basically fair to assume that all of the revenue upside, and I think it was like $140 million. The point is, from insurance, in other words, the other two segments, your expectations really have not changed. Yeah, Jason, I'll take that.
Jason: So maybe just... Thank you.
Youssef Houssaini Squali: A couple follow-ups. I guess as you look at your prior guidance for the year relatively to the new guidance, is it basically fair to assume that all of the revenue upside and I think it was like 140 million dollars of it
Jason: at the midpoint, is from insurance, in other words, the other two segments, your expectations really have not changed? That's the first question.
Jason Bangle: Yeah, that's basically right. It's primarily due to favorability and insurance, just as Scott had outlined. And then, switching to the balance sheet, how much is left in the convertible note due July 2025? And what are the subsequent maturities after that?
Jason: Yes, Jason, I'll take that. Yeah, that's basically right. You know, it's primarily due to favorability and insurance, just as Scott had outlined.
Speaker Change: And then on the, kind of switching to the balance sheet, how much is left in the convertible note due July 2025, and what are the subsequent maturities after that?
Jason Bangle: So it's Jason. I'll take that one also. So the convert, we retired $161 million of the convert in Q2. So as of Q2, we have $123 million left. And then subsequent to that, we retired another $7 million.
Speaker Change: So it's Jason. I'll take that one also. So the Convert, we retired $161 million of the Convert in Q2. So as of Q2, we have $123 million left. And then subsequent to that, we retired another $7 million. So now we're down to $116 million.
Jason Bangle: So now we're down to $116 million, and so the strategy there is the same. We're going to buy those back at a price that's attractive to us. And then, going forward, we'll, you know, use cash on hand, the $50 million delayed draw from the Apollo facility, and future cash to address that maturity. The remaining maturities are several years out, so we're feeling pretty good about our capital structure. Yeah. Can you quantify the following material?
Speaker Change: And so the strategy there is the same. We're going to buy those back at a price that's attractive to us.
Speaker Change: And then going forward, we'll, you know, use cash on hand, the $50 million delayed draw from the Apollo facility and future cash to address that maturity.
Jason Bangle: 250 is due out in 2028. Is there anything else outside of that? So yeah, Apollo is, you know, 2031.
Speaker Change: The remaining maturities are several years out, so we're feeling pretty good about our capital structure.
Speaker Change: Yeah, can you quantify the subsequent material, 250 due out in 2028? Is there anything else outside of that?
Jason Bangle: So that'll be $175 million with a $50 million delayed draw. And then the original term loan is for September 2028. And lastly, maybe Doug, there was a broad data breach out there that affected everybody, including you guys. Can you just help us kind of, well, first provide any update on what went on there? And then how is this potentially impacting the business, if at all? Scott, do you want to take that first?
Speaker Change: So yeah, Apollo is, you know, 2031. So that's that'll be $175 million with a $50 million delay draw. And then the original term loan is.
Speaker Change: September 2028
Speaker Change: Yeah.
Speaker Change: Okay. And lastly, maybe Doug, there was a broad data breach out there that affected everybody, including you guys. Can you just help us kind of, well, first provide any update to
Speaker Change: to kind of what went on there. And then how is this potentially impacting the business, if at all, maybe it's not.
Jason Bangle: Do you have any comments on that? And then I'll pick it up. Um, I'll be honest, I'm going to have to read the statement. We can confirm that we use Snowflake for our business operations and that we were notified by them that our subsidiary, Quill Wizard, was impacted by the Snowflake data incident.
Speaker Change: Scott, do you want to take that first?
Scott: It kind of came from, do you have any comments on that? And I'll pick it up second.
Speaker Change: I'll be honest, I'm going to have to read the statement. We can confirm that we use Snowflake for our business operations and that we were notified by them that our subsidiary, Quilt Wizard, was impacted by the Snowflake data incident.
Scott Peyree: We immediately began an investigation upon hearing from Snowflake. We take these matters seriously and are currently working to conclude our investigation and address any related legal obligations. Based on our investigations, no consumer social security numbers or financial account information was affected, and no LendingTree branded products or services were impacted. Okay, so in other words, from a financial standpoint. You don't really see this as impacting the business, at least as of now, based on what? No, yeah, we really can't comment on this. It's an ongoing investigation. What I can say is, you know, we don't expect this to happen. If it were material, we would have announced its materiality. And we don't believe it is.
Douglas R. Lebda: Got it. Okay. That's helpful.
Speaker Change: We immediately began an investigation upon hearing from Snowflake. We take these matters seriously and are currently working to conclude our investigation and address any related legal obligations.
Speaker Change: Based off our investigations, no consumer social security numbers or financial account information was affected, and no LendingTree branded products or services were impacted.
Speaker: Okay, so in other words, from a financial standpoint, you don't really see this as impacting the business, at least as of now, based on what you're talking about.
Speaker Change: Okay, so in other words, from a financial standpoint...
Speaker: Yeah, we really can't comment on this as an ongoing investigation. Like Ken says, you know, we don't expect us that if it were material, we would have announced its materiality, and we don't believe it is.
Speaker Change: You don't really see this as a...
Speaker Change: as impacting the business, at least as of now, based on what you said.
Speaker Change: Yeah, we really can't comment on this. It's an ongoing investigation. What I can say is, you know, we don't expect us that if it were material, we would have announced its materiality.
Speaker: Okay, that's helpful.
Speaker: Thank you, guys. Thank you.
Operator: Thank you, guys. Thank you. One moment for our next question, and it comes from the line of Melissa Wedel with J.P. Morgan. Please proceed. Good afternoon.
Speaker: And he comes from the line of Melissa Wedel with J.P. Morgan, please proceed.
Speaker Change: And we don't believe it is.
Speaker Change: Okay, that's helpful. Thank you, guys.
Speaker: Good afternoon. Thanks for taking my questions.
Operator: Thanks for taking my questions. Also, just say congrats to Trent on the new role and looking forward to working with the team going forward. Going back to the idea of replicating the sort of the insurance strategy of reducing margin to capture share, when we look at how that's probably looking like a really great strategy right now that you're reaping the benefits of it, and you've got a recovery in revenues and margin.
Speaker Change: Thank you. One moment for our next question and it comes from the line of Melissa Wedel with JP Morgan. Please proceed.
Speaker: Also, just to say congrats to both Trent on the new role and looking forward to working with the team going forward.
Melissa Weddell: Good afternoon. Thanks for taking my questions. Also, just say congrats to both Trent on the new role and looking forward to working.
Speaker: Going back to the idea of replicating the sort of the insurance strategy of reducing margin to capture shares, when we look at how that's probably looking like a really great strategy right now that you're reaping the benefits of it and you've got a recovery on revenues and that and margin.
Speaker Change: with the team going forward. Going back to the idea of replicating the sort of the insurance strategy of
Speaker Change: Reducing margin to capture share, when we look at how that's probably looking like a really great strategy right now that you're reaping the benefits of it and you've got a recovery on revenues down that.
Operator: But when we look at how long that took, that was really like sort of a five to six quarter commitment to reduced margin. It sounds like what you're saying, at least in consumer, is that you don't necessarily think that that investment period or the period where you'll see that margin compression will necessarily be as long, maybe as long as you saw on insurance. Is that a fair interpretation of what your view is? Jason, Scott.
Speaker: But when we look at how long that took, that was really like sort of a five-digit quarter commitment on reduced margin. It sounds like what you're saying, at least in consumer, is that you don't see that that margin compression will necessarily be as long. Maybe, as you saw an insurance, is that a fair interpretation of what your view is?
Speaker Change: and Margin. But when we look at how long that took, that was really like sort of a five to six quarter commitment on reduced margin. It sounds like what you're saying, at least in consumer, is that you don't necessarily think that
Speaker Change: That investment period or the period where you'll see that that margin compression will necessarily be as long. Maybe as you saw in insurance, is that a fair interpretation of what your view is?
Jason Bengel: Jason Scott, I'll start, and again, I'll just repeat, as I've repeated, like our goal is increasing total B&B dollars. So, if I can do $3 billion of revenue at lower margins, but double my B&D, I'm happy with that.
Scott Peyree: I'll start and again, I'll just repeat as I've repeated, like our goal is increasing total BMD dollars. So if I can do $3 billion of revenue, at lower margins but double my V&D, I'm honest; I'm happy with that. Like, you know, so that...
Speaker Change: Jason, Scott. I'll start and again I'll just repeat as I've repeated like our our goal is increasing total BMD dollars.
Speaker Change: So, if I can do $3 billion of revenue at lower margins but double my V&D, I'm honest, I'm happy with that.
Jason Bengel: So I would say, when you get into an extreme growth mode in lending, which we will be sooner rather than later, if our clients have high demand and want to be writing loans for 3, 4, 5X the amount of consumers than they do currently, we're going to do our best to service that because we want to walk in that budget, we want to show them that we can deliver on that budget. And if we need to do it a slightly lower margin, as long as we're making more B&D at the end of the day, our clients are happy and we're happy.
Scott Peyree: So, I would say, when you get into an extreme growth mode in lending, which we will be sooner rather than later, you know, if our clients have high demand and want to be writing loans for 3, 4, 5x the amount of consumers than they do currently, we're going to do our best to service that, because we want to walk in that budget. We want to show them that we can deliver on that budget.
Speaker Change: So I would say when you get into an extreme growth mode in lending, which we will be sooner rather than later,
Speaker Change: If our clients have high demand and want to be writing loans for 3, 4, 5x the amount of consumers than they do currently, we're going to do our best to service that, because we want to walk in that budget, we want to show them that we can deliver on that budget, and if we need to do it at a slightly lower margin,
Scott Peyree: And if we need to do it at a slightly lower margin, as long as we're making more V&D at the end of the day, our clients are happy and we're happy. Yeah, the way I like to think of it in a two-sided marketplace is if you've got demand for customers from our clients, you have to go fulfill that and you go take that as much of that demand as you can and then you go try to compete to fulfill that because not only are you making money in the first transaction, we're also making money in cross-sell and other revenue streams afterwards and the added effect of that, and the positive effect that you're having, even if it's at theoretically zero percent margin, you know, that budget is coming from somebody else, and or it's coming from the market growing overall and to the extent it's coming from somebody else it's improving our revenue per liter, our RPL, our demand equation and it's hurting somebody else's and that's making us more positive in in the auctions and we've always prided ourselves on on dominating among that high intent traffic and working with our clients because that you know, they want more efficiency and higher conversions and don't want a bunch of trash.
Speaker: Yeah, the way I like to think of it in a two-sided marketplace is if you've got demand for customers from our clients, you have to go fulfill that. And you go take that as much of that demand as you can, and then you go try to compete to fulfill that because not only are you making money in the first transaction, we're also making money in cross-sell and other revenue streams afterwards. And the added effect of that and the positive effect that you're having, even if it's theoretically 0% margin, you know, that budget is coming from somebody else.
Speaker Change: As long as we're making more VMD at the end of the day, our clients are happy and we're happy.
Speaker Change: Yeah, the way I like to think of it in a two-sided marketplace is, if you've got demand for customers from our clients,
Speaker Change: You have to go fulfill that and you go take that as much of that demand as you can and then you go
Speaker Change: We try to compete to fulfill that because not only are you making money on the first transaction, we're also making money in cross-sell and other revenue streams afterwards, and the added effect of that
Speaker Change: and the positive effect that you're having even if it's a theoretically 0% margin you know you're that that budget is coming from somebody else
Speaker: and, or it's coming from the market growing overall, and to the extent it's coming from somebody else, it's improving our revenue per liter, our PL, our demand equation, and it's hurting somebody else's, and that's making us more positive in the options.
Speaker Change: And, or it's coming from the market growing overall, and to the extent it's coming from somebody else,
Speaker Change: It's improving our revenue per liter, our RPL, our demand equation, and it's hurting somebody else's. And that's making us more positive in the auctions. And we've always prided ourselves on...
Speaker: And we've always pride ourselves on dominating among that high-intent traffic and working with our clients because that's, you know, they want more efficiency and higher conversions and don't want to buy their trash, and so we partner with them. And the only reason we can do that is because we have more demand than others, and when you're in a growth mode, you want to capture all of that that you can.
Scott Peyree: And so we partner with them, and the only reason we can do that is because we have more demand than others. And when you're in a growth mode, you want to capture all of that, the Yeah. All right. That's great. And I'll just. Jason, go ahead.
Speaker Change: on dominating among that high intent traffic and working with our clients because that you know they want more efficiency and higher conversions and don't want a bunch of trash and so we partner with them and
Speaker Change: And the only reason we can do that is because we have more demand than others, and when you're in a growth mode, you want to capture all of that that you can.
Speaker: Yeah, okay, so now just.
Speaker: Jason, good.
Jason Bangle: I'll just add one more thing to that. When we think about home and consumer coming back, just going back to our expense base, we've been focused on making sure that we have a lot of leverage in that expense base. So when home and consumer come back, it's largely our current partners spending more with us. And so we've been focused on making sure as much of that BMD as possible drops down to EBITDA. And so the activities when our current partners spend more time with us aren't changing that much.
Speaker: I'll just, I'll just tack on one more thing to that. You know, and when we think about home and consumer coming back, at just going back to our expense base, we've been focused on making sure that we have a lot of leverage in that expense base. So when home and consumer come back, it's largely our current partner spending more with us. And so we're going to, we've been focused on making sure as much of that, the MD is possible drops down to EBITDA.
Speaker Change: Yeah. All right. Next case.
Speaker Change: I'll just tack on one more thing to that, you know, when we think about home and consumer coming back, just going back to our expense base,
Speaker Change: We've been focused on making sure that we have a lot of leverage in that expense base. So when home and consumer come back, it's largely our current partners spending more with us.
Speaker: And so the activities, when our current partner's done more with us, aren't changing that much; we don't need to hire a massive number of account managers necessarily to support that growth. And so we're really focused on making sure it translates into EBITDA as it comes back.
Jason Bangle: We don't need to hire a massive number of account managers necessarily to support that growth, and so we're really focused on making sure it translates into EBITDA as it comes back. Yeah, it's a great point.
Speaker Change: And so we've been focused on making sure as much of that BMD as possible drops down to EBITDA. And so the activities, when our current partners spend more with us, aren't changing that much. We don't need to hire.
Jason Bangle: You're basically hanging on during these markets but trying to use it to gain share. Yes, okay. I wanted to also pull on the thread a little bit around some of the partners within consumer talking about loosening underwriting standards or at least starting to talk about that. I'm curious, as you noted, it's multiple partners. Is it within a particular, like, super prime part of the market? Is it geared toward a particular type of customer? Yeah, so I would say that there's a problem there.
Speaker: Yeah, it's a great point, like you're basically hanging on during these markets, but trying to use it to gain share. Yes, okay.
Speaker Change: a massive number of account managers necessarily to support that growth. And so we're really focused on making sure it translates into EBITDA as it comes back. Yeah, it's a great point. Like you're basically hanging on during these markets, but trying to use it to gain share.
Speaker: One is also pulling the thread a little bit around your, some of the partners within consumer talking about listening underwriting standards, or at least starting to talk about that.
Speaker Change: Yes, okay. I wanted to also pull on the thread a little bit around your some of the partners within consumer talking about loosening underwriting standards or at least starting to talk about that.
Speaker: I'm curious; is that, you noted it's multiple partners. Is it within a particular, like, super prime part of the market? Is it geared at a particular type of customer.
Speaker Change: I'm curious is that, you noted it's multiple partners, is it within a particular like super prime part of the market? Is it geared at a particular type of customer?
Speaker: Yeah, so I would say this is a problem there. Absolutely, I can just tell you, at generic high levels, some of the conversations were happening.
Scott Peyree: Absolutely. I can just tell you at a generic high level where some of the conversations were happening. Obviously, I won't specifically call out clients, but yeah, you know, you're looking for, for example, like, small business and personal loans. Like, one thing that we're having a conversation about loan purpose is that. Like, I would say on the mortgage side, we've had a few clients that may have been capped in certain products, like purchase mortgages, that are now opening up that. So you're kind of seeing across the board in all lending categories, to be honest. Okay, okay.
Speaker: Obviously, I want to specifically call out the clients. But yeah, you know, if you're looking on, for example, like on small business and personal loans, like one thing that we're having conversation around is like loan purpose is that that. That can be very, like, whether you get an inventory loan, going on vacation, like, what, what is the purpose of your loan? That's one of the things they've got really restrictive on that they're talking about. Opening up categories of loan purpose that they'll accept. Another category is just credit scores, like talking about, for example, lowering. Well, we need to be 720 above.
Speaker Change: Yeah, I would say there's a problem there. Absolutely. I can just tell you at generic high levels, some of the conversations were happening. Obviously, I won't specifically call out the clients.
Speaker Change: But yeah, you know, you're looking on, for example, like on small business and personal loans, like one thing that we're having a conversation around is like loan purpose is that that's...
Speaker Change: That can be very like whether you get an inventory loan going on vacation like what what what is the purpose of your loan? That's one of the things they've got really restrictive on that. They're talking about
Speaker: Now, we'll start accepting to say to you in above, that's, that's the start of the snowball there.
Speaker Change: opening up categories of loan purpose that they'll accept.
Speaker Change: Another category is just credit scores, like talking about, for example, lowering, well, we needed to be 720 above, now we'll start accepting 680 and above, you know, that's the start of the snowball there.
Speaker: Like, I would say on the mortgage side, we've had a few clients that may have been tapping certain products like purchase mortgage that are now opening up that. So, you're kind of seeing across the board and in all living categories, beyond it.
Speaker Change: I would say on the mortgage side, we've had a few clients that have been capped in certain products like Purchase Mortgage that are now opening up that. So, you're kind of seeing it across the board in all lending categories, to be honest.
Scott Peyree: And so I was asking you my last question about small business. It seems like that has been, obviously, the performance there is bifurcating from personal loans a little bit. But you're saying you're hearing that from lending partners to expand that credit box a little bit into the small business area. Yep, yep. And I'll say, and I'll caveat it all with everything that's happening, it's small, it's nothing as significant, but this, but what is significant... It's the first time the winds have changed, from restrictive to opening. And it's just like it happened in insurance a year ago. It starts very small, but then the dam starts to break open.
Speaker: And so, I was actually my last question to you is around small business. It seems like that had been obviously the performance there was by procating from personal loan a little bit, but you're saying you're hearing that from running partners too. Expanding that credit box a little bit into the small business area.
Andrew N. Wessel: and Andrew Wessel.
Speaker Change: Okay, okay. And so, that was actually my last question too, was around small business. It seems like that has been, obviously the performance there is bifurcating from personal loan a little bit, but you're saying you're hearing that from lending partners too, expanding that credit box a little bit into the small business area?
Speaker: Yep, and I'll say, and I'll caveat it all with everything that's happening is small.
Speaker: It's nothing is significant, but these; but what is significant is the first time they've turned, the winds have changed from restrictive to opening. And it's just like it happened an insurance year ago.
Speaker Change: Yep, yep, and I'll caveat it all with everything that's happening, it's small, nothing is significant, but what is significant is the first time the winds have changed.
Speaker: It starts very small, but then once the dam starts to break open, it can be a flood pretty wide.
Scott Peyree: It can be a flood pretty quick. Okay, thanks, everyone. Thank you. One moment for our next question, please. And it's from the line of Madeleine Zhu with Susquehanna International. Please proceed. Hi. Well, it's actually Jamie.
Speaker Change: from restrictive to opening. And it's just like it happened in insurance years ago. It starts very small, but then once the dam starts to break open,
Speaker: Okay, thanks, everyone. Thank you.
Speaker Change: It can be a flood pretty quick.
Speaker: And it's on the line of Madeline Zhu with Susquehanna International, please proceed.
Speaker Change: Okay. Thanks, everyone.
Speaker Change: Thank you. One moment for our next question, please.
Speaker: Hi, I was actually Jamie. So, is home and consumer contemplated to grow in the second half of 24?
Speaker Change: And it's from the line of Madeleine Zhu with Susquehanna International. Please proceed.
Operator: So is home and consumer contemplated to grow in the second half of 24? It's Jason. I'll take that. So it's, you know, again, I think the easiest way to think about it is relative to where we are in Q2. And relative to that, it's generally in a steady state, with some slight drop seasonally in Q4. When you look at it versus the prior year, that cop is just much easier in the second half of the year because that's when most of the tightening happens.
Speaker Change: Hi, well it's actually Jamie.
Jamie: So is home and consumer contemplated to grow in the second half of 24?
James Friedman: Hi, it's James, and I'll take that. So it's, you know, again, I think the easiest way to think about it is relative to where we are in Q2. And relative to that is generally steady state; some drop sees no in Q4. When you look at it versus prior year, that, that cop is just much easier in the second half of the year because that's when most of the tightening happened. So when you look at growth rates from Q1 to Q2 to Q3 to Q4, they will improve, but mostly because the cop is that much easier.
Jamie: It's Jason, I'll take that. So it's, you know, again, I think the easiest way to think about it is relative to where we are in Q2.
Speaker Change: And relative to that, it's generally steady state, some drop seasonally in Q4. When you look at it versus prior year, that cop is just much easier in the second half of the year because that's when most of the tightening happened.
Operator: So when you look at growth rates from Q1 to Q2 to Q3 to Q4, they will improve, but mostly because the comp is that much easier. Okay. Thanks for that, Scott. And then... or Jason, I'm sorry, and then Scott.
Speaker Change: So when you look at growth rates from Q1 to Q2 to Q3 to Q4, they will improve, but mostly because the comp is that much easier.
Speaker: Okay, thanks for that, Scott.
Speaker: And then, or Jason, I'm sorry.
Speaker: And then Scott, you know, I'm surprised that you have these constructive comments about lending, but it says in the shareholder letter, there's ongoing weakness in the credit card vertical.
Operator: You know, I'm surprised that you have these constructive comments about lending, but it says in the shareholder letter there's ongoing weakness in the credit card vertical. So could you help us unpack what you say about lending? Is there a reason why?
Speaker Change: Okay. Thanks for that, Scott. And then...
Speaker Change: or Jason, I'm sorry, and then Scott.
Speaker: So could you help us like unpack when you say lending? Is there a reason why, and I'm sure there is, I just don't understand it, separate behavior being exhibited between, say, personal loans, home equity, and carded originations?
Speaker Change: You know, I'm surprised that you have these constructive comments about lending, but it says in the shareholder letter there's ongoing weakness in the credit card vertical.
Scott Peyree: And I'm sure there is, I just don't understand it, separate behavior being exhibited between, say, personal lines, home equity, and carded originations. Yeah, you know, it's accurate to say credit cards are still by far the toughest business in the world. And that would be the one category that I didn't call out earlier that that's the one category we're not hearing a lot of excitement about opening up. I think credit cards, in general, as the riskiest unsecured debt category in lending, they've seen default rates spike significantly higher than most of the other lending industries have seen.
Speaker Change: So could you help us like unpack when you say lending is there a reason why and I'm sure there is I just don't understand it
Speaker: Yeah, you know, it's accurate to say credit cards are still by far the toughest business in the one, and that would be the one category as I didn't call out earlier. That's the one category we're not hearing a bunch of excitement about opening up. I think the credit cards, in general, as the riskiest, unsecured debt category in lending, that they've seen default rates spike significantly higher than most of the other lending industries have seen. It's to make a very general statement. I think you've seen in other lending industries raise spikes. It's a good length of these spikes raised one up, but it's kind of leveled off over the past six months.
Speaker Change: separate behavior being exhibited between say personal lines, home equity and carded originations?
Speaker Change: Yeah, you know, it's accurate to say credit cards is still by far the toughest business in the world, and that would be the one category, as I didn't call out earlier, that that's the one category we're not hearing a bunch of excitement about opening up. I think the credit cards in general...
Speaker Change: As the riskiest unsecured debt category in lending, they've seen default rates spike
Scott Peyree: To make a very general statement, I think you've seen in other lending industries, rates spike, delinquency spikes as rates go up, but it's kind of leveled off over the past six months. And so even though it's at concerning levels, it's not at fire alarm levels, and they're feeling more comfortable that it's leveled off and hopefully will go down when rates start to go down. I think the credit card business has been a little bit different where it's kind of spiked to alarming levels in the credit card business.
Speaker Change: significantly higher than most of the other lending industries have seen. To make a very general statement, I think you've seen in other lending industries, rates spike. Delinquency spikes as rates went up, but it's kind of leveled off over the past six months.
Speaker: And so, even though at concerning levels, it's not at fire alarm levels. And they're feeling more comfortable that it's leveled, and hopefully we'll go down when race starts to go down.
Speaker Change: And so even though it's at concerning levels, it's not at fire alarm levels, and they're feeling more comfortable that
Speaker: I think the credit card business has been a little bit different. It's kind of spikes to an alarm bell level in the credit card business. And they're more, in general, in a mode of trying to get credit card balances off the books versus adding more balances to the book.
Speaker Change: It's leveled and hopefully it will go down when rates start to go down. I think the credit card business has been a little bit different where it's kind of spiked to alarm bell levels in the credit card business and they're more in general in a mode of trying to.
Scott Peyree: And they're more, in general, in a mode of trying to get credit card balances off the books versus like adding more balances to the books. Does that answer your question? Yeah, and the only thing I'd add is that we're definitely committed to the category, and it is a big financial services category, and we can do better there, and we want to be a really valuable partner for the major issuers and the minor issuers, and we've got a lot of stuff in the works on the product and tech front to hopefully address that and make it a great business for our partners that we can actually invest in I got it.
Speaker: So that answered your question.
Speaker: Yeah, and the only thing I'd add is we're definitely committed to the category and see that, and it is a big financial services category. And you know, we can do better there and we want to be a really valuable partner for the major issuers and the minor issuers. And we've got a lot of stuff in the works and the product context front to hopefully address that and make it a great business for our partners, and we can actually invest in sometime in the future.
Speaker Change: Trying to get credit card balances off the books versus like adding more balances to the books.
Speaker Change: Does that answer your question?
Speaker Change: Yeah, and the only thing I'd add is we're definitely...
Speaker Change: committed to the category and see that and it is a big financial services category.
Speaker Change: And, you know, and we can we can do better there. And we want to be a really valuable partner for the major issuers and the minor issuers. And we've got a lot of stuff in the works in the product and tech front to
Speaker: Got it, and lastly, then it's just echo my congratulations to Trent, but I'll pleasure working with you over the years. Thanks, Jamie.
Douglas R. Lebda: And lastly, let me just echo my congratulations to Trent. It's been a pleasure working with you. Thanks, Jamie.
Speaker Change: Hopefully address that and make it a great business for our partners so we can actually invest in sometime in the future.
Operator: And our last question, one moment please, comes from the line of Mike Grondahl with Northland Securities. Please proceed. Hey guys, thanks. Kind of just a question at a high level. How would you describe the visibility, the forward visibility?
Speaker: Thank you, and our last question. One moment please.
Speaker Change: Got it. And lastly, let me just echo my congratulations to Trent. It's been a pleasure working with you over the years.
Michael Grondahl: Come from the line of my Grondahl with Northland Securities, please proceed. Hey guys, thanks. Kind of just a question at high level.
Trent Ziegler: Thanks, Jamie.
Speaker Change: Thank you. And our last question. One moment, please.
Operator: Personal loans and a mortgage for each of those. John, do you want to take that? Forward visibility as far as just revenue growth, demand, budget, and buying, you know, trends in the business, you know, I know you guys don't, yeah, I mean, I would say, but what do you see today? I would say I'll start with insurance. The terminology I would use is relentless growth in insurance. It just seems to be building and building versus leveling off, and we sure aren't getting much, if any, indications from our clients about pulling back. The general attitude is, how can we get more? What can we do to get more?
Speaker Change: comes from the line of Mike Grondahl with Northland Securities. Please proceed.
Speaker: How would you describe kind of the visibility, the forward visibility, maybe in months or in quarters for insurance personal loans and mortgage for each of those areas? Do I want to take that? Forward forward visibility, as far as just revenue, growth, I mean, budget and buying. Trends in the business, you know, I know you guys don't.
Michael John Grondahl: Hey guys, thanks. Kind of just a question at high level. How would you describe kind of the visibility, the forward visibility, maybe in months or in quarters for insurance, personal loans, and mortgage for each of those areas?
Speaker Change: Okay, you want to take that?
Speaker Change: Forward visibility as far as just revenue growth demand. Budget and buying. You know, trends in the business. You know, I know you guys don't have super long visibility, but what do you see today?
Speaker: Yeah, I mean, I would say, but what do you see today?
Speaker: I would say, I'll start with insurance. I will add the terminology I would use is relentless growth, and insurance is it just seems to be. Building and building versus leveling off, and we sure aren't getting. Much of any indications from our clients about pulling back there that the general attitude is how can we get more? What can we do to get more.
Speaker Change: I would say I'll start with insurance. The terminology I would use is relentless growth and insurance. It just it seems to be
Speaker Change: building and building versus leveling off and we sure aren't getting
Speaker: Um, you know, the lending, as Jason kind of said, well, I would say, lending it, it's dropped out into one, it's been in a steady state. I think we've been growing top line revenues slightly in that steady state with the view largely same the same. I would say that look out and forecast out. It will probably stay generally in that state until rates start to decline, and then once rates start to decline. I think you're immediately in growth mode there and so, you know, like, we all hope that that will start to happen in September, right?
Scott Peyree: You know, the lending, as Jason kind of said before, I would say lending, troughed out in Q1. It's been in a steady state. I think we've been growing top-line revenue slightly in that steady state, with B&B largely staying the same. I would say, as I look out and forecast out, it will probably stay generally in that state until rates start to decline. And then once rates start to decline, I think you're immediately in growth mode there. And so, you know, we all hope that that will start to happen in September, right? I mean, odds are very high that that's gonna start. But we don't know that.
Speaker Change: much if any indications from our clients about pulling back there that the general attitude is how can we get more what can we do to get more
Jason: You know, the lending, as Jason kind of said before, I would say lending, it troughed out in Q1, it's been in a steady state.
Speaker Change #100: I think we've been growing top line revenue slightly in that steady state with V&V largely staying the same. I would say as I look out and forecast out, it will probably stay generally in that state.
Speaker Change #100: until rates start to decline. And then once rates start to decline...
Speaker: I mean, the odds are very high, but that's when it starts. We don't know that. I mean, it's something to the Fed to make that decision, but that's how I would answer the winning category in general: you're probably in steady state and to tell the rate starts. I'm down.
Speaker Change #101: I think you're immediately in growth mode there. And so, you know, we all hope that that will start to happen in September , right? I mean, odds are very high that that's going to start. We don't know that. I mean, it's up to the Fed to make that decision. But...
Scott Peyree: I mean, it's up to the Fed to make that decision, but that's how I would answer the lending category in general: you're probably in a steady state until the rates start to come down. Yeah, I don't want to get too optimistic. But if you just look at the size of the industry among the public companies, just direct, Tam is three to four times bigger than we are. And then when you look at direct marketing as a percentage of the total ad spend of the Geicos, the Progressives, the Allstates, I don't think we're even making a dent in their total marketing budget.
Speaker: Yeah, and I don't want to get too optimistic, but if you just look at the size of the industry among the public companies. The just direct. Tam there is probably is three to four times bigger than we are. And then when you look at direct marketing as a percentage of the total ads, then of the guy goes the progressive the All States. I don't think we're even making a dent in their total marketing budget. And, you know, we're we can, you know, show ROI till the cows come home, and so increasingly, you know, we've always believed that that marketplaces are going to help these guys really expand their.
Speaker Change #101: That's how I would answer the lending category in general, is you're probably in a steady state until the rates start to come down.
Speaker Change #102: Yeah, and I don't want to get too optimistic, but if you just look at the size of the industry among the public companies, the just direct...
Speaker Change #103: Tam there is probably three to four times bigger than we are. And then when you look at direct marketing as a percentage of the total ad spend of the Geico's, the Progressive, the Allstates,
Scott Peyree: And, you know, we're... We can, you know, show ROI till the cows come home. And so increasingly, you know, we've always believed that marketplaces are going to help these guys really expand their, you know, their businesses. And that's proven to be the case. Now, they've gotten the rates right. You know, there's there's.
Speaker Change #103: I don't think we're even making a dent in their total marketing budget, and, you know, we're, uh...
Speaker Change #103: We can, you know, show ROI till the cows come home, and so increasingly, you know, we've always believed that marketplaces are going to help these guys really expand their
Speaker: You know, their businesses, and that's proven to be the case now that gotten the rates right. You know, there's, there's they just like we don't stop until the last profitable dollar. They don't want to stop until the last profitable policy they're putting on.
Douglas R. Lebda: They, just like we don't stop until the last profitable dollar. They don't want to stop until the last profitable policy they're putting on. Got it.
Speaker Change #104: you know, their businesses. And that's proven to be the case. Now they've gotten the rates right. You know, there's, there's, they, just like we don't stop until the last profitable dollar, they don't want to stop until the last profitable policy they're putting on.
Speaker: Thank you so much, and thank you everybody for your questions. We are very excited about the opportunity ahead of us. Our outlook for continued year-over-year growth in revenue, VMD, and over the last two years. Growth in our market leading insurance segment remains robust.
Speaker Change #105: Got it. Hey, thanks guys.
Speaker Change #105: Thank you and as I see no further questions in the queue I will pass it back to Doug Lebda for final comments.
Douglas R. Lebda: Thank you so much and thank you everybody for your questions. We are very excited about the opportunity ahead of us. Our outlook for continued year-over-year growth in revenue, VMD, and adjusted EBITDA is the end result of many strategic decisions we have made over the last two years.
Speaker: Our targeted strategy to increase wallet share with our lending partners is performing well and should put us in a great competitive position to grow revenue and VMD as interest rates begin to decline or credit conditions begin to ease.
Speaker Change #105: Growth in our market-leading insurance segment remains robust.
Speaker Change #105: Our targeted strategy to increase wallet share with our lending partners is performing well and should put us in a great competitive position to grow revenue and VMD as interest rates begin to decline or credit conditions begin to ease.
Speaker: Thank you so much for joining us on this call, and we look forward to connecting again when we report third quarter results.
Speaker: And thank you all for participating in today's conference. You may now disconnect. Thank you. .
Speaker Change #105: Thank you so much for joining us on this call and we look forward to connecting again when we report third quarter results.
Speaker Change #106: And thank you all for participating in today's conference. You may now disconnect.
Speaker Change #108: and Andrew Wessel's daughter, the late Miriam, and the late Dr. Dr. Dr. Dr. Dr. Dr. Dr. Dr. Dr. Dr. Dr. Dr.
John Robert Campbell: and John Smith.
John Robert Campbell: [inaudible]
John Robert Campbell: [inaudible]
Andrew Wessel: I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I Thank you, Carmen, and good afternoon to everyone joining us on the call to discuss LendingTree's second quarter, 2024 financial results.
Operator: Hey, thanks. Thank you. And as I see no further questions in the queue, I will pass it back to Doug Lebda for final comments. Thank you so much, and thank you everybody for your questions.
Douglas R. Lebda: We are very excited about the opportunity ahead of us. Our outlook for continued year-over-year growth in revenue, VMD, and adjusted EBITDA is the result of many strategic decisions we have made over the last two years. Growth in our market-leading insurance segment remains robust.
Speaker Change #109: Good day, everyone, and thank you for standing by.
Speaker Change #110: Welcome to LendingTree Inc. Second Quarter 2024 Earnings Conference Call.
Speaker Change #111: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To participate, you will need to press star-1-1 on your telephone. You will then hear a message advising your hand is raised.
Douglas R. Lebda: Our targeted strategy to increase WalletShare with our lending partners is performing well, and should put us in a great competitive position to grow revenue and VMD as interest rates begin to decline or credit conditions begin to ease. Thank you so much for joining us on this call, and we look forward to connecting again when we report third-quarter results. And thank you all for participating in today's conference. You may now disconnect.
Speaker Change #111: To withdraw your questions, simply press star 11 again. Please be advised that today's conference is being recorded. I will hand the call over to the Senior Vice President of Investor Relations and Corporate Development, Andrew Wessel.
Operator: [inaudible] Youssef Squali, Scott Peyree, Ryan Tomasello, Douglas Lebda, Jed Kelly, Scott Peyree, Trent Ziegler, LendingTree Inc Youssef Squali, Scott Peyree, Ryan Tomasello, Douglas Lebda, Jed Kelly, Scott Peyree, LendingTree Inc ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, everyone, and thank you for standing by. Welcome to LendingTree Inc. Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Douglas R. Lebda: With us today are Doug Lebda, LendingTree's chairman and CEO, Scott Peri, CEO and president of Marketplace Businesses, Trent Ziegler, our CFL, and Jason Bengel, our incoming CFL. As a reminder to everyone, we posted a detailed letter to shareholders on our investor relations website earlier this afternoon, and for purposes of today's call, we will assume that listeners have read that letter and will focus on Q&A. Before I hand the call over to Doug for his remarks, I remind everyone that during today's call, we may discuss LendingTree's expectations for future performance. Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's actual results could differ materially from the views expressed today.
Andrew N. Wessel: Thank you, Carmen, and good afternoon to everyone joining us on the call to discuss LendingTree's second quarter 2024 financial results.
Speaker Change #112: With us today are Doug Lebda, LendingTree's Chairman and CEO , Scott Peyree, COO and President of Marketplace Businesses, Trent Ziegler, our CFO , and Jason Bangle, our incoming CFO .
Speaker Change #113: As a reminder to everyone, we posted a detailed letter to shareholders on our investor relations website earlier this afternoon. And for purposes of today's call, we will assume that listeners have read that letter and will focus on Q&A.
Operator: After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 11 on your telephone. You will then hear a message advising that your hand is raised. To withdraw your question, simply press star 11 again.
Operator: Please be advised that today's conference is being recorded. I will hand the call over to the Senior Vice President of Investor Relations and Corporate Development, Andrew Wessel. Thank you, Carmen, and good afternoon to everyone joining us on the call to discuss LendingTree's second quarter 2024 financial results. With us today are Doug Lebda, LendingTree's Chairman and CEO, Scott Peyree, CEO and President of Marketplace Businesses, Trent Ziegler, our CFO, and Jason Bangle, our incoming CFO.
Andrew N. Wessel: As a reminder to everyone, we posted a detailed letter to shareholders on our investor relations website earlier this afternoon, and for purposes of today's call, we will assume that listeners have read that letter and will focus on Q&A. Before I hand the call over to Doug for his remarks, I remind everyone that during today's call, we may discuss LendingTree's expectations for future performance. Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's 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.
Speaker Change #114: Before I hand the call over to Doug for his remarks, I remind everyone that during today's call we may discuss LendingTree's expectations for future performance.
Speaker: Many but not all of the risks we face are described in our periodic reports filed with the FEC. We will also discuss a variety of non-GAAP measures on the call today, and I refer you to today's press release and the share of the letter, both available on our website for the comparable GAAP definitions and full reconciliation of non-GAAP measures to GAAP.
Speaker Change #115: Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's 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.
Douglas Lebda: But with that, Doug, please go ahead. Thank you, Andrew, and thank you to everyone for joining us this evening. Our company generated exceptional revenue growth this quarter, led by the insurance business more than doubling from the second quarter last year. Our overall revenue outlook continues to improve into the third quarter. As you all know, we operate the business on a day-to-day basis with a laser focus on generating positive incremental variable margin dollars. We seek to attract as many high-intent consumers to our marketplace as we can at positive unit economics, while at the same time driving wallet share gains with our insurance and lending clients to both deepen our relationships and expand demand on the network.
Doug: and the shareholder letter both available on our website for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP. With that, Doug, please go ahead.
Douglas R. Lebda: We will also discuss a variety of non-GAAP measures on the call today, and I refer you to today's press release and the shareholder letter, both available on our website, for the comparable gap definitions and full reconciliations of non-gap measures to GAAP. With that, Doug, please go ahead. Thank you, Andrew, and thank you to everyone for joining us this evening. Our company generated exceptional revenue growth this quarter, led by the insurance business, more than doubling from the second quarter last year.
Doug: Thank you, Andrew, and thank you to everyone for joining us this evening.
Douglas R. Lebda: Our overall revenue outlook continues to improve into the third quarter. As you all know, we operate the business on a day-to-day basis with a laser focus on generating positive incremental variable margin dollars. We seek to attract as many high-intent consumers to our marketplace as we can at Positive Unit Economics while at the same time driving wallet share gains with our insurance and lending clients, to both deepen our relationships and expand demand on the network.
Doug: Our company generated exceptional revenue growth this quarter, led by the insurance business, more than doubling from the second quarter last year. Our overall revenue outlook continues to improve into the third quarter.
Doug: As you all know, we operate the business on a day-to-day basis with a laser focus on generating positive incremental variable margin dollars.
Doug: We seek to attract as many high-intent consumers to our marketplace as we can and positive unit economics, while at the same time driving wallet share gains with our insurance and lending clients to both deepen our relationships and expand demand on the network.
Douglas R. Lebda: During the past two years in insurance, we successfully executed our plan to drive high-intent traffic despite limited budgets to grow our share with carriers. Now is the time to execute the same strategy in lending. Ultimately, we expect this gain in share at partners will be rewarded when interest rates decrease or lending conditions begin to loosen. We're also encouraged by the increased consensus that the Federal Reserve may be ready to lower its target rate at one of its next two meetings, although we do not assume any rate change in our financial outlook.
Speaker: During the past two years, insurance, we successfully executed our plan to drive high-intent traffic despite limited budgets to grow our share with carriers. Now is the time to execute the same strategy and lending. Ultimately, we expect this gain in share at partners will be rewarded when interest rates decrease or lending conditions begin to loosen. We are also encouraged by the increased consent for forming the Federal Reserve, maybe ready to lower its target rate at one of its next two meetings, although we do not assume any rate change in our financial outlook. Looking at segment performance, insurance grew revenue 100% and VMD grew 47% from the same time last year.
Doug: During the past two years in insurance, we successfully executed our plan to drive high-intent traffic despite limited budgets to grow our share with carriers.
Doug: Now is the time to execute the same strategy in lending. Ultimately, we expect this gain in share at partners will be rewarded when interest rates decrease or lending conditions begin to loosen.
Doug: We are also encouraged by the increased consensus forming that the Federal Reserve may be ready to lower its target rate at one of its next two meetings, although we do not assume any rate change in our financial outlook.
Douglas R. Lebda: Looking at segment performance, insurance grew revenue 109% and VMD grew 47% from the same time last year. Demand from carrier partners continued to build throughout the period. On one level, competition for market share has strengthened within the auto insurance category as very good underwriting results have allowed carriers to invest more in customer acquisition, and we expect that trend will continue throughout the rest of the year. But to put our insurance growth into context, two years ago, we were the third largest insurance aggregator in the U.S. market. Today, based on comparable results, we are the second largest, and believe our continued market share gains will propel us into first. Our partnerships with carriers are stronger than they have ever been.
Doug: Looking at segment performance, insurance grew revenue 109% and VMD grew 47% from the same time last year.
Speaker: Demand from carrier partners continued to build throughout the period. On one level, competition for market share has strengthened within the auto insurance category as very good underwriting results have allowed carriers to invest more into customer acquisition, and we expect that trend will continue throughout the rest of the year. But to put our insurance growth into context, two years ago we were the third largest insurance aggregator in the U.S. market. Today, based on comparable results, we are the second largest and believe our continued market share gains will propel us into first.
Doug: Demand from carrier partners continued to build throughout the period.
Doug: On one level, competition for market share has strengthened within the auto insurance category as very good underwriting results have allowed carriers to invest more into customer acquisition, and we expect that
Doug: trend will continue throughout the rest of the year. But to put our insurance growth into context, two years ago we were the third largest insurance aggregator in the US market.
Speaker: Our partnerships with carriers are stronger than they have ever been, and we cannot be more excited for the future or more appreciative of this relationship. chips. Our consumer segment grew revenue by 9% sequentially. We are still laughing a period of Lucifer underwriting standards in the first half of last year, which resulted in a decline from a year ago. During the quarter, we leaned into stable lending demand at many of our partners, with a particular focus on the personal loan business. Our strategy, our strategy drove a 44% sequential increase in high-intent consumer traffic, which helped improve the number of loans we closed for our partners by 34%.
Doug: Today, based on comparable results, we are the second largest and believe our continued market share gains will propel us into first.
Douglas R. Lebda: We could not be more excited for the future or more appreciative of those relationships. Our consumer segment grew revenue by 9% sequentially. However, we are still lapping a period of looser underwriting standards in the first half of last year, which resulted in a decline from a year ago.
Doug: Our partnerships with carriers are stronger than they have ever been. We could not be more excited for the future or more appreciative of those relationships.
Doug: Our consumer segment grew revenue by 9% sequentially. We are still lapping a period of looser underwriting standards in the first half of last year, which resulted in a decline from a year ago.
Douglas R. Lebda: During the quarter, we leaned into stable lending demand at many of our partners with a particular focus on the personal loan. Our strategy drove a 44% sequential increase in high intent consumer traffic, which helped to improve the number of loans we closed for our partners by 34%. The home segment performed as expected, with higher mortgage rates and a lower supply of homes for sale limiting the number of consumers shopping for refinance and purchase.
Doug: During the quarter, we leaned into stable lending demand at many of our partners with a particular focus on the personal loan business.
Doug: Our strategy drove a 44% sequential increase in high-intent consumer traffic, which helped to improve the number of loans we closed for our partners by 34%.
Speaker: The home segment performed as expected, with higher mortgage rates and lower supply of homes per sale, limiting the number of consumers shopping for refined purchase loans. Home equity continues to be the bright spot of the segment, as revenue grew 6% sequentially.
Douglas R. Lebda: Home equity continues to be the bright spot of the segment as revenue grew 6% sequentially. Finally, I'd like to extend my sincere gratitude to our CFO, Trent Ziegler. He started 12 years ago as an analyst in our finance department.
Doug: The home segment performed as expected with higher mortgage rates and lower supply of homes for sale limiting the number of consumers shopping for refinance purchase loans.
Douglas Lebda: Finally, I'd like to extend my sincere gratitude to our CFO, Trends English. He started 12 years ago as an analyst in our finance department. In his time at the company, he's helped build our financial planning and analysis team, build an award-winning investor relations function, investor relations function by himself, and took on the role of treasurer as well. His work for the last three years are CFO helped us to improve our operating efficiency and recapitalize our balance sheet with the loans from Apollo we closed in March.
Doug: Home equity continues to be the bright spot of the segment as revenue grew 6% sequentially.
Douglas R. Lebda: In his time at the company, he's helped build our financial planning and analysis team, built an award-winning investor relations function by himself, and took on the role of treasurer as well. His work the last three years as our CFO helped us to improve our operating efficiency and recapitalize our balance sheet with a loan from Apollo we closed in March. Jason Bengal will be taking over the job from here.
Speaker Change #116: Finally, I'd like to extend my sincere gratitude to our CFO , Trent Ziegler.
Speaker Change #117: He started 12 years ago as an analyst in our finance department. In his time at the company, he's helped build our financial planning and analysis team, built an award-winning investor relations function by himself, and took on the role of treasurer as well.
Speaker Change #117: His work the last three years as our CFO helped us to improve our operating efficiency and recapitalize our balance sheet with a loan from Apollo we closed in March.
Jason Bengel: Jason Bangle will be taking over the job from here. Jason is truly one of the most respected people at Lending Trade. And last year he partnered with Trent or remove over $60 million of fixed costs from the business. Jason has built out and led a team of professionals tasked with driving ongoing improvements in operating efficiency. He also co-led our internal strategy process, which has resulted in our becoming a much more responsive and agile company. I'm excited and thrilled for him to take over this extended role.
Douglas R. Lebda: Jason is truly one of the most respected people at LendingTree, and last year, he partnered with Trent to remove over $60 million of fixed costs from the business. Jason has built out and led a team of professionals tasked with driving ongoing improvements and operations. He also co-led our internal strategy process, which has resulted in us becoming much more responsive and agile. I am excited and thrilled for him to take over this expanded role. And with that introduction, Jason would like to say a few words as well. Thank you, Doug.
Speaker Change #118: Jason Bengel will be taking over the job from here. Jason is truly one of the most respected people at LendingTree and last year he partnered with Trent to remove over 60 million dollars of fixed costs from the business.
Speaker Change #119: Jason has built out and led a team of professionals tasked with driving ongoing improvements in operating efficiency.
Speaker Change #119: They also co-led our internal strategy process which has resulted in our becoming a much more responsive and agile company.
Jason Bengel: And with that introduction, Jason would like to say a few words as well.
Jason Bangle: Trent and I have worked very closely over the last six years, and we've made huge progress fixing our balance sheet and right sizing our expense base. So we're very happy with where we are. We now have an expense base that's highly leverageable. And going forward, my priority is going to be, you know, continuing to make strides and focus and discipline. Focus, you know, not trying to do everything all at once but placing thoughtful bets, being disciplined about resource allocation and being disciplined about measuring our progress with KPIs and making sure we pivot where it makes sense.
Speaker: Thank you, Doug. Trent and I have worked very closely over the last six years, and we've made huge progress fixing our balance sheet and right-sizing our expense space. So we're very happy with where we are.
Speaker Change #120: I am excited and thrilled for him to take over this expanded role. And with that introduction, Jason would like to say a few words as well.
Jason: Thank you, Doug.
Jason: Trent and I have worked very closely over the last six years, and we've made huge progress fixing our balance sheet and right-sizing our expense base. So we're very happy with where we are. We now have an expense base that's highly leverageable. And going forward, my priority is going to be, you know, continuing to make strides and focus and discipline.
Speaker: We not have an expense space with highly leverageable. And going forward, my priority is going to be continuing to make strides and focus and discipline. Focus; you know, not trying to do everything all at once, but placing thoughtful bets. And discipline about resource allocation and discipline about measuring our progress with KPIs and making sure we pivot where it makes sense.
Jason: focus, you know, not trying to do everything all at once but placing thoughtful bets and disciplined about resource allocation and disciplined about measuring our progress with KPIs and making sure we pivot where it makes sense.
Jason Bangle: So I'm very excited about the opportunity LendingTree has before it, and I'm also very excited about my new role at it. So, thank you, Trent, and thank you, Doug. I really appreciate the opportunity here. And with that, Operator, we'll take questions. Thank you so much. And as a reminder, press star 1-1 to get in the queue and wait for your name to be announced. To withdraw the question, simply press star 1-1 again.
Speaker: So I'm very excited about the opportunity LendingTree has before it and I'm also very excited about my new role in it. So thank you, Trent, and thank you, Doug. I really appreciate the opportunity here.
Speaker Change #123: So I'm very excited about the opportunity LendingTree has before it and I'm also very excited about my new role in it. So thank you Trent and thank you Doug, I really appreciate the opportunity here.
Speaker: And with that operator, we'll take questions. Thank you so much, and a very reminder: press start one one to get in the queue and wait for your name to be announced. To withdraw the questions, simply press start one one again.
Speaker Change #121: And with that, Operator, we'll take questions. Thank you so much, and as a reminder, press star 1 1 to get in the queue and wait for your name to be announced. To withdraw the question, simply press star 1 1 again.
Operator: One moment for our first question. It comes from Jed Kelly with Oppenheimer. Please proceed. Hi, thanks for taking our call. This is Josh on behalf of Jed.
Jed Kelly: One moment for our first question. It comes from JetCalley with OpenHimer. Please proceed. Hi, thanks for taking our call. This is Joshua on for Jet. Thanks for taking our questions.
Operator: Thanks for taking our questions. Just had to ask, how much of the insurance margin compression is due to higher demand versus some of the competition from other, other operators? And then do you get concerned with how long this period of earnings can continue going forward? If I don't include that, yeah, there's a Scott group. Scott Perry, I'll answer that question.
Speaker Change #122: One moment for our first question. It comes from Jed Kelly with Oppenheimer. Please proceed.
Scott Peyree: Just had to how much it did insurance margin compression is due to the higher demand versus some of the competition from other operators. And then you get concerned with how long this period of earning can continue. Go forward.
Speaker Change #122: Hi, thanks for taking our call. This is Josh for Jed. Thanks for taking our questions. I just had two.
Josh: How much of the insurance margin compression is due to the higher demand versus some of the competition from other operators, and then do you get concerned with how long this period of earning can continue going forward?
Scott Peyree: Scott Perry, I'll answer that question. Yeah, I would say as far as the margin compression, you know, I was started with by saying overall VMD dollars continued to increase, and that's our primary concern as we grow with our clients to provide aid, highest quality product to the clients possible, and at the same time grow VMD as much as possible. So the incremental revenue growth, which has been extreme right now, has come at a lot lower margins, but it has come as positive VMD margins.
Scott Peyree: Yeah, I would say, as far as the margin compression, you know, I would start with by saying overall VM, and VMD dollars continue to increase, and that's, and that's our primary concern as we grow with our clients in providing the highest quality product to the clients possible while, at the same time, growing VMD as much as possible. So the incremental revenue growth, which has been extreme right now, has come at a lot lower margins, but it has come at a positive VMD margin.
Josh: If I don't include that, yeah, this is Scott Peyree.
Scott Peyree: Scott Peyree, I'll answer that question. Yeah, I would say as far as the margin compression, you know, I would start with by saying overall VMD dollars continue to increase, and that's our primary concern as we grow.
Scott Peyree: with our clients to provide A, the highest quality product to the clients as possible, and at the same time grow VMD as much as possible. So the incremental revenue growth, which has been extreme right now, has come at a lot lower margins, but it has come at positive VMD margins.
Scott Peyree: So, you know, if I look at the long-term history of the insurance business, when you're in extreme growth mode, which we are right in the middle of extreme growth mode right now, you'd probably expect your margins to be as low as the high 20s. And when you're in extreme downturns, like we were a year ago, with a lot of cap budgets, you would expect margins to be up in the low Long-term normality, which honestly, we haven't been at before COVID.
Scott Peyree: So you know, if I look at the long term history of the insurance business, when you're in extreme growth mode, which we are right in the middle of extreme growth mode right now, you'd probably expect it to be as low as the highest 20s, your margins. When you're in extreme downturns, like we were a year ago, with a lot of cat budgets, you would expect bars to be up in the low to mid 40s, long term normality, which honestly we haven't been at before COVID. But I think we could probably, I think we'll be in extreme growth for a while now. But say a year from now, things start normalizing, you're probably looking at low to mid 30s, is our historical average margins and the insurance business, which that's where I would expect to level out, what's the reach more of a normal state in the insurance business?
Scott Peyree: So, you know, if I look at the long-term history of the insurance business, when you're in extreme growth mode,
Scott Peyree: Which we are right in the middle of extreme growth mode right now. You'd probably expect it to be as low as the high 20s. Your margins.
Scott Peyree: When you're in extreme downturns, like we were a year ago, with a lot of cap budgets, you would expect margins to be up in the low to mid-40s. Long-term normality?
Scott Peyree: But I think we could probably be in extreme growth for a while now. But say, a year from now, things start normalizing, you're probably looking at low to mid-30s, our historical average margins in the insurance business, which that's where I would expect to level out once we reach more of a normal state in the insurance business. The only thing I'd add to that, Doug, is that as you're getting so much more demand coming into the marketplace, whether it's price, quantity, or volume and coverage, you want to go fulfill that. Because as you're growing your share and growing your revenue per lead, that share that you take from the market makes you that much more competitive in the auction-based advertising markets, particularly search.
Scott Peyree: Which, honestly, we haven't been at before COVID, but I think we could probably, I think we'll be in extreme growth for a while now, but say a year from now, things start normalizing, you're probably looking at low to mid-30s as our historical average margins in the insurance business.
Scott Peyree: The only thing I'd add is that you're getting so much more demand coming into the marketplace, whether it's price, quantity, or volume, and coverage. You want to go to fill that, because as you're growing your share and growing your revenue per lead, that share that you take from market makes you that much more competitive in the auction-based advertising markets, particularly search, and the ability to drive that high quality, high conversion, high intent volume, the customers is really where we differentiate.
Scott Peyree: which that's where I would expect to level out once we reach more of a normal state in the insurance business.
Scott Peyree: And the only thing I'd add to that is, Doug, is that, you know, as you're getting so much more demand coming into the marketplace, whether it's price, quantity, or volume and coverage,
Speaker Change #124: You know, you want to go fulfill that, because as you're growing your share and growing your revenue per lead, you know, that share that you take from the market makes you that much more competitive in the auction-based advertising markets, particularly search.
Scott Peyree: And the ability to drive that high quality, high conversion, high intent volume to customers is really where we differentiate. Great. And then for the personal loans, there was some good improvement there. Just trying to get an idea of how much is from, you know, better conversion versus, you know, better macro background.
Scott Peyree: Great, and then the last one for the personal loans, or some good improvement there, just trying again, idea of how much is from better conversion versus better macro background, and if there's any color you can give us on the consumer segment benefit, if the Fed does lower rates? I'll start at a high level, just on consumer lending in general, overall lending in general. As Doug mentioned at the top of the call, we've reached a level of stability for a while that we saw in QT. I would say Q1 was probably the stock as far as the tightening and underwriting standards from clients, and then it's kind of been a level of stability, and we were able to grow through that level of stability.
Speaker Change #127: And the ability to drive that high-quality, high-conversion, high-intent volume to customers is really where we differentiate.
Speaker Change #128: Great, and then the last one for the personal loans, there's some good improvement there. Just trying to get an idea of how much is from, you know, better conversion versus, you know, better macro background and if there's any color you can give us on the consumer segments benefit if the Fed does lower rates.
Scott Peyree: And if there's any color you can give us on the consumer segment's benefit if the Fed does lower rates. Yeah, I'll start at a high level just on consumer lending in general, overall lending in general. I would say, as Doug mentioned at the top of the call, We reached a level of stability for a while that we saw in Q2. Like, I would say, you know, Q1 was probably the trough as far as tightening of underwriting standards from clients, and then it's kind of been a level of stability.
Speaker Change #125: Yeah, I'll say I'll start at a high level just on consumer lending in general, overall lending in general, I would say, as Doug mentioned at the top of the call, we reached a level of stability for a while that we saw in Q2. Like, I would say, you know, Q1 was probably the trough as far as
Scott Peyree: And we were able to grow through that level of stability mainly by focusing on gaining market share in the high-intent marketplaces, which we've done a very successful job of doing. So that drove revenue growth in personal loans, whereas BND was relatively flat overall in consumer loans quarter over quarter. We were able to grow revenue with high-quality, high-intent traffic, and having better positioning in those marketplaces sets us up extremely well for when rates start coming down, and more importantly, our clients start opening up their underwriting criteria again, which will be the biggest domino to fall, honestly, in the consumer lending segment when rates start coming down. So, you know, that's imminently in front of us at this point. You know, more clearly in front of us than it's been in years. So I'm really, really happy personally with our positioning right now.
Scott Peyree: Mainly by focusing on gaining market share in the high intent marketplaces, which we've done a very successful job of doing, so that drove revenue growth in personal loans. What we're as B&D was relatively flat, overall in consumer quarter over quarter, we were able to grow revenue with high quality, high intent traffic, and having better positioning in those marketplaces sets us up extremely well for when race start coming down, and more importantly, our clients start opening up their underwriting criteria again, which will be the biggest domino to fall, honestly, in the consumer lending segment, when race start coming down. And so, you know, that's eminently in front of us at this point, you know, more clearly in front of us than it's been in years.
Speaker Change #125: The tightening of underwriting standards from clients, and then it's kind of been a level of stability, and we were able to grow through that level of stability.
Speaker Change #126: Mainly by focusing on gaining market share in the high-intent marketplaces, which we've done a very
Speaker Change #126: successful job of doing so that that drove revenue growth in personal loans, whereas BMD was relatively
Speaker Change #126: Overall in consumer, quarter over quarter, we were able to grow revenue with high quality.
Speaker Change #126: High Intent Traffic, and having better positioning in those marketplaces sets us up extremely well.
Speaker Change #126: For when rates start coming down and more importantly our clients start opening up their underwriting criteria
Speaker Change #126: Again, which will be the biggest domino to fall, honestly, in the consumer lending segment when rates start coming down.
Scott Peyree: So, I'm really, really happy, personally, with our positioning right now. It put a lot of focus on personal loans and QT, but honestly, we did a lot of similar work in the mortgage space, which you saw revenue growth there in high intent consumers. Towards the end of the quarter, we started putting our efforts into small business, and you know, high intent consumers are growing there. So, I think we're showing lots of success across the board to drive more of those consumers. Improving our mix, and that's going to set us up really well for when the winning market starts to turn in the near future.
Scott Peyree: We put a lot of focus on personal loans in Q2, but honestly, we did a lot of similar work in the mortgage space, where you saw revenue growth there from high-intent consumers. Towards the end of the quarter, we started putting our efforts into small business, and our high-intent consumers are growing there. So I think we're showing lots of success across the board to drive more of those consumers and improve our mix. And that's going to set us up really well for when the lending market starts to turn in the near future. Thank you. Please take a moment for our next question. And it's from Ryan Tomasello with KVW.
Speaker Change #126: You know, that's that's imminently in front of us at this point, you know, more clearly in front of us than it's been in years. So.
Speaker Change #126: So, I'm really, really happy, personally, with our positioning. Right now, we put a lot of focus on personal loans in Q2, but honestly, we did a lot of similar work in the mortgage space, which you saw revenue growth there in high-intent consumers.
Speaker Change #126: Towards the end of the quarter, we started putting our efforts into small business, and our high-intensity consumers are growing there. So, I think we're showing lots of success across the board to drive more of those consumers.
Speaker: Okay, thank you. Thank you.
Speaker Change #126: in improving our mix and that's going to set us up really well for when the lending market starts to turn in the near future.
Speaker: One moment for our next question.
Ryan Tomasello: Any from Ryan Tomasello with KVW, please proceed. Hi everyone, thanks for taking the questions.
Speaker Change #129: Okay, thank you.
Speaker Change #130: Thank you. One moment for our next question.
Operator: Please proceed. Hi everyone, thanks for taking the questions. I guess just taking a step back on the margin front, guide for the year is calling for EBITDA margins of around 10%. The second half implies guidance is, I think, you know, high single-digit margins. You know, how should we think about all the moving pieces here, you know, insurance being the biggest one near term, around how that impacts the timing, your ability to get back to structural EBITDA margins closer to the mid to high teens that you've previously shown an ability to achieve?
Speaker: I guess just taking a step back on the margin from looks like the revised guide for the years calling for EBITDA margins around 10 percent, the second half implied guide is I think, you know, high single digit margins. You know, how should we think about all the moving pieces here, you know, insurance being the biggest one in your term around how that impacts the timing and your ability to get back to structurally EBITDA margins, you know, closer to the mid to high teams that you've, you know, previously shown an ability to get to? Is that going to take, you know, this massive insurance cycle, you know, maturing a bit and also seeing consumer, you know, come back? You know, just trying to understand the moving pieces around what will drive the margin expansion on a consolidated basis.
Speaker Change #129: And it's from Ryan Tomasello with KBW. Please proceed.
Ryan John Tomasello: Hi, everyone. Thanks for taking the questions.
Ryan John Tomasello: I guess just taking a step back on the margin front, it looks like the revised guide for the year is calling for EBITDA margins of around 10%. The second half implied
Speaker Change #131: God is, I think, you know, high single-digit margins.
Speaker Change #132: You know, how should we think about...
Speaker Change #133: All the moving pieces here, you know, insurance being the biggest one near term.
Speaker Change #134: around how that impacts the timing and.
Speaker Change #135: your ability to get back to
Operator: Is that going to take this massive insurance cycle, you know, maturing a bit, and also seeing consumers come back? You know, just trying to understand the moving pieces around what drives the margin. Yeah, so this is Doug. Let me just start off and echo something that Scott said earlier, which is, The entire laser focus of the company has to be maximizing variable margin dollars every single day.
Speaker Change #135: structural EBITDA margins, you know, closer to the mid to high teens that you've, you know, previously shown an ability to get to.
Speaker Change #136: Is that going to take, you know, this massive insurance cycle, you know, maturing a bit, and also seeing consumer, you know, come back, you know, just trying to understand the moving pieces around what ultimately drives the margin expansion on a consolidated basis.
Speaker: Yeah.
Douglas Lebda: So this is Doug.
Douglas Lebda: Let me just start off and echo some of the Scott said earlier, which is the entire laser focus with company has to be maximizing variable margin dollars every single day. So we can make an incremental $100 of margin of dollars, and it costs us 97 bucks to do it. We're going to do that when at times when our clients are demanding more customers from us than we actually have. So, yeah, then, you know, we're going out and trying to get more and more demand, and as that demand is building, then it enables us to invest in marketing.
Speaker Change #136: Thanks.
Speaker Change #136: Yeah, so this is Doug. Let me just start off and echo something that Scott said earlier, which is...
Operator: So if we can make an incremental $100 in margin, and it costs us 97 bucks to do it, we're going to do that at times when our clients are demanding more customers from us than we actually have.
Speaker Change #137: The entire laser focus of the company has to be maximizing variable margin dollars every single day. So if we can make an incremental...
Speaker Change #138: hundred dollars of margin of dollars and it costs us 97 bucks to do it, we're going to do that when at times when our clients are demanding more customers from us than we actually have.
Douglas R. Lebda: So, you know, then, you know, we're going out and trying to get more and more demand. And as that demand is building, that enables us to invest in marketing. So we don't really, so we don't.
Speaker: So we don't really, so we don't, a percentage margin at the end of the day is more of an output than it is a target for us, and marketing expense is fuel rather than an expense. And so I think the revenue and the VMD is where we like to focus.
Speaker Change #139: So, you know, then, you know, we're going out and trying to get more and more demand. And as that demand is building, that enables us to invest in marketing. So we don't really, so we don't.
Douglas R. Lebda: A percentage margin at the end of the day is more of an output than it is a target for us, and marketing expense is fuel rather than an expense. And so I think the revenue of the BMD is... where we like to focus. And with that, I'll hand it over to Jason to talk about the numbers or Scott. Yeah, it's Jason.
Speaker Change #139: A percentage margin at the end of the day is more of an output than it is a target for us, and marketing expense is fuel rather than an expense.
Jason Bengel: And with that, I'll hand it over to Jason to talk about the numbers, or Scott. Yeah, it's Jason. I can, I can frame out some of the assumptions and the guide here. And I think the easiest way to think about it is just relative to Q2. And so I'll go piece by piece here. So just starting with insurance, you know, we expect continued strength in insurance the rest of the year. This is, this market has a long runway. So we expect sequential growth in both revenue and VMD from here relative to Q2. But with some margin compression, for all the reasons we just talked about, again, focused on driving VMD dollars though.
Speaker Change #139: And so I think the revenue and the VMD is where we like to focus. And with that, I'll hand it over to Jason to talk about the numbers or Scott.
Jason Bangle: I can frame out some of the assumptions in the guide here, and I think the easiest way to think about it is just relative to Q2. And so I'll go piece by piece here. So just starting with insurance, we expect continued strength and insurance for the rest of the year. This market has a long runway, so we expect sequential growth in both revenue and VMD from here relative to Q2, but with some margin compression for all the reasons we just talked about. Again, it is focused on driving VMD dollars, though.
Jason: Yeah, it's Jason. I can frame out some of the assumptions in the guide here, and I think the easiest way to think about it is just relative to Q2. And so I'll go piece by piece here. So just starting with insurance, you know, we expect continued strength in insurance the rest of the year.
Jason: This market has a long runway, so we expect sequential growth in both revenue and BMD from here relative to Q2, but with some margin compression for all the reasons we just talked about.
Jason Bengel: As it relates to insurance on the expense side, we are gradually investing in some head count to drive some of that VMD in insurance. So, as the economics work out and we're able to drive VMD, we'll see some increase in expense for the rest of the year.
Jason Bangle: As it relates to insurance on the expense side, we are gradually investing in some headcount to drive some of that VMD and insurance. So as the unique economics work out, and we're able to drive VMD, we'll see some increase in expense for the rest of the year. And then moving along home and consumer, really, the guide is assuming just a generally steady state from where we are with some normal seasonal decline in Q4.
Jason: Again, focused on driving VMD dollars, though. As it relates to insurance on the expense side, we are...
Jason: Gradually investing in some headcount to drive some of that VMD and insurance, so as the new economics work out and we're able to drive VMD, we'll see some increase in expense for the rest of the year.
Jason Bengel: and then moving along home and consumer. Really, the guy is assuming just generally steady state from where we are with some normal seasonal decline in key four.
Jason Bangle: The big unknown is obviously rates. It seems like it's increasingly imminent that that will happen and we will benefit from it, but we're not assuming any benefit in the guide for home and consumer at this point. So those are really the key assumptions to talk through. Great, that's really helpful.
Jason: And then moving along home and consumer, really the guide is assuming just generally steady state from where we are with some normal seasonal decline in Q4.
Jason Bengel: The big unknown, obviously, is rates. It seems like that's increasingly imminent that that will happen, and we will benefit from it, but we're not assuming any benefit in the guy for home and consumer at this point. So that's, those are really the key assumptions to Dr. Great.
Speaker Change #140: The big unknown obviously is rates. It seems like that's increasingly imminent that that will happen, and we will benefit from it, but we're not assuming any benefit in the guide for home and consumer at this point. So those are really the key assumptions to talk through.
Jason Bangle: And you already kind of touched on what was gonna be my second question here, but maybe just help us, you know, unpack the magnitude and timing of the potential uplift that the business could see from fed rate cuts. I mean, do you feel like the Fed finally getting on a cut, a trend of cuts here is more of an emotional type of response you'll see out of your network partners, or will it take time for several rate cuts to actually play out in terms of benefiting, you know, you know, loosening credit boxes and driving more volume on the consumer side and also more retail? It might take more time. Yeah, I think you hit the nail on the head with the word benefit.
Speaker: That's really helpful, and you already kind of touched on what was going to be my second question here, but maybe just help us, you know, unpack the magnitude and timing of the potential uplift that the business could see from Fed rate cuts. I mean, do you feel like the Fed finally getting on a cut, a trend of cuts here is more of an emotional type of response you'll see out of your network partners, or it will take time for several rate cuts to actually play out in terms of benefiting, you know, loosening credit boxes and driving more volume on the consumer side and also more.
Speaker Change #142: Great that's that's really helpful and you already kind of touched on what was gonna be my second question here but maybe just help us you know unpack the magnitude and timing of the potential uplift that the business could see from from fed rate cuts I mean it is do you feel like
Speaker Change #141: The Fed finally getting on a cut, a trend of cuts here is more of a
Speaker Change #143: emotional type of response you'll see out of your your network partners or it will take time for several rate cuts to actually play out in terms of benefiting
Speaker: Yeah, I think you hit the word right with the word benefit. So, you know, structurally, the mortgage business right now 70% of customers have rates that are 5% or below. So the time when there's going to be a large change in consumer benefit is probably a ways off. However, the change in shopping behavior will be, we think it's always been dramatic. And so we expect to see, or we hope to see when that happens, we would expect to see a large, you know, a decent increase in inflows, just due to the market. And then we're going to have to work with our lenders to swap up all of that extra demand or all that extra supply that we're going to have coming in.
Speaker Change #144: You know, you know, loosening credit boxes and and driving more volume on the consumer side and off and also more might take more time
Douglas R. Lebda: So, structurally, in the mortgage business right now, 70% of customers have rates that are 5% or below. So, the time when there's going to be a large change in consumer benefit is probably a ways off. However, the change in shopping behavior will be, we think it's always been, dramatic, and so we expect to see, or we hope to see when that happens. We would expect to see a large, you know, decent increase in inflows just due to the market.
Speaker Change #146: Yeah, I think you hit the word right with the word benefit.
Speaker Change #144: So...
Speaker Change #145: Structurally, in the mortgage business right now, 70% of customers have rates that are 5% or below.
Speaker Change #145: So, the time when there's going to be a large change in consumer benefit
Speaker Change #145: is probably a ways off. However, the change in shopping behavior.
Speaker Change #145: will be, we think it's always been dramatic. And so we expect to see, or we hope to see when that happens, we would expect to see a large, you know, a decent increase in inflows just due to the market.
Douglas R. Lebda: And then we're going to have to work with our lenders to soak up all of that extra demand or all that extra supply that we're going to have coming in. And the other thing I would note is that we're working right now on preparing for that just because there will be a change in shopping behavior. So, you called it, I think, you know, more of a psychological change than a benefit change, but there will be that psychological change because it'll be everywhere in the news that, you know, Fed country. And yeah, this is Scott. I'll add a few things.
Speaker: And the other thing I would note is that we're working right now on preparing for that just because there will be a change in shopping behavior.
Speaker Change #145: And then we're going to have to work with our lenders to sop up all of that extra demand or all that extra supply that we're going to have coming in. And the other thing I would note is that we're working right now on preparing for that.
Scott Peyree: So you call it, I think, you know, more of a psychological change than a benefit change, but there will be that psychological change because it'll be everywhere in the news that, you know, the set of rates. And yeah, this is Scott all out on a few things. I mean, as I said, the first dominant of fall, I'll be consumer shopping behavior. The next dominant will be loosening up of underwriting requirements, and in all, I'll be off without getting any specific client negotiations. We've had multiple clients for working with right now, not just like one, multiple clients that are talking already about loosening underwriting requirements and accepting more consumers from us, a wider swath of consumers across multiple product lines.
Speaker Change #145: Just because there will be a change in shopping behavior, so you call it, I think, you know, more of a psychological change than a benefit change, but there will be that psychological change because it'll be everywhere in the news that, you know, the Fed cut rates.
Scott Peyree: I mean, as Doug said, the first domino to fall will be consumer shopping behavior. The next domino will be the loosening of underwriting requirements, and I'll be honest, without getting into any specific client negotiations, we've had multiple clients we're working with right now, not just one, multiple clients that are already talking about loosening underwriting requirements and accepting more consumers from us, a wider swath of consumers across multiple product And it is very similar to Q3 last year when insurance was in its trough.
Speaker Change #145: And yeah, this is Scott. I'll add on a few things. I mean, as Doug said, the first domino to fall would be consumer shopping behavior.
Speaker Change #147: The next domino will be loosening up of underwriting requirements, and I'll be honest, without getting into any specific client negotiations,
Speaker Change #148: We've had multiple clients we're working with right now, not just like one, multiple clients that are talking already.
Scott Peyree: And it echoes very similar to Q3 last year when insurance was in its drop. It was around Q3 last year when we started having similar conversations with carriers about them loosening their underwriting requirements and opening up geographies. And then it started actually happening in Q4, and then it started snowballing in Q1. So, you know, I would say a combination of inquiry shopping and then even the bigger domino of loosening underwriting requirements, it could really snowball the lending side, you know, getting into early 25. You know, and then the final, the final domino, as Doug said, is when that rate benefits, especially for refinance.
Speaker Change #147: about loosening underwriting requirements and accepting more consumers from us.
Scott Peyree: It was around Q3 last year when we started having similar conversations with carriers about them loosening their underwriting requirements and opening up geographies. And then refinance will probably skyrocket. That's probably going to be the third domino.
Speaker Change #147: and a wider swath of consumers.
Speaker Change #147: across multiple product lines, and it echoes very similar.
Speaker Change #147: to Q3 last year when insurance was in its trough. It was around Q3 last year when we started having similar conversations with carriers about them loosening their underwriting requirements and opening up geographies, and then it
Speaker Change #147: It started actually happening in Q4 and then it started snowballing in Q1.
Speaker Change #147: So, you know, I would say a combination of increased shopping and then even the bigger domino of loosening underwriting requirements, it could really snowball.
Doug: The lending side, you know, getting into early 25, you know, and then the final domino, as Doug said, is when that rate benefit, especially for refinance, when that reaches that tipping point, refinance will probably skyrocket. That's probably going to be the third domino.
Speaker: When that reaches that tipping point, refinance will probably lose skyrocket.
Speaker: That's probably going to be the third dominant.
Operator: Great, thanks for all the comments. Thank you. One moment for our next question, please. And it's from the line of John Campbell with Stevens. Please proceed. Hey guys, it's Jonathan on for John.
Speaker: Thank you. One moment for our next question, please.
Speaker: And it's from the line of John Campbell with Stevens, please proceed. Hey guys, it's Jonathan on for John. I was wondering if you could give some more color on the trajectory of insurance revenue throughout the quarter.
Speaker Change #149: Great. Thanks for all the color, guys.
Operator: I was wondering if you could give some more color on the trajectory of insurance revenue throughout the quarter. Did it sort of ramp up as more and more carriers got off the bench and increased marketing dollars? You know, what did that look like, and what was the trajectory like exiting the quarter?
Speaker Change #150: Thank you. One moment for our next question, please.
Speaker Change #151: And as from the line of John Campbell with Stevens, please proceed.
Speaker Change #150: Hey guys, it's Jonathan on for John . I was wondering if you could give some more color on the trajectory of insurance revenue throughout the quarter. Did it sort of ramp up as more and more carriers got off the bench and increased marketing dollars? You know, what did that look like and what was the trajectory like exiting the quarter?
Speaker: Did it sort of ramp up as more and more cares got off the bench and increased marketing dollars? You know, what did that look like and what was the trajectory like exiting the quarter? Yeah, so yes, it continued ramping up throughout the quarter. And that's why our revenue beat was so significant on that versus what we estimated going into the quarter. I would say we had strong, we had strong positioning going into the quarter. And then there was a significant step change at the beginning of June, which was basically to give a lot of credit to my insurance team, doing a lot.
Scott Peyree: Yes, so yes, it continued ramping up throughout the quarter. And that's why our revenue beat was so significant on that versus what we estimated going into the quarter. I would say we had strong positioning going into the quarter.
Speaker Change #152: Yes, it continued ramping up throughout the quarter, and that's why our revenue beat was so significant on that versus what we estimated going into the quarter. I would say we had strong positioning going into the quarter, and then there was a significant step change.
Scott Peyree: And then there was a significant step change at the beginning of June, which was basically, I give a lot of credit to my insurance team, doing a lot of significant negotiations with our top clients and securing major budget increases from those clients. So, we did a big step change in June, and we have, you know, honestly, heading into July; we've been running slightly hotter than we even were in June. So, you know, I would argue our current Q3, revenue, and VMD forecasts are probably pretty conservative for insurance, the way the insurance market is going right now. Now, obviously, with this extreme growth, you want to be a little conservative, but it's just...
Speaker: That of significant negotiations with our top clients and securing major budget increases from most clients. So, so we did a big step change in June. And we have, you know, honestly, heading in July, we've been running slightly hotter than we even were in June. So, you know, I, I would argue our current key three revenue V&D forecast are probably pretty conservative for insurance, the way the insurance market is going right now. Now, obviously, with this extreme growth, you want to be a little conservative, but these carriers have, especially the ones that have reached rate adequacy, have extreme appetite for bringing on consumers right now.
Speaker Change #153: at the beginning of June , which was basically to give a lot of credit to my insurance team doing a lot of significant negotiations with our top clients and securing major budget increases from those clients.
Speaker Change #153: So, so we did a big step change in June and we have, you know, honestly heading in July , we've been running slightly hotter than we even were in June . So, you know, I would argue our current Q3
Speaker Change #153: Revenue and VMD forecasts are probably pretty conservative for insurance, the way the insurance market is going right now. Now obviously with this extreme growth, you want to be a little conservative, but it's just...
Scott Peyree: These carriers, especially the ones that have reached rate adequacy, have an extreme appetite for bringing on consumers, right? Okay, thank you for that. And then, as a follow-up. You know, at this point, is it pretty broad-based, or is it still, you know, a couple players, are there still players on the bench, any color you can provide there?
Speaker Change #153: These carriers have, especially the ones that have reached rate adequacy, have an extreme appetite for bringing on consumers right now.
Speaker: Okay, thank you for that.
Speaker: And then as a follow-up, you know, is that at this point, is it pretty broad-based or is it still, you know, a couple players, are there still players on the bench, you know, any color you can provide there? I would say, I would say yes to both of that.
Speaker Change #154: Okay, thank you for that. And then as a follow-up...
Speaker Change #155: You know, at this point, is it pretty broad-based, or is it still, you know, a couple players, are there still players on the bench, you know, any color you can provide there?
Scott Peyree: I would say yes to both of those. It is extremely broad-based. We're seeing very significant budgets from a number of carriers. Obviously, at our revenue levels, we're seeing some long-term clients spending way more than they ever have with us. That said, there are a few carriers that historically spend a lot more money with us that haven't even come back at any significant level yet. So that's still an opportunity. There are still certain geographies that have very limited coverage still, but it's going to be that they will eventually open up. The home insurance industry has still not achieved rate adequacy as an industry.
Speaker: It is extremely obvious. We're seeing very significant budgets from a number of carriers; obviously, our revenue levels, we're seeing long from long-term client spending way more than they ever have with us. That said, there are a few carriers that historically spend a lot more money with us that haven't even come back at any significant level yet. So that's still an opportunity. There are still certain geographies that have very limited coverage still. That's going to be that they will eventually open up. The home insurance industry is still not achieved rate rate adequacy is an industry. So that's pretty suppressed still, and that will open up with a lot of demand.
Speaker Change #156: I would say yes to both of that. It is extremely broad-based. We're seeing...
Speaker Change #157: Very significant budgets from a number of carriers, obviously our revenue levels, we're seeing some long-term clients spending way more than they ever have.
Speaker Change #157: with us. That said, there are a few carriers that historically spent a lot more money with us that haven't even come back at any significant level yet. So that's...
Speaker Change #157: Still an opportunity. There are still certain geographies that have very limited coverage still.
Scott Peyree: So that's pretty suppressed still, and that will open up with a lot of demand. So, I mean, you just logically look at it.
Speaker Change #158: That's going to be that they will eventually open up the home insurance industry has still not achieved rate rate adequacy as an industry
Speaker: So, I mean, you just logically look at it. There's, there's a lot of runway left in this growth phase of insurance. That's great.
Operator: There's a lot of runway left in this growth phase of insurance. That's great. Thank you for taking my question. Thank you. One moment for our next question. And it comes from the line of Youssef Squali.
Speaker Change #158: So that's pretty suppressed still, and that will open up with a lot of demand. So, I mean, you just logically look at it, there's...
Speaker: Thank you for taking my questions. Thank you.
Speaker Change #158: There's a lot of runway left in this growth phase of insurance.
Youssef Squali: One moment for our next question. Any concern the line of UCF squally with tourist securities, please proceed.
Operator: With Truist Securities, please proceed. All right, thank you. Trent, all the best for you in your new role. And Jason, congratulations, and I'm looking forward to working with you. So maybe just...
Speaker Change #159: That's great. Thank you for taking my questions.
Speaker: All right. Thank you.
Speaker Change #160: Thank you. One moment for our next question and it comes from the line of Youssef Squali with Truist Securities. Please proceed.
Speaker: Try and tell the best for you in your new role. And Jason, congratulations. I'm looking forward to working with you.
Speaker: So maybe just. Thank you.
Youssef Houssaini Squali: All right, thank you. Trent, all the best for you in your new role, and Jason, congratulations. I'm looking forward to working with you.
James Friedman: A couple of follow-ups, I guess, as you look at your prior guidance for the year relative to the new guidance, is it basically fair to assume that all of the revenue upside, and I think it was like $140 million of it at the main point, is from insurance? In other words, the other two segments, your expectations really have not changed.
Operator: I guess as you look at your prior guidance for the year relative to the new guidance, is it basically fair to assume that all of the revenue upside, and I think it was like $140 million, is from insurance. In other words, the other two segments, your expectations really have not changed. Yeah, Jason, I'll take that.
Speaker Change #161: So maybe just... Thank you.
Youssef Houssaini Squali: A couple follow-ups. I guess as you look at your prior guidance for the year relative to the new guidance, is it basically fair to assume that all of the revenue upside, and I think it was like $140 million of it,
Jason Bengel: That's the first question. Yes, James, now I'll take that. Yeah, that's basically right. You know, it's primarily due to favorability and insurance, just as, as Scott had outlined.
Youssef Houssaini Squali: at the midpoint is from insurance. In other words, the other two segments, your expectations really have not changed. That's the first question.
Jason Bangle: Yeah, that's basically right. It's primarily due to favorability and insurance, just as Scott had outlined. And then, kind of switching to the balance sheet, how much is left in the convertible note due July 2025? And what are the subsequent maturities after that?
Jason Bengel: And then on the kind of switching to the balance sheet, how much is left in the convertible note due July 2025, and what are the subsequent maturities after that? So it's case, and I'll take that one also, so the convert we retired 161 million of the convert in Q2. So as of Q2, we have a hundred twenty-three million dollars left, and then subsequent to that, we retired another seven million. You know, we're down to 116 million.
Youssef Houssaini Squali: Yeah, it's Jason, I'll take that. Yeah, that's basically right. You know, it's primarily due to favorability and insurance, just as Scott had outlined.
Speaker Change #162: And then on the, kind of switching to the balance sheet, how much is left in the convertible note due July 2025, and what are the subsequent maturities after that?
Jason Bangle: So it's Jason. I'll take that one also. So the convert, we retired $161 million of the convert in Q2. So as of Q2, we have $123 million left. And then subsequent to that, we retired another $7 million.
Speaker Change #162: So it's Jason, I'll take that one also. So the Convert, we retired 161 million of the Convert in Q2.
Jason Bangle: So now we're down to $116 million, and so the strategy there is the same. We're going to buy those back at a price that's attractive to us. And then, going forward, we'll, you know, use cash on hand, the $50 million delayed draw from the Apollo facility, and future cash to address that maturity. The remaining maturities are several years out, so we're feeling pretty good about our capital structure. Yeah, can you quantify the subsequent 250 due out in 2028? Is there anything else outside of that? So yeah, Apollo is, you know, 2031.
Jason Bengel: And so the strategy, there's the same; we're going to, we're going to buy those back in a price that's attractive to us. And then going forward, we'll, you know, use cash on hand, the $50 million delayed draw from the Apollo facility, and future cash to address that maturity. The remaining maturities are several years out, so we're feeling pretty good about our capital structure. Yeah.
Speaker Change #163: So as of Q2, we have $123 million left, and then subsequent to that, we retired another $7 million. So now we're down to $116 million. And so the strategy there is the same. We're going to buy those back at a price that's attractive to us.
Speaker Change #163: And then going forward, we'll, you know, use cash on hand, the $50 million delayed draw from the Apollo facility and future cash to address that maturity.
Jason Bengel: Can you quantify subsequent? Right 250 do you have in 2028? Is there anything else?
Speaker Change #163: The remaining maturities are several years out, so we're feeling pretty good about our capital structure.
Jason Bengel: We have outside of that. So, yeah, Apollo is, you know, 2031. So that's that'll be 175 million dollars with a $50 million delayed draw. And then the original turn loan is September 2028.
Speaker Change #164: Yeah, can you quantify the subsequent 250 due out in 2028? Is there anything else outside of that?
Jason Bangle: So that'll be $175 million with a $50 million delay draw. And then the original term loan is for September 2028. And lastly, maybe, Doug, there was a broad data breach out there that affected everybody, including you guys. Can you just help us kind of, well, first, provide any update on what went on there? And then how is this potentially impacting the business, if at all? Scott, do you want to take that first?
Speaker Change #165: So yeah, Apollo is, you know, 2031. So that's, that'll be $175 million with a $50 million delay draw. And then the original term loan is
Speaker: Yeah, okay.
Scott Peyree: And lastly, maybe the, there was a broad data breach out there that affected everybody, including you guys. Can you just help us kind of, well, first provide any update to kind of what went on there. And then how is this potentially impacting the business, if at all, maybe it's not.
Speaker Change #165: September 2028.
Speaker Change #165: Yeah.
Speaker Change #166: Okay. And lastly, maybe Doug, there was a broad data breach out there that affected everybody, including you guys. Can you just help us kind of, well, first provide any update to...
Speaker Change #167: to kind of what went on there. And then how is this potentially impacting the business, if at all, maybe it's not.
Scott Peyree: Scott, do you want to take that first? It's kind of came from the, do you have any comments on that, and I'll pick it up second? Um, after I'll be honest, I have to read.
Jason Bangle: Do you have any comments on that? And then I'll pick it up. Um, I'll be honest, I'm going to have to read the statement. We can confirm that we use Snowflake for our business operations and that we were notified by them that our subsidiary, Quilt Wizard, was impacted by the Snowflake data incident.
Speaker Change #167: Scott, do you want to take that first?
Scott: It kind of came from, do you have any comments on that? And I'll pick it up second.
Scott Peyree: We can confirm that we use Snowflake for our business operations and that we were notified by them that our subsidiary, what was the impact about the Snowflake data incident. We immediately began an investigation upon hearing from Snowflake. We take these matters seriously and are currently working to conclude our investigation and address any related legal obligations.
Scott: Um,
Scott: I'll be honest, I'm going to have to read the statement. We can confirm that we use Snowflake for our business operations and that we were notified by them that our subsidiary was impacted by the Snowflake data incident.
Scott Peyree: We immediately began an investigation upon hearing from Snowflake. We take these matters seriously and are currently working to conclude our investigation and address any related legal obligations. Based on our investigations, no consumer social security numbers or financial account information was affected, and no LendingTree branded products or services were impacted. Okay, so from a financial standpoint... You don't really see this as impacting the business, at least as of now, based on what you just said.
Scott Peyree: Based off our investigations, no consumer Social Security numbers or financial account information was affected, and no Lending Tree branded products or services were impacted.
Scott: We immediately began an investigation upon hearing from Snowflake. We take these matters seriously and are currently working to conclude our investigation and address any related legal obligations.
Scott: Based off our investigations, no consumer social security numbers or financial account information was affected, and no LendingTree branded products or services were impacted.
Speaker: Okay, so in other words, from a financial standpoint, you don't really see this as impacting the business, at least as of now, based on what you're talking about. Yeah, we really can't comment on this as an ongoing investigation. Like Ken says, you know, we don't expect us that if it were material, we would have announced its materiality, and we don't believe it is.
Speaker Change #172: Okay, so in other words, from a financial standpoint,
Scott Peyree: No, yeah, we really can't comment on this. It's an ongoing investigation. What I can say is, you know, we don't expect it. If it were material, we would have announced its materiality. And we don't believe it is.
Speaker Change #174: You don't really see this as a...
Speaker Change #170: as impacting the business, at least as of now, based on what you said.
Speaker Change #168: Yeah, we really can't comment on this. It's an ongoing investigation. What I can say is, you know, we don't expect us that if it were material, we would have announced its materiality.
Speaker: Okay, that's helpful.
Douglas R. Lebda: Got it. Okay. That's helpful.
Operator: Thank you, guys. Thank you. One moment for our next question, and it comes from the line of Melissa Wedel with J.P. Morgan. Please proceed. Good afternoon.
Speaker: Thank you, guys. Thank you.
Melissa Wedel: And he comes from the line of Melissa Wedel, with JP Morgan; please proceed. Good afternoon. Thanks for taking my question.
Speaker Change #169: And we don't believe it is.
Speaker Change #171: Got it. Okay, that's helpful. Thank you, guys.
Operator: Thanks for taking my questions. Also, just say congrats to Trent on the new role and looking forward to working with the team going forward. Going back to the idea of replicating the sort of the insurance strategy of reducing margin to capture share, when we look at how that's probably looking like a really great strategy right now that you're reaping the benefits of it, and you've got a recovery in revenues and margin.
Speaker Change #173: Thank you. One moment for our next question and it comes from the line of Melissa Wedel with JP Morgan. Please proceed.
Speaker: Also, just say congrats to both Trent on the new role and looking forward to working with the team going forward.
Melissa Wedel: Good afternoon. Thanks for taking my questions. Also, just say congrats to both Trent on the new role and looking forward to working.
Speaker: Going back to the idea of replicating the sort of the insurance strategy of reducing margin to capture shares. And we look at probably looking like a really great strategy right now that you're reaping the benefits of it, and you've got a recovery on revenues and margin. But when we look at how long that took, that was really like sort of a five to six quarter commitment on reduced margin. It sounds like what you're saying, at least in consumer, is that you don't necessarily think that that investment period or the period where you'll see that that margin compression will necessarily be as long.
Speaker Change #176: with the team going forward. Going back to the idea of replicating the sort of the insurance strategy of
Speaker Change #177: Reducing margin to capture share, when we look at how that's probably looking like a really great strategy right now that you're reaping the benefits of it, and you've got a recovery on revenues and that.
Operator: But when we look at how long that took, that was really like sort of a five to six quarter commitment to reduced margin. It sounds like what you're saying, at least in consumer, is that you don't necessarily think that that investment period or the period where you'll see that margin compression will necessarily be as long, maybe as long as you saw on insurance. Is that a fair interpretation of what your view is? Jason, Scott.
Speaker Change #178: and Margin. But when we look at how long that took, that was really like sort of a five to six quarter commitment on reduced margin. It sounds like what you're saying, at least in consumer, is that you don't necessarily think that
Speaker: Maybe, as you saw an insurance, is that a fair interpretation of what your view is?
Speaker Change #179: That investment period, or the period where you'll see that that margin compression will necessarily be as long, maybe, as you saw in insurance. Is that a fair interpretation of what your view is?
Jason Bengel: Jason Scott. Also, I'll start, and again, all this repeat as I've repeated, like our goal is increasing total B&D dollars. So if I can do $3 billion of revenue at lower margins, but double my B&D, I'm happy with that.
Scott Peyree: I'll start and again, I'll just repeat as I've repeated like our goal is increasing total BNB dollars. So, if I can do $3 billion of revenue... at lower margins but double my V&D, I'm honest; I'm happy with that. Like, you know, so that...
Speaker Change #179: Jason, Scott. I'll start and again I'll just repeat as I've repeated like our our goal is increasing total BMD dollars.
Speaker Change #180: So if I can do $3 billion of revenue at lower margins, but double my V&D, I'm honest, I'm happy with that.
Jason Bengel: So I would say, when you get into an extreme growth mode in lending, which we will be sooner rather than later, if our clients have high demand and want to be writing loans for 3, 4, 5X the amount of consumers than they do currently, we're going to do our best to service that because we want to walk in that budget. We want to show them that we can deliver on that budget. And if we need to do it a slightly lower margin, as long as we're making more B&D at the end of the day, the clients are happy and we're happy.
Scott Peyree: So I would say, when you get into an extreme growth mode in lending, which we will be sooner rather than later, you know, if our clients have high demand and want to be writing loans for 3, 4, 5x the amount of consumers than they do currently, we're going to do our best to service that, because we want to walk in that budget, we want to show them that we can deliver on that budget, and if we need to do it at a Yeah, the way I like to think of it in a two-sided marketplace is if you've got demand for customers from our clients, you have to go fulfill that.
Speaker Change #181: So I would say, when you get into an extreme growth mode in lending, which we will be sooner rather than later,
Speaker Change #181: If our clients have high demand and want to be writing loans for 3, 4, 5x the amount of consumers than they do currently, we're going to do our best.
Speaker Change #181: to service that, because we want to walk in that budget, we want to show them that we can deliver on that budget, and if we need to do it at a slightly lower margin, as long as we're making more VMD at the end of the day, our clients are happy and we're happy.
Speaker: Yeah, the way I like to think of it in a two-sided marketplace is if you've got demand for customers from our clients, you have to go fulfill that. And you go take that as much of that demand as you can, and then you go try to compete to fulfill that because not only are you making money in the first transaction, we're also making money in cross-sell and other revenue streams afterwards. And the added effect of that and the positive effect that you're having, even if it's theoretically 0% margin, you know, that budget is coming from somebody else.
Scott Peyree: And you go take as much of that demand as you can, and then you go try to compete to fulfill that. Because not only are you making money in the first transaction, but you're also making money in cross-sell and other revenue streams afterwards.
Speaker Change #181: Yeah, the way I like to think of it in a two-sided marketplace is if you've got demand for customers from our clients
Speaker Change #181: You have to go fulfill that and you go take that as much of that demand as you can and then you go
Speaker Change #181: We try to compete to fulfill that because not only are you making money in the first transaction, we're also making money in cross-sell and other revenue streams afterwards, and the added effect of that
Douglas R. Lebda: And the added effect of that, and the positive effect that you're having, even if it's at theoretically zero percent margin, you know, that budget is coming from somebody else, and or it's coming from the market growing overall and to the extent it's coming from somebody else it's improving our revenue per liter our rpl our demand equation and it's hurting somebody else's and that's making us more positive in in the auctions and we've always prided ourselves on on dominating among that high intent traffic and working with our clients because that you know, they want more efficiency and higher conversions and don't want to buck the trash. And so we partner with them. And the only reason we can do that is because we have more demand than others. And when you're in a growth mode, you want to capture all of that the, Yeah. All right. That's Jason.
Speaker Change #181: and the positive effect that you're having, even if it's at, theoretically, 0% margin, you know, that budget is coming from somebody else.
Speaker: and, or it's coming from the market growing overall, and to the extent it's coming from somebody else, it's improving our revenue per liter, our RPL, our demand equation, and it's hurting somebody else's, and that's making us more positive in the auctions, and we've always prided ourselves on dominating among that high intent traffic, and working with our clients.
Speaker Change #181: And, or it's coming from the market growing overall, and to the extent it's coming from somebody else,
Speaker Change #181: It's improving our revenue per liter, our RPL, our demand equation, and it's hurting somebody else's, and that's making us...
Speaker Change #181: more positive in the auctions. And we've always prided ourselves on
Speaker: Because that's, you know, they want more efficiency and higher conversions, and don't want a bunch of trash. And so we partner with them, and the only reason we can do that is because we have more demand than others. And when you're in a growth mode, you want to capture all of that that you can. Yeah, I'll just, I'll just, I'll just, yeah, I'll just tack on one more thing to that, you know, and when we, when we think about home and consumer coming back at just going back to our expense base, we've been focused on making sure that we have, we have a lot of leverage in that expense base, so when home and consumer come back, it's largely our current partner spending more with us.
Speaker Change #181: on dominating among that high-intent traffic and working with our clients because that, you know, they want.
Speaker Change #181: more efficiency and higher conversions and don't want a bunch of trash. And so we partner with them and
Speaker Change #181: And the only reason we can do that is because we have more demand than others. And when you're in a growth mode, you want to capture all of that that you can.
Jason Bangle: I'll just. Jason, go ahead. I'll just add one more thing to that. When we think about home and consumer coming back, just going back to our expense base, we've been focused on making sure that we have a lot of leverage in that expense base. So when home and consumer come back, it's largely our current partners spending more with us. And so we've been focused on making sure as much of that BMD as possible drops down to EBITDA. And so the activities when our current partners spend more time with us aren't changing that much.
Speaker Change #182: Yeah. Okay.
Speaker Change #182: I'll just tack on one more thing to that, you know, when we think about home and consumer coming back, just going back to our expense base,
Speaker: And so we're going to, we've been focused on making sure as much of that view as possible drops down to either dot, and so the activities when our current partners spend more of us aren't changing that much, we don't need to hire a massive number of account managers, necessarily to support that growth, and so we're really focused on making sure it translates into either that comes back.
Jason: We've been focused on making sure that we have a lot of leverage in that expense base. So when home and consumer come back, it's largely our current partners spending more with us.
Jason Bangle: We don't need to hire a massive number of account managers necessarily to support that growth, and so we're really focused on making sure it translates into EBITDA as it comes back. Yeah, it's a great point.
Speaker Change #182: And so we've been focused on making sure as much of that BMD as possible drops down to EBITDA. And so the activities, when our current partners spend more with us, aren't changing that much. We don't need to hire.
Scott Peyree: Like you're basically hanging on during these markets, but trying to use it to gain share. Yes, okay. I wanted to also pull on the thread a little bit around your some of the partners within consumer talking about loosening underwriting standards or at least starting to talk about that. I'm curious, as you noted it's multiple partners, is it within a particular part of the market? Is it geared toward a particular type of customer? Yeah, so I would say that there's a problem there.
Speaker: Yeah, it's a great point; like you're basically hanging on during these markets, but trying to use it to gain share.
Speaker Change #182: a massive number of account managers necessarily to support that growth. And so we're really focused on making sure it translates into EBITDA as it comes back. Yeah, it's a great point. Like you're basically hanging on during these markets, but trying to use it to gain share.
Speaker: Yes, okay, one is to also pull on the thread a little bit around your some of the partners within consumer talking about loosening underwriting standards or at least starting to talk about that. I'm curious, is that you noted as multiple partners, is it within a particular like super prime part of the market? Is it geared at a particular type of customer?
Speaker Change #183: Yes, okay. I wanted to also pull on the thread a little bit around some of the partners within consumer talking about loosening underwriting standards, or at least starting to talk about that.
Speaker Change #184: I'm curious, is that, you noted it's multiple partners, is it within a particular, like, super prime part of the market? Is it geared at a particular type of customer?
Scott Peyree: Absolutely. I can just tell you at a generic high level where some of the conversations were happening. Obviously, I won't specifically call out clients, but yeah, you know, you're looking for, for example, like, small business and personal loans. Like, one thing that we're having a conversation around loan purpose is that. Like, I would say on the mortgage side, we've had a few clients that have been capped on certain products, like purchase mortgages, that are now opening up that. So you're kind of seeing across the board in all lending categories, to be honest. Okay.
Speaker: Yeah, I can just tell you at generic high levels. Some of the conversations were happening; obviously, I won't specifically call out clients. But yeah, you know, you're looking on, for example, like on small business and personal loans, like like one thing that we're having conversation around is like loan purpose. Is that that can be very like whether you get an inventory loan, going on vacation, like what is the purpose of your loan? That's one of the things they've got really restrictive on that they're talking about opening up categories of loan purpose that they'll accept.
Speaker Change #185: Yeah, so I would say that there's a problem there. Absolutely. I can just tell you at generic high levels, some of the conversations were happening. Obviously I won't specifically call out.
Speaker Change #186: Douglas Lebda, Andrew Wessel
Speaker Change #187: That can be very like whether you get an inventory loan going on vacation like what what what is the purpose of your loan? That's one of the things they've got really restrictive on that. They're talking about
Speaker: Another category is just credit scores, like talking about, for example, lowering. Well, we needed to be 720 above; now we'll start accepting society and above that. You know that that's the start of the snowball there. Like I would say on the mortgage side, we've had a few clients that may have been happen certain products like purchase mortgage that are now opening up. So you were, you're kind of seeing across the board and in all lending categories, to be honest.
Speaker Change #187: opening up categories of loan purpose that they'll accept.
Speaker Change #188: Another category is just credit scores, like talking about, for example, lowering, well, we needed to be 720 above, now we'll start accepting 680 and above. So, you know, that's the start of the snowball there.
Speaker Change #189: I would say on the mortgage side, we've had a few clients that have been capped in certain products like Purchase Mortgage that are now opening up that. So, you're kind of seeing it across the board in all lending categories, to be honest.
Speaker: Okay, okay, and so I was I was asking my last question to you around small business. Seems like that has been obviously the performance there is by procating from personal on a little bit, but you're saying you're hearing that from running partners to expanding that credit box a little bit into into small business area. Yep, yep, and I'll caveat it all with everything that's happening is small; it's nothing is significant, but these, but what is significant is the first time they turn, the wins have changed from restrictive to opening.
Speaker Change #190: Okay, okay. And so, that was actually my last question too, was around small business. It seems like that has been, obviously, the performance there is bifurcating from personal loan a little bit, but you're saying you're hearing that from lending partners too, expanding that credit box a little bit into the small business area?
Speaker Change #191: Yep, yep, and I'll caveat it all with everything that's happening, it's small, nothing is significant, but what is significant is the first time the winds have changed.
Scott Peyree: And so my last question to you was around small business. It seems like that has obviously been the performance there bifurcating from personal loans a little bit, but you're saying you're hearing that from lending partners too, expanding that credit box a little bit into the small business area. Yep, yep. And I'll caveat it all with everything that's happening: it's small, nothing is significant. But what is significant is that it's the first time the winds have changed, from restrictive to opening. And it's just like it happened in an insurance year ago. It starts very small, but then once the dam starts to break open, it gets bigger.
Speaker: And it's just like it happened in a short period of time. It starts very small, but then once the dam starts to break open, it can be a flood pretty quick.
Operator: It can be a flood pretty quick. Okay, thanks everyone. Thank you. One moment for our next question, please. And it's from the line of Madeleine Zhu with Susquehanna International. Please proceed. Hi. Well, it's actually Jamie.
Speaker Change #191: from restrictive to opening. And it's just like it happened in insurance a year ago. It starts very small, but then once the dam starts to break open,
Speaker: Okay, thanks, everyone. Thank you. One moment for our next question, please.
Speaker Change #191: It can be a flood pretty quick.
Madeline Zhu: And it's on the line of Madeline Zhu with Susquehanna International; please proceed.
Speaker Change #191: Okay. Thanks, everyone.
Speaker: Hi, it was actually Jamie. So, is the home and consumer contemplated to grow in the second half of 24?
Speaker Change #192: Thank you. One moment for our next question, please.
Speaker Change #192: And it's from the line of Madeleine Zhu with Susquehanna International. Please proceed.
Jason Bangle: So is home and consumer contemplated to grow in the second half of 24? It's Jason. I'll take that. So it's, you know, again, I think the easiest way to think about it is relative to where we are in Q2. And relative to that, it's generally in a steady state, with some slight drop seasonally in Q4. When you look at it versus the prior year, that cop is just much easier in the second half of the year because that's when most of the tightening happens.
Jamie: Hi, it's actually Jamie.
Jamie: So is home and consumer contemplated to grow in the second half of 24?
Jason Bengel: Hi, it's Jason. I'll take that, so it's, you know, again, I think that you just way to think about it is relative to where we are in Q2 and relative to that is generally steady state, some drop, seasonal in Q4. When you look at it versus prior year, that cop is just much easier in the second half of the year because that's when most of the tightening happened. So, when you look at growth rates from Q1 to Q2 to Q3 to Q4, they will improve, but mostly because the cop is that much easier.
Jamie: It's Jason. I'll take that. So it's, you know, again, I think the easiest way to think about it is relative to where we are in Q2.
Speaker Change #193: And relative to that, it's generally steady state, some drop seasonally in Q4. When you look at it versus prior year, that cop is just much easier in the second half of the year because that's when most of the tightening happened.
Jason Bangle: So when you look at growth rates from Q1 to Q2 to Q3 to Q4, they will improve, but mostly because the comp is that much easier. Okay. Thanks for that, Scott. And then... or Jason, I'm sorry, and then Scott.
Speaker Change #193: So when you look at growth rates from Q1 to Q2 to Q3 to Q4, they will improve, but mostly because the comp is that much easier.
Speaker: Okay, thanks for that, Scott.
Speaker: And then, Jason, I'm sorry. And then Scott, you know, I'm surprised that you have these constructive comments about lending, but it says in the shareholder that there's ongoing weakness in the credit card vertical.
Jason Bangle: You know, I'm surprised that you have these constructive comments about lending, but it says in the shareholder letter there's ongoing weakness in the credit card vertical. So could you help us, like unpack, when you say lending? Is there a reason why, and I'm sure there is, I just don't understand it, separate behavior being exhibited between, say, personal lines, home equity, and carded originations? Yeah, you know, it's accurate to say credit cards are still by far the toughest business in the world.
Speaker Change #193: Okay. Thanks for that, Scott. And then...
Speaker Change #193: or Jason I'm sorry and then Scott
Speaker: So, could you help us like unpack when you say lending? Is there a reason why, and I'm sure there is, I just don't understand it, separate behavior being exhibited between, say, personal lines, home equity, and carded originations?
Douglas Goldstein: You know I'm surprised that you have these constructive comments about lending but it says in the shareholder letter there's ongoing weakness in the credit card vertical so could you help us like unpack when you say lending is there a reason why and I'm sure there is I just don't understand it
Speaker: Yeah, you know, it's accurate to say credit cards is still by far the toughest business in the, and that would be the one category as I didn't call out earlier that that's the one category we're not hearing a bunch of excitement about opening up.
Speaker Change #195: separate behavior being exhibited between say personal lines, home equity and carded originations?
Jason Bangle: And that would be the one category, as I didn't call out earlier that that's the one category we're not hearing a lot of excitement about opening up. I think credit cards, in general, as the riskiest unsecured debt category in lending, have seen default rates spike significantly higher than most of the other lending industries I've seen.
Speaker Change #196: Yeah, you know, it's accurate to say credit cards is still, by far, the toughest business in the land, and that would be the one category, as I didn't call out earlier, that that's the one category we're not hearing a bunch of excitement about opening up. I think the credit cards in general...
Speaker: I think the credit cards in general. As the riskiest, unsecured debt category and lending, that they've seen default rates spike significantly higher than most of the other lending industries that seem to make a very general statement. I think you've seen in other lending industries race spike is a good link to spike was raised one up, but it's kind of leveled off over the past six months. And so, even though it's at concerning levels, it's not at fire alarm levels in the feeling more comfortable that it's leveled and hopefully we'll go down when race start to go down.
Speaker Change #196: as the riskiest unsecured debt category in lending that they've seen default rates spike
Scott Peyree: To make a very general statement, I think you've seen in other lending industries, rates spike, and delinquency spikes as rates go up, but it's kind of leveled off over the past six months. And so even though it is,
Speaker Change #196: significantly higher than most of the other lending industries have seen. To make a very general statement, I think you've seen in other lending industries, rates spike, the delinquency spike as rates went up, but it's kind of leveled off over the past six months.
Scott Peyree: At concerning levels, it's not at fire alarm levels, and they're feeling more comfortable that it's leveled and, hopefully, will go down when rates start to go down. I think the credit card business has been a little bit different, where it's kind of spiked to alarm-bell levels in the credit card business. And they're more, in general, in a mode of trying to get credit card balances off the books versus like adding more balances to the books.
Speaker Change #196: And so even though it's at concerning levels, it's not at fire alarm levels, and they're feeling more comfortable that
Speaker: I think the credit card business has been a little bit different words. It's kind of spikes to alarm bill levels in the credit card business, and they're more in general in a mode of trying to trying to get credit card balances off the books versus like adding more balances to the books.
Speaker Change #196: It's leveled and hopefully will go down when rates start to go down. I think the credit card business has been a little bit different where it's kind of spiked to alarm bell levels in the credit card business and they're more in general in a mode of trying to
Speaker: Does that answer your question?
Scott Peyree: Does that answer your question? Yeah, and the only thing I'd add is that we're definitely committed to the category, and it is a big financial services category, and we can do better there, and we want to be a really valuable partner for the major issuers and the minor issuers, and we've got a lot of stuff in the works on the product and tech front to hopefully address that and make it a great business for our partners that we can actually invest in I got it. And lastly, let me just echo my congratulations to Trent.
Speaker: Yeah, and the only thing I'd add is we're definitely committed to the category and see that, and it is a big financial services category, and we can do better there, and we want to be a really valuable partner for the major issues and the minor issues. We've got a lot of stuff in the works on the product and tech front to hopefully address that and make it a great business for our partners so we can actually invest in sometime in the future.
Speaker Change #196: Trying to get credit card balances off the books versus like adding more balances to the books.
Speaker Change #196: Does that answer your question?
Speaker Change #196: Yeah, and the only thing I'd add is we're definitely...
Speaker Change #196: committed to the category and see that and it is a big financial services category.
Speaker Change #196: And, you know, we can do better there, and we want to be a really valuable partner for the major issuers and the minor issuers, and we've got a lot of stuff in the works in the product and tech front to
Speaker: Got it, and last but not least, echo my congratulations to Trent and spend a pleasure working with you over the years. Thanks, Amy.
Operator: It's been a pleasure working with you. Thanks, Jamie. Thank you. And our last question, one moment please, comes from the line of Mike Grondahl with Northland Securities. Please proceed. Hey guys, just a question at a high level. How would you describe the visibility, the forward visibility?
Speaker Change #196: Hopefully address that and make it a great business for our partners so we can actually invest in sometime in the future.
Speaker: Thank you. In our last question, one moment please.
Speaker Change #197: Got it. And lastly, let me just echo my congratulations to Trent. It's been a pleasure working with you over the years.
Speaker: Come from the line of my Grondahl with Northland Securities, please proceed. Hey guys, thanks. Kind of just a question at high level.
Trent Ziegler: Thanks, Jamie.
Speaker Change #198: Thank you. And our last question. One moment, please.
Speaker Change #199: Calls from the line of Mike Grondahl with Northland Securities, please proceed.
Speaker: How would you describe kind of the visibility, the forward visibility, maybe in months or in quarters for insurance, personal loans and mortgage for each of those areas? Do I want to take that forward, forward visibility as far as just revenue growth demand?
Scott Peyree: Maybe in months or in quarters for insurance, personal loans, and mortgage for each of those. Scott, do you want to take that? Forward visibility as far as just revenue growth demands, budget, and buying, you know, trends in the business, you know, I know you guys don't, yeah, I mean, I would say, but what do you see today? I would say I'll start with insurance. The terminology I would use is relentless growth and insurance.
Michael John Grondahl: Hey guys, thanks. Um, kind of just a question at high level.
Michael John Grondahl: How would you describe kind of the visibility, the forward visibility, maybe in months or in quarters for insurance, personal loans, and mortgage for each of those areas?
Speaker: Budgeting, buying and you know trends in the business. You know, I know you guys don't know.
Speaker Change #200: John , you want to take that?
Speaker Change #201: Forward visibility as far as just revenue growth demands. Budget and buying. You know, trends in the business. You know, I know you guys don't have super long visibility, but what do you see today?
Speaker: Yeah, I mean, I would say, but what do you see today?
Speaker: I would say I'll start with insurance. I would; the terminology I would use is relentless growth and insurance. It seems to be building and building versus leveling off, and we sure aren't getting much of any indications from our clients about pulling back. The general attitude is, how can we get more? What can we do to get more?
Scott Peyree: It just seems to be building and building versus leveling off, and we sure aren't getting much, if any, indications from our clients about pulling back. The general attitude is, "How can we get more? What can we do to get more?"
John Robert Campbell: I would say, I'll start with insurance. The terminology I would use is relentless growth in insurance. It just, it seems to be...
John Robert Campbell: building and building versus leveling off and we sure aren't getting
Scott Peyree: You know, the lending, as Jason kind of said before, I would say lending, troughed out in Q1. It's been in a steady state. I think we've been growing top-line revenue slightly in that steady state, with V&V largely staying the same. I would say, as I look out and forecast out, it will probably stay generally in that state until rates start to decline. And then once rates start to decline, I think you're immediately in growth mode there. And so, you know, we all hope that that will start to happen in September, right? I mean, odds are very high that that's gonna start. But we don't know that.
Speaker: You know, the lending, as Jason kind of said, I would say lending, it trought out in Q1. It's been in a steady state. I think we've been growing pop line revenues slightly in that steady state with VMD largely the same, same. I would say, as I look out and forecast out, it will probably stay generally in that state until rates start to decline. And then once rates start to decline, I think you're immediately in growth mode there. And so, you know, like, we all hope that that will start to happen in September, right? I mean, the odds are very high, but that's going to start.
Speaker Change #202: Much, if any, indications from our clients about pulling back. The general attitude is how can we get more? What can we do to get more?
Jason: You know, the lending, as Jason kind of said before, I would say lending, it troughed out in Q1, it's been in a steady state.
Speaker Change #203: I think we've been growing top line revenue slightly in that steady state with V&V largely staying the same. I would say as I look out and forecast out, it will probably stay generally in that state.
Speaker Change #203: until rates start to decline. And then once rates start to decline...
Speaker Change #204: I think you're immediately in growth mode there. And so, you know, like, we all hope that that will start to happen in September , right? I mean, odds are very high that that's going to start. We don't know that. I mean, it's up to the Fed to make that decision.
Speaker: We don't know that. I mean, it's up to the Fed to make that decision, but that's how I would answer the lending category in general: you're probably in a steady state, and until the rate starts to come down.
Douglas R. Lebda: I mean, it's up to the Fed to make that decision, but that's how I would answer the lending category in general: you're probably in a steady state until the rates start to come down. Yeah, I don't want to get too optimistic. But if you just look at the size of the industry among the public companies, the just direct, www.youtube.com, we can, you know, show ROI till the cows come home. And so increasingly, you know, we've always believed that marketplaces are going to help these guys really expand their, you know, their businesses.
Speaker: Yeah, and I don't want to get too optimistic, but if you just look at the size of the industry among the public companies, the direct TAM there is probably 3 to 4 times bigger than we are. And then when you look at direct marketing as a percentage of the total ads, then of the Geico's, the progress of the all states, I don't think we're even making a dent in their total marketing budget. And, you know, we can, you know, show ROI until the cows come home.
Speaker Change #204: That's how I would answer the lending category in general, is you're probably in a steady state until the rates start to come down.
Speaker Change #204: Yeah, and I don't want to get too optimistic, but if you just look at the size of the industry among the public companies, the just direct...
Speaker Change #205: Tam there is probably three to four times bigger than we are. And then when you look at direct marketing as a percentage of the total ad spend of the Geico's, the Progressive, the Allstates,
Speaker Change #205: I don't think we're even making a dent in their total marketing budget, and, you know, we're, uh...
Speaker: And so, increasingly, you know, we've always believed that marketplaces are going to help these guys really expand their, you know, their businesses. And that's proven to be the case. Now, if they've gotten the rates right, you know, they, just like we don't stop until the last profitable dollar, don't want to stop until the last profitable policy they're putting on.
Speaker Change #205: We can, you know, show ROI till the cows come home, and so increasingly, you know, we've always believed that that marketplaces are going to help these guys really expand their
Douglas R. Lebda: And that's proven to be the case. Now, they've gotten the rates, right? You know, there's, there's. They, just like we don't stop until the last profitable dollar. They don't want to stop until the last profitable policy they're putting on.
Speaker Change #205: you know, their businesses. And that's proven to be the case. Now they've gotten the rates right. You know, there's, there's, they, just like we don't stop until the last profitable dollar, they don't want to stop until the last profitable policy they're putting on.
Operator: Got it. Hey, thanks. Thank you. And as I see no further questions in the queue, I will pass it back to Doug Lebda for final comments. Thank you so much, and thank you everybody for your questions.
Speaker: Thank you so much, and thank you everybody for your questions. We are very excited about the opportunity ahead of us. Our outlook for continued year-over-year growth in revenue, VMD, and over the last two years. Growth in our market leading insurance segment remains robust.
Speaker Change #206: Got it. Hey, thanks guys.
Douglas R. Lebda: We are very excited about the opportunity ahead of us. Our outlook for continued year-over-year growth in revenue, VMD, and adjusted EBITDA is the result of many strategic decisions we have made over the last two years. Growth in our market-leading insurance segment remains robust. Our targeted strategy to increase wallet share with our lending partners is performing well, and should put us in a great competitive position to grow revenue and VMD as interest rates begin to decline or credit conditions begin to ease. Thank you so much for joining us on this call, and we look forward to connecting again when we report third quarter results. And thank you all for participating in today's conference. You may now disconnect.
Speaker Change #206: Thank you, and as I see no further questions in the queue, I will pass it back to Doug Lebda for final comments.
Douglas R. Lebda: Thank you so much and thank you everybody for your questions. We are very excited about the opportunity ahead of us. Our outlook for continued year-over-year growth in revenue, VMD, and adjusted EBITDA is the end result of many strategic decisions we have made over the last two years.
Speaker: Our targeted strategy to increase wallet share with our lending partners is performing well and should put us in a great competitive position to grow revenue and VMD as interest rates begin to decline or credit conditions begin to ease.
Douglas R. Lebda: Growth in our market-leading insurance segment remains robust.
Douglas R. Lebda: Our targeted strategy to increase wallet share with our lending partners is performing well and should put us in a great competitive position to grow revenue and VMD as interest rates begin to decline or credit conditions begin to ease.
Speaker: Thank you so much for joining us on this call, and we look forward to connecting again when we report third quarter results.
Speaker: And thank you all for participating in today's conference. You may now disconnect.
Douglas R. Lebda: Thank you so much for joining us on this call and we look forward to connecting again when we report third quarter results.
Speaker Change #207: And thank you all for participating in today's conference. You may now disconnect.