LendingTree, Inc.

Good day and thank you for standing by. Welcome to the LendingTree Incorporated fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Andrew Wessel, VP of Investor Relations and Corporate Development. Please go ahead.

Thank you, DeeDee, and good morning to everyone joining us on the call to discuss LendingTree's fourth quarter 2023 financial results. With us on the call today are Doug Lebda, LendingTree's Chairman and CEO, Scott Puri, COO and President of Marketplace Businesses, and Trent Ziegler, CFO. As a reminder to everyone, we posted a detailed letter to shareholders on our investor relations website earlier today. And for the 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 differ materially from the views expressed today. Many, but not all, of the risks we face are described in our periodic reports filed with the SEC. We will also discuss a variety of non-GAAP measures on the call today, and I refer you to today's press release and share with the letter both available on our website for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP. And with that, Doug, please go ahead.

Thank you, Andrew, and thank you to all who are with us on the call today. In 2023, we strategically simplified our business, reduced our fixed expense base, strengthened our balance sheet margins. Despite the revenue challenges we continue to navigate, we remain solidly profitable and maintain the ability to strategically invest in the company. All three of our reportable segments have operated through a historic period of disruption, following a rapid move higher in interest rate than its period of elevated inflation. And at the same time, our business model has again proven its durability, as we earned $78.5 million of adjusted EBITDA this year and generated $55 million of free cash flow. As our lender and insurance partners broadly pulled back from new customers because of these external factors last year, we chose to focus on efficiency, causing our operating margins to steadily increase throughout the year. In the fourth quarter, we earned $15.5 million, which is normally a seasonally softer quarter for us. Encouragingly, the much anticipated upturn in our insurance segment began to take hold in December, and has continued to strengthen into the first quarter. The consumer, auto, and home insurance markets have endured a prolonged hard market cycle over the last two years that is in many ways unprecedented, driven by the inflationary impacts to loss, cost, and economy after COVID lockdowns. Now that insurers have effectively passed through numerous rounds of price increases, they have returned to a more robust pace of marketing spend. Fortunately, our customers continue to shop for new policies at record levels, with volumes increasing 10% compared to a year ago. During the quarter, we also repurchased $100 million of our 2025 convertible notes at a discount to par value, similar to the transaction we completed earlier in the year. We now have opportunistically paid down half of the original $575 million amount of these notes at about a 20% discount, and we remain committed to retiring the remainder in the most efficient manner possible for our shareholders. Finally, the financial outlook we released this morning assumes continued improvement in the insurance segment compared to last year. We have taken what we believe to be a conservative view for our home and consumer segments, continued dislocations in the housing market, and persistently tighter lending standards than many of our consumer partners. However, due to the extensive work we've done right-sizing our expense base, we're now forecasting our adjusted EBITDA will grow at a healthy pace from last year as we hold fixed costs near current levels. As the revenue picture improves, we would expect this operating leverage to positively impact our bottom line. And now, operator, please open the line for questions.