LendingTree, Inc.

Good day and thank you for standing by. Welcome to the LendingTree Incorporated first quarter 2026 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 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 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, Head of Investor Relations. Please go ahead.

Thank you, Kelly, and hello to everyone joining us on the call to discuss our first quarter 2026 financial results. On with us today are Scott Pari, our President and CEO, and Jason Bangle, our CFO. This afternoon, we posted a detailed letter to shareholders on our Investor Relations website. We've also posted a new investor presentation that we would encourage everyone to look at on our website. For the purposes of today's discussion, we will assume that listeners have gone through those materials and will focus on Q&A. Before I hand over the call to Scott for his remarks, I remind everyone that during this 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. We will also discuss a variety of non-GAAP measures on the call, and I refer you to today's press release and shareholder letter, both available on our website, for comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP. And with that, Scott, please go ahead.

Thanks, Andrew, and I appreciate everyone joining us on the call today. I'm going to start with some highlights from our first quarter results and then spend a few minutes on how we're executing on our strategy before opening up the line for questions. We've posted an updated presentation on our investor relations website that goes deeper on some of the remarks I have today. We had an exceptional start to the year. Adjusted EBITDA grew 71% year over year on a 37% increase in revenue, driven by a very strong performance in our insurance segment and a healthy contribution from consumer. We had a record revenue quarter, and it was the highest quarterly adjusted EBITDA we've had in six years. Just as importantly, we continued to strengthen our financial position. Net leverage declined to 2.1 times from 3.4 times a year ago, and we were pleased to receive a credit upgrade from S&P to B-plus with a stable outlook. Stepping back, what these results reinforce is the strength of our model. We operate a high-margin, asset-light marketplace with a scalable cost structure and we are demonstrating meaningful operating leverage as we grow. That combination, strong growth and expanding margin, is core to our investment proposition. Turning to our segments, insurance continues to lead the way. Revenue and segment profit both achieve new records in the quarter, growing 51% and 50% respectively year over year. We are now the largest marketplace for consumers to shop for their insurance needs, be that auto, home, health, or other products. Our scale with our largest carriers combined with growing demand from midsize insurers competing for market share provides our network with unparalleled depth and breadth. That translates into better outcomes for consumers and optimizes our monetization. Looking ahead, we expect price decreases in auto insurance across select states to further stimulate shopping activity and competition amongst carriers, which should support continued momentum. It is becoming clearer and clearer that the P&C industry has entered into a period of strong health and stability. In consumer, we delivered another quarter of healthy growth led by small business lending. Revenue increased 49% year over year. As the quarter progressed, we did begin to see some softening in consumer demand for loans. We believe this is tied to the broader macro dynamics, including elevated tax refunds earlier in the year and more recently a decline in consumer sentiment, which reached historically low levels in April. We are seeing similar patterns from small business borrowers as well. While we are mindful of these near-term headwinds, we remain confident in the long-term growth opportunity in consumer. As broader macro uncertainty begins to normalize, we expect demand to recover and credit supply to be ample. In the meantime, we continue to invest in our small business concierge capabilities, which remains a key differentiator in driving conversion and customer satisfaction. Home remains pressured by elevated mortgage rates, but we continue to view the current level of revenue and profit as cyclical lows, and we have meaningful upside as rates normalize and transaction volumes recover. After making a dedicated marketing investment during the first quarter, we expect revenue growth will continue and margins should expand in Q2. Unlike most of our competitors that over-index to specific verticals, we lead with our diversified platform. Each of our operating segments has unique macroeconomic drivers. Insurance cycles tend to be uncorrelated with changes in interest rates and benefit from long-term secular shift towards digital acquisition. Our consumer segment is most closely tied to credit availability, while home is most highly tied to rate and interest rates and tied to the mortgage cycles. This diversification enables us to navigate varying market and economic cycles while still offering a clear path to growth. At the midpoint of our updated 26 outlook, adjusted EBITDA is running at a three-year compound annual growth rate of 26%. We believe this growth profile combined with our advantage margin structure and capital efficiency are unique and valuable components of our business model. Now I'd like to provide an update on execution against our strategy. As a reminder, our North Star is to be the number one destination to shop for financial products. Everything we do is anchored in that objective, which is focused on four pillars. accelerating the core business, improving the consumer experience, expanding our product offerings, and rebuilding our brand. At the heart of this strategy is a simple idea. If we deliver a better experience and build stronger brand awareness, we increase organic traffic, improve conversion, and drive better unit economics across the platform. On the consumer side, a compelling brand promise brings users into our ecosystem. We deliver an easy and memorable experience that helps them accomplish what they came to do, which improves satisfaction, repeat usage, and referrals. That increases lifetime value while reducing customer acquisition costs. On the partner side, more high intent traffic leads to more monetization opportunities. As partners see better outcomes, they deepen integrations, increase spend, and compete more aggressively within our marketplace, which further improves pricing and selection for our consumers. One of the clearest opportunities we see in shifting more of our traffic mix is shifting more of our traffic mix towards organic channels. Every five-point increase in organic revenue mix represents about $40 million of incremental segment profit and roughly 400 basis point uplift in our variable marketing margin. This is the economic opportunity we're actively investing into. Through improvements in consumer experience that drive repeat visits and brand initiatives that increase unaided awareness. AI is a critical enabler across all of these efforts. We understand investor focus on AI and its potential impact to our business. Our view is very clear. AI is a tailwind, not a disruptor. AI is changing how consumers discover information, but it is not changing how financial products are ultimately purchased. These are complex, highly regulated transactions that require trust, compliance, identity verification, and deep integration with providers. In that context, marketplaces like ours become even more important. AI can guide consumers, but it cannot complete the transaction. It cannot underwrite a loan, bind an insurance policy, or securely handle sensitive financial data across multiple providers. That is where our platform plays a critical role. We are leaning into this shift. We are using AI to improve every stage of the consumer journey, from personalized engagement and financial guidance to smarter matching and more efficient application handoffs. At the same time, we are deploying AI internally to drive efficiency across marketing sales and operations. During the quarter, we launched an internally developed AI agent for our search marketing teams that provides real-time optimization insights. Based on early success, we are expanding this capability across additional channels and into our sales organization. We are also continuing to see strong results from AI-powered voice tools in our call centers and are extending those capabilities and to outbound and SMS engagement as well. Taken together, these initiatives are improving conversion, reducing costs, and reinforcing our role as the transaction layer in the financial ecosystem. To wrap up, we believe our investment proposition is compelling. We are a high-margin asset-light marketplace with proven operating leverage. We have multiple growth engines with embedded upside across insurance, consumer, and home. We have a strengthened balance sheet that provides flexibility and resilience. and we are leveraging AI to enhance our platform. We're encouraged by our strong results to start the year and remain confident in both our strategy and our ability to execute. While we are mindful of near-term macro headwinds, we believe we are well positioned to deliver durable growth and increased profitability over time. With that, I'll pause here and open the line for questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster.

Our first question comes from the line of Ryan Tomasello from KBW.

Your line is now open.

everyone congrats on a strong start to the year um i guess just to maybe start on the uh the slowdown scott that you're highlighting in consumer loan demand i guess not all that surprising given the geopolitical backdrop but just wanted to put a finer point around that whether it's also being accompanied by tightening credit boxes at your partners and is there any way to quantify the impact

um that you're baking into the guidance um incorporating this new back trial thank you yeah i mean maybe maybe i'll have jason talk to the exact quantifying which which is kind of hard during these wild geopolitical times we're in right now but i'm but i mean i would say just that on the credit availability side we haven't seen as much impact on credit availability especially for example like on the consumer the personal loan business, it's more have been around consumer shopping behavior. And, you know, with consumer sentiment all-time low, you know, gas prices that are all-time high, you know, a bunch of consumers getting extra tax refunds, you know, in kind of the February-March timeframe, we just saw demand drop off for personal loans for many of those reasons. It has, we have seen it start to increase again in April, which is good, but it is still is below what we would expect seasonal shopping behavior to be in Q2 at this point in time. But it's definitely off of the March lows. You know, when the war started in March, the gas prices went way up. That was kind of a shock to the system in that month specifically. Now, on the small business lending side, I would say we're seeing a little bit of both where you're seeing fewer merchants, small merchants look for loans and the size of loans they're looking for is lower than normal. But we're also seeing on the lender side a little bit of, there's still, the credit is still available, but it's typically they're offering lower loan amounts at higher interest rates. And so when you have a cautious merchant to begin with, And then they're not getting the exact loan they want. It's a little bit higher interest rate. The sense that we're getting is they're just not as urgently looking for money right now because of macro geopolitical stuff that's going on. But I think this is a short-term thing that will go away. And once consumer sentiment comes back up, hopefully things settle down geopolitically. I think we'll just be right back off to the races.

And I can maybe just turn to the guide a little bit.

Sorry, Jason.

No, sorry. Go ahead. No, please finish your response. Just with respect to the guide, you know, like Scott said, you know, January and February, we were doing really well. It was very strong. But then March and April, we did see headwinds, right? Like this is a lot of things we're talking about. With SMB, like Scott said, we did see decline in appetite from both merchants and lenders. And that resulted in a decrease in close rate, which has the effect of decreasing our RPL. So, coming out of the end of Q1, we did see a downward trend. And so, normally, what we expect to see is Q2 and Q3 is the strongest in consumer. That's just typical seasonality. But Where consumer sentiment is now at record lows and elevated gas prices, like we said, what we're assuming in the guide is just conservative. We're assuming very, very muted seasonality with the possibility of further credit tightening out there. So we're being very conservative. We're not hearing anything from our partners that would indicate we're tightening, but we're just really assuming much more muted seasonality than we otherwise would.

um great thanks for all that color and then i guess turning to insurance um if you can just elaborate on what you are seeing uh for run rate trends there and your expectations for the balance of the year and in particular i think last quarter you had called out some nice stats around just the diversification of the carrier um spend on the platform and the growth you were seeing from the you know number four plus partners on the marketplace so if you can provide any updated stats there, that would be helpful. Thanks.

So, yeah, I mean, I'll let Scott speak to, you know, some of the Q1 records that we're seeing. We had some great performance in Q1. Like we talked about in the last call, Q1 insurance performance was incredibly strong. Our prior record in Q4 was $48 million of VMD. You can see we beat that by a large margin, 20% or up $10 million. So we did see that normalize a bit coming out of Q1, which we expected. But going forward, we still expect to be materially ahead of that prior record. So this really goes to the benefit of having a diversified product portfolio, right? Like where we're seeing some headwinds in consumer that we hope will abate, Insurance, the backdrop is still very, very strong. Insurance carrier profitability is very, very high, and competition seems to be increasing at a rapid pace. So going forward, Q1 is going to normalize a bit, but it's still going to be performing at very, very strong levels.

Yeah, and just to add in there, just at a high level, the carrier demand just remains extremely strong. We've had, even towards the end of the quarter heading into Q2, there was a carrier that we hadn't worked with in a long time, came back on the network spending a decent amount of money. Another carrier that historically spends pretty small amounts of money, increased their budget pretty dramatically. Another carrier that typically just buys one of our products. You know, we've got elite click and call products. You know, they expanded and started buying another product to try to access like a higher overall quantity of our consumers. So it's just a very, very healthy competitive marketplace in insurance right now, which just makes it better and better for consumer choice, which helps drive further shopping as good consumer choice is there. Another thing I throw in was health insurance was a very pleasant surprise for us in Q1. And we attribute a lot of that to a lot of the COVID health insurance subsidies that a lot of people were getting started coming to an end in Q1. And it was a surprising large amount of consumers were out just shopping for health insurance and coming through our network. And that was a very pleasant surprise for us in Q1. You know, heading in, I think, you know, as Jason said, we dramatically outperformed what our forecast and expectations were for Q1. So, you know, Q2, we're not expecting it to be at those same levels. And a little bit of it is also, if you look at seasonality, you know, the consumer shopping behavior for insurance products comes down a little bit in Q2. But, I mean, big picture here. Very healthy marketplace, and we continue to expect insurance to grow year over year for the indefinite future. Thank you.

Thank you. One moment for our next question.

Our next question comes from the line of Mike Rondelt from Northland Capital Markets. Your line is now open.

Hey, guys. This is Owen on for Mike. In the home section segment, sorry, you mentioned investing more aggressively in that higher quality traffic despite the elevated mortgage rates and competitive marketing conditions. I guess How should we think about the balance between protecting margins versus continuing to invest through this weaker housing backdrop?

Yeah, I mean, I think, you know, it's, again, getting to the advantage of having a diversified product set. This really speaks to it because, yeah, there's the consumer demand for home homes. home loan products is at historically low levels for obvious reasons because the interest rates are a lot higher than they were a few years ago. But, you know, you still have to, like, it means that you're fighting, you know, all of the companies in the industry are fighting over a smaller number of consumers that are out there shopping. But the advantage of us being diversified in insurance and in consumer lending, you know, that are doing very well that means we can invest and fight, fight extra hard for that high quality traffic because bottom line, we are continuing to grow our lender network. I mean, that's actually one of our strategic focuses is to really grow a lot of our small and medium sized brokers in the mortgage world. And that, and that means you just need to be able to deliver quantity as much high quality consumers as you can. Um, And they're out there, and I think we did a successful job of testing into a few areas that now we know heading into Q2 and beyond, we have an idea of like, okay, what is it going to take to win in these certain areas long term? Some of them are sustainable. That's why you're seeing revenue continue to go up with the margins will go up in Q2. Some of them we had to step back from, but we have a lot of knowledge now of like, okay, this is what it's going to take to grow that. But I mean, bottom line, we need to be prepared We need to have a big distribution and client network when the mortgage industry turns around to be able to have the revenue grow really rapidly. And so that's a big part of how we're supporting the platform right now.

Got it. Got it. And then lastly for me, the homepage redesign metrics you disclosed were pretty impressive. how early are these results and where do you still see the biggest opportunities to improve that funnel conversion and personalization across the marketplace?

Yeah, we're, we are extremely excited about that and that they're very early results. The new homepage, uh, launched not even a month ago. Right. Right. Jason Andrews, like three weeks ago. Um, you know, and we, And we honestly, you know, it was really important for us as part of the brand rebuild process to redo the homepage and redo our messaging and move away from a SEO slash lead gen oriented homepage to a true branded homepage with our value proposition and useful information and data for the consumers. And, you know, so we weren't necessarily even thinking the metrics would increase when we rolled it out, but then, but then we were shockingly surprised as with metrics you saw of the improvement in performance and that is sustaining and that is holding. And now after the homepage, you know, now we're going to go through and revamping all of our specific product pages. And we're just, I think this is, in some of our research we had in the LLM world and whatnot, this is, this is a better approach at the end of the day. that's gonna help us win that organic traffic long-term and create a much more sticky consumer that lands on our site and is getting valuable information from us versus just like having, you know, immediately being pushed through a funnel. So we're very excited with how well that's performed. And also as we're looking, to do more proactively, do some brand advertising the second half of this year. It's also exciting to see how rolling out some of that messaging on the homepage has landed so well with consumers.

Awesome. Thanks, guys. Yep.

Thank you. I'm seeing no further questions at this time. I would like to turn it back to Scott Perry, Chief Executive Officer, for closing remarks.

We got one. All right. That was pretty short and sweet. Thank you, everyone, for joining. Just to reiterate, we're very excited about the results of the first quarter. Also very excited with all the strategic areas we're focusing on and how that's going to help this company continue to grow at a high rate over the next few years. With that, have a good day, everyone.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.