LendingTree, Inc. Aktie

Good day, and thank you for standing by. Welcome to the LendingTree, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] 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 Peyree, our President and CEO; and Jason Bengel, our CFO. This afternoon, we posted a detailed letter to shareholders on our Investor Relations website. We have 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 we'll focus on Q&A. Before I hand over the call to Scott for his remarks, I'll 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 6 years.

Just as importantly, we continue to strengthen our financial position. Net leverage declined to 2.1x from 3.4x a year ago. And we are pleased to receive a credit upgrade from S&P to B+ with a stable outlook.

Stepping back, what these results reinforces 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 achieved 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 mid-sized 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 clear and clear that the PMC 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 3-year compound annual growth rate of 26%. We believe this growth profile, combined with our advantaged 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 #1 destination to shop for financial products. Everything we do is anchored in that objective, which is focused on 4 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 5-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, find 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 team 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 into 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.

[Operator Instructions] Our first question comes from the line of Ryan Tomasello from KBW.

Congrats on a strong start to the year. I guess just to maybe start on 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 that you're baking into the guidance incorporating this new backdrop?

Yes. I mean maybe I'll have Jason talk to the exact quantifying, which is kind of hard during these wild geopolitical times we're in right now. But I mean, I would say, just 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 again, with consumer sentiment at all-time low, gas prices at an all-time high, a bunch of consumers getting extra tax refunds in kind of the February-March time frame. We just saw demand drop off for personal loans for many of those reasons. It has -- we have seen a 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. 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 that 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. They're just -- it's just 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 still think -- 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.

Yes. And I can...

And I can maybe just turn to guide a little.

Sorry, go ahead, Jason.

Oh, sorry, go ahead.

No, please finish.

Just with respect to the guide, like Scott said, 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 -- there's 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 the 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 more tightening. But we're just really assuming much more muted seasonality than we otherwise would.

And then, I guess, turning to insurance. If you can just elaborate on what you are seeing 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 spend on the platform and the growth you are seeing from the #4 plus partners on the marketplace. So if you can provide any updated stats there, that would be helpful.

So yes, I mean, I'll let Scott speak to some of the Q1 records that we're seeing. We had some great performance in Q1. Like we talked about on 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 normalized 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 not -- it is going to normalize a bit, but it's still going to be performing at very, very strong levels.

Yes. 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 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. We've got a lead click and call product. 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'd 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 who were out just shopping for health insurance and coming through our network and that was a very pleasant surprise for us in Q1.

Heading in, I think, as Jason said, we dramatically outperformed what our forecast and expectations were for Q1. So 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, consumer shopping behavior for Insurance products come down a little bit in Q2. But I mean, big picture, very healthy marketplace. And we continue to expect Insurance to grow year-over-year for the indefinite future.

Our next question comes from the line of Mike Grondahl from Northland Capital Markets.

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?

Yes. I mean I think it's again, getting to the advantage of having a diversified product set. This really speaks to it because, yes, there's -- the consumer demand for home loan products is at historically low levels for obvious reasons as the interest rates are a lot higher than they were a few years ago.

But you still have to -- like it means that you're fighting -- 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 consumer lending that are doing very well. That means we can invest and 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 means you just need to be able to deliver quantity, as much high-quality consumers as you can. 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.

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?

Yes. We are extremely excited about that. And they're very early results. The new homepage launched not even a month ago, right, right, Jason, Andrew, it's like 3 weeks ago. And we honestly -- it was really important for us as part of the brand rebuild process to redo the homepage and make -- and redo our messaging and move away from a SEO/lead-gen oriented homepage to a true branded homepage with our value proposition and useful information and data for the consumers.

And so we weren't necessarily even thinking the metrics would increase when we rolled it out. But then we were shockingly surprised as the metrics you saw of the improvement in performance. And that is sustaining and that is holding. And now after the homepage, now we're going to go through and revamping all of our specific product pages.

And we're just -- I think this is in -- this is some of our research we had in the LLM world and whatnot, this is a better approach at the end of the day. That's going to 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 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 in 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.

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

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.

Good day, and thank you for standing by. Welcome to the LendingTree, Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Andrew Wessel, Head of Investor Relations. Please go ahead.

Thank you, Tanya, and hello to everyone joining us today to discuss our fourth quarter 2025 financial results. On with us are Scott Peyree, President and CEO; and Jason Bengel, CFO. This afternoon, we posted a detailed letter to shareholders on our Investor Relations website. And for the purposes of today's discussion, we'll assume that listeners have read that letter, and we will focus on Q&A.

Before I hand the call over 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 the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP. And with that, Scott, please go ahead. .

thanks, Andrew. And thanks to everyone joining us today as we discuss our very strong fourth quarter and full year 2025 results. I will first touch on some of the highlights from our earnings release. And then I'd like to take everyone through our '26 strategy before opening it up for questions. .

First off, we had a fantastic 2025. VMD was up 14%. Adjusted EBITDA grew at double that pace 28%. Each of our 3 reportable segments grew VMD at double-digit rates. Insurance again led the way as very strong demand from carriers, combined with our ability to take market share from competitors generated $174 million of VMD, a 10% increase over the previous year. We have heard some of our peers call out slowing demand from the largest insurers in Q1. I just want to tell everyone we are not seeing that at all ourselves as top carriers budgets with us remain robust as we're targeting our high-quality consumers.

In fact, we expect Q1 to be yet another record revenue quarter. The #4 [indiscernible] insurers on our network grew revenue by 65% with us [ 25% ] from the previous year, a testament to the strength and breadth of partners in our marketplace. Insurance gathered strength as the year progressed, finishing with record performance in the fourth quarter that was just ahead of our previous record the year ago period. The momentum is carried through the start of '26, and we expect another record year from the insurance division this year.

Consumer Group segment profit by 17% last year, anchored by a 60% revenue growth from our small business team. Similar to the Insurance segment, our Consumer group of businesses strengthened throughout the course of the year, with segment profit increasing 24% in Q4 from the prior year and small business revenue growing a remarkable 78% year-over-year. Importantly, we have not sacrificed margin to generate this growth. Segment margin for both the quarter and full year was stable at 51%.

As a reminder, we have continually invested in addition to our small business concierge sales force, allowing us as well as lenders on the network, allowing us to help a greater number of business owners find the best loan options for them while guiding them through the often complex process of completing their applications through to funding, continuing the build out of this team is in our plans for '26.

The home segment recorded 6% year-over-year in revenue -- growth in revenue for the fourth quarter, although increasing media costs and lower conversion rates for our lender partners pressured segment margins. The national 30-year mortgage rate just dipped below 6% for the first time since 2022. We were hopeful lower rates will finally start to unlock what has historically been -- which has been a historically slow mortgage market. The guidance we published today does not assume any continued improvement in rates.

So we hope this means our home segment forecast will end up being conservative. The pace of AI and AI-enabled search innovation has continued to accelerate. As I have said on previous calls, we view these new tools as fantastic opportunities for our business and are a key component of the strategy we have developed to increase the number of high intent visitors to our sites to compare and shop for financial products. We understand investor fears around the threat of disintermediation to our business model. There are many legal and regulatory structures in place that will make it difficult for agentic AI to overcome, not to mention our own partners incentive structures that will negate the outcome.

Instead of focusing on playing defense, though, against these low probability outcomes, we are embracing this innovative technology. I cannot be more excited about the AI-powered improvements that we are making to our consumer experience. We have already driven results with the use of AI voice in our call center. As mentioned in the letter, we've seen significant revenue growth to the tune of $10 plus million in revenue growth per quarter over the last 6 quarters compared to OpEx growth of a few hundred thousand dollars per quarter over the last 6 quarters in our call center operations.

We've also seen efficient improvements and our marketing team has generated using AI-enabled technology to speed up, design, ad testing and funnel testing. This is shown with a 17% increase in overall conversions coming through our network year-over-year in the fourth quarter. And that is with the headwind of legacy SEO coming down. Our North Star as a company continues to be -- I'm sorry, the North Star of our company is to be the #1 destination to shop for financial products. Every [indiscernible] that goes into forming our long-term initiatives is based on this aspiration.

We have the right to win as LendingTree has the broadest network of financial partners of any consumer finance shopping site, sourcing millions of visitors who are in the market for these products and what the best deal is our core competency. We will use these strengths as the bedrock to scale customer volumes and improve outcomes with enhanced experiences, new tools and better matching. Our North Star strategy has 4 strategic pillars: number one, accelerate the core business; number two, improve the consumer experience, number three, expand product offerings; and finally, number four, rebuild and reposition our brand.

I'd like to briefly hit on each of these pillars for the investors today. Number one, accelerate the core business. Initiatives focused in this growth area focus on our existing businesses to support ongoing double-digit growth. These strategic initiatives support driving more consumers to our network providing more purchase options to consumers and increasing monetization of our traffic via our distribution networks. Examples of areas we're focusing on now include the continued expansion of our SMB concierge sales force and network of lenders in SMB.

The development of a concierge sales force and auto lending, investments into tech products and sales teams for rapid expansion of our media business development capabilities and tech investment into major upgrades of our marketing technology platforms. Number two, improve the consumer experience. In this pillar, the CX team is systematically resolving consumer pain points, often with the use of AI technology. Initiatives in this pillar focused on making shopping easier for what are often complicated financial products.

We are seeking to serve both consumers looking to transact as well as consumers who are just window shopping. The goal of this pillar is to become a trusted partner for the consumer when seeking financial products to drive an increase in return visits and referrals. Examples of this area focusing -- that we're focusing on now include improving our [indiscernible] experience, taking learnings from our spring app to our website, such as making it easier to log in and customizing the homepage for log-in users based on products that are shopping for, also simplifying the process to find and review offers they had previously received.

Second, develop a personal loan rate table using our proprietary rate data we gather from millions of consumer shopping for loans on our network, which will allow consumers to know what rate they should expect before applying. This can be provided on our website, in our app and can be embedded with our business development partners and importantly, embedded within LOMs.

Third pillar, expand our product offerings. This pillar focuses on the addition of categories of financial products offered to consumers. Our long-term strategic goals to provide representation of all financial products that consumers could want. We do not have to manufacture a shopping experience for some products when we can instead identify and partner with industry-leading service providers.

The focus over the next 18 months is to sign partnerships in areas such as commercial insurance, pet insurance, boat and RV insurance, wealth management, robo advisers, student lending and others. Finally, our fourth pillar, rebuild and reposition our brand. We have strong brand resilience with aided awareness, but need to rebuild the brand from an unaided awareness perspective.

We also are focused on repositioning our brand to be a destination to suffer a wide variety of insurance, lending and other financial products, where historically, we've been associated more specifically with mortgage products. In Q1, we made key brand hires and have begun the redesign of our homepage. Our goal is to target brand spend in several large geographic markets in the second half of this year, introducing new customers to our redesign experience.

So thank you, everyone. I know that was a lot, but I thought it was important with our North Star and our new strategic focus to really lay it out for all of our investors. A little bit of a long winded there, so thank you for bearing with me. And so with that, I'll pause there and open the line to your questions about our results, outlook and strategy.

Our first question will be coming from the line of Youssef Squali of Truist Securities.

Congrats on a strong quarter. Scott, maybe can you talk a little bit about the sustainability of growth in insurance? I'm really just trying to understand what the main drivers are. I think you talked about how 4 out of the 10 insurance partners grew revenues, I think, by 60% or 65%. Maybe can you peel that onion one more layer and just kind of describe exactly what's going on that's driving all that growth? And I have a follow-up, please.

Yes, sure. No problem, Youseef. Thanks for the question. And just to clarify, what I was talking about with the insurance providers is our carriers 4 through 10, so like after our top 3 carriers, the next 7 carriers combined grew by 65% year-over-year. I just wanted to illustrate in that statement, how it's just -- we aren't solely dependent -- the top 3 carriers also grew a lot year-over-year, but just the growth is broad-based.

It's not just purely based on top 3 carriers. Even though our top 3 carriers, I mean, it's fair to say they still represent an outside portion of our overall insurance revenue. So just to discuss on the sustainability of the insurance marketplace right now, the bottom line, I would start with the insurance carriers themselves remain very profitable. They had a great year last year. They've started the year well this year. And after many years of -- few years of unprofitability and pulling back marketing spend amongst [indiscernible] other spends for a long time, they are now all very aggressive in growing market share, especially the top carriers.

And it is -- and honestly, I would say, over the past 3 to 6 months, they've become more aggressive, if anything, of trying to fight over market share. And we have just a lot of high-quality, high-intent consumers coming through our network. And the carriers know that our network is an extremely cost-effective way for them to get their insurance products in front of targeted high-intent insurance consumers. As the year goes on, we expect to start seeing some rate decreases more aggressively from rate carriers, which will bring more consumers shopping into the marketplace, carriers have continued to open up geographies.

They're getting very open at this point, but that is -- I mean, more geographies are open today than were a year ago as a general statement for carriers being willing to offer consumers product. And then finally, just internally, as I mentioned with our marketing strategy, we've just done a very good job of increasing consumer traffic coming through our site. We're out there, and we're in front of a lot more consumers now today than we were a year ago. And honestly, we look at our opportunities in front of us over the next year. We are very excited about continued growth in consumer traffic coming through our site per insurance products.

That's very helpful. And then on the AI disintermediation topic, how are you currently working or integrating with some of these LLMs to try to stay visible basically as it search transitions to more of a conversational kind of interface.

Yes, there's a number of fronts we're working on there. There's obviously the SEO front, where you're getting referenced by the LLMs driving consumers to our site. We continue to focus on that, and it continues to grow. It's a very high-intent consumers, as I've mentioned on previous calls, I would materially, it's still a pretty small percentage of our overall consumer base, but it's continuing to grow. .

Some of the LLMs, ChatGPT being an example are looking to start testing some advertising, which we're excited about participating in. Again, I don't know how material to expect it to be in the calendar year 2026 as far as quantity of consumers, but it's -- being that we are very, very good at paid advertising to get in front of consumers, we're excited about the LLM starting to open up that. And just from a technology development standpoint, we've been working at our teams on using AI development, conversational funnels, AGENTIC bots to help get documentation necessary to finish application process, developing comparison tools that helps consumers compare their offers, apples-to-apples at the personal loans rate table. I mentioned in my opening statements, as an example, I mean, we're building our a lot of technical chops on how to use AI in LLM style technology for front end consumer products.

I would say there's been varying levels success on the consumer engagement standpoint at this point. But I mean -- but we're getting better and better at building it. And as that consumer behavior starts to change, I think we'll be a leader in that space.

And our next question will be coming from the line of Ryan Tomasello, KBW.

This is Juan on for Ryan. Can you talk about the targeted brand investments in the second half of the year? What's driving that decision? And if you could size the amount of the investment relative to 2025.

Yes. I'll just start at a high level, Jason, you can throw in like the level of investments. I want to -- if you want to talk about that. But that was -- it's just a critical part of our North Star strategy is to be the #1 destination to shop for financial products. And as we looked at the landscape and our brand, we've got a really strong brand, and we're very proud of the brand we've developed. We haven't invested a ton on the pure basis of our brand over the past few years. .

And so whereas our brand is very good on an aided awareness perspective with consumers, it's not very good on unaided awareness. So we feel it's important to get out there, especially now that we want to reposition ourselves as a destination for all financial product shopping, whereas historically, a lot of consumers really associate specifically with mortgage and mortgage shopping. So we want to -- the goal is at the end of the day to really get to the point where an average consumer on the street, we are one of the first companies that comes to their mind if they are thinking about shopping for financial products.

And that's really what we want to start. So we want to go in the second half of this year with the redesigned homepage experience, a couple of pages with different messaging, some different types of messaging from a brand advertising perspective, and go on to some large markets where we have good positioning with all of our financial products some geographic markets where we can test different messaging and see what sticks and lands with the consumers well before we really roll it out on a national basis. And so that will probably start happening kind of mid-Q3 to mid-Q4. Jason, you want to hit on just the investment levels we're looking at.

Yes. That's -- like Scott said, this is probably more in the second half. And the amount that we spend is going to be a function of how well we're performing, I guess, is the one and then also how well that brand spend itself is performing as well. So we -- so if it performs and exceeds our expectations, then we may wind up leaning into it. And the guidance does contemplate at least an initial investment, where we're starting to roll this out and starting to do some testing. But the investment itself is at least initially probably less than $10 million as we're thinking about it in guidance. .

Got it. That's very clear. And just a quick follow-up. In terms of the outlook, can you provide a bit more granularity at the segment level for revenue and VMD growth as well as VMD margins?

Yes, sure. Happy to. So yes, I'll just talk through segment by segment, how we're thinking about the guide. So first home, the backdrop for home, we're not assuming any real rate benefit for home. We've seen some rate decreases coming through, but we're not assuming any going forward. That would be upside to the guide. Generally, home equity should have support with record home equity balances. But at the end of the day, there's still not a lot of consumers out there shopping. And we have seen some increase in competition causing media costs to increase. So margin-wise, I would say we expect home to be roughly where it was landing in Q4.

We are investing in quality to win a prominent space in our marketing channels, and we are investing and expanding our small lender network, which will provide some margin support. Going on to consumer. Consumer, the real driver is going to be small business. The merchant cash advance market is a strong market. That's growing. We've been investing in our concierge experience, the staffing, the marketing channel placements to drive high-quality traffic.

We expect all of that to continue into 2026. That's a model that's really working well for us. Personal loans, we move on to personal loans, record credit card balances provide a great use case for debt consolidation in 2026. But 2025 did see quite a bit of expansion, buy box expansions, which we're not expecting to repeat in 2026, we're being maybe a little bit more measured when it comes to PL growth expectations. We're focused on better matching consumers with lenders and finding additional sources of traffic to feed those lenders.

Margin-wise, it's generally where we have been in Q4, I think, is probably fair. It will bounce around, but I think Q4 is generally a decent starting point. And then insurance, when it comes to insurance, that backdrop is very favorable, like for all the reasons Scott said, carriers are becoming more competitive for market share and policies. They really want to grow policies. Their profitability is extremely strong. And with selective rate decreases coming through, that should spur additional traffic, which should support the CPL side of the house, the cost per lead.

So backdrop is really strong. Things we're doing, we're really focused on improving our margin. We're making some key investments in martech to make sure we grab more margin. And we're seeing a lot of that come through already in January and February in Q1. We've noticed a material increase in margins from where we were in Q4, and we expect that generally to continue throughout the year. And so I think just candidly, we are running hotter than what we expected in Q1 in insurance.

And so the backdrop is favorable. We have no indications that it's going to slow down, but it's -- when it comes to the guide we're also being a little bit cautious. It's only been 2 months. We kind of -- we don't want to bake in this very, very strong performance for the rest of the year in that. So to be totally totally candid. We are pulling that down a little bit and being a little bit more conservative, just to be prudent when it comes to the insurance segment. And then like we said, we do want to allow ourselves room to spend on brand as it relates to the strategy. So I mean I think that's generally some color on each of the pieces there. Hopefully, that's helpful.

And our next question will be coming from the line of Jed Kelly of Oppenheimer & Co.

Yes. Just can you just -- just in your shareholder letter, can you kind of explain more of like what's going on with these trigger leads and how that benefits? And then kind of taking the last comments around the guidance, are we kind of coming into an environment when the insurance segment is just now a lot more predictable and easier for you guys to forecast than it has been in the last 5 years? Then I have a follow-up.

All right. I'll start with hitting on the trigger leads, Jed, and then we can go to the insurance. So the trigger leads is -- for those that don't know the trigger leads, the very basic version of that is when -- for example, when we develop a lead and sell to our mortgage providers, and then they do a hard credit pool to provide a firm offer to the consumers then the credit bureaus will -- it will trigger them. That's what I call it trigger leases. They will be triggered to sell it off to a bunch of like third-party buyers that we have no association with, our clients have no association with, but it's basically saying like hey, this consumer just got our pull on the credit from an insurance -- from -- I'm sorry, a mortgage company. So maybe you might want to call them to see.

So it turns into a really horrible consumer experience. We're like they're about to close the mortgage and then all of a sudden, they're getting another 50 or 60 calls from -- who knows who. So the one for sure is Congress passed the bill that basically said that can no longer happen. And that's coming in Jason, Andrew. I don't know the exact date. It's quick this week, that's coming out. So it helps us on the front end of the quality of our traffic because now you don't have our clients when they're giving their firm offers to the consumers, it's not triggering like 50 calls on the back end. So like that will really help the consumer experience and the quality of our leads to our direct clients.

Secondly, how it helps us, there's a lot of buyers of these trigger leads that will no longer be able to buy these leads. And so we think that will drive many companies to come to buy these consumers on the front end from the likes of us, which should help our monetization. And I'm sorry, Jed, what was your second question around insurance?

Just we kind of...

[indiscernible] this period.

Yes, like the predictability following like last 5 years of a decent amount of volatility.

Yes. I think the short answer there is yes. It seems -- not that there is -- I mean there will always be some level of carriers leaning in and leaning out and that's why we manage a large network and keep all of that. But I view I do feel like the past few quarters has been -- there's been a lot more stability than maybe the previous 8 quarters were, and I expect that to continue.

And I expect the changes in geographic targeting, demographic targeting total ad spend to be a lot slower, a lot lower swings than they've been in recent history. Jason, do you have anything to add to that? .

Yes. Yes, I agree. I would just add on like the market will be less defined by 2 carriers, I think, as we progress throughout 2026. As we said, we saw a lot of strong growth from the next 7 carriers. And so as it becomes more competitive, as more carriers really start to come into the market and play a more prominent position in our market will be less defined by a smaller number of carriers. So that should help the predictability. .

And can I just sneak 1 more in?

Sure.

Just we've had a drawdown in valuations in most of the sector. Can you just talk about -- I get -- wanting to get your debt down below $200 million and then potentially maybe do buybacks. But can you talk about just potentially the acquisition landscape where you've seen valuations come in quite a bit with what's been going on over the last couple of months. .

Sure. I'll start on that, Jason, you can feel free to add in. I mean there's -- it is a big priority for us to bring down our total debt load and especially as a multiple. So we are very focused on continuing to do that. And we got that Jed, as you said, with valuations coming down pretty significantly across the board, there's no denying that makes opportunities out there become a lot more interesting.

Now it's always the classic. It takes 2 to tango, right? You deal with the scenario where some others out there view that their value is is way below where it should be, and that makes them less interested in M&A sort of activity, which I totally understand personally. But yes, that could drive -- yes, could potentially drive -- because if it sustains over a longer period of time, could it potentially drive consolidation, I think absolutely it could. Are we -- are we interested in it? Yes, are we aggressively pursuing it at this point in time.

Yes, I would tack on our -- we have a 1-on-1 soft call on our term loan. That was up in February. So we are free now to pay down debt at par. But kind of like we're saying here, like the uncertainty is significant out there. So right now, when you have that much uncertainty, like let's just hold on cash and let's for at least the short term here, like let's -- we're not going to pay down debt, we're going to accumulate cash and maintain flexibility, just given how dynamic things are at the moment.

Our next question will be coming from the line of Mike Grondahl of Northland.

Scott, if you could, could you maybe talk about the visibility you have in the business today for revenue versus maybe 6 months or a year ago?

Yes. Yes, sure. I mean I think the visibility for revenue in '26 is pretty solid. I mean I don't expect massive pendulum swings. I mean, I do think our ability to drive more consumer traffic at an outsized pace, we'll continue to drive revenue growth because I think I would say pretty much every industry we're in right now. If we have the ability to drive more quality consumers at the existing monetization levels, our clients will keep buying those consumers and wanting to get their products in front of those consumers.

So I would almost argue our revenue is much more dependent now on our ability to continue driving more and more consumers through our network than it is on clients opening up a lot more budget. And so that does go to like creating more predictability in the revenue.

Got it. And on the mortgage side, not home equity now, but sort of mortgage purchase and refi. How close are we to a tipping point? I think last quarter, you talked about maybe $575. Kind of what's your thoughts there? How should we handicap that?

Yes. I mean it's still -- it's nice seeing a 5 handle on the 30-year rate right now. I mean, that feels good. it's still too high to really drive a lot of consumer traffic on specifically the refi side. Home Purchase home purchase can be a lot more around just there's a lot bigger affordability issues more than just pure interest rates. But I mean, there's still like when people are stuck -- when people sit on a 2.5%, 3% interest rate, it's hard to commit them to go and buy a new house at a 6% rate or 5.98% or whatever it is. But I do think it 5. 75% as we've mentioned on previous calls, that is where you really start to see the snowball start to build. Where -- and there's the mortgage industry has lots of metrics that you can look at as well. But the 5.75% is really where you have more and more homeowners "in the money" on a cash out refi.

And then 5.5% -- at 5.5%, it really starts to build. And then if you get below 5%, it can really start being a title way. But I mean, I think we're ways away from that. So hopefully, that answers your question. .

And our next question is a follow-up from the line of Youssef of Squali of Truist Securities.

Yes. Scott, I think in the letter, you mentioned something to the effect that partners were not incentivized to provide actionable quotes for automated bots and I think you think [indiscernible] insurance. Can you maybe just expand on that a little bit, please?

I mean I want to just -- I mean, insurance is a big one. I want to just single out insurance. I think there's a number of levels where there's incentivation to do it. And then I would also say there's capability to do it. Starting on the incentivation front, and it's like you don't need AI or agentic AI for like these insurance companies, for example, they could have made their actuarial tables available as a commodity 20 years ago to Google, if they wanted to.

There was nothing stopping it from being embedded, but they just -- they've built big brands. They consider their rate information, probably the most proprietary thing that they have as a company. And so they have always been always not just recently, extremely resistant to any sort of bot, a agentic or not. Like coming in and accessing their rate information. And they -- all indications in our conversations is they -- I mean they're very profitable. They're offering rates direct to consumers that they want to and writing a lot of policies.

And there's no rule or desire for them to really open the [ kimono ] there at the end of the day. And then there's a lot of insurance carriers that just simply aren't -- you go to their website today, you cannot get a rate online. I would say the majority of carriers are that way. Those basically say like, hey, we're going to connect you to an agent or a call center rep but, you got to talk to someone over the phone or in person to get a rate and a lot of that is just simple capabilities, technical capabilities of providing rates.

And that was -- when you go on to the lending world, there's a lot of similarities in the lending world. A lot of our like small business lenders, for example, they don't even write direct to merchants. They write loans through brokers like us -- so it's like deep API logged-in access we have to get their loan information like these consumers won't even know that these companies exist outside of talking to us get a loan. So I mean -- so there's a bunch of hurdles from that side where I just don't think genetic AI overlay on going out -- filling out a bunch of forms is really going to solve any consumers' problems anytime soon. in these industries specifically.

You see like real estate, there's a lot of publicly available information there. So it's a little easier to implement like a chatGPT app there.

And I'm showing no further questions. I would now like to turn the conference back to Scott for closing remarks.

All right. Thank you, everybody, for joining. For all of your questions today, I hope we've given you a helpful context around some of the incredible opportunities we're working on to enhance the marketplace. We're very excited about our path ahead and look forward to connecting you with you again soon when we report our first quarter earnings. .

And this concludes today's program. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the LendingTree Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Andrew Wessel, Investor Relations and Corporate Development. Please go ahead.

Thank you, Brittany, and hello to everyone joining us on the call to discuss LendingTree's Third Quarter 2025 Financial Results. On with us today are Scott Peyree, CEO; and Jason Bengel, CFO. This morning, we posted a detailed letter to shareholders on our Investor Relations website. And for the purposes of today's discussion, we will assume that listeners have read that letter and we'll focus on Q&A.

Before I hand the call over 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 the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP.

And with that, Scott, please go ahead.

Thank you, Andrew, and thanks to everyone for joining us today as we discuss our third quarter results. First off, all of us here at LendingTree are deeply saddened by our Founder, Doug Lebda's sudden passing a few weeks ago. Doug was a visionary leader who had an impact on every part of our company. He was truly passionate, creating a marketplace where consumers can find the best financial product for them at the most competitive price. He coined our long-standing and well-known marketing tagline, "when banks compete, you win".

Personally, I came to know Doug as he explored buying the company I founded, QuoteWizard, back in 2018. At that time, I appreciated his entrepreneurial spirit that we both shared, his deep passion for the business, and the strong and similar culture he had at LendingTree compared to QuoteWizard. After LendingTree ultimately bought my company, I was able to know him more closely, especially in the last 2 years I served as President and Chief Operating Officer. I viewed him as a great boss, great business partner and a great friend. I also came to appreciate how much he cared about all of the employees at LendingTree. For example, he insisted that full-time employees receive stock as part of their compensation, so they would think like owners.

He was present at all kinds of internal company events. Of course, him seeing every quarterly all-hands meeting, but also showing up at small internal meetings or celebrations, always offering encouraging words and pushing all of us to achieve more.

The outpouring of condolences we have received since his passing from people across the country and within our industry has been truly overwhelming. All of us at LendingTree mourn him and keep his wife, daughters, parents and family in our thoughts as we carry on with his legacy.

I'm honored to become the second CEO in the company's history and carry the mantle of what Doug founded nearly 30 years ago. Doug and I were aligned on driving continuous improvement in the consumer shopping experience, optimizing our business through operational excellence initiatives, which I started to implement 2 years ago upon being appointed as COO. We also share the belief that improvements in AI technology will greatly benefit the consumer experience when they come to LendingTree shopping for financial products. I'm very excited as to how Agentic AI, LLMs and other AI tools can transform the shopping experience of our products over the next few years.

Finally, we both agreed we needed to ensure our balance sheet was equipped not just to survive future periods of economic stress, but to thrive in them, allowing us to go on the offense when competitors are pulling back and our customers need us more than ever.

Reflecting on the incredible business Doug created, it seems appropriate that in the third quarter this year, our revenue of $308 million was our second highest in company's history, barely missing our high point when the Fed rates were essentially 0.

Each of our three segments recorded double-digit year-over-year revenue and VMD growth. This is the sixth consecutive quarter we have reported revenue growth from the prior period.

The company's diversification across industries is allowing us to lean into areas of high demand, most notably from our insurance carrier partners looking for new auto customers.

We have retaken a leadership position in the insurance marketplace. We will continue matching carriers with quality, high-intent consumers to capture an increasing share of those insurance companies' marketing budgets as we move into next year. This is a similar strategy we employed during the downturn in carrier demand in '23, which led us to being well positioned with leading market share in the industry -- when the industry recovered and then boomed in '24. Importantly, we've begun to see a strong ramp in spend outside of our top three carriers, an important indicator of the health and duration of this cycle. Specifically in Q3, if you look at our 4 through 10 largest carriers in our network, so take out our top 3 carriers, those next 7 spend with us increased by nearly 60% compared to a year ago.

Our Consumer segment is also producing fantastic results. Segment VMD grew 26% on the quarter and 11% revenue growth. Our small business team has just been spectacular and it's benefited from our investment in the concierge sales strategy. These high-touch customer service models helped us drive a 30% increase in the number of loans we closed for partners in this quarter versus last year, and driving overall 50% year-over-year increase in revenue. It has propelled growth in our high-margin bonus and revenue referral revenue streams as well.

The personal loans business continues to grow nicely as lenders are steadily and cautiously widening their credit criteria for borrowers. Notably, close rates for both prime and mid-prime loans for debt consolidation grew by double digits in the quarter compared to the prior year. Record consumer credit card balances and the forecast for lower short-term interest rates should help accelerate the growth of this vertical in the next year.

The Home segment is also doing quite well. And despite persistent high mortgage rates and a sluggish housing market, revenue from our home equity product increased 35% in the third quarter as lenders continue to target this product given the lack of demand for first mortgages. Existing home sales remain stuck around the 4 million annual unit level. You'd have to look back to the financial crisis period of '08, '09 to find similarly low activity.

Before we take your questions, I want to let the investor community know that we are extremely well positioned to grow our business. Doug created a revolutionary company, the first true online comparison shopping site, and I'm honored to lead it going forward and continue executing on its original vision.

I would also like to thank all of the employees at LendingTree for putting up such strong performance and positioning us well for continued growth in 2026.

We are happy to open the line to your questions.

[Operator Instructions] Our first question comes from the line of Jed Kelly with Oppenheimer & Company Inc.

Just digging into the Consumer segment, in the shareholder letter, you said your credit cards are getting back to your historical margins. And then if I look -- it looks like consumer VMM is going to be at record annualized margins this year. So can you just talk about how we should think about all the moving puts and takes in that segment and the margin profile and what we should look at going out into next year?

Yes, sure. Thanks, Jed. First off, I would say, I'd probably say the consumer VMM being at the highest levels overall is largely driven by our small business -- just because our small business is generally a high-margin category, and it has grown spectacularly. Small business was our biggest lending business in consumer in the third quarter. And we -- with the concierge sales staff, our lead growth, our positioning in that market, we do expect that to be continued strong growth for the indefinite future. And so we're very excited about that business and where it's going.

And honestly, I'd also say we have some other businesses for proprietary reasons. I won't say specifically which ones, but we think we can move that similar concierge sales model into, and we will be actively engaging that in '26, and starting to build a direct concierge sales team, which is both great for the customer -- consumer experience as well as the monetization of the traffic.

To hit on credit cards briefly, yes, we were -- the combination of rolling out TreeQual and just pulling back the margins in that business had gotten really low. So there was a real focus. Over the past 12 to 16 months of just like, all right, let's get the business back in good, healthy shape, running at solid margins. And we have done that, and it's been a great -- it's a smaller piece of the overall consumer business, but it's much healthier today than it was a year or 2 ago. And I think that is positioned for -- to get back into top level growth mode next year.

Okay. And then obviously, I think to the other real good point about the quarter is just where the balance sheet is. So a great job on your part, getting it down to 2.5x leverage. Can you just talk about where you're going to prioritize capital returns, buybacks, paying down debt or investing in the business?

Yes, Jed, this is Jason. I can take that one. Yes, we're very happy with the completed refinancing this quarter. We think that's a great event that's going to allow us much more flexibility going forward, like you said. Our leverage has continued to come down 2.6x. It was 4.4x a year ago, and it was much higher than that even before that. And so when it comes to capital allocation, I think our first priority, our default is going to be paying down debt. That's a risk-free return of north of 8%. But now because we have a cov-lite term loan, we do have the option to start thinking about buying back shares and doing selective M&A. So we're certainly going to look at those things. And if we do see the stock trading at an attractive price, we're certainly going to consider it. If we do see an acquisition out there that's going to be beneficial to us, we'll consider it. But I would say the default is generally going to be paying down debt.

Our next question comes from the line of Ryan Tomasello with KBW.

My sincerest condolences for the loss of Doug. In your insurance business, Scott, if you can just elaborate on what gives you confidence that this cycle has legs into next year? And then just remind us the typical composition of revenue between the top and low end of the funnel. It sounds like variability in that mix is a main driver of the margin volatility. And just how you're thinking about what a reasonable trajectory is for segment margins in the insurance business from here?

Okay. Yes. I mean just starting at the sustainability of the industry levels, I mean, I would just open with the insurance industry as a whole on a macro level remains in a very, very profitable position. These companies are -- after the deep downturn that they're in a very healthy position now, a healthy position to the level of where a number of companies are starting to look at rate reductions for their policies, I mean they're that profitable. So I think we're just in a good position where all of the major clients that are spending marketing dollars with us are in very healthy positions. So there's no reason to think that they won't continue to aggressively pursue market share in the upcoming year plus, which obviously is -- we're a major place to go if you're looking to increase your market share.

Talking about the product lines within insurance and how it affects margins, that's a very true statement you're just making. We've got clicks, leads and calls are our main product lines in insurance. And if you -- the clicks is generally by far the lowest margin product where leads and calls are much larger margin products, but they all work together. So -- but what happens when you have some of our major clients that are click buyers, it drives your revenue way up, but at a lower margin profile. But what that does is by -- it allows us to go out and buy and secure way more traffic, that means we can sell more leads and calls at the end of the day. So your overall margin profile goes down, but you're generating so much revenue and you're selling off so many more leads and calls that your overall VMD goes up quite a bit. So that's just kind of the wave of the up and down as those click budgets may go up and down a lot.

But I would say we're a total VMD dollar company. We will -- we want to drive as much high-quality traffic as possible and make as much total VMD while we're doing that. And I think Q3 is very reflective of that strategy, over $200 million of revenue with just under $50 million of VMD, our second biggest VMD quarter of all time there outside of Q4 last year, which was just abnormally high as we've discussed on previous earnings calls. And I think that this business, we are well positioned, especially the first six months of next year to see very strong VMD growth in the insurance segment.

Yes. And I'll just tack on to that. Just to Scott's point, if you look sequentially, Q2 to Q3, insurance VMD went up $8 million. $8 million that are largely going to fall to EBITDA. And so that's what we're focused on, driving operating leverage, keeping expenses under control and dropping VMD dollars to EBITDA. When it comes to expenses, we're happy to invest in variable expenses that are going to drive VMD and then focus on efficiency everywhere else, just so we can really focus on driving operating leverage into 2026.

And then consumer credit has come under more scrutiny of late. So I'm curious what the latest is you're hearing from your lending partners on appetite and credit boxes. And this is obviously with respect to your -- mainly your personal loans business. Have you noticed any signs of tightening more recently? Or do you think that there's still room to run on the conversion rates, which sounds like they improved pretty nicely here in the quarter?

Yes. I mean, I would say, overall, at a macro level, and I've seen the same things that you're seeing and referring to. I would say when you actually get to our clients, they're not really saying the same -- their credit boxes and their delinquency rates and all are generally well within acceptable ratios for them at a high level. We've seen a few of our clients on the more deep subprime side of it pull back a little bit. So maybe there's a bit more concern when you get down towards the more deep subprime. But I mean -- but I would say for the most part, at a macro level, we're seeing more expansion than contraction for credit boxes.

Our next question comes from the line of Mike Grondahl with Northland.

Condolences and prayers for Doug's family and the LendingTree family. Two questions. One, could you talk at a high level about the SEO, the GenAI sort of environment and how that's changing and kind of the quality of leads you're seeing overall and the conversion trends.

And then secondly, I'd be curious just overall visibility in the business today vis-a-vis or as compared to a couple of the previous quarters.

Can you be a little bit more specific with your second question there?

Yes. Just we debate from time to time revenue visibility that you guys have. Can you see out 60 days, 90 days? Just sort of how you feel about your revenue visibility today versus prior quarters?

Okay. I would -- okay. So starting on the SEO front, along with LLM, AIO strategy around there. So LLM and AIO type traffic is going up. We have -- like from a conversion perspective, it's night and day when you get traffic from the LLMs or AIOs. I mean it's literally like 4 to 5x the conversion rate. And I think that's just because they've gotten so many answers at that point, we feel like these people are ready to transact by the time they come to you. So -- but that said, the traffic is way lower than the SEO. And it's way lower on 2 levels of just obviously, the consumer uptick of it. There's still vastly more consumers going to the traditional like Google-type search results versus the vLLMs. And then it's just the newness of placement within the LLMs and the SEO strategy of getting that place in the LLM.

So SEO is one of those categories. It's been very -- I mean, I'll be honest, it's been very turbulent in Q3 as traffic has shifted and changed in legacy SEO. The entire financial services industry has been hit pretty hard by it. I would not want to be a company that's highly dependent on legacy SEO traffic. I'll make that statement. I think it's fair to say the era of [ "free rein" ] on Google is coming to an end. But then at the same time, the paid search traffic, which we are very, very good at ourselves is continuing to be very strong and growing. So we're happy with that.

So yes, it's definitely a turbulent market, and it's definitely a transitional period where there is still legacy SEO and that is still important to be participating in, but it's also very important to be focusing on building your content and tools and data openness around LLMs and AIOs.

And then getting -- and then moving to your second question, just about revenue outlook. I would say after -- starting with insurance, after that's been so turbulent over the past few years, I would say we're probably -- it's a little bit more steady and predictive now going forward after that hyper growth era. And I think it will still grow at some level, but not in the hyper growth area.

Consumer and mortgage -- mortgage is a little trickier because mortgage is really about when do we get that inflection point where the refinance snowball starts to grow, right? We were looking at some stats here, and you look at about 5.75% mortgage rates, that is about 3x as many mortgage borrowers are in the money at that rate versus what the rate has been most of this year. So if you trend down to that level, that's probably where you really see the snowball start to happen. Now I'm not a soothsayer. Like, I can't tell you at what exact point we trend to that level. But that -- when you hit that inflection point and it gets 5.75% and it keeps fading down below that, that snowball could build really fast, and revenue could blow up and VMD could blow up really fast there. And it will be hockey stick growth for a while. There might even be a little bit of an upfront wave that comes through when it happens. But you just -- I think you kind of got to get down to that 5.75% level for enough people to be in the money there.

Consumer, I think consumer is probably the most steady where like we can look at just like our media practices growing our media traffic, growing our direct sales force. That's just a bit more predictive on what the revenue will generate there. So I hope that answers your question.

Yes. No, it does. And maybe just one quick follow-up. On the mortgage side, are you seeing lenders engage more and get potentially ready for that refi environment at 5.75%. Are they moving today to be in a position to capture that?

Yes, I think so. And I think what you see is like our home equity business has grown so much. I mean home equity is not near as profitable for these lenders as refi is. But the reason they're so staffed up and want to buy so much of that home equity traffic, a big part of that is they want to be ready for -- when the refi boom comes around and be staffed up for that. Another thing we're doing in the more control your own destiny mode, we're really actively pursuing a small lender growth strategy, and we're really ramping up now pretty quickly just our total distribution network. So not just the major direct-to-consumer players, but I mean, when we hit that inflection point, we would like to have 1,000-plus clients on the network to really soak up that demand when it explodes.

Our next question comes from the line of Melissa Wedel with JPMorgan.

Most of mine have already been asked and answered. I thought it would be helpful, though, to follow up on a reference earlier to potentially considering some M&A with the balance sheet flexibility that you now have. I think in the past, most of the acquisition activity that LendingTree has done has been sort of bolt-on type acquisitions with the exception of QuoteWizard of course. So as you think about that going forward, do you expect that to continue? Or would you consider larger potential deals?

Yes. I mean, at this point in our cycle, I don't think we're looking at any sort of larger, like QuoteWizard size deals, to be bluntly honest. But I mean, yes, if there's -- if you think about and you look at our network, I mean, like one way you can look at it is what are the products and services -- financial products and services we are not offering right now. And is there a small company out there that's built something good that helps round out our services that we can like use the power of our remarketing and e-mail and SMS and call center like to really drive a lot of growth on one of those products. That is the type of thing we would be interested in. You look at something, hey, if someone has come up with something that is really unique on really improving the consumer shopping experience, that's probably something we would look at and be interested in. But yes, that's just kind of a high level of the types of companies we look at.

Okay. Appreciate that. And then finally, this is a small point. I think in the shareholder letter, there was a reference to some homeowner type insurance policies and also health. Just wondering if you could give us an update on where those categories fall in terms of sort of contribution to revenue. Obviously, auto is going to be the dominant one in insurance. I'm just curious where those have grown to.

Yes. I'm actually glad you asked that because I actually made some notes because those are -- they kind of get hidden in the numbers, but those are really good stories for us as a company. And I'll take this opportunity to give a lot of credit to the teams at LendingTree that are working on those product lines.

Our home insurance VMD is up 80% year-over-year. Home insurance is a hot, hot product for us. That's probably the biggest growth product we have in the company. And it's about 20%. I think it's just under 20% of our insurance business. So it's not a tiny piece.

Health insurance is another great story. It's up 41% year-over-year VMD, and it's just over 10% of our insurance business. So that just hopefully gives you a high level of where those products are at.

[Operator Instructions] I am showing no further questions at this time. I would now like to turn it back to Scott Peyree for closing remarks.

Thank you, operator, and thank you, everyone, for your questions today. I look forward to speaking with you all on follow-up calls and in person at investor conferences in the near future. Have a great day.

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

Good day, and thank you for standing by. Welcome to the LendingTree, Inc. Second Quarter 2025 Earnings Conference Call. [Operator Instructions] 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, Senior Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Didi, and hello to everyone joining us on the call to discuss LendingTree's Second Quarter 2025 Financial Results. On with us today are Doug Lebda, LendingTree's Chairman and CEO; Scott Peyree, COO and President of Marketplace; and Jason Bengel, CFO. As a reminder to everyone, last week, we preannounced a summary of our quarterly results and our initial financial outlook for the third quarter and updated our 2025 outlook.

This evening, we posted a detailed letter to shareholders on our Investor Relations website. And for the purposes of today's discussion, we will assume that listeners have read that letter and we'll focus on Q&A. Before I hand the call over to Doug 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 the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP. And with that, Doug, please go ahead.

Thanks, Andrew, and thank you to everyone for joining us today for our second quarter update. Overall, I am absolutely thrilled with how the company is performing. In Q2, we delivered another strong quarter marked by double-digit growth across all of our 3 business segments. Profitability is up for the fifth consecutive period of year-over-year revenue growth for the company. In short, we are on a roll. Revenue for the quarter came in at $250 million, representing 19% year-over-year growth. Adjusted EBITDA of $31.8 million was up 35% from last year. What's causing LendingTree to continue its momentum this quarter is simply being operationally excellent across the board. This has been a key tenet of our 2025 strategy, and it has taken shape in initiatives across the company that improved everything from how we build products, to streamline decision-making to building cost controls into the system.

Delving into the specific segments. First, Consumer delivered 12% revenue growth with segment profit increasing 19%. Notably, small business loan revenue grew 61% and personal loan revenue grew 14%. Personal loan lenders have shown some signs of widening their buy box, but improved execution is the larger driver there. In small business, we made a strategic investment to grow our sales force, and it has paid off in more business and more efficiency. I think the small business can be a real growth driver for us.

In Home, revenue climbed 25%, driven by a 38% increase in home equity revenue. We have a strategic focus this year on adding more small lenders to the network to fill in gaps and provide better coverage for consumers, and that is starting to pay off. I'm really pleased to see Home doing so well despite any macro tailwinds.

In Insurance, the results are awesome. Since the beginning of the year, we have been focused on increasing quality and conversion rates for our clients, and that is paying off in higher bids and more budget. Be at 21% year-over-year, particularly against an awesome Q2 last year is great momentum for our insurance business. Now, AI and its impact on our business has certainly also been top of mind. 18 months ago, I told our Board and our company that we are going to be an AI-first company. And today, effectively all of our employees are using AI in their day jobs, including having enterprise GPT for everyone.

And our multiyear investment in data and Snowflake couldn't have come at a better time. As we connect AI to our internal data, we expect to see a lot more efficiency of the company. In marketing, in particular, we are very focused on the future of paid search, organic search and most importantly, LLM answers. We believe we are well positioned in whatever the future may bring and early data is very, very encouraging. We are also implementing AI in several of our key product initiatives with the aim of providing the right guidance to our customers to make smart decisions. AI unlocks potential that has never existed for us before. Since the founding of the company, we recognize that getting a loan or an insurance policy, as Scott recognized is not just a transaction. It's a highly considered purchase that usually involves conversations over as long as several months.

I believe and we believe that AI will enable us to more easily guide customers through these complicated transactions, which I will -- which I expect will continue to -- will improve close rates and thus unit revenue and thus revenue and profits for the company overall. For sure, there are still risks out there. At the moment, I believe the opportunities are far greater than the risks. I also believe that the deep relationships and integration with our clients isn't easily disintermediated. And in a world with exploding choice, our trusted brand and history with consumers is more relevant than ever. And now operator, we're happy to take questions.

[Operator Instructions] And our first question comes from Ryan Tomasello of KBW.

Last quarter, I think you alluded to -- last quarter, you alluded to experiencing some friction, I believe, with one of your carrier partners. So I was hoping you can give us an update on how that's going and if you feel comfortable maintaining historical levels of wallet share there.

Yes, I wouldn't say friction, but we definitely had to go through a period of adjustment as we talked about. And Scott, why don't you talk about that?

Yes, sure. Ryan, this is Scott Peyree. Yes, as we headed into the first quarter last year, and we were dealing with the single lender consent issues, there wasn't as much friction with the carriers. We had introduced some technical errors in our system that was affecting our traffic and monetization. I mentioned that in the last earnings call that we were working through some of those issues.

We largely solved the technical issues late Q1, early Q2 and started reinvesting into traffic and growing revenue getting more in mid- to late Q2. And so we exited Q2 with great, really high revenue levels. Q3 will be a record revenue for the insurance division. Our carriers are very happy. Almost all of our conversations with carriers right now are how do we drive more traffic, not the opposite. So the insurance industry is in a very good spot for us.

Great. And then dovetailing off the prepared remarks, Doug, I was hoping you can just elaborate on how the company is assessing the evolving search landscape with generative and now GenTech AI. How do you envision Tree playing a role in customer acquisition as consumer behaviors change? And do you view that as more of a risk or an opportunity? And what are some of the initiatives underway there?

Yes. So as you can imagine, we're -- this is something at the top of our agenda. Scott, I know you're close to this in marketing. So why don't you take that one? And then I'll be happy to add comments, too.

Yes, sure. I mean, to be honest, Ryan, I would call all the GenAI and the LLMs. It's -- I would call more of a huge opportunity than any sort of risk for us. A few big reasons I'd put there. First, as the GenAI competitors grow in popularity and receive more consumer usage, we'll see the benefit of a new source of traffic. We're actually -- we're already seeing a tangible number of high-quality consumers being referred to LendingTree from the likes of ChatGPT, for example. And they're very high quality, very high-intent consumers coming through.

We're being referenced in their results, and that's why we're getting the traffic. We're also seeing a significant increase in direct type-in traffic to the website, which we believe one of the big drivers of that is our presence in AI overviews across the Internet. So -- and then our SEO team, obviously, as Doug said in his prepared remarks, is very focused on making sure all of our content is built and able to be used very well in AI overviews across the Internet as those are growing in popularity.

And then obviously, as GenAI companies look to advertising to support monetization of their platforms, we'll, of course, be an aggressive first mover there. Second, I would say Google themselves, they're a clear leader in the Gen AI space. And obviously, we have a very close relationship with Google and drive a lot of traffic from them. And as Google themselves even said, their search queries have gone up very significantly since they've been introducing more and more AI overviews. And as a reflection of that, we've seen an increase in clicks, both paid and SEO clicks coming to our site. And I think a benefit of that is a lot of these clicks are coming through much higher intent than they were before because I think the consumers with AI assistance with these LLMs are getting more of their early questions answered. So by the time they're coming to us, they're ready to transact, which is great.

Third and the final point I'd make, and this is more of a long-term point is I'm a big believer that GenAI will create more overall comparison shoppers in the marketplace. Products like insurance and financial products are at the end of the day, complicated products, and it's hard for a lot of consumers to understand these products. I believe GenAI is and will continue to do a good and better job of helping to democratize to explain these products to consumers. And because of that, consumers going to be -- are going to become more active shoppers of these products.

Whereas today, we have a lot of consumers that will just go to the insurance agent they know or go to their local bank branch for these products. I think as it's easier for them to get questions answered and understand these products better, there'll be more active shoppers of which we'll be a direct beneficiary of. Hopefully, that answers your question.

Yes. The only thing I'd add to that, which Scott excellent answer is because we don't today have versus our competitors, such a dependence on SEO, traditional Google-based SEO, it enables us to take -- to do more testing and find more opportunities in the early, early days of LLMs. And at the same time, because we have enough content, enough history in our brands and our reputation, particularly including the acquisitions that we made, we've got a lot of domain authority. And so we're finding ourselves showing up more than we would have expected compared to traditional SEO in LLM results.

And our next question comes from Jed Kelly of Oppenheimer & Company.

Two, if I may, then I have a follow-up. Just on the personal loans, can you discuss what's driving the strength there? And what happens if we potentially get an interest rate cut? And then just on the AI topic, can you talk about what it can do to your expense base? And is there ability to sort of reduce that $200 million in expenses lower?

Scott, why don't you take the first? And Jason, you take the second, and I'll add on.

All right. Sounds good. Yes, Jed, on personal loans, it's a combination of things. I would start with saying it's an absolutely excellent job of executing over the past year plus and with a lot of growth. We've really broadened the network of where we're getting consumers shopping. So we've just -- we've done a really good job of increasing the number of consumers shopping for personal loans through our network.

It remains a very popular product out there. And I think we've got a lot of growth opportunities in the future. I mean there is a lot of green shoots we're seeing in different areas where we feel like we can continue significant growth for the foreseeable future. And then secondly, I'd say on the industry standpoint, more and more optimism coming from the lenders. Even one quick anecdote for you is we track internally the number of actions our lenders take to expand the swath of demographics they're willing to offer loans to versus contracting.

And in Q2, there was 37 expansions compared to 4 contractions and opening up the number of loans they're willing to offer to people. So I think that just shows you like in general, the industry, they have a strong desire to write more quantities of loans, more total value of loans, and they're starting to be willing to accept more risk while they're writing those loans. And that's happening outside of interest rates dropping. So if interest rates drop, that would only accelerate that.

And so Jason?

Yes. Jed, I can comment on the expense point. I'm personally really excited about AI. As you know, like the expense base and using zero-based budgeting to break it apart and make sure we're happy with all the pieces of it has been a big priority. This is going to take all the work to another level. And so we are getting, like Doug said, we're getting -- everyone in the company will have a ChatGPT license. And it's pretty amazing what you can do. When you think about a custom GPT, what you're able to do with it, it's almost like having your own personal developer.

And so when you think about the work that can be automated, it's pretty expensive, and it's pretty exciting. And so I think we're really excited internally to point ourselves at a goal of just becoming way more productive in our expense base. And so we're trying to work through the details of all that. But the goal here is really to get everyone trained on it, so they know how to use it. We may even have like a competition for the best use case to really drive adoption. And then we're going to set ourselves a goal internally to make sure we become more productive with all the work that's happening today, sort of upskill people to stop doing lower skilled labor, let's automate that and let's free up people to work on sort of the higher-skill labor that they'd like to do, but they don't have time to that's going to add a whole lot more value.

Yes. And the way I'd add on is to say, if we expected our business to be the same size, AI could probably have us run the business with a whole lot fewer people and a whole lot less expense. And it can also enable us to do with the same expense base and/or drifting and/or coming down as it has to do 10x more work and run 50x more tests and get products in market much faster and know what works much faster and be able to develop stuff at much lower cost.

And it's just the speed at which I've seen us move just even product development over the last few months and how it's just accelerated since we started on this journey has just been incredible. So we want to keep our employees motivated on just increasing productivity and anything you can automate and then you go do the higher-level work that only you can do. And let's do -- let's use this as an opportunity to do a lot more work and do a lot more business and make us a lot smarter.

And then just as a follow-up real quick. I think there was a local competitor that lost a contract. It was like, call it, 10%, 15% of their EBITDA. Are you having that same impact? Or was that just your competitors' issue?

Yes, it's Jason. I can take that one, too. We're familiar with the situation. And as you know, like a value that we provide is on-demand customer acquisition. So we don't really have longer-term contracts or any longer-term committed spend. That's not really our business model. So whatever the specific issue is, it's not affecting us. And I think you can see in the results how well we're performing and how strong our guide is. So that's not -- it's definitely not an issue for us.

Our next question comes from Luke Horton of Northland.

This is Luke on for Mike Grondahl. Congrats on the quarter. Just wanted to touch here on the kind of raised guidance sort of puts and takes either from a macro standpoint, kind of the assumptions baked in here? And any sort of trends to call out across the business here in the month of July?

Yes, it's Jason. I can take that one, too. Yes, I'm happy to take that one. I can kind of go segment by segment like I usually do. Hopefully, that's helpful. Home, the big question is rates and are they going to decrease. We're not assuming any change in rates in the current guide. So we're assuming basically continued strength in home equity, which like we've talked about, is performing very, very well.

Margin may normalize a little bit upward from where it was in Q2, but generally, where we are in Q2 forward. We do expect a seasonal decline in Q4 in the guide. This is a little bit of a departure from Q4 last year, where we had home equity ramp up to the sort of the current levels in Q4 last year. So we do expect a little bit of a decline in Q4 this year, whereas last year in Q4, you can see like it actually increased. We don't expect that to repeat.

Consumer, Scott talked about PL. It's pretty exciting what we're seeing where lenders are growing all this year within their credit boxes, they've been growing originations double digits. Now, we're starting to see them sort of creep out of their credit boxes. That's very encouraging. If credit can start to open, that would be fantastic for the consumer segment. We're not contemplating that in the guide. We're sort of assuming generally current performance forward with a normal seasonal decrease, but I think those macro indications are very encouraging there, I would say.

Insurance is one area where, as Scott mentioned, we do expect a significant step up. And we're seeing that in July. And this is the July actuals where we're run rating significantly higher than where we were in Q2, and this is based on the quality investments that Scott outlined, and we're seeing real results coming through in July. So we do expect a step change in Q3.

Margin may be slightly less than where it was in Q2 as it is a competitive environment. Like Scott said, carriers are intent on acquiring customers. So it is a pretty hot market, and we expect it to continue to be hot. But we do expect strength going forward and significantly higher than Q2. Expenses generally kind of see in the guide is generally where we are Q2 forward. So hopefully, that outlines things for you.

I'm showing no further questions at this time. I'd like to turn it back to Doug Lebda for closing remarks.

Thank you all so much. In closing, I am just really proud of our second quarter results and thrilled that they reflect the strength of our business model and the consistency of our execution and the strategic investments we've made to position LendingTree for long-term growth. We're delivering measurable value to our partners. We're expanding share across core verticals and driving innovation through thoughtful integration of AI. As we look to the second half of the year, we forecast the strong momentum in our financial results will continue.

Thank you again for your continued support and partnership, and I look forward to talking to you again in 3 months.

This concludes today's conference call. Thank you for participating, and you may now disconnect.