LendingTree Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
October 31, 2023

Key Takeaways

  • Adjusted EBITDA of $22 M in Q3 2023 with a 14% operating margin, at the high end of the company’s forecast, demonstrating sustained profitability despite revenue challenges.
  • Operating expenses have been reduced by 30% from peak levels through proactive cost initiatives, positioning LendingTree to achieve strong operating leverage as revenues improve.
  • The company is live-testing TreeQual with six credit card issuers—offering full credit prequalification and fraud protection—which management expects to enhance monetization and market share in its credit card business.
  • Insurance segment outlook has improved, with LendingTree taking share from competitors, carriers planning to increase budgets based on supportive underwriting results, which could materially uplift earnings.
  • July 2025 convertible note maturity remains a significant financing pressure, and management is exploring options to refinance this debt with longer-term capital to alleviate share price risk.
AI Generated. May Contain Errors.
Earnings Conference Call
LendingTree Q3 2023
00:00 / 00:00

There are 10 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to LendingTree Incorporated Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference With your speaker today, Andrew Wessel, Vice President, Investor Relations. Please go ahead, sir.

Speaker 1

Thank you, Norma, and good morning to everyone joining us on the call to discuss LendingTree's Q3 2023 financial results. On the call today are Doug Lebda, LendingTree's Chairman and CEO Scott Perri, COO and President of Marketplace Businesses and Trent Ziegler, CFO. As a reminder to everyone, we posted a detailed letter to shareholders on our Investor Relations website earlier today. And for the purposes of the call, We will assume that listeners read that letter and will focus on Q and A. Before I hand the call over to Doug for his remarks, I remind everyone that during today's call, We may discuss LendingTree's expectations for future performance.

Speaker 1

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, the risks we face are described in our periodic reports filed with the SEC. We will also discuss a variety of non GAAP measures on the call today, And I refer you to today's press release and shareholder letter, both available on our website for the comparable GAAP definitions and full reconciliations of non GAAP measures to GAAP. With that, Doug, please go ahead.

Speaker 2

Thank you, Andrew, and thank you to all of you who are joining us today. We earned $22,000,000 of Adjusted EBITDA in the Q3 generating a 14% operating margin, which was at the high end of our forecast. We again generated strong segment margins in both consumer and insurance and continue to benefit from our focus on operating efficiency. We remain soundly profitable with a strong balance with a strong balance sheet despite the significant revenue challenges we've been navigating over the last few quarters. We have made significant changes at the company, Most notably, including our senior leadership positions, our operating expenses have decreased by 30% from peak levels, Thanks to proactive cost initiatives taken by management, which should generate strong operating leverage in a recovering revenue scenario.

Speaker 2

We have redesigned our product function with dedicated project staffing and clearly defined quarterly goals by group that are tracked and published internally so that all employees can follow them. Finally, we focused our resources on optimizing our core marketplace business and remove distractions from our employees to accomplish targeted BMD improvements. For example, during the quarter, We identified areas where we can increase monetization of consumer traffic through more effective routing and cross selling. Also, we began recently live testing with 6 credit card issuers for our redesigned TreeQual platform. It is the 1st service to offer full credit prequalification to on authenticated consumer traffic with complete fraud protection enabled by our partnership with the top credit bureau.

Speaker 2

Treequal has received significant interest from top credit card issuers. In combination with the margin enhancements we've seen from our Lightspeed implementation, We are quite optimistic about how our credit card business can improve going forward as we work and grow share in this very large market. Our outlook for insurance has improved significantly over the last quarter. We know from publicly available data that we are taking share from competitors. Over a year ago, our team committed to delivering the highest quality volume in the face of reduced demand from carriers.

Speaker 2

That focus on quality and meeting each one of our insurance Partners where they needed us most drove those market share gains. Recent conversations with the marketing teams at large carriers reinforce that we are accounting for an increased portion of their budgets. Carriers also have indicated that underwriting results are supportive of increased marketing for customer acquisition, which we expect will be in the very near term. We aim to continue increasing our share of their growing budgets, which would provide a material uplift to our earnings profile. We are also acutely aware of the pressure our July 2025 Convertible note maturity has on our share price.

Speaker 2

The management team continues to explore a variety of paths to replace this debt With capital that has extended that has an extended maturity profile, providing us with an additional time for our numerous actions to improve the business to take hold. And now operator, I'd be happy to open it for questions.

Operator

Thank you. Please wait for your name to be announced. Please stand by while we compile the Q and A roster. One moment for our first question please. Our first question comes from the line of Jed Kelly with Oppenheimer and Company.

Operator

Your line is now open.

Speaker 3

Hey, great. Thanks for taking my question. Just 2 if I may. Just digging into the consumer segment, I think personal loans were down. Can you just talk about the competition in that segment?

Speaker 3

I mean, one of your competitors, I think, reported last week had pretty strong results in that product. So can you talk about the competition? And then just circling back to the convertible, can you talk about the cash flow profile? I think 4Q is typically your strongest free cash flow profile. How much cash you need to run the business?

Speaker 3

I think you said $50,000,000 historically and where we are in terms of Wanting to get the debt refinanced. Thanks.

Speaker 2

Hi, Jed. Scott, if you could take the first one there and then, Trent, if you could take the second one.

Speaker 4

Yes, sure, absolutely. Hi, Jed. How are you doing this morning? So starting off on the consumer side with the personal And in other categories are credit cards, small business loans. Over the past 18 months, credit card has tightened in our client With our clients monetization has come down.

Speaker 4

We've done a good job of maintaining our traffic levels and controlling our marketing expenses to make equal to and often greater margins on the traffic. So I would say, you will look at our consumer volume has generally remained fairly steady over that Time period. And you've seen the drop in revenue tied to the monetization per consumer. So where we're focusing now Is improving that monetization for consumer. We've historically been a very specific product search focused company.

Speaker 4

So when I say that, What I mean is, if you're searching for a personal loan, we're going to try really hard to get you a personal loan. We're now shifting to more of a solution based model, where If you're looking for a personal loan, we're going to try to get your personal loan, but maybe a home equity loan is a better option. Maybe you can't get a personal loan, but you can get a credit card, Maybe you're a debt relief candidate. If you own a car, maybe you get a cash out refi on your car loan, etcetera, etcetera. We have a lot of ways to help solve the consumer problems, the problem being seeking money.

Speaker 4

We have distinct advantages In the industry being that we have direct client relationships and distribution in so many different financial industries. So we just Need to be better at solutioning across the board and cross selling into other products and that will be a win win win across the board which We'll provide, A, better options to consumers B, more high quality leads to our clients and C, increased monetization, Most importantly for us, which lets us crank up the marketing flywheel to start increasing the traffic coming through our network of sites, which is I think is maybe one of the big key gaps is where there is a lot of consumer demand out there. We just need that Marketing flywheel to kick back in to start driving more of those consumers to our sites specifically.

Speaker 2

Grant?

Speaker 5

Yes. And then I guess on your question around cash flow, I mean, we Yes, obviously, remained solidly profitable, right, in the zip code of $15,000,000 $20,500,000 of EBITDA every quarter. That EBITDA converts to cash flow at a really healthy clip. I mean, save for a little bit of capitalization expense and then obviously our ongoing interest That EBITDA basically converts 1 for 1. And so we feel really good about our cash flow position And are optimistic that we're sort of at the bottom here and are positioned for things to get better as we head into next year.

Speaker 3

Thank you.

Operator

Thank you. One moment for our next question please. And our next question comes from the Line of Ryan Tomasello with KBW. Your line is now open.

Speaker 6

Good morning, everyone. Thanks for taking the questions. I was hoping you can put a finer point just elaborating on the comments from your prepared remarks around what you're seeing From carriers regarding the 2024 their 2024 growth plans, obviously a recovery in the Insurance business seems like the area you have most visibility around. So I guess it would just be helpful if you could provide some guardrails around the different scenarios for that business next year. How fast it could inflect, the margin profile, whether that's sustainable as competition increases for that traffic And just generally how you feel about the competitive positioning and the ability to take shares as wallets increase?

Speaker 2

So I'll just hit the high level and then hand it off to Scott, who he and his team have just done a magnificent job. We think the margin profile can while probably not As your marketing flywheel starts going, you got to spend into demand, But our team has really done a remarkable job there. As I mentioned, we've had some carrier meetings that have given us some early indications. Scott, why don't you take the rest of that?

Speaker 4

Yes, sure. Yes, I would say we've had a lot of good conversations and there's definitely the wins are changing in the insurance industry. And really over the past 2 or 3 months, we've gotten a lot of positive indications from a lot of our clients, Including our historically largest client that we're currently working on budget planning with for 2024. But The short of it is they've made pretty clear the budgets are going to be increasing significantly starting in January and we'll continue The plan is they will continue to snowball as far as growth throughout the year. Not just I mean, we've had there's another big client of ours that 2, 3 months ago, we thought there was going to be no budget until January.

Speaker 4

And now it looks We're going to get a decent amount of budget for November December this year. So that just shows the indication that these carriers are just feeling better and better by the day that they're more consistently profitable. I would say another 4 pretty big carriers of ours have all either increased budget and or reopened states that they had Previously shut down over the past 3 months, nothing crazy significant at this point, But it just shows that overall macro trend shifting away from tightening up and shutting things down to getting back in expansion mode. From a quality and market share perspective, we have gotten specific very specific feedback from a number of carriers that we are Outperforming both from a market share standpoint and a quality perspective as far as the product we're delivering compared to competitors. So we're feeling really good about getting outsized pieces of budget as the money comes back.

Speaker 6

Great. Thanks for all that color. And then separate question on just typical seasonality, maybe for Trent. How are you thinking about Now heading into the Q4, does the 4Q guidance assume that typical seasonality plays out or maybe Some different assumptions, variables you're assuming given just the nature of the current environment.

Speaker 5

Yes. Thanks, Ryan. Yes, look, I mean, the guidance assumes kind of typical seasonal patterns That we've observed historically, what I'd say is baked into the guidance for the rest of the year is Kind of a stabilization in fundamentals, but it really is just those seasonal trends that we've seen kind of applied over the top. We've had a lot of debate internally about Given where the trends have been, will the seasonality be as pronounced as it has been in prior years? We obviously don't know the answer to that yet, but we've taken a pretty conservative stance with regard to what's baked into the guide for the rest of the quarter.

Speaker 1

Great. Thanks, guys.

Operator

Thank you. One moment for our next question, please. Our next question comes from the line of John Campbell with Stephens. Your line is now open.

Speaker 1

Hey guys, good morning.

Speaker 2

Hey, good morning.

Speaker 1

Hey, for insurance, I want to touch back on Ryan's question there. Just based on the channel commentary, it does I mean, it feels like the arrows are certainly Pointing in the right direction for recovery next year, but just on the segment VMM outlook, I'm thinking maybe we should think about it like a seesaw effect maybe next year, You get the revenue rebound and the VMM margin comes back in a bit or alternatively rev remains somewhat sluggish and then VMM kind of stays at current levels. Is that just Generally the right way to think about it for next year?

Speaker 2

I'm going to let these other guys comment too, but the way I like to think about it Is in BMD, not as much on the percentage. And as your demand kicks in, You're able to go obviously advertise while your cost of acquisition might go up a tad as you Let's just keep it simple, bid higher in search terms. That obviously might crimp a percentage margin, but it would drive a lot more dollars. Trent? Scott?

Speaker 2

Yes. Trent? Scott?

Speaker 4

Yes. I'll jump in quick too. And I would echo what Doug says. I mean, We look at total VMD. So as your client budgets start significantly increasing, as you're spending into more traffic, your VMM margins will Typically come down, but your overall VMD will go up pretty significantly.

Speaker 4

And so when we're in limited budget environments, it's easy to target The types of traffic, the high quality traffic that clients want to make good margin off it, as the budgets move more towards what you would call it an unlimited budget Yes, like CPA targets for clients. That's where you're more aggressively spending in the areas trying to generate revenue and traffic, but And oftentimes lower VMM margins, but higher overall VMD.

Speaker 1

Okay. That makes sense. I appreciate that. And then To what extent you guys can, I'm hoping maybe you could run us through the strategic shifts in credit card, while you're looking to partner, how that partnership economics work, maybe just at a high level and then What do you think that credit bureau partnership can do for the business in the years ahead?

Speaker 2

Scott?

Speaker 4

Yes, I would say with this partnership, what I'm really excited about the partnership with 3rd party bureau and being is the consumer's And from a business perspective, That's probably the most significant impact this will have is where a lot of our card presentation right now on our sites focus on more prime consumers, which throws out a lot of consumers that don't qualify for those cards. So now by doing this partnership and bringing more options It allows us to onboard a lot more issuers and make for a very smooth and easy process So those consumers to get pre approved for those cards that would be otherwise a little nervous about filling out a full application on a card. So it's A lot more consumer choice means for every 100 consumers coming through the site, you're finding a solution for a lot more of them than we are today. And that's Where I think again getting to that marketing flywheel will help us increase traffic a lot there.

Speaker 1

Okay. Makes sense to me. Thanks guys.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Chris Kennedy with William Blair. Your line is now open.

Speaker 7

Good morning. Thanks for taking the questions. Doug, you've seen a lot of cycles in this business over time. Can you Talk about your competitive position today relative to prior cycles and as the markets improve The earnings talk about the earnings power of the business?

Speaker 2

So, I think our position is better in this one. If it were not for the debt that we the debt refinancing that we're facing, I would say we're in a much stronger position. In the past several cycles that I've been to really that I've been through this, Your monetization went down. We did not have the balance sheet that we had. We were getting we were and most Importantly, we were concentrated in like 95% mortgage.

Speaker 2

This business with the diversification that we pulled off, Certainly, at a cost, has enabled us to weather the mortgage downturn and then you can weather The personal loan downturn. This is the first time that I've experienced where literally everything is pulled back at once In every category and we've still been able to make a good amount of money and that's what I think differentiates this one from all the others. From a competitive standpoint, I would only add that there's Fewer competitors today. The LendingTree brand name is obviously very well known, and we got to improve our product That we bring to consumers, but that is underway. I'm thrilled that Treequal has finally made it out of the gates After talking to you all about it for the last couple of years and it's

Speaker 5

going to

Speaker 2

be a knife fight among some of the competitors, but we're up Forward and ready.

Speaker 7

Got it. Thank you. And then just can you talk about the margin profile? You've taken A lot of expenses out of the business and as the macro improves, can you talk about the long term margin profile? Thank you.

Speaker 5

Yes, Chris, this is Trent. I'll hit on that one. Yes, look, I mean, obviously, you've seen us take margins from Mid to high teens EBITDA margin to mid teens, I'm sorry, mid to high single digits to mid teens, just over the course of the last Year or so. I think as we've unpacked our cost structure and continue to chip away at it, right, we've done a lot of really good work. And as we sit here today, We feel like we are still perfectly well resourced to continue to run this business and place a few focused bets, right?

Speaker 5

We're not Strap for resourcing in such a way that we can't continue to innovate and drive product improvement. We're adequately staffed for that. And as the macro continues to improve, there's not a lot of variable expense that we have to layer on top, right? And so we feel really good about our ability to Maintain and improve upon kind of that mid teens EBITDA margin profile that you're seeing today.

Speaker 7

Thanks for taking the questions.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Youssef Squali with Churit Securities. Your line is now open.

Speaker 1

Awesome. Thank you so much. So one quick question for Doug and maybe So Doug, just as you look at the potential turnaround In 2024 across the businesses, maybe what early indicators are you tracking to identify the reversion, maybe in underwriting Anders, it's fine. Lenders across both the consumer segment and home segment, not as much as insurance, I think you've discussed that. And then Trent, can you just help us Think through the Q4 guide and what's implied across growth across the 3 segments Home, Consumer and insurance, please.

Speaker 2

So in terms of metrics And Scott or Trent, feel free to add in. From a client's perspective, you need to look at their cost per funded loan. What is it getting what is it costing them to get what they're looking for, which is a new loan? We look at that across all of our clients. In mortgage, like prior quarters, that's been too high.

Speaker 2

That's It's merely because consumers don't get as much of a benefit from refinancing obviously at much higher rates. So you look at your cost per funded loan Or your cost per policy in insurance. And then it's really the CPA, what's it costing us to get somebody to Come and want the transaction and then your RPL, what is your revenue that you're getting from that introduction on the other side And then that times volume is what drives the whole thing. And that's the marketing flywheel that Scott talks about. And then the only other thing I would add on top of that is, with the launch of Spring on the web and with the upcoming Launch of it, this is the new name for My LendingTree.

Speaker 2

And with the launch of the app, we think in November, Plus Trecall, we think we can move those numbers up appreciably.

Speaker 4

Yes. Yes. Yes.

Speaker 2

Go ahead, Scott.

Speaker 4

Okay. Yes. Just real quick, in another key metric, as I alluded earlier, that we're going to be Yes. I like to call it the leaky bucket. But at the end of the day, it's like looking at consumers that are falling A quick easy example, if someone comes looking for a personal loan, they may be looking for a personal loan to go on a vacation to the Bahamas.

Speaker 4

18 months ago, you could get a 10,000 for 12 personal loan for that. Today, it's hard to get a personal loan for that. But they may be a homeowner with good credit Perfect home equity candidate. So like really identifying how large is the leaky bucket and how good Are we matching them to other products that can get them the money they're seeking?

Speaker 5

Trent? Yes. And then on the Q4 guide, Youssef, I mean, I guess just framing it up kind of sequentially Relative to Q3, we expect insurance to be pretty stable, Q3 into Q4. We do expect Some softness to come from both home and consumer. I mean in consumer, that's where we've typically seen the most pronounced Seasonality historically, volumes just tend to kind of drop off in Q4 and then begin to ramp back up in Q1.

Speaker 5

And then in home, right, I mean, we've all seen what's going on sort of in the rate environment. We've seen home equities slow down a little bit as a source of strength given the rate environment and The conversion aspects of that product, and so a little bit of weakness in both home and consumer, pretty stable in insurance.

Speaker 2

And the only thing I'd add is, over the last 25, 27 years, I think I've said this pretty much every year that Q4, the consumer behavior on the lending side, In particular is not in the borrowing mindset. They're more in a spending mindset and then Typically wake up in January and say, oh shoot, what did I do? And then they start to get their financial house in order and that's when we See a resumption of call it normalcy.

Speaker 1

That's helpful color. Thank you all.

Operator

Thank you. One moment for our next question please. Our next question comes from the line of Robert Wlhek with Autonomous Research. Your line is now open.

Speaker 3

Good morning, guys. Wanted to go back to an earlier question. Can you speak to how the changes you're making to Trequal will leave a position to or position relative to competing products out there?

Speaker 2

I'll let Scott Chime in on some of the details of it and some of the stuff we're not going to want to give out for competitive reasons, but we think this will be As good and probably better than any of the competing products out there. The notion in credit card, as Scott referred to the leaky bucket, has a hugely leaky bucket because Credit card companies, particularly in subprime and nearprime, only approve about 1 in 10 of the people that we send them because they're coming Because they're self grading their credit and they don't always self grade themselves accurately. So this is going to Enable us to drive that number up in terms of the approval rate, But it also enables us to give the consumer a much, much better experience. Scott, you want to talk about the competitive like where you think we stand versus competitors? Yes.

Speaker 2

I would Good

Speaker 4

morning, Paul. There's 2 things with our product that I would really highlight, which I think is advantageous for us. I mean, the first off, The fact that we're working through a 3rd party credit bureau, which a lot of our clients consider kind of an independent party in this transaction That by the way all the issuers are already working with. So at AA makes integrations way easier, way easier to onboard with us If they don't have to onboard with a custom system that we've built in house, because we're both working with a mutual third party there. And B, there's that level of trust of like we're not necessarily going to take Specific information from their credit boxes and underwriting criteria and use it for our own purposes.

Speaker 4

And so I think at that level, it will Allow us to bring on issuers at a really rapid pace and they like this model and how to spend money with us. And then on the other side, You don't this can be a live product if someone just on the website, they can actively go through this. It does not have to be a logged in user. It's Definitely something that we can use for our logged in users and we will use for our logged in users, but this is just a live Pre approval and real time these consumers can get, which I feel is a really advantageous component to this.

Speaker 3

That's great. Thanks. And then can you just give some more detail on the investment impairment in the quarter? What was that in relation to?

Speaker 5

Yes, Rob, this is Trent. So there were 2. One was related to our investment in Stash. There was an observable event that caused us to relook at that valuation and that shouldn't come as a huge surprise to anyone if you've followed the Consumer FinTech space at all, right? I mean, clearly, we marked that up very considerably when we sold a position of sold part of our position, I think it was fall of 2021, and now multiples in that space have just come crashing back down to reality.

Speaker 5

And so that's what's being reflected in our mark. The other write down was related to our carrying value of goodwill, and that is really just a function of Kind of what we've observed in the market, right? It's not really a call on our long term outlook for any of our various businesses. It's Really does the stock price support the level of goodwill that you've got on the books? And in our scenario, unfortunately, it doesn't.

Speaker 5

And so we again had a third party come in and look at the different Segment. In this case, the impairment was attributed to the insurance business. That's largely because We built up goodwill as we did all those acquisitions from 2015 through 2019. When we moved from one reportable segment to 3 reportable segments, Insurance got the brunt of the carrying value of that goodwill and so it had a higher bar to kind of justify The carrying value. And so again, we have to test that goodwill annually.

Speaker 5

We went through that process with a third party and took a modest write down against the Insurance segment.

Speaker 3

Okay, thanks. Just on that last piece, Is it safe to assume that the majority of the goodwill impairment didn't come from your long term outlook or projections for the business, but more from maybe Comparables or discount rates, things like that?

Speaker 5

That's right. So it's there will be more details in the 10 Q when it comes out, but it's like 50% based on long term outlook, 50% based on observable sort of market That's right. And as you pointed out, clearly discount rate has gone up, stock prices come down, multiples across the space have come down, and so that's really what's reflected.

Speaker 3

Got it. Thank you, guys.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Jamie Friedman with Susquehanna International Group. Your line is now open.

Speaker 8

Hi. So it's helpful to have these Comments early comments on 2024 in insurance.

Speaker 2

I'm just

Speaker 8

looking through the letter. And it sounds like you're optimistic About potential growth in that segment. I was I know it's early, but I was just wondering if you have any high level comments on the potential For the other segments as well?

Speaker 2

I don't think for 2024 anything that we're willing to reveal yet. However, I do think cards will be better and Scott, you should add on and Trent feel free too. Cards will be better because of TreeKlaw, personal loans and the other ones will be better because of the Cross selling that Scott referred to, and that all obviously all depends on client demand and you just heard the early stuff on About client demand, I wouldn't I'm not expecting much tremendous growth out of home As until the log jam in the home market really abates, You've got people who don't want to sell homes and people who don't want to buy homes. Now there's always a market to make, but in home, the consumer benefit there's It's not as much of a consumer benefit and or they can't afford what they see. So you have a leakier bucket in home.

Speaker 2

That said, from a product standpoint, we've planned out our product pipeline through Q4 and Q1, And we are making some improvements and hope to grip and doing a lot of testing around that Product to come up with new consumer experiences. And so that is very hopeful for that one. Scott, what else would you add?

Speaker 4

Yes, I would just hit on 2 very large categories, SMB and personal loans being I would start with there's a lot of remain A lot of consumer demands for those products and a high level of client demand. Even though the credit criteria The loans they are writing, they're happy to write and they're indicating they want to write more and more of those loans with us. So like as we get better at Fixing that leaky bucket and cross selling effectively increasing our monetization, I think we can definitely see growth in those categories next year, Just based off of high consumer demand for those products.

Speaker 8

Okay. Thanks for that. And then, Trent, I was interpreting some of your prior comments about margin. So You've gone actually from the low single digits into the teens in terms of adjusted EBITDA margin. Do you view that as structurally sustainable for the company?

Speaker 8

Or asked another way, is there any reason why that Where you are now would not be structurally sustainable?

Speaker 5

We have no reason to believe that it's not sustainable. I mean, as I said, we've done a lot of thoughtful On the cost structure, we've gotten it in a very good place and then we think it's scalable as the top line kind of inflects and moves in the right direction as we get into next year.

Speaker 8

Got it. Okay. Thank you all.

Operator

Thank you. One moment. Our final question will come from the line of Melissa Wedel with JPMorgan. Your line is now open.

Speaker 9

Good morning. Thanks for taking my questions today.

Speaker 3

Good morning.

Speaker 9

Hi. I was hoping to circle back to some of your comments about Trequal. You talked I think Scott talked about expanding product offering to additional I just wanted to clarify, is that something that is entirely focused on subprime and nearprime or would that extend into the prime offering as well?

Speaker 2

Yes. No, it's not entirely focused on subprime and nearprime. That's just where the biggest opportunity is and let's call that the biggest leak in the credit card bucket.

Speaker 4

Yes. And I would add, our prime customers are very, very interested in integrating with this. We've just kind of Had to focus like as we line people up, we want to get the subprime and nearprime in first because that's a new product offering for our customers, but prime customers Definitely want to integrate with this. And I would also say a lot of our personal loan customers want to integrate with this as well for the personal loan product.

Speaker 9

Okay. That's helpful. And then you did I think the shareholder letter mentioned that it is being tested right now with a handful of partners On the platform, could you give us a sense of what that testing timeline is like and when that might be rolled out more broadly?

Speaker 2

Scott, you want to take that?

Speaker 4

Yes. I mean, we're rolling it out. We have 4 clients on the initial rollout that is happening imminently here and We will be doing a lot of testing throughout the Q4. Our hope is, if all goes well, we start really expanding where All the places that consumer can potentially be seeing that as early as the beginning of Q1 and then it will just be a Continual flow of onboarding new issuers as fast as we can. Again, one of the advantages of this product is that it is easy It is pretty easy for issuers to onboard this product.

Speaker 4

It's not a lot of work, which is great. So we should be able To grow the number of issuers rapidly and assuming the testing goes fine in the Q4, we should be exposing it to a lot more traffic in the Q1.

Speaker 9

Okay. Thanks for that. If I could follow-up on the rebranding and relaunch My LendingTree are now spring. I had always had the impression that that was particularly focused or particularly Had particularly good engagement with personal loan consumers. Is there something that we should be thinking about differently with the relaunch Of the app that you're planning shortly?

Speaker 2

No. So The hope with spring is, so it is so right now a lot the largest source of new members Are people coming from our personal loan product? That's what you are referring to. But the hope with Spring is, As the product evolves, that we can actually have its own traffic And that you can be advertising for downloading the app, and we just need to make our alerts much better. And one thing that I'm just thrilled with, and the change that's happened over the last 3 months is our product organization.

Speaker 2

I referred to that Somewhat, but we have a completely redone way of doing product And it's really starting to work. So we're starting to see much better and faster progress on the tech and product front.

Speaker 9

Thanks, Doug.

Operator

Thank you. I would now like to turn the conference back to Mr. Doug Lebda for closing remarks.

Speaker 2

Thank you. I want to thank everybody on this Call for your continued faith in our business. The outlook is beginning to turn positive, largely due to the operational improvements we've implemented, but also due to the inflection we expect in our insurance business. Our team is properly focused on the core of our marketplace, working on numerous discrete initiatives to drive additional VMD from our existing base of customers who come to us every day looking for the financial product that is right for them. We are leaning into our entrepreneurial culture by testing ideas quickly and inexpensively and that helps to optimize the business.

Speaker 2

Our team is leaner and better. We are operationally faster. Our client relationships are strong And we are very optimistic about the future.

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