LendingTree (NASDAQ:TREE) Announces Earnings Results

Key Points

• LendingTree missed quarterly expectations: It reported $0.68 in earnings per share versus the $1.41 consensus estimate, while revenue of $305.77 million also fell short of analysts’ $315.56 million forecast.
• Insurance drove growth, but small-business lending weakened: Insurance revenue rose 25% year over year, while cautious merchant demand and lower close rates led management to expect the small-business segment to be flat to down for the year.
• Financial flexibility and technology investments improved: Operating expenses remained essentially flat, annual free cash flow after interest was approximately $80 million, and net leverage declined to 1.9x; the company is also accelerating AI initiatives across its platform.

LendingTree (NASDAQ:TREE - Get Free Report) posted its quarterly earnings results on Wednesday. The financial services provider reported $0.68 earnings per share for the quarter, missing the consensus estimate of $1.41 by ($0.73), FiscalAI reports. LendingTree had a return on equity of 17.01% and a net margin of 15.02%.The company had revenue of $305.77 million for the quarter, compared to analyst estimates of $315.56 million.

Here are the key takeaways from LendingTree's conference call:

• Insurance led growth, with revenue up 25% year over year and adjusted EBITDA up 11%; management expects healthy growth to continue in the second half despite variable margins remaining near Q2 levels.
• Small-business lending materially underperformed expectations as merchant demand, loan sizes, and close rates weakened amid cautious sentiment; management now expects the business to be flat to down for the year rather than the previously anticipated growth.
• Management believes SMB weakness is temporary and macro-driven rather than structural, citing recovering lender appetite, improving close rates, larger loan requests, and July performance that is expected to be the strongest since Q1.
• Operating leverage and balance-sheet flexibility improved, with operating expenses essentially flat year over year, approximately $80 million of annual free cash flow after interest, and net leverage falling to 1.9x from 3.0x a year ago.
• LendingTree is accelerating AI initiatives across internal operations and consumer products, including AI offer summaries, voice and text engagement, and a home-loan rate confidence app; its homepage redesign has increased sessions by 11% and form starts by 18%.

LendingTree Stock Performance

Shares of NASDAQ TREE traded down $1.54 during midday trading on Wednesday, hitting $39.46. 285,169 shares of the company's stock were exchanged, compared to its average volume of 318,335. The company has a quick ratio of 1.89, a current ratio of 1.89 and a debt-to-equity ratio of 1.27. The firm has a market capitalization of $550.59 million, a PE ratio of 3.07 and a beta of 2.00. LendingTree has a 12 month low of $32.65 and a 12 month high of $77.35. The company's 50 day moving average price is $40.30 and its 200 day moving average price is $43.81.

Institutional Investors Weigh In On LendingTree

Several hedge funds have recently added to or reduced their stakes in TREE. ExodusPoint Capital Management LP acquired a new stake in LendingTree in the 4th quarter worth about $609,000. Price T Rowe Associates Inc. MD grew its position in shares of LendingTree by 5.7% during the 4th quarter. Price T Rowe Associates Inc. MD now owns 11,398 shares of the financial services provider's stock worth $606,000 after purchasing an additional 612 shares in the last quarter. VARCOV Co. acquired a new position in shares of LendingTree during the 4th quarter worth approximately $544,000. XTX Topco Ltd bought a new position in shares of LendingTree during the third quarter worth approximately $508,000. Finally, Creative Planning increased its holdings in shares of LendingTree by 12.4% during the third quarter. Creative Planning now owns 6,450 shares of the financial services provider's stock worth $418,000 after purchasing an additional 710 shares during the period. Institutional investors and hedge funds own 68.26% of the company's stock.

Wall Street Analysts Forecast Growth

Several research firms recently weighed in on TREE. Weiss Ratings reissued a "hold (c)" rating on shares of LendingTree in a research note on Wednesday, June 24th. Needham & Company LLC reaffirmed a "buy" rating and set a $60.00 price target on shares of LendingTree in a research report on Friday, May 1st. Wall Street Zen lowered shares of LendingTree from a "strong-buy" rating to a "buy" rating in a research report on Monday, July 20th. JPMorgan Chase & Co. began coverage on shares of LendingTree in a research report on Tuesday, April 14th. They issued an "overweight" rating and a $50.00 price objective for the company. Finally, Zacks Research lowered shares of LendingTree from a "strong-buy" rating to a "hold" rating in a research note on Tuesday, June 30th. Five analysts have rated the stock with a Buy rating and two have given a Hold rating to the company's stock. Based on data from MarketBeat, the stock has a consensus rating of "Moderate Buy" and an average price target of $66.20.

About LendingTree

LendingTree, Inc operates an online marketplace that connects consumers with a network of lenders and financial service providers. Through its platform, borrowers can compare loan offers for mortgages, home equity loans, personal loans, student loans, auto loans and small business financing. The company also offers tools for comparing credit cards and deposit accounts, allowing users to research rates and terms from a range of providers in one place.

Founded in 1996 by Doug Lebda, LendingTree pioneered the comparison-shopping model for consumer credit products.

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