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State law protecting economic abuse survivors faces legal challenge

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CASCO — A key provision of a “first-of-its-kind” law protecting Maine survivors of economic abuse is facing a legal challenge that could compromise the scope of its impact.

The bill, sponsored by Rep. Jess Fay, D-Raymond and signed into law by the governor last June, creates a number of protections for financial abuse survivors, including help with credit repair and expansion of protection orders against abusive partners.

According to the National Network to End Domestic Violence, 99% of domestic violence cases involve financial abuse.

“The overarching goal is to empower victims and give them the tools they need to make it easier to leave an abusive relationship,” Fay, who represents Casco and parts of Raymond and Poland, said in an interview Monday.

U.S. District Court of Maine Judge George Z. Singal last month ruled in favor of a lawsuit filed by the Consumer Data Industry Association that claimed the part of the law that relieves survivors of poor credit ratings inflicted by abusive partners is trumped by the federal Fair Credit Reporting Act of 1996. The association is a trade organization of credit reporting agencies.

The ruling means the state would have to remove that provision from the law.

Last week, Maine Attorney General Aaron M. Frey filed an appeal of Singal’s ruling in the First Circuit U.S. Court of Appeals.

“I continue to believe this law is defensible and worth fighting for, which is why I have directed my office to appeal the District Court’s ruling,”  Frey said in a prepared statement

‘Economic part reared its ugly head’ 

Oren Courtesy of Jeannine Lauber Oren

In 2016, Fay, recently elected to her third term in state Legislature, was running for the first time and was knocking on constituents’ doors when a Casco woman invited her into her home to chat about domestic economic abuse.

“I was so taken with the fact that this wasn’t … a policy issue that I even knew existed,” Fay said, that she promised to work on the issue if elected.

That woman, Jeannine Lauber Oren, said in an interview Monday that she began researching economic abuse after she divorced her ex-husband, whom she said abused her for 15 years.

“Had I known then what I know now, I would have left that toxic relationship a lot sooner. I would have been better,” she said.

Oren, who was a news anchor for local ABC-affiliate WMTW for 10 years, filed for divorce after she said her ex-husband physically assaulted her for the first time.

“The economic part really reared its ugly head with me once I filed for divorce. It was very difficult for me to get a fair shake at trial for the divorce if assets were being hidden, which they were,” she said.

In her April 2019 testimony before the legislative Judiciary Committee, Oren said that some survivors have told her they’d rather be physically abused than financially abused because it’s easier to recover from.

“One woman I know had her pelvis shattered by her domestic violence perpetrator. It took her a year to recover physically. Do you know how long it takes to recover from bankruptcy or identify theft, or credit card fraud? … It took me 15 years to become whole again.”

‘Why don’t they just leave?’

In a survey of 135 domestic abuse survivors by the Maine Coalition to End Domestic Violence, the umbrella organization for nine of the state’s domestic violence prevention advocacy groups, 81% reported that economic abuse prevented them from leaving an abusive partner.

“And for the vast majority of survivors, economic abuse impairs their credit long term – making it hard to secure stable housing, good jobs and financial independence,” wrote Andrea Mancuso, the Coalition’s public policy director, in an Oct. 30 press release.

The coalition worked with Fay and other partners to draft the bill.

“One of the things we hear all the time is, why don’t they just leave? Well, you can’t leave if you’ve got no place to go and you have no money,” said Fay.

Oren said she’s “very disappointed” in the ruling against the bill.

“It’s hard to get an apartment, hard to get a job, hard to lift yourself out of the stigma of being a victim. And that’s one of the things that the bill attempts to do,” she said.

Despite the legal challenges, the definition of economic abuse in the bill remains intact, which Oren said brings “huge awareness” to the issue, especially for survivors demonstrating abuse in court.

“I’m confident that on appeal that the law will be made whole again,” Oren said.


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LendingTree Inc (TREE) Q4 2020 Earnings Call Transcript

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Image source: The Motley Fool.

LendingTree Inc (NASDAQ:TREE)
Q4 2020 Earnings Call
Feb 25, 2021, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen and welcome to the LendingTree, Inc. Fourth Quarter Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host, Mr. Trent Ziegler, VP of Investor Relations. Please go ahead.

Trent ZieglerVice President, Head of Investor Relations and Treasurer

Great. Thank you and thanks everybody for joining the call this morning to discuss LendingTree’s fourth quarter 2020 financial results. On call with me this morning are Doug Lebda, LendingTree’s Chairman and CEO; and J.D. Moriarty, Chief Financial Officer. As a reminder, once again, we posted a detailed letter to shareholders on our Investor Relations website earlier the morning. And with that we will keep our prepared remarks relatively brief and spend both of our time addressing your questions.

Before I hand the call over, I also want to remind everyone that during today’s call, we may discuss LendingTree’s expectations for future performance. Any forward-looking statements 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 LendingTree’s 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 at investors.lendingtree.com for the comparable GAAP measures, definitions and full reconciliations of non-GAAP measures to GAAP.

And with that, I will turn it to Doug.

Douglas LebdaChairman, Chief Executive Officer and Founder

Thanks, Trent and thank you everyone for joining our call. Before we get into questions, I’d like to spend a few minutes giving you my perspective on the business and a few of the reasons, why I increasingly encouraged by our prospects as we successfully navigated the challenges of the past year and we enter 2021 with positive momentum and clear focus on our strategic priorities. 2020 was a year like any — unlike any other, the pandemic brought havoc on public health and safety that brought massive unemployment and economic strength. In part countered by unprecedented fiscal monetary policy. While we’ve seen far-reaching changes in the way people live, work, consume and manage their money, past has also provided many challenges and it has created great opportunity.

Headwinds in certain continues areas or aspects of our business in 2020. We were able to maintain a healthy and productive workforce along with a strong balance sheet, sustained positive cash flows. Thanks to our diversified portfolio of businesses. Because of that, we were able to remain focused on execution. Serving our customers and our partners without losing sight on our — of our broader strategic objectives around innovation and scale. Our fourth quarter’s results reflect increasing momentum at strength in our home and insurance segments combined with sustained recovery in consumer, drove sequential growth in both revenue and adjusted EBITDA during what is typically a seasonally slower quarter.

As we head into 2021, and the world begins to return to normal as we all hope, we are focused on a broad range of strategic objectives across each and every one of our business segments that all serve to accomplish the greater objective of growing, engaging and delighting our customers while serving our partners in a integrated and automated fashion.

We look forward to highlighting those initiatives and our continued momentum as the year unfolds. And with that, we’d love to take your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from the line of Youssef Squali with Truist Securities. Please go ahead.

Youssef SqualiTruist Securities — Analyst

Great, thank you very much and good morning, folks. So questions. One, maybe Doug, just stepping back and look at the — looking at the competitive front, just curious to know how, do you think about competition, particularly in the auto insurance, home loan and etc. And maybe, how you think about competitors like Credit Karma, now that they’re part of into — what advantages you guys see yourself having as competition ramps up for larger players. And then J.D., I know you guys are obviously not guiding to 2021, but can you maybe just flesh out for us, the biggest areas of investment, you’re planning for this year, because if I look at your margin guide for Q1, it looks like, it’s much lower than you guys have posted in a few years. So maybe if you can just flesh that out for us that will be terrific. Thanks, guys.

Douglas LebdaChairman, Chief Executive Officer and Founder

Perfect. So on competition, we are obviously very, very mindful, and we always want to be winning even if the market is growing. We don’t want just take credit for tailwinds. A couple that obviously, they talk about the one that you focused on Credit Karma, we think we are at least now, the good news is, now everybody see numbers and I think it’s safe to say they’re about our size and I think it’s safe to say we’re more diversified and they’re more concentrated. And so we feel really solid in our position there.

Now will they have a great product? We have a great product. We hope ours is better. We think ours is. We think our brand name is exceedingly strong. And there’s a lot of things going on in that area that will expand in products even from just loans and alerts as you’ve seen us — and it’ll go beyond free credit scores into cash management and how you’re doing budgeting, which we’ve done already. So I was honestly really happy to see our pacing versus them in the first on the public numbers.

The other one that I would say that just moved to another subject would be EverQuote which now we’ve got, obviously, they’re a public company and a tie — and in the past few quarters, what we know they’re a little bigger than us. We’re a little bigger than them. But I can tell you as our companies I think our biggest shareholder. I am thrilled with where they’re going and the things that they’re doing and expanding me agency business expand new lines of insurance and their integration with My LendingTree that’s all really coming together.

So I think unless you’re a diversified product set in fintech it’s going to be really hard to compete with a company that is more diversified across loans, insurance and all the partnerships we’ve gotten investing etc., etc. so it’s just beginning. J.D. you want to take the next?

J.D. MoriartyChief Financial Officer

Yeah. Sure. Thanks, Youssef. So they’re both good question. So let me just expand a little bit on the competitive landscape because when you talk about auto insurance specifically relative to ever quote and obviously they’ve been public since the middle of 2018. We have businesses that on a revenue scale basis as Doug points out. We had trade quarters and that’s bigger. We do enjoy better VM and margins generally.

We also do admittedly have a little bit more dependent on SCM and we’re diversifying that as with all of our acquisitions the strategy has been to acquire a really good business and make it better through a diversification of marketing channels. And so within our QuoteWizard business which is our insurance business that’s exactly what we’re doing. And that’s not the only diversification going on. We’re actually expanding our agent business. We’re expanding our Medicare business.

And so I think as 2021 goes on, you’re going to see us continue the diversification within insurance and that will just we’re going to take a very good business and make even better for diversification. So when you ask the question about investments that’s absolutely one of the areas where you’re going to see us invest until that will tie into the next answer as it relates to margin.

We certainly as Doug points out now interestingly we have some public comparable competitors out there Carmo being one of them. We see what they’re doing in for instance auto insurance and they’ve talked about some of those initiatives. That’s not new information to us. It’s just new public information. So, the strategy is not tremendously different.

When we think about insurance and specifically auto insurance, we look to whatever quote is doing. We look to a couple other players in the space and we think we’re a real leader in that space, we know we’re real leader in that space. So, we’re really happy with the diversification efforts in insurance specifically and we see some great growth areas. I mentioned EDC and Medicare specifically, but that’s what you’re going to see throughout 2021.

As it relates to the margin question that you asked about investments, recognize that our guide is informed not just by investments that will go on throughout the year, but I think what’s going on in Q1 specifically is really mix. And one of the things that we make an effort to do since we run a diversified portfolio of businesses is let them all operate independently with regard to strategy in the moment.

So, right now, in mortgage as you’ve seen from us times again, there’s a great opportunity to drive VMD growth, but that VMD is going to come at probably lower VMM percentages as we enjoy great revenue growth. That’s happening at the same time as we are rebuilding certain of our consumer businesses. So, we highlighted pretty exceptional percentage growth in credit card in the fourth quarter and we expect some of that growth to continue in the first quarter as we rebuild that business. But I made the point on the last call, but that card business may not contribute at all to the bottom line as we rebuild it.

And so, recognize that you’ve got a mortgage business where you’re getting incremental revenue growth at lower percentage margin, a card business that we’re rebuilding at very modest margin because that’s the right strategy for the business at the time. So, it’s really mix, but it’s also our desire to let these business do the right thing strategically to grow. And so, as you look at that card business I need to remind everybody in 2019 that was $212 million business for us.

And it was down at the trough 85% and we are growing it back but at small margins initially and we’re really happy with the progress in Q4. But as we pencil that out in Q1 that contributions can be very modest and when you combine that with the trend in mortgage you can understand the guide. So that’s really what’s going on with Q1. There are number of investments we’re going to make throughout the year. We’re really happy about the strategic plan for all of the businesses my LendingTree included. But in terms of the margin in the Q1 guide that’s really the influence.

Youssef SqualiTruist Securities — Analyst

Okay. Very helpful. Thank you, both.

Operator

Your next question is from the line of Jed Kelly [Phonetic] with Oppenheimer. Please go ahead.

Jed KellyOppenheimer — Analyst

Great. Thanks for taking my question. Two if I may. One just circling back on My LendingTree, I think at your Analyst Day in twenty nineteen you admitted that’s the key to sort of expanding your terminal margin. So just where are we with the my LendingTree strategy and how do you see driving increased consumer engagement. Is there any way to take advantage of sort of some of the enthusiasm we’ve seen with retail investing? And then just on the home segment JD you said it’s expected to accelerate in 1Q. I mean how should we see that trending throughout the balance of the year?

Douglas LebdaChairman, Chief Executive Officer and Founder

So I’ll take My LendingTree first on a — from a product standpoint we feel very, very, very good from a strategic standpoint we also feel good. And the reason as it is just like how LendingTree diversified and when we were 90% mortgage and 10% every other loan type. As we’ve brought in other loan types those not only add to the individual like credit card business or personal loans business as it adds to the overall. On My LendingTree, the same thing is happening.

So while we don’t have the largest source of revenue for My LendingTree users which is personal loans because during a pandemic appropriately so people took their stimulus money paid down their balances and so they weren’t necessarily shopping for credit cards and personal loans. Totally fine but we’re seeing members do well, we’re seeing engagement do now and we see a lot of new products that we couldn’t slot in there.

So we’re looking at a number of individual product apps that could be folded into something even more broader. Everything from identity theft, obviously credit repair and we think that is a powerful source in that base as we can help improve people’s credit. But even as if interest rates rise which they will that we can refinance people as they move up the credit. So I’m very happy with where that’s going right now. J.D.?

J.D. MoriartyChief Financial Officer

As part of your — yeah. So Jed, part of — it has two parts in My LendingTree question right, one is are we happy with the progress on the product? To answer that, yes, absolutely. When we look back however 2020, our strategy for sign-ups for driving members to My LendingTree has been depend on personal loans as Doug points out and when personal loans goes backwards, we’re — our new signups is going to flatten.

We’re happy with the — with the fourth quarter signups, right. That’s a pretty meaningful jump from 15.7% to 16.6% and certainly the most meaningful jump that we’ve had. Now, how is that happening in an environment where personal loans are still weak? We’ve — you’ve heard us talk about syndicating our platform and working with partners and we’ve mentioned each on our block and there are many other partners actually there are other partners that are on board and some that are in the pipeline. But effectively what we’re talking about is the syndication of my LendingTree, and managed marketplaces. And right now between each in our block and one other key partner we’ve driven $1.5 million new signups.

So, that’s the strategy that we’ve been talking about for well over a year is starting to bear fruit, which we’re really excited about. Then, there’s got to be the engagement of the product and we talked about Plaid and the Plaid integration and we’ve got to drive people to connect to their accounts there. But the product is unquestionably much, much better than it was a year ago and we’re really excited about the new features that will add this year. So, we actually look at the growth in signups in Q4 amid an environment that was tough for personal loans.

It’s a real bright spot for my LT and I think it suggests that strategy of syndicating the platform is a good one. In terms of your question around mortgage, we’ve made a real effort to make sure that people understand the mortgage cycle for our mortgage lenders and our mortgage cycle, right. And that earlier in 2020 when there was tons of organic volume, that’s a tough environment for us when lenders are flushed with organic volume. Well, as the year has progressed, our services have been more dearly valued and you see that in our RPOs.

Hard to say what inning we’re in, obviously we’re very mindful of this increase in rates which is going to make the value proposition of a refinance a bit more challenging. Right now we’re certainly seeing a good RPO environment and we need to work with our lenders to make sure that our leads convert. And that’s really what’s been going on under the hood.

We talked about different products that lenders can choose from an exclusive matches and the like. Those are all intended to drive conversion and that’s the subtle thing that’s been going on within our own business so we’re really excited about because we think our product is just working better for our lenders. Certainly better than it was in the last cycle where it’s kind of one product that you can either succeed with or not we think we’ve really evolved our home products specifically.

So hard to call it a cycle but we’re certainly seeing that there’s — as we’ve talked about in the past as the refi cycle progresses for our lenders, we tend to lag that a bit and you’re seeing our outperformance right now. So that was evident in Q4 and as we said it’s accelerating here in Q1 which is great to see.

Jed KellyOppenheimer — Analyst

Thank you.

Douglas LebdaChairman, Chief Executive Officer and Founder

And all I would add there is as people heard in the past in a refi boom LendingTree low rate interest rate environment in mortgage, LendingTree will tend to underperform because lenders don’t need us because of the product changes and all the stuff that J.D. said talked about we’ve been able to dramatically increase lender capacity through this. And we have strong indications that volume discount that their needs and their volume is going to stick.

In addition to that, you’ve now got new mortgage companies who are springing up and the first place they’re calling to get volume is us. And we’ve also talked to other even start-ups since who are trying to build a brand, any brand new thing inside of mortgage and their biggest problem is you know you’ve got to get customers to trust you. We’ve already got them.

So we can now lean into marketing at lower percentages but we maximize the dollars. And now with My LendingTree LTVs, we can not only be marketing against the ball — the payoff today but we can be marketing as we know it in terms of the payoff tomorrow and whether tomorrow is a day, a month, a quarter or six months, we’ve now got the ability to do that.

Operator

Your next question is from the line of Stephen Sheldon with William Blair. Please go ahead.

Stephen SheldonWilliam Blair — Analyst

Good morning. Thanks. Want to follow-up on My…

Douglas LebdaChairman, Chief Executive Officer and Founder

Hey, Stephen.

Stephen SheldonWilliam Blair — Analyst

My — hey — want to follow-up on My LendingTree. Clearly great sequential member growth. Monetization there has been lower for the last three quarters and that’s almost entirely from the pullback in personal loans. As you think about this year 2022 potentially into 2023, is stronger monetization there highly dependent upon personal loans recovering? Or with some of the added member touch points prior to integration is better monetization there becoming much less dependent upon personal loans? Could we be hitting that point over the next couple of years?

Douglas LebdaChairman, Chief Executive Officer and Founder

So, the short answer is absolutely not going to be dependent on personal loans. We’re working on some new feature — I don’t want to say features, but even consumer experiences like inside of mortgage and inside a purchased mortgage, inside of more longer term alerts that we can give to people. So, the answer is we’re definitely not going to be dependent on personal loans.

Personal loans happens to be the easiest thing, right, that you can say to a consumer, you’ve got a bunch of credit card debt and we can tell you right now we can consolidate that you’re paying this percent interest, you’re going to pay a lot less over here, consolidate, get it done, right. That’s an easy thing to do. And as I said during COVID, a lot of consumers did that on their own, did that on their own. Seven years ago, none of us would ever have been talking about personal loans because it was sort of this, was something that was done by a sort of subprime finance companies.

Anytime people are providing financing, we’re going to provide a market for it and so we’re right there. And so, now the my lending to revenue is — in the cycle we’ve seen it dependent on personal loans with everything else and the conversion and the after and the after application touch point to the engagement is very, very good and I’m happy with it. I wish everybody in America had a my LendingTree account and someday we’re going to get there because it’ll just tell you when to save money across every financial institution in the United States across lending. Clearly we’re not there but we’re definitely at war. J.D.?

J.D. MoriartyChief Financial Officer

Yeah. Let me — Stephen, let me give you a good example. Like you said — the answer to your question is no. As you look out to 2021, 2022, later in 2021 and 2022, the dependence on personal loans should reduce fairly significantly. But one of the things that we’re focused on obviously we want each of our businesses to drive new sign up. That’s one thing. But we’re really focused on making sure that we can actually have the consumer have a really good experience within loyalty and across our products.

So there are some foundational things you have to build first. So one big question we often get is insurance integration and it’s not just driving sign ups but that’s saying OK you’re somebody who’s in market this is great insurance platform that we have why — what are we doing to make that work with My LT. Well, the agency initiative that we have within insurance when we talked in our letter in our shareholder letter about the app that the in auto dealer app, well the agency technology is the key to that.

Okay. So we have built this technology for the agency that supports the dealership app. But guess what it also supports the ability to show a rate within My LT and any other cross-sell opportunities and being able to show rate is really important. So as we build out that agency within insurance it will not only help diversify our insurance business which is wonderful but it supports the cross-sell opportunity.

It supports the integration with My LT. And so we’re really happy with that when does that manifest itself in terms of results, probably the timeline that you’re talking about later 2021, 2022 in terms of my LTE results. But I think you’re sitting here a year from now talking about My LT. That dependent on personal loans is quite a bit lower and you should see actually insurance and card and other business is far better integrated with My LT, which will be awesome and obviously as you point out, that should actually really help our natural margin profile.

Stephen SheldonWilliam Blair — Analyst

Great. Thanks.

Douglas LebdaChairman, Chief Executive Officer and Founder

And J.D. hit on the B2B aspects of this a little bit, the co-branded with other partners is definitely working and that is — that will work not only with lending, it also works with insurance, the auto dealer app for example while it’s me and a few other dealers it is having a great impact and when we look at the unit economics and the future of that, if it works at three auto dealers it will work at 300 and there are things coming behind that and that auto dealer for example can get some quality with fully bondable quotes for auto insurance that we will — we’re much more integrated on Lending Tree. But those types of products can now migrate across everything else we have as we build out our ecosystem.

Stephen SheldonWilliam Blair — Analyst

Great. I appreciate all the color. Thanks.

Douglas LebdaChairman, Chief Executive Officer and Founder

Thanks, Stephen.

Operator

Your next question is from the line of John Campbell with Stephens. Please go ahead.

John CampbellStephens — Analyst

Hey, guys. Good morning.

Douglas LebdaChairman, Chief Executive Officer and Founder

Hey, John.

John CampbellStephens — Analyst

Hey, I know this is probably impossible to directly piece out, but J.D or Doug I’m just curious about some bigger picture thoughts around stimulus and how much that might be playing a factor kind of in the pace of recovery in consumer.

Douglas LebdaChairman, Chief Executive Officer and Founder

So I think I alluded to it before. I think it’s definitely have a major impact. We’ve got lenders ready to lend and we’ve got consumers that aren’t necessarily in as they were before needing or wanting to borrow. And as much as that might not have our EBITDA higher in the year from a company that’s trying to help that our mission is really to help consumers get their help, everybody get their finances right.

That’s Okay. So I’m fine with it. If people are paying down debt because the government’s giving them free money that’s certainly better than borrowing it from a credit card company that hurts our business for a few months. That’s fine. It’s good to put them in a position where their net they now can become homeowners they can start small businesses, how they can engage with us a much more valuable products in the future.

J.D. MoriartyChief Financial Officer

Yeah. John I guess — yeah I would just say it’s really the stimulus if it helps people get through wonderful. But the uncertainty around it is what we need to get past for our partners right. So let’s talk about each business. If your credit card issuer and you’re trying to you’re looking at credit card balances but you’re trying to assess the impact on the consumer and how creditworthy are they, right. That influences how aggressive you’re going to be in growing credit card, new card issuance right. And so we’re definitely seeing a number of our credit card issuers.

We have I think two now back to pre-COVID underwriting standards. Okay. So they obviously pulled back quite a bit. But we’re now seeing finally a couple of them get back to the same underwriting standard. That’s great. We’re starting to see in credit card better offers, better product right, so instead of a 12 month balance transfer with 18 months, and so more inducement for the consumer.

So we’re seeing a little bit more aggressive behavior on the part of the credit card issuer which is great to see and it’s certainly a sign of confidence. In personal loans as we point out if people don’t have credit card balances they’re not going to — they’re not going to have as much desire for a personal loan. And the stimulus obviously has definitely impacted that business. Interestingly in small business which had a great fourth quarter that we were very happy with. We definitely see the PPP impact, what we see is a lot of small businesses inquiring about loans, but the conversion rates impacted by the uncertainty of PPP, right. So what are they going to get from the government impacts the follow through of a small business owner to proceed with a non-PPP loan because they don’t know what they’re — what’s going to be available to them.

So I think the common ground on each of these is really a little bit of uncertainty. Personal loans are a little bit different. Every lender who was on the network pre-COVID is back on. I think we disclosed that last quarter. We were thrilled with that. But really personal loans that will be unique just because there’s not as much consumer desire for that product right now given the stimulus. So it’s certainly having an impact. But as Doug pointed out if it’s helping our consumers get through this that’s going to be great for us long term.

John CampbellStephens — Analyst

Okay, that’s great color. Quick follow up here on the brand spend I think last year if I recall correctly you guys had some committed spend and then obviously a portion of those kind of you were able to flex. But just curious for this year you guys have kind of earmarked a particularly level of spend and if so how much of that is fully committed versus truly variable?

Douglas LebdaChairman, Chief Executive Officer and Founder

Yeah so we kind of went into this year assuming it would be similar to last. But we’ve taken steps so that we can flex it higher based on how certain businesses trend. And so you might see us later in the year stepping that up. It certainly — it stepped up a little bit quarter on quarter here in the first quarter relative to the fourth reflective of our business. But as the year progresses you might see a step up a little bit.

John CampbellStephens — Analyst

Okay. Great. Thanks again.

Douglas LebdaChairman, Chief Executive Officer and Founder

And the only thing I would add to that is we are always going to deliver — we’re always going to do our best to deliver profits to our shareholders. And if we’ve got opportunities to invest for the future that are truly investments, not just spending money, but J.D. Moriarty or somebody from our finance team says yes, let’s go spend this much money on this above and beyond what we were thinking about because we’re seeing new numbers and it’s going to have a return. We’re going to do it and we’re going to tell you about it.

John CampbellStephens — Analyst

Makes sense. Thanks, guys.

Douglas LebdaChairman, Chief Executive Officer and Founder

Thanks, John.

Operator

Your next question is from the line of Melissa Wedel with J.P. Morgan. Please go ahead.

Melissa WedelJ.P. Morgan — Analyst

Good morning, guys. Thanks for taking my questions, today.

Douglas LebdaChairman, Chief Executive Officer and Founder

Hey.

Melissa WedelJ.P. Morgan — Analyst

Thank you. I wanted to focus on customers while I’m trying to reconcile some of the comments you’ve made about — so I think it’s particularly in part with having sort of a lower margin on that business to as card issuers come back. I’m trying to reconcile if that was actually what was pretty strong margin in the consumer category as a whole.

In 4Q I’m wondering what sort of offsetting areas of strengths that were in that segment? And then I guess second question would be around the partnership with Westlake and sort of understanding that better how that differs from current in auto and how we should think about that J.D.? Thank you.

Douglas LebdaChairman, Chief Executive Officer and Founder

J.D. you want to take that?

J.D. MoriartyChief Financial Officer

Yeah, absolutely. So, overall the consumer category does carry high margin because it also includes our — of our big businesses our personal loan business is our highest margin business. So that business normally is weak in the fourth quarter relative to the third, right, because typically people run up credit card balances and in the fourth quarter and then it’s strong in the first quarter, OK. So that seasonality did not play out and actually personal loan was modestly bigger in the fourth quarter than it was in the third. And card obviously grew.

Now the card business as we look at each of our businesses and we’ve been doing this since on a daily basis in light of COVID, one of the nice things about our model is obviously when the revenue opportunity goes down so does our cost structure. And so we’ve watched each of our businesses and you saw that in our mortgage business for instance in the second and third quarter when that margin expanded. Well, the card business is the only business that had days in 2020 where it actually lost money, right, where the cost to deliver volume to our card issuers exceeded the revenue opportunity. And so as payouts compressed in card that was a tougher business to manage.

Now it wasn’t losing money on a daily basis, but I’d say every kind of fifth day throughout 2020 it would seem to have a day where it might lose a little bit of money throughout 2020, it would seem to have a day where it might lose a little bit of money. And recognize that with card it’s a month to month business. And as issuers want to profile new cards and we get certain payouts for those cards and we learn about those for the month ahead and what their goals are. We’re trying to meet their volume goals. And the cost environment has been high.

We’ve had to in the fourth quarter we’ve got competitors in card who are driving that cost up. And now I would say that we are probably I mentioned that a couple issuers are back to pre-COVID levels with respect to underwriting. That’s the first sign. If they’re underwriting criteria is back, that’s great. What should follow from there is enthusiasm to grow. And when the RPOs or pardon me when they’re payouts I should say move up a little bit. And when we get I’d say a couple more one or two more issuers who want to grow that should flip, meaning that the revenue opportunity will exceed the cost environment.

We are strategically deciding to grow that business right now meeting volume targets for issuers to take more of their market share as the months proceed and recognizing that it might be a breakeven proposition in the card business as we try to build it back right. So with any one issuer we’re saying to them OK in January how much of your spend could we get, OK, great. Maybe we did that at a breakeven level for us in January what can we do in February.

Can we grow it? That’s the strategy. And when the network gets a little bit more robust, we’ll start to be a profitable business. But card specifically is going to drag on margin in Q1 relative to what consumer is typically, the personal and business continues to enjoy pretty good margin profile, which need revenue growth there. So, it’s really a mix of business, now the other thing I would point out. Sorry, sorry, go ahead, Doug.

Douglas LebdaChairman, Chief Executive Officer and Founder

No, you, sorry. Sorry, go ahead.

J.D. MoriartyChief Financial Officer

Yeah. No, I mean if you look at those businesses that’s called personal loan, small business was very strong in the fourth quarter, but we’re preparing for that card business is going to grow with modest contributions. Sorry, go ahead.

Douglas LebdaChairman, Chief Executive Officer and Founder

The only other thing I would add to sort of the conundrum of why you can have like the comments in card and then still have very good merges in consumer, it goes back to in My LendingTree even with consumer balance sheets being better. We can get a lot of “free” or already paid for transactions happening later in their mortgage markets. So, that’s these longer term My LendingTree strategy, which — which is why you’re seeing consumer margins a little bit higher. But you’re also not seeing as yet saying come to LendingTree and get a personal loan like that would be a direct thing around personal loans and that comes and is that those economics work we improve those.

But in the meantime, you’ve got — you still have a lot of My LendingTree traffic that is fed from all of those other loan types coming through and that’s what’s enabling us to be able still say is that let’s grow the credit card business and for the lenders are paying us enough money that we can go market grade. We’re certainly not going to lose money. But if we make a dollars, but losing dollar and we’re going to get sign ups and lifetime value and add more customers in the front door engaging with us that’s the plan.

Operator

Your next question is from the line of Rob Wildhack with Autonomous Research. Please go ahead.

Rob WildhackAutonomous Research — Analyst

Good morning, guys. I wanted to follow up on My LT and engagement there, I’m wondering if you can share any additional color around usage interactions our MY LT users interacting with the platform more and more and if so how fast that they increase?

Douglas LebdaChairman, Chief Executive Officer and Founder

J.D., do you want to give like numbers and then I’ll hit overall.

J.D. MoriartyChief Financial Officer

Sure.

Douglas LebdaChairman, Chief Executive Officer and Founder

Signs of goodness in there. And it’s still no perfect.

J.D. MoriartyChief Financial Officer

Yeah. The biggest thing Rob is really this planned integration getting people to become connected accounts. So of those who are connecting their accounts and the real thing that we’ve got to drive this year is that what’s the call to action to get somebody to connect their accounts with plaid. We’re seeing their engagement up almost 30%. So that’s great. And then we’re seeing revenue per active user as a result of that connected account that’s up 20%.

So strategically we want to drive people to engage their accounts that’s really important to us but the monthly active users we’ve got to get them to connect accounts we think that’s really the driver strategically throughout the year. So we’re not — we don’t have a new set of like public metrics that we’re going out with but that strategy is certainly working and we’re really happy to see that.

Douglas LebdaChairman, Chief Executive Officer and Founder

And then the reason for that is if we can get you to connect your accounts, we have more opportunities to give you alerts. So the more we know We can get you to connect your accounts, we have more opportunities to give you alerts. So the more we know about you the more we can tell you how to save money, but we have — and we have to get consumers to sort of take that next step. So the beautiful thing about our business model as we can drive you in to say come and get a mortgage, come and get a personal loan, come and get a credit card comparison shop for this.

And we can also say get a free credit score if you want. We can say get identity theft insurance and we can say get it all together. So we’ve got many different marketable opportunities. But ultimately we want you to whether you engage with whether you complete that first transaction or not. We want to make sure that we’ve got an account for you so that we can engage with you over other transactions and that is starting to grip.

Rob WildhackAutonomous Research — Analyst

Got it. That’s really helpful. It’s just a follow up, you’ve talked in the past about expanding the product set and the offering on the assets side of the consumer balance sheet, but also today has highlighted a lot of current investment in existing businesses. So where does that asset side of the consumer balance sheet rank as a priority, you guys, just any updated thoughts you might have on the opportunity there.

Douglas LebdaChairman, Chief Executive Officer and Founder

So right on deposits, our deposits business is obviously not doing great, because deposit rates are low right now. So it doesn’t make sense to say hey deposit here versus there. However, longer term I think that the trends there are very good. J.D. do you want to add on?

J.D. MoriartyChief Financial Officer

Yeah. I mean right now if you think about the asset side for us Rob it’s — it started with deposits. That’s a modest business at this point. We’ve talked about two things around investments. One is, obviously you’ve got an ownership stake in Stash and we will continue to evolve how we partner with them. We’re happy with some of the partnerships thus far, but they haven’t yet manifested themselves in opportunities for MyLT customers, that’s a little bit more complicated. But we — over time we think there will be the opportunity to offer investment products to the MyLT base through that partnership which will be great.

We also have, and we’ve talked about this, a business around investments. And so, we’ve been developing content around investments, we’re in the early stages of it. But we actually have partners who are engaging with us and in the fourth quarter we had a small amount of revenue in that investments vertical. So, that — think about that as providing customer acquisition services for the RIA channel. Okay. So, that will be a growing business at Lending Tree over time as well.

But we’re early days, but we think it’s important and we think it is something it’s a natural extension of our business, but that’s the way to think about it, it’s kind of — there’s the Stash which is a product for a first time person to save and invest, that’s a specific product and we’ll partner with them for that. And then kind of the marketplace experience for the registered investment advisor community and we talked about that, that’s not a new opportunity but we think it’s a very natural [Indecipherable].

Douglas LebdaChairman, Chief Executive Officer and Founder

And I would just add on by saying the Stash integration is going very well on both of us helping monetize their users and help and their investment product helping us or our users get engaged. The auto’s product while it’s to the insurance could very quickly going to helping you buy a car which is also obviously an asset. The overall cash flow analysis that we’re doing…

Rob WildhackAutonomous Research — Analyst

Yes.

Douglas LebdaChairman, Chief Executive Officer and Founder

Very strong into savings and then is JD point out the RIA business. We think that for a certain segment of customers they should be using a robo advisor. For another set of customers, they can be working with somebody at a different a very high end. And for the middle, there’s a lot of people who want registered investment advisors to help them through retirement. They get very good earnings from those accounts and it’s a brand new channel for us that is early stages showing very, very good signs of life.

Rob WildhackAutonomous Research — Analyst

Good. Great. Thank you, guys.

Douglas LebdaChairman, Chief Executive Officer and Founder

Thank you.

Operator

Your next question is from the line of Jamie Friedman with Susquehanna. Please go ahead.

Douglas LebdaChairman, Chief Executive Officer and Founder

Hey, J.D.

Jamie FriedmanSusquehanna — Analyst

Hi. Good morning, guys. So you mentioned in the second page of the shareholder — shareholder letter that the strength that you saw trying to find a year ahead, the trend that is persisting into the new year, in terms of the strike that you saw earlier I was hoping you could just elaborate on what it is that you may have seen quarter to date.

Douglas LebdaChairman, Chief Executive Officer and Founder

I believe you were. Yeah I believe you’re referring to the mortgage segment, is that? It’s home, sorry it’s in the second paragraph. So it says as previously discussed much the fourth quarter our performance was driven by strength in the home segment. I’m specific to home. Yeah.

J.D. MoriartyChief Financial Officer

Yeah. So it’s — listen it’s specific to home. It’s played out as we expected it would right? And we’ve talked about that we effectively as the year 2020 progressed with rates and organic volume in the beginning of the year. We knew that there would be more desire for our services as year progressed and we knew that we would be able to drive revenue per lead, right? So as increase capacity as we say among our lenders, we expanded capacity and when we expand capacity what do we see?

We see increase in our RPO OK? So our mortgage revenue per lead was up 35% over the prior year. And then volume was up 15%. So how are we getting that right? That’s year-over-year growth in the business of 51%. That has continued in the first quarter and we’re really happy with the performance. And so that’s the mortgage cycle. I think we evolved the product over the last year and we came into this cycle well-prepared for it and we’re trying to make the most of it and work with our partners to be a more critical partner.

So as I said before hard to say where we are in that cycle. We’ve obviously seen rates tick up recently. That will make it a little bit harder for our lenders if they continue to be higher. But what it does in the short run is obviously make our services that much more valuable.

Jamie FriedmanSusquehanna — Analyst

Okay. If I could just follow up with what one on card, I know a lot of the questions are folks on card, but are we generally in a balance transfer environment or are we more rewards driven environment. How would you characterize what’s going on right now?

Douglas LebdaChairman, Chief Executive Officer and Founder

Yeah. I think what you will see as card issuers come to the fore is more of a balance transfer focus. Having said that, credit card balances themselves are not high at the moment, right. So — but they can make a lot of money on that product when they grow to expand their portfolios. Now the reward programs have been probably challenged a bit, because of the absence of travel right. So much of that is travel centric.

Having said that, I would expect that when people get back to more normalized travel let’s all hope that the card issuers will be focused on reward cards. It’s sort of hard to say right now Jamie, we’re principally focused on helping them grow again and on underwriting criteria and product. So we’re starting to see as I mentioned before the balance transfer card that moves from 12 months to 18 months with zero interest. That’s the beginning of we want to grow cards. That’s what we need to see that the anecdotal or partly be anecdotal something of a desire to grow. And I think it will probably beat balance transfer at the outset.

Operator

And your final question is from the line of Kunal Madhukar with Deutsche Bank. Please go ahead.

Kunal MadhukarDeutsche Bank — Analyst

Hi. Thanks for squeezing me in. One of the longer term, bigger picture. Want to understand where you stand in the comparative landscape for marketing spend from financial services firms. Most of them have been spending online for the longest time. You’ve been around for the past over 20 — almost 25 years. So, it’s not as if there is lack of preparedness. So, how do you get a bigger share of the advertising spend from the financial services firms.

And then second, and this is something more from personal experience is, I see a lot of like LendingTree ads all the time whenever I go online and most of them are basically about refinancing. But I just refi it, I just refi it and I refi it through LendingTree. So, you should know that I’m no longer in the market for refi. Why am I still getting those ads?

Douglas LebdaChairman, Chief Executive Officer and Founder

So, here’s why and let me cut out the advertising works and you’re sort of experiencing there in the short run, the marketplace. So, our ads will — let’s take online and offline a little bit separately. So, in the online space we are — because of our asset and because of the long tail of all those lenders, those ads payoff and there you’re seeing there some generalized ads, not necessarily targeted because you’re prior LendingTree customer and they’re more general and we do them because they work.

And right now, they’d be more refi focused bigger that’s what our lenders demand, right. And then when they’re not demanding that you would see those generalize to some hopefully. Well you would also be seeing in addition to ads on the Internet is that now that you’re a customer and you refi through us you should be getting hopefully more targeted alerts and less of that.

I will tell you that the ability to know a customer who’s already there and then not and then show them either more highly targeted ads so for example you could go all the way to saying hey you don’t need to see it as hard to refinance because always though your refinance customer but you might be interested next it gets a little sort of creepy and we talked — so we felt necessary to go there. So current customers will see ads across the Internet and they definitely work. So that’s how that works. Does that make sense?

Kunal MadhukarDeutsche Bank — Analyst

I’ll take the word for it.

J.D. MoriartyChief Financial Officer

So Kunal, right, Kunal, it’s J.D. Let me just — the only thing I would expand on there is there’s another part to your question as well. So I’ll maybe address that. We just were constantly trying to develop channels and I think what you were reflecting is when you’re seeing display ads, well we’ve seen great success in display over the last year and we certainly wish that every that all of our channels became more — become more personalized. We’re principally focused on making sure that the mile to experience is more personal ads right.

So there we should have more control over showing you an ad and then we’re going to necessarily in display. Display is going to be a function most often of what you’re reading when you see it right. So that’s just the display channel. And we’ve seen great success there. We try to grow every channel as the year goes on and that’s what you’re seeing is our — when you see us have more presence in display, it means that it’s working as Doug points out. Now again not as personalized display it’s going to be a function most often of what you’re reading when you see it, right. So that’s just the display channel and we’ve seen great success there. We try to grow every channel as the year goes on and that’s what you’re seeing is our — is our — when we — you see us have more presence in display, it aims it’s working as Doug points out. Now, again not as personalized as we’d like. We have longer-term goals that’s one of them.

The other question you asked is how do we get bigger more committed spend from partners. And over time that should be one of our great opportunities given our diversification. And we have certain partners where they are structuring themselves certain big bank partners where they’re structuring themselves to be more holistic and more comprehensive, right. So they want to talk about deposits combined with mortgage, combined with personal loans. But they’re few and far between.

We’re trying to drive them there but they tend to have people who are responsible for customer acquisition by product they tend our partners tend to be more siloed. So we try to drive change and we try to get to more committed spend. But it’s just — you have to have organizational change on the partner side to get there. We also tend to have partners who exceed in one product more than another, right. But the biggest opportunity exists within those big financial institution partners. And actually if you look at our Company versus five years ago today what you’re — what you’d find is the top 10 customer base is a much healthier base than it was five years ago.

Five years ago in our top 10 customer base you would have seen some non-bank mortgage originators that the average investors never heard of. And today everybody’s pretty much a brand name financial institution whether it’s an insurance carrier or a credit card issuer or obviously the rockets and loan depots of the world that are newly public. So, we’ve certainly seen our top 10 customers become bigger, more stable organizations over time and the next leg of that should be the ability to drive to more holistic relationships with them.

Douglas LebdaChairman, Chief Executive Officer and Founder

And the only thing I would add is among those big customers, you’re going to see those companies whether they’re banks, mortgage companies we’re seeing more of that, credit card companies etc. if they’re advertising both online and offline that is both — it’ll rip our marketing costs because they want to build their brands too. And we also see that when they do that, it helps their conversion rates on Lending Tree just like when we’re doing brand advertising on TV. It helps us inside of Google.

So, if we’re the search engine for money, we’re going to have some companies that are going to be more I’d say reliant in a negative way on Lending Tree or call — partnered and you’re going to have companies where we’re out of their business and they’re also going to do their own advertising. What we hear from things like mortgage side right now because of the improvements in products that JD talked about, we’ve talked about in the past. We’ve got a lot of capacity from lenders and we just need to be able to deliver it to them. And so, you’re seeing more marketing because we’re marketing in to that demand that they’ve got from us.

Kunal MadhukarDeutsche Bank — Analyst

Great. Thanks, Doug.

Douglas LebdaChairman, Chief Executive Officer and Founder

Thank you, Kunal.

Operator

And I’m showing no further questions at this time. I would like to turn the conference back to Doug Lebda for closing remarks.

Douglas LebdaChairman, Chief Executive Officer and Founder

So just a couple of closing thoughts, these are all coming from your questions and just reflections as we’ve had this call. I am thrilled with how our team has come through COVID. During this past year we have had ups and we’ve had downs and we’ve had people working very, very hard and we’ve come out at a better company. We’ve come out leaner. We’ve come out with much more understanding of the right ways to do things and that we’re a company that’s on a continuous improvement cycle.

Second thing I would say the core businesses are solid with you. You can run every individual loan type. You can add on my LendingTree everything is solid. Some will do better in times and some will do worse in times and that is nearly the supply and demand economics of what’s going on. Expect to see us continue to hopefully deliver and also invest because at the end of the day you don’t end up with 10 marketplaces in any industry you end up with one or two.

Next thing I would say which is somewhat boring here but it’s really impactful is that throughout this last year and throughout the planning process we went through and the processes that we have laid in place I think that we are now at a place where we’ve got the team and the processes the brand and the capabilities to scale this Company to a much larger company. And we intend to do that. And then the last I would say to you all is always please know that particularly now that Liberty Media is not our largest shareholder that I am always talking to you as a CEO and I’m also talking to you as a shareholder who has my entire net worth in this basically and has a passion to succeed and more importantly than me every single employee at LendingTree sees the mission the same way.

So you’ve got 1,200 fired up shareholders who are waking up every day trying to not only increase the value of our enterprise, but to do it the right way by helping consumers save them money and by helping our partners build big and enduring businesses around them. And I am really happy with where we are. So thank you all very much for your time. Thank you for your attention to our Company and we look forward to talking to you soon.

Operator

[Operator Closing Remarks]

Duration: 63 minutes

Call participants:

Trent ZieglerVice President, Head of Investor Relations and Treasurer

Douglas LebdaChairman, Chief Executive Officer and Founder

J.D. MoriartyChief Financial Officer

Youssef SqualiTruist Securities — Analyst

Jed KellyOppenheimer — Analyst

Stephen SheldonWilliam Blair — Analyst

John CampbellStephens — Analyst

Melissa WedelJ.P. Morgan — Analyst

Rob WildhackAutonomous Research — Analyst

Jamie FriedmanSusquehanna — Analyst

Kunal MadhukarDeutsche Bank — Analyst

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An Industry on Auto-Drive: Car Buyers Embrace Fintech Applications 

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The average cost of buying a new automobile soared to almost $40,000 in 2020 and the cost of owning one topped $9000 per year. While used car buyers may spend less, they’re still shelling out plenty of cash: the average price of a used car was over $21,000. Used car prices spiked in response to the COVID-19 economic crisis, which left a record number of Americans unemployed and the remainder uneasy and steering clear of new car expenses. Either way, car owners are looking to save money wherever they can. And financial technology companies in three sectors—auto insurance, auto financing, and its best friend, credit repair—are lending a  hand. 

Background: Growth of the Fintech Industry  

A cooperative study performed by the World Bank and the Cambridge Centre for Alternative  Finance found that many financial technology firms aren’t just surviving, but thriving in the  COVID-19 economy. In some parts of the world, fintech companies experienced jaw-dropping growth rates of up to 40% in the first half of 2020. Consumer lifestyle changes brought on by the pandemic—the fact that we’re staying home more and increasingly unwilling to visit businesses in person—are contributing to the industry’s growth. But the growth has been steady for some years. Case in point: The share of venture capital going to fintech startups over the past decade has increased by 60%. Since 2015, the amount has doubled and reached a high of $43 billion in  2019. In 2020, the number of fintech startups topped 10,000 in the Americas alone. Consumers continue to clamor for more ways to live their lives online and accessing financial services digitally is one thing they’ve increasingly demanded. 

Fintech’s Influence on the Auto Financing Experience 

Auto shoppers no longer have to listen to long-winded, in-person sales pitches. For years they’ve been able to research car features online at all auto manufacturers’ websites, complete with 360˚ virtual vehicle tours. They’re able to narrow down their purchase choices without leaving home to the point that they need only take a few test drives to decide on a new ride.  

But financing their purchases has been another story. Comparing auto loan rates and applying for financing has historically been a wearisome process. Many consumers experienced the frustration of being turned down for a loan, only to have to start all over again. And their credit scores took a hit each time a new lender made a hard credit inquiry. 

Enter fintech to take the time and hassle out of finding a loan. Auto loan marketplace sites allow car buyers to compare the rates, terms, and qualification factors associated with multiple loans with just a few keystrokes. Some provide credit tools that help borrowers figure out where they stand on certain credit qualifications. These sites return detailed loan quotes within a matter of seconds. Most can do so without doing a hard credit pull and adversely affecting a car buyer’s credit. Auto loan marketplaces also centralize and streamline the loan application process, delivering an up or down decision to consumers more quickly. When it comes to speed, fintech-powered lending leaves traditional auto financing in the dust.  

Simplifying Auto Insurance 

Auto insurance represents one of the greatest annual expenses of owning a car. New car owners who never even leave their driveways are still looking at an average insurance bill of over $2000.  For many, shopping for the best auto insurance means shopping for the best price. Layer on the complexity of deciding on coverage and consumers are once again looking for a simple solution to purchasing auto insurance. 

Forbes Magazine added the insurance category to its top 50 list of fintech companies, noting that investors poured $4.4 billion into insurance technology companies in 2020. These companies are replacing live agents and phone calls with a fully digital experience that allows car buyers to compare plans and pricing and purchase a policy in minutes. Industry analysts advise that auto insurance companies that don’t embrace new fintech solutions will be left behind. They’ll lose out on the operations efficiencies offered by new technology and alienate the growing percentage of insurance customers who demand the speed and simplicity of an online buying experience. From grocery shopping to banking, mobile access is another key feature customers are demanding. It’s no surprise they’re insisting insurers deliver it, too. The best-known insurance brands now offer proprietary apps that allow customers to purchase and manage their policies more conveniently. And mirroring the auto finance industry, auto insurance is frequently purchased on insurance marketplaces. Brand loyalty is declining as an insurance purchase motivator. Customers are looking for the best deal, plain and simple.  Insurance marketplaces generally offer instant quotes from multiple insurers and make finding a  great deal a painless process.  

Fintech Fueling the Credit Repair Industry 

Both auto finance and insurance companies take customers’ credit profiles into account when deciding what kind of deals they want to offer. The best interest rates and terms and policy deals are reserved for customers with stellar credit profiles. Nowadays, consumers are recognizing the advantage of maintaining a high credit score and in 2020, the average credit score in the US rose to 710 points. The credit repair industry, powered by fintech, is helping consumers address their credit problems. Credit repair is a long, tedious road that many consumers are loath to take on their own. Using artificial intelligence, credit repair companies deliver reliable results and lift a significant burden for consumers who want to reap the financial benefits of having good credit. 

What’s Next? 

From investment management to real estate to cryptocurrency trading, the fintech frontier is vast and expanding all the time. Check back with Techbullion frequently for new product news and trend reporting. Stay informed on an industry that’s already transformed business and insight you can use to make better business decisions.









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LendingTree Reports Fourth Quarter 2020 Results | News

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CHARLOTTE, N.C., Feb. 25, 2021 /PRNewswire/ — LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online financial services marketplace, today announced results for the quarter ended December 31, 2020. 

The Company has posted a letter to shareholders on its investor relations website at investors.lendingtree.com.

“We navigated the headwinds of the past year incredibly well, and I’m proud of our team’s resilience and dedication,” said Doug Lebda, chairman and CEO.  “Despite the prior year’s challenges, we were fortunate to maintain a healthy and productive workforce, a strong balance sheet and sustained positive cash flows, all of which enabled us to remain acutely focused on executing for our customers, our partners and our shareholders.  The fourth quarter’s results are evidence of the progress we continue to make in expanding our leading market position.”

J.D. Moriarty, CFO, added, “We are pleased to be able to report better-than-expected fourth quarter results, and even more encouraging is the positive momentum we see across each of our segments.  Our diversified portfolio of businesses continues to strengthen our competitive advantage as our leading presence in Home and Insurance bolster our recovering Consumer segment.” 

Fourth Quarter 2020 Business Highlights  

  • Insurance segment revenue of $85.6 million grew 21% over fourth quarter 2019 and translated into segment profit of $33.4 million, up 19% over the same period.
  • Home segment revenue of $88.8 million grew 36% over fourth quarter 2019 and produced segment profit of $32.3 million, up 20% over the same period.
    • Within Home, record mortgage products revenue of $81.5 million grew 51% over the prior year period.
  • Consumer segment revenue of $47.8 million showed improving trends despite typical seasonal headwinds.
    • Within Consumer, credit card revenue of $11.9 million improved substantially from $6.7 million in third quarter 2020.
    • Personal loans revenue of $13.7 million improved from $12.5 million in third quarter 2020.
    • Revenue from our small business offering grew 129% sequentially from the third quarter 2020.
  • Through December 31, 2020, 16.6 million consumers have signed up for My LendingTree.

 

LendingTree Summary Financial Metrics

(In millions, except per share amounts)

Three Months Ended

December 31,

Y/Y

Three Months Ended

September 30,

Q/Q

2020

2019

% Change

2020

% Change

Total revenue

$

222.3

$

255.2

(13)

%

$

220.3

1

%

(Loss) income before income taxes

$

(13.2)

$

4.5

(393)

%

(32.7)

(60)

%

Income tax benefit (expense)

5.1

(3.1)

(265)

%

7.9

(35)

%

Net (loss) income from continuing

operations

$

(8.1)

$

1.5

(640)

%

$

(24.8)

(67)

%

Net (loss) income from continuing

operations % of revenue

(4)

%

1

%

(11)

%

(Loss) income per share from continuing

operations

Basic

$

(0.62)

$

0.11

(664)

%

$

(1.90)

(67)

%

Diluted

$

(0.62)

$

0.10

(720)

%

$

(1.90)

(67)

%

Variable marketing margin

Total revenue

$

222.3

$

255.2

(13)

%

$

220.3

1

%

Variable marketing expense (1) (2)

$

(140.0)

$

(161.4)

(13)

%

$

(142.2)

(2)

%

Variable marketing margin (2)

$

82.3

$

93.8

(12)

%

$

78.1

5

%

Variable marketing margin % of revenue (2)

37

%

37

%

35

%

Adjusted EBITDA (2)

$

26.3

$

45.9

(43)

%

$

21.7

21

%

Adjusted EBITDA % of revenue (2)

12

%

18

%

10

%

Adjusted net income (loss) (2)

$

1.8

$

16.3

(89)

%

$

(3.4)

153

%

Adjusted net income (loss) per share (2)

$

0.13

$

1.12

(88)

%

$

(0.26)

150

%

(1)

Represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related

expenses. Also includes the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties. Excludes overhead,

fixed costs and personnel-related expenses. 

(2)

Variable marketing expense, variable marketing margin, variable marketing margin % of revenue, adjusted EBITDA, adjusted EBITDA

% of revenue, adjusted net income and adjusted net income per share are non-GAAP measures. Please see “LendingTree’s Reconciliation

of Non-GAAP Measures to GAAP” and “LendingTree’s Principles of Financial Reporting” below for more information.

 

LendingTree Segment Results

(In millions)

Three Months Ended

December 31,

Y/Y

Three Months Ended

September 30,

Q/Q

2020

2019

% Change

2020

% Change

Home (1)

Revenue

$

88.8

$

65.5

36

%

$

78.9

13

%

Segment profit

$

32.3

$

26.9

20

%

$

25.2

28

%

Segment profit % of revenue

36

%

41

%

32

%

Consumer (2)

Revenue

$

47.8

$

113.4

(58)

%

$

48.4

(1)

%

Segment profit

$

22.7

$

43.3

(48)

%

$

21.6

5

%

Segment profit % of revenue

47

%

38

%

45

%

Insurance (3)

Revenue

$

85.6

$

70.9

21

%

$

92.5

(7)

%

Segment profit

$

33.4

$

28.0

19

%

$

37.0

(10)

%

Segment profit % of revenue

39

%

39

%

40

%

Other (4)

Revenue

$

0.1

$

5.4

(98)

%

$

0.5

(80)

%

Loss

$

(0.4)

$

(0.1)

300

%

$

%

Total revenue

$

222.3

$

255.2

(13)

%

$

220.3

1

%

Total segment profit

$

88.0

$

98.1

(10)

%

$

83.8

5

%

     Brand marketing expense (5)

$

(5.7)

$

(4.2)

36

%

$

(5.7)

%

Variable marketing margin

$

82.3

$

93.8

(12)

%

$

78.1

5

%

Variable marketing margin % of revenue

37

%

37

%

35

%

(1)

The Home segment includes the following products: purchase mortgage, refinance mortgage, home equity loans and lines of credit,

reverse mortgage loans, and real estate.

(2)

The Consumer segment includes the following products: credit cards, personal loans, small business loans, student loans, auto loans,

deposit accounts, and other credit products such as credit repair and debt settlement.

(3)

The Insurance segment consists of insurance quote products.

(4)

The Other category includes revenue from the resale of online advertising space to third parties and revenue from home improvement

referrals, and the related variable marketing and advertising expenses.

(5)

Brand marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct

marketing and related expenses that are not assignable to the segments’ products. This measure excludes overhead, fixed costs and

personnel-related expenses.

Business Outlook – 2021

Today, the company is providing revenue, variable marketing margin and adjusted EBITDA guidance for the first quarter of 2021, as follows:

For first quarter 2021:

  • Revenue: $260$270 million
  • Variable Marketing Margin: $80$85 million
  • Adjusted EBITDA: $20$25 million

LendingTree is not able to provide a reconciliation of projected variable marketing margin or adjusted EBITDA to the most directly comparable expected GAAP results due to the unknown effect, timing and potential significance of the effects of legal matters, tax considerations, and income and expense from changes in fair value of contingent consideration from acquisitions. Expenses associated with legal matters, tax consequences, and income and expense from changes in fair value of contingent consideration from acquisitions have in the past, and may in the future, significantly affect GAAP results in a particular period.  

Quarterly Conference Call

A conference call to discuss LendingTree’s fourth quarter 2020 financial results will be webcast live today, February 25, 2021 at 9:00 AM Eastern Time (ET). The live audiocast is open to the public and will be available on LendingTree’s investor relations website at investors.lendingtree.com. The call may also be accessed toll-free via phone at (877) 606-1416. Callers outside the United States and Canada may dial (707) 287-9313. Following completion of the call, a recorded replay of the webcast will be available on LendingTree’s investor relations website until 12:00 PM ET on Friday, March 05, 2021. To listen to the telephone replay, call toll-free (855) 859-2056 with passcode #4562248. Callers outside the United States and Canada may dial (404) 537-3406 with passcode #4562248.

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended 

 December 31,

Twelve Months Ended 

 December 31,

2020

2019

2020

2019

(in thousands, except per share amounts)

Revenue

$

222,329

$

255,187

$

909,990

$

1,106,603

Costs and expenses:

Cost of revenue (exclusive of depreciation and amortization shown

separately below) (1)

13,558

16,728

54,494

68,379

Selling and marketing expense (1)

153,275

167,842

617,404

735,180

General and administrative expense (1)

34,825

27,456

129,101

116,847

Product development (1)

10,384

9,412

43,636

39,953

Depreciation

3,738

3,261

14,201

10,998

Amortization of intangibles

12,475

13,756

53,078

55,241

Change in fair value of contingent consideration

(2,384)

7,181

5,327

28,402

Severance

105

390

295

1,026

Litigation settlements and contingencies

40

140

(943)

(151)

Total costs and expenses

226,016

246,166

916,593

1,055,875

Operating (loss) income

(3,687)

9,021

(6,603)

50,728

Other (expense) income, net:

Interest expense, net

(9,894)

(4,863)

(36,300)

(20,271)

Other income

369

381

376

524

(Loss) income before income taxes

(13,212)

4,539

(42,527)

30,981

Income tax benefit (expense)

5,095

(3,073)

19,961

8,479

Net (loss) income from continuing operations

(8,117)

1,466

(22,566)

39,460

(Loss) income from discontinued operations, net of tax

(139)

392

(25,689)

(21,632)

Net (loss) income and comprehensive (loss) income

$

(8,256)

$

1,858

$

(48,255)

$

17,828

Weighted average shares outstanding:

Basic

13,051

12,921

13,007

12,834

Diluted

13,051

14,580

13,007

14,619

(Loss) income per share from continuing operations:

Basic

$

(0.62)

$

0.11

$

(1.73)

$

3.07

Diluted

$

(0.62)

$

0.10

$

(1.73)

$

2.70

(Loss) income per share from discontinued operations:

Basic

$

(0.01)

$

0.03

$

(1.98)

$

(1.69)

Diluted

$

(0.01)

$

0.03

$

(1.98)

$

(1.48)

 Net (loss) income per share:

Basic

$

(0.63)

$

0.14

$

(3.71)

$

1.39

Diluted

$

(0.63)

$

0.13

$

(3.71)

$

1.22

(1) Amounts include non-cash compensation, as follows:

Cost of revenue

$

372

$

197

$

1,319

$

755

Selling and marketing expense

1,809

918

6,240

5,785

General and administrative expense

10,442

8,643

39,650

39,177

Product development

1,874

1,577

6,524

6,450

 

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,

2020

December 31,

2019

(in thousands, except par value

and share amounts)

ASSETS:

Cash and cash equivalents

$

169,932

$

60,243

Restricted cash and cash equivalents

117

96

Accounts receivable, net

89,841

113,487

Prepaid and other current assets

27,949

15,516

Current assets of discontinued operations

8,570

84

Total current assets

296,409

189,426

Property and equipment, net

62,381

31,363

Operating lease right-of-use assets

84,109

25,519

Goodwill

420,139

420,139

Intangible assets, net

128,502

181,580

Deferred income tax assets

96,224

87,664

Equity investment

80,000

Other non-current assets

5,334

4,330

Non-current assets of discontinued operations

15,892

7,948

Total assets

$

1,188,990

$

947,969

LIABILITIES:

Revolving credit facility

$

$

75,000

Accounts payable, trade

10,111

2,873

Accrued expenses and other current liabilities

101,196

112,755

Current contingent consideration

9,028

Current liabilities of discontinued operations

536

31,050

Total current liabilities

111,843

230,706

Long-term debt

611,412

264,391

Operating lease liabilities

92,363

21,358

Non-current contingent consideration

8,249

24,436

Other non-current liabilities

362

4,752

Total liabilities

824,229

545,643

SHAREHOLDERS’ EQUITY:

Preferred stock $.01 par value; 5,000,000 shares authorized; none issued or outstanding

Common stock $.01 par value; 50,000,000 shares authorized; 15,766,193 and 15,676,819 shares

issued, respectively, and 13,124,875 and 13,035,501 shares outstanding, respectively

158

157

Additional paid-in capital

1,188,673

1,177,984

Accumulated deficit

(640,909)

(592,654)

Treasury stock; 2,641,318 shares

(183,161)

(183,161)

Total shareholders’ equity

364,761

402,326

Total liabilities and shareholders’ equity

$

1,188,990

$

947,969

 

LENDINGTREE, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

Year Ended December 31,

2020

2019

2018

(in thousands)

Cash flows from operating activities attributable to continuing operations:

Net (loss) income and comprehensive (loss) income

$

(48,255)

$

17,828

$

96,499

Less: Loss from discontinued operations, net of tax

25,689

21,632

12,820

(Loss) income from continuing operations

(22,566)

39,460

109,319

Adjustments to reconcile income from continuing operations to net cash provided by operating activities

attributable to continuing operations:

Loss (gain) on impairments and disposal of assets

1,160

(695)

2,210

Amortization of intangibles

53,078

55,241

23,468

Depreciation

14,201

10,998

7,385

Rental amortization of intangibles and depreciation

630

Non-cash compensation expense

53,733

52,167

44,365

Deferred income taxes

(9,628)

(8,555)

(63,901)

Change in fair value of contingent consideration

5,327

28,402

10,788

Bad debt expense

1,785

1,697

880

Amortization of debt issuance costs

3,474

1,974

1,776

Write-off of previously-capitalized debt issuance costs

333

Amortization of convertible debt discount

19,570

12,016

11,397

Loss on extinguishment of debt

7,768

Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities

8,888

213

Changes in current assets and liabilities:

Accounts receivable

21,861

(22,457)

(16,820)

Prepaid and other current assets

(952)

(3,258)

(2,985)

Accounts payable, accrued expenses and other current liabilities

(8,013)

(2,322)

14,270

Current contingent consideration

(25,787)

(12,500)

(21,912)

Income taxes receivable

(10,598)

4,548

3,669

Other, net

(2,002)

(88)

(591)

Net cash provided by operating activities attributable to continuing operations

111,299

157,174

123,948

Cash flows from investing activities attributable to continuing operations:

Capital expenditures

(42,149)

(20,041)

(14,907)

Proceeds from the sale of fixed assets

24,077

Equity investment

(80,000)

Acquisition of ValuePenguin, net of cash acquired

(105,578)

Acquisition of QuoteWizard, net of cash acquired

482

(297,072)

Acquisition of Student Loan Hero, net of cash acquired

(59,483)

Acquisition of Ovation, net of cash acquired

(11,566)

Acquisition of SnapCap

(10)

Net cash used in investing activities attributable to continuing operations

(122,149)

(101,060)

(383,038)

Cash flows from financing activities attributable to continuing operations:

Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock

options

(3,910)

(8,406)

2,217

Proceeds from the issuance of 0.50% Convertible Senior Notes

575,000

Repurchase of 0.625% Convertible Senior Notes

(233,862)

Payment of convertible note hedge on the 0.50% Convertible Senior Notes

(124,200)

Termination of convertible note hedge on the 0.625% Convertible Senior Notes

109,881

Proceeds from the sale of warrants related to the 0.50% Convertible Senior Notes

61,180

Termination of warrants related to the 0.625% Convertible Senior Notes

(94,292)

Net (repayment of) proceeds from revolving credit facility

(75,000)

(50,000)

125,000

Payment of debt issuance costs

(16,568)

(2,518)

(583)

Contingent consideration payments

(4,755)

(21,275)

(27,588)

Purchase of treasury stock

(5,470)

(93,704)

Acquisition of noncontrolling interest

(499)

Other financing activities

(184)

(9)

Net cash provided by (used in) financing activities attributable to continuing operations

193,290

(87,678)

4,843

Total cash provided by (used in) continuing operations

182,440

(31,564)

(254,247)

Discontinued operations:

Net cash used in operating activities attributable to discontinued operations

(72,730)

(13,255)

(13,236)

Total cash used in discontinued operations

(72,730)

(13,255)

(13,236)

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents

109,710

(44,819)

(267,483)

Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period

60,339

105,158

372,641

Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period

$

170,049

$

60,339

$

105,158

Non-cash investing activities:

Increase (decrease) in capital expenditures included in accounts payable and accrued expenses

$

4,196

$

(946)

$

2,246

Capital additions from tenant improvement allowance

1,111

Supplemental cash flow information:

Interest paid

$

4,741

$

7,005

$

3,593

Income tax payments

561

25

541

Income tax refunds

60

4,743

5,678

 

LENDINGTREE’S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Variable Marketing Expense

Below is a reconciliation of selling and marketing expense to variable marketing expense. See “Lending Tree’s Principles of

Financial Reporting” for further discussion of the Company’s use of this non-GAAP measure.

Three Months Ended

Twelve Months Ended

December 31,

2020

September 30,

2020

December 31,

2019

December 31,

2020

December 31,

2019

(in thousands)

Selling and marketing expense

$

153,275

$

154,670

$

167,842

$

617,404

$

735,180

Non-variable selling and marketing expense (1)

(13,248)

(12,541)

(11,036)

(49,652)

(47,000)

Cost of advertising re-sold to third parties (2)

4,557

1,086

22,755

Variable marketing expense

$

140,027

$

142,129

$

161,363

$

568,838

$

710,935

(1)

Represents the portion of selling and marketing expense not attributable to variable costs paid for advertising, direct

marketing and related expenses. Includes overhead, fixed costs and personnel-related expenses.

(2)

Represents the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties. Excludes overhead,

fixed costs, and personnel-related expenses.

 

LENDINGTREE’S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Variable Marketing Margin

Below is a reconciliation of net (loss) income from continuing operations to variable marketing margin and net (loss) income

from continuing operations % of revenue to variable marketing margin % of revenue. See “LendingTree’s Principles of

Financial Reporting” for further discussion of the Company’s use of these non-GAAP measures.

Three Months Ended

Twelve Months Ended

December 31,

2020

September 30,

2020

December 31,

2019

December 31,

2020

December 31,

2019

(in thousands, except percentages)

Net (loss) income from continuing operations

$

(8,117)

$

(24,809)

$

1,466

$

(22,566)

$

39,460

Net (loss) income from continuing operations %

of revenue

(4)

%

(11)

%

1

%

(2)

%

4

%

Adjustments to reconcile to variable marketing margin:

Cost of revenue

13,558

13,220

16,728

54,494

68,379

Cost of advertising re-sold to third parties (1)

(4,557)

(1,086)

(22,755)

Non-variable selling and marketing expense (2)

13,248

12,541

11,036

49,652

47,000

General and administrative expense

34,825

33,705

27,456

129,101

116,847

Product development

10,384

11,477

9,412

43,636

39,953

Depreciation

3,738

3,535

3,261

14,201

10,998

Amortization of intangibles

12,475

13,090

13,756

53,078

55,241

Change in fair value of contingent consideration

(2,384)

6,658

7,181

5,327

28,402

Severance

105

390

295

1,026

Litigation settlements and contingencies

40

13

140

(943)

(151)

Interest expense, net

9,894

16,617

4,863

36,300

20,271

Other income

(369)

(381)

(376)

(524)

Income tax (benefit) expense

(5,095)

(7,925)

3,073

(19,961)

(8,479)

Variable marketing margin

$

82,302

$

78,122

$

93,824

$

341,152

$

395,668

Variable marketing margin % of revenue

37

%

35

%

37

%

37

%

36

%

(1)

Represents the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties. Excludes overhead, fixed costs,

and personnel-related expenses.

(2)

Represents the portion of selling and marketing expense not attributable to variable costs paid for advertising, direct marketing and related

expenses. Includes overhead, fixed costs and personnel-related expenses.

 

LENDINGTREE’S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Adjusted EBITDA

Below is a reconciliation of net (loss) income from continuing operations to adjusted EBITDA and net (loss) income from

continuing operations % of revenue to adjusted EBITDA % of revenue. See “LendingTree’s Principles of Financial Reporting”

for further discussion of the Company’s use of these non-GAAP measures.

Three Months Ended

Twelve Months Ended

December 31,

2020

September 30,

2020

December 31,

2019

December 31,

2020

December 31,

2019

(in thousands, except percentages)

Net (loss) income from continuing operations

$

(8,117)

$

(24,809)

$

1,466

$

(22,566)

$

39,460

Net (loss) income from continuing operations %

of revenue

(4)

%

(11)

%

1

%

(2)

%

4

%

Adjustments to reconcile to adjusted EBITDA:

Amortization of intangibles

12,475

13,090

13,756

53,078

55,241

Depreciation

3,738

3,535

3,261

14,201

10,998

Severance

105

390

295

1,026

Loss (gain) on impairments and disposal of assets

474

134

424

1,160

(945)

Non-cash compensation expense

14,497

14,161

11,335

53,733

52,167

Costs of secondary public offering

863

863

Change in fair value of contingent consideration

(2,384)

6,658

7,181

5,327

28,402

Acquisition expense

(188)

205

14

2,217

211

Litigation settlements and contingencies

40

13

140

(943)

(151)

Interest expense, net

9,894

16,617

4,863

36,300

20,271

Income tax (benefit) expense

(5,095)

(7,925)

3,073

(19,961)

(8,479)

Adjusted EBITDA

$

26,302

$

21,679

$

45,903

$

123,704

$

198,201

Adjusted EBITDA % of revenue

12

%

10

%

18

%

14

%

18

%

 

LENDINGTREE’S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Adjusted Net Income

Below is a reconciliation of net (loss) income from continuing operations to adjusted net income (loss) and net (loss) income per

diluted share from continuing operations to adjusted net income (loss) per share. See “LendingTree’s Principles of Financial

Reporting” for further discussion of the Company’s use of these non-GAAP measures.

Three Months Ended

Twelve Months Ended

December 31,

2020

September 30,

2020

December 31,

2019

December 31,

2020

December 31,

2019

(in thousands, except per share amounts)

Net (loss) income from continuing operations

$

(8,117)

$

(24,809)

$

1,466

$

(22,566)

$

39,460

Adjustments to reconcile to adjusted net (loss) income:

Severance

105

390

295

1,026

Loss (gain) on impairments and disposal of assets

474

134

424

1,160

(945)

Non-cash compensation

14,497

14,161

11,335

53,733

52,167

Costs of secondary public offering

863

863

Change in fair value of contingent consideration

(2,384)

6,658

7,181

5,327

28,402

Acquisition expense

(188)

205

14

2,217

211

Litigation settlements and contingencies

40

13

140

(943)

(151)

Loss on extinguishment of debt

7,768

7,768

Income tax benefit from adjusted items

(3,402)

(7,361)

(4,087)

(17,880)

(20,694)

Excess tax benefit from stock-based compensation

(51)

(175)

(516)

(2,033)

(17,058)

Income tax benefit from CARES Act

(6,104)

Adjusted net income (loss)

$

1,837

$

(3,406)

$

16,347

$

21,837

$

82,418

Net (loss) income per diluted share from continuing

operations

$

(0.62)

$

(1.90)

$

0.10

$

(1.73)

$

2.70

Adjustments to reconcile net (loss) income from

continuing operations to adjusted net income (loss)

0.76

1.64

1.02

3.41

2.94

Adjustments to reconcile effect of dilutive securities

(0.01)

(0.14)

Adjusted net income (loss) per share

$

0.13

$

(0.26)

$

1.12

$

1.54

$

5.64

Adjusted weighted average diluted shares outstanding

14,163

13,033

14,580

14,150

14,619

Effect of dilutive securities

1,112

1,143

Weighted average diluted shares outstanding

13,051

13,033

14,580

13,007

14,619

Effect of dilutive securities

1,659

1,785

Weighted average basic shares outstanding

13,051

13,033

12,921

13,007

12,834

LENDINGTREE’S PRINCIPLES OF FINANCIAL REPORTING

LendingTree reports the following non-GAAP measures as supplemental to GAAP:

  • Variable marketing margin, including variable marketing expense
  • Variable marketing margin % of revenue
  • Earnings Before Interest, Taxes, Depreciation and Amortization, as adjusted for certain items discussed below (“Adjusted EBITDA”)
  • Adjusted EBITDA % of revenue
  • Adjusted net income
  • Adjusted net income per share

Variable marketing margin is a measure of the efficiency of the Company’s operating model, measuring revenue after subtracting variable marketing and advertising costs that directly influence revenue. The Company’s operating model is highly sensitive to the amount and efficiency of variable marketing expenditures, and the Company’s proprietary systems are able to make rapidly changing decisions concerning the deployment of variable marketing expenditures (primarily but not exclusively online and mobile advertising placement) based on proprietary and sophisticated analytics. Variable marketing margin and variable marketing margin % of revenue are primary metrics by which the Company measures the effectiveness of its marketing efforts.

Adjusted EBITDA and adjusted EBITDA % of revenue are primary metrics by which LendingTree evaluates the operating performance of its businesses, on which its marketing expenditures and internal budgets are based and, in the case of adjusted EBITDA, by which management and many employees are compensated in most years.

Adjusted net income and adjusted net income per share supplement GAAP income from continuing operations and GAAP income per diluted share from continuing operations by enabling investors to make period to period comparisons of those components of the nearest comparable GAAP measures that management believes better reflect the underlying financial performance of the Company’s business operations during particular financial reporting periods. Adjusted net income and adjusted net income per share exclude certain amounts, such as non-cash compensation, non-cash asset impairment charges, gain/loss on disposal of assets, severance, litigation settlements and contingencies, acquisition and disposition income or expenses including with respect to changes in fair value of contingent consideration, one-time items which are recognized and recorded under GAAP in particular periods but which might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded, the effects to income taxes of the aforementioned adjustments and any excess tax benefit or expense associated with stock-based compensation recorded in net income in conjunction with FASB pronouncement ASU 2016-09. LendingTree believes that adjusted net income and adjusted net income per share are useful financial indicators that provide a different view of the financial performance of the Company than adjusted EBITDA (the primary metric by which LendingTree evaluates the operating performance of its businesses) and the GAAP measures of net income from continuing operations and GAAP income per diluted share from continuing operations.

These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. LendingTree provides and encourages investors to examine the reconciling adjustments between the GAAP and non-GAAP measures set forth above.

Definition of LendingTree’s Non-GAAP Measures

Variable marketing margin is defined as revenue less variable marketing expense. Variable marketing expense is defined as the expense attributable to variable costs paid for advertising, direct marketing and related expenses, including the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties, and excluding overhead, fixed costs and personnel-related expenses. The majority of these variable advertising costs are expressly intended to drive traffic to our websites and these variable advertising costs are included in selling and marketing expense on the company’s consolidated statements of operations and consolidated income. When advertising inventory is re-sold to third parties, the proceeds of such transactions are included in revenue for the purposes of calculating variable marketing margin, and the costs of such re-sold advertising are included in cost of revenue in the company’s consolidated statements of operations and consolidated income and are included in variable marketing expense for purposes of calculating variable marketing margin.

EBITDA is defined as net income from continuing operations excluding interest, income taxes, amortization of intangibles and depreciation.

Adjusted EBITDA is defined as EBITDA excluding (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) restructuring and severance expenses, (5) litigation settlements and contingencies, (6) acquisitions and dispositions income or expense (including with respect to changes in fair value of contingent consideration), and (7) one-time items.

Adjusted net income is defined as net income (loss) from continuing operations excluding (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) restructuring and severance expenses, (5) litigation settlements and contingencies, (6) acquisitions and dispositions income or expense (including with respect to changes in fair value of contingent consideration), (7) gain/loss on extinguishment of debt, (8) one-time items, (9) the effects to income taxes of the aforementioned adjustments, and (10) any excess tax benefit or expense associated with stock-based compensation recorded in net income in conjunction with FASB pronouncement ASU 2016-09.

Adjusted net income per share is defined as adjusted net income divided by the adjusted weighted average diluted shares outstanding. For periods which the Company reports GAAP loss from continuing operations, the effects of potentially dilutive securities are excluded from the calculation of net loss per diluted share from continuing operations because their inclusion would have been anti-dilutive. In periods where the Company reports GAAP loss from continuing operations but reports positive non-GAAP adjusted net income, the effects of potentially dilutive securities are included in the denominator for calculating adjusted net income per share.

LendingTree endeavors to compensate for the limitations of these non-GAAP measures by also providing the comparable GAAP measures with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measures. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

One-Time Items

Adjusted EBITDA and adjusted net income are adjusted for one-time items, if applicable. Items are considered one-time in nature if they are non-recurring, infrequent or unusual, and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. For the periods presented in this report, there are no adjustments for one-time items, except for the $6.1 million income tax benefit from the CARES Act in Q1 2020 and the Q4 2020 expenses incurred in connection with a secondary public offering of our common stock by our largest shareholder, for which we did not receive any proceeds.

Non-Cash Expenses That Are Excluded From LendingTree’s Adjusted EBITDA and Adjusted Net Income

Non-cash compensation expense consists principally of expense associated with the grants of restricted stock, restricted stock units and stock options. These expenses are not paid in cash and LendingTree includes the related shares in its calculations of fully diluted shares outstanding. Upon settlement of restricted stock units, exercise of certain stock options or vesting of restricted stock awards, the awards may be settled on a net basis, with LendingTree remitting the required tax withholding amounts from its current funds. Cash expenditures for employer payroll taxes on non-cash compensation are included within adjusted EBITDA and adjusted net income.

Amortization of intangibles are non-cash expenses relating primarily to acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as purchase agreements, technology and customer relationships, are valued and amortized over their estimated lives.  Amortization of intangibles are only excluded from adjusted EBITDA.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

The matters contained in the discussion above may be considered to be “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations or anticipations of LendingTree and members of our management team. Factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following: uncertainty regarding the duration and scope of the coronavirus referred to as COVID-19 pandemic; actions governments and businesses take in response to the pandemic, including actions that could affect levels of advertising activity; the impact of the pandemic and actions taken in response to the pandemic on national and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; adverse conditions in the primary and secondary mortgage markets and in the economy, particularly interest rates; default rates on loans, particularly unsecured loans; demand by investors for unsecured personal loans; the effect of such demand on interest rates for personal loans and consumer demand for personal loans; seasonality of results; potential liabilities to secondary market purchasers; changes in the Company’s relationships with network lenders, including dependence on certain key network lenders; breaches of network security or the misappropriation or misuse of personal consumer information; failure to provide competitive service; failure to maintain brand recognition; ability to attract and retain consumers in a cost-effective manner; the effects of potential acquisitions of other businesses, including the ability to integrate them successfully with LendingTree’s existing operations; accounting rules related to contingent consideration and excess tax benefits or expenses on stock-based compensation that could materially affect earnings in future periods; ability to develop new products and services and enhance existing ones; competition; allegations of failure to comply with existing or changing laws, rules or regulations, or to obtain and maintain required licenses; failure of network lenders or other affiliated parties to comply with regulatory requirements; failure to maintain the integrity of systems and infrastructure; liabilities as a result of privacy regulations; failure to adequately protect intellectual property rights or allegations of infringement of intellectual property rights; and changes in management. These and additional factors to be considered are set forth under “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2019, in our Form 10-Q for the period ended September  30, 2020, and in our other filings with the Securities and Exchange Commission. LendingTree undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations.

About LendingTree, Inc.

LendingTree, Inc. is the parent of LendingTree, LLC and several companies owned by LendingTree, LLC (collectively, “LendingTree” or the “Company”).

LendingTree operates what it believes to be the leading online consumer platform that connects consumers with the choices they need to be confident in their financial decisions. The Company offers consumers tools and resources, including free credit scores, that facilitate comparison-shopping for mortgage loans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, deposit accounts, personal loans, student loans, small business loans, insurance quotes and other related offerings. The Company primarily seeks to match in-market consumers with multiple providers on its marketplace who can provide them with competing quotes for loans, deposit products, insurance or other related offerings they are seeking. The Company also serves as a valued partner to lenders and other providers seeking an efficient, scalable and flexible source of customer acquisition with directly measurable benefits, by matching the consumer inquiries it generates with these providers.

LendingTree, Inc. is headquartered in Charlotte, NC. For more information, please visit www.lendingtree.com.

Investor Relations Contact:

Trent Ziegler

[email protected]

704-943-8294                                                                         

Media Contact:

Megan Greuling

[email protected] 

704-943-8208

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SOURCE LendingTree, Inc.

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