Company remains focused on strategic
imperatives despite persistent inflation and interest rate-driven
headwinds
CHARLOTTE, N.C., June 23,
2022 /PRNewswire/ -- LendingTree, Inc. (NASDAQ:
TREE), the nation's leading online financial services marketplace,
today announced revised guidance for the current quarter.
"Our variable marketing model continues to serve us well as
difficult economic forces have persisted, and in many instances
worsened, so far this year. Despite rapid increases in
interest rates, rampant consumer price inflation, and looming
recession fears presenting persistent headwinds for some of our
operating segments, our diversified business model and strong
balance sheet allow us to continue to strengthen our competitive
position while navigating shorter-term macro driven challenges,"
said Doug Lebda, Chairman and
CEO. "This year we remain focused on our key strategic
initiatives to create even more useful, usable, and desirable
experiences for consumers that come to LendingTree for their
borrowing and insurance needs. We are happy with the pace of
execution on these plans and expect the positive impact from them
to begin to manifest in the quarters ahead."
Chief Financial Officer, Trent
Ziegler added, "The challenging interest rate environment
that progressed through this quarter combined with annual inflation
persistently running above 8% has presented additional challenges
for many of our mortgage lending and insurance partners. We
have seen the most significant impact in our Home segment as
mortgage rates have nearly doubled over the last six months,
causing a sharp decline in refinance volumes and more recent
pressure on purchase activity. Although our Insurance segment
continues to rebound from the trough in 4Q 2021, the recovery has
been slower than expected as demand from our carrier partners
remains volatile as premium increases continue to chase
inflation. On a positive note, our Consumer segment continues
to perform quite well, as we expect approximately 40% growth in the
quarter. Annual guidance provided in our 1Q earnings
announcement is under review, and we intend to provide a revised
outlook when we announce formal 2Q results next month.
Despite near-term headwinds, our balance sheet remains incredibly
solid, we expect continued positive cash flow generation, and we
continue to operate from a position of strength."
2Q 2022 Preliminary Results
- Revenue is now anticipated in the range of $259 - $264 million
vs prior range of $283 - $293 million.
- Variable marketing margin is now anticipated to be $88 - $92 million
vs prior range of $100 - $106 million.
- Adjusted EBITDA is now anticipated to be in the range of
$26 - $29
million vs prior range of $35
- $40 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 and tax
considerations. Expenses associated with legal matters and tax
considerations have in the past, and may in the future,
significantly affect GAAP results in a particular
period.
LendingTree's Principles of Financial Reporting
LendingTree reports variable marketing margin and Earnings
Before Interest, Taxes, Depreciation and Amortization, as adjusted
for certain items discussed below ("Adjusted EBITDA") as non-GAAP
measures supplemental to GAAP.
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, 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.
Variable marketing margin is a measure of the operating
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 is a
primary metric by which the Company measures the effectiveness of
its marketing efforts.
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) gain/loss on investments,
(5) restructuring and severance expenses, (6) litigation
settlements and contingencies, (7) acquisitions and dispositions
income or expense (including with respect to changes in fair value
of contingent consideration), and (8) one-time items.
Adjusted EBITDA is a primary metric by
which LendingTree evaluates the operating performance of
its businesses, on which its marketing expenditures and internal
budgets are based and by which management and many employees are
compensated in most years.
The most directly comparable GAAP measure for both variable
marketing margin and adjusted EBITDA is net income from continuing
operations.
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. However, 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 and tax
considerations. Expenses associated with legal matters and
tax considerations have in the past, and may in the future,
significantly affect GAAP results in a particular period.
These non-GAAP measures may not be comparable to similarly
titled measures used by other companies.
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, 2021, in our Quarterly Report on
Form 10-Q for the period ended March 31,
2022, 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 (NASDAQ: TREE) is the nation's leading online
marketplace that connects consumers with the choices they need to
be confident in their financial decisions. LendingTree
empowers consumers to shop for financial services the same way they
would shop for airline tickets or hotel stays, by comparing
multiple offers from a nationwide network of over 500 partners in
one simple search and choosing the option that best fits their
financial needs. Services include mortgage loans, mortgage
refinancing, personal loans, credit cards, business loans, auto
loans, student loan refinancing, and insurance including auto and
homeowners' policies. Through the My LendingTree platform,
members receive free credit scores, credit monitoring and
recommendations to improve credit health. My LendingTree
proactively compares consumers' credit accounts against offers on
our network and notifies consumers when there is an opportunity to
save money.
LendingTree, Inc. is headquartered in Charlotte, NC. For more information,
please visit www.lendingtree.com.
Investor Relations
Contact:
investors@lendingtree.com
Media Contact:
press@lendingtree.com
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SOURCE LendingTree, Inc.