LendingTree, Inc. Stock

Good day, and thank you for standing by. Welcome to LendingTree, Inc.'s Third Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

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

Thank you, James. Hello to everyone joining us on the call to discuss our third quarter 2026 financial results. On with us are Scott Peyree, President and CEO; and Jason Bengel, CFO.

This afternoon, we posted a detailed letter to shareholders and our investor presentation on our Investor Relations website. For the purposes of today's discussion, we'll assume that listeners have gone through those materials, and we'll focus on Q&A.

Before I hand the call over to Scott for his remarks, I remind everyone that during this call, we may discuss our expectations for future performance. Any forward-looking statements that we make are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Many but not all of those risks we face are described in our periodic reports filed with the SEC. We will also discuss a variety of non-GAAP measures on the call, and I refer you to today's press release and shareholder letter, both available on our website for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP.

And with that, Scott, please go ahead.

Thank you, Andrew. Jason and I have a few opening comments before we get into Q&A. First off, we're very excited to provide strong financial results in Q3 that handily beat guidance we put out as well as our updated guidance for the full year assumes adjusted EBITDA growth by 14% at the midpoint despite ongoing headwinds in the mortgage business. This result highlights the durability of our diversified business model.

To hit very briefly on each of our main businesses, starting with insurance. The property and casualty industry cycle remains steady and very strong. We have multiple clients growing very quickly with us. The new bidding platform with our largest client that we were integrating with at the end of Q2 and beginning of Q3 went very well and rolled out faster than we fully expected to and provide a benefit to our business there throughout the quarter, the remainder of the quarter.

On the consumer side, as we expected and communicated in the Q2 earnings call, Q2 was a trough in the performance of the small business lending, and we did see strong sequential growth. We're still on the path to getting back to our all-time records of Q4 of last year and Q1 of this year, but we're feeling that the industry is in a much better position, and we are tracking to continued growth. As a matter of fact, September and October were our 2 best SMB concierge sales month since January of this year. So we definitely think it's heading in the right trajectory.

Just on the consumer lending side, in general, we're seeing strong -- from a client perspective, we're seeing strong lender performance. Credit availability remains very strong. Loan performance remains good. Unemployment rate, which is a big leading indicator a lot of the lenders look at remains very low. So personal loans and the other consumer lending areas remain in a strong and healthy place.

On the Home side, long-term interest rates and overall have definitely gone in the wrong direction this year, which has provided some headwinds. That said, even in those headwinds, we provided strong year-over-year growth in both revenue and VMD. So we're very proud of that. We feel like we're taking market share there. We feel like a number of the investments there we've done to grow consumer traffic have been effective. There still is very strong demand from clients in that space. It's really a matter of finding those qualified consumers that are looking for the loans. But as we mentioned in the letter, home equity has become and HELOC has become a major part of that business, and that business is much less interest rate sensitive and purchase or refinance mortgage. And so we believe heading into next year, we can continue to see growth in the home equity side of that business.

On the North Star strategy, execution continued and stayed strong. Just to remind everyone, we have -- our big focus is on return customers, referred customers and logged-in user growth. On the logged-in user side, we've been building and rolling out a number of tools we're excited about, debt management tools, AI-driven recommendations, scenario tools analysis. We're really looking forward to some of the things we'll be rolling out over the next few quarters, and we've got a long list of features that we think will create a very sticky log-in user base over the long run that will provide return consumers that we can proactively provide our financial and insurance product offering to without paying for those consumers to come through every time.

On just the consumer experience, the shopping experience, the [ Susie ] experience, as we call it internally, which is just to transform and dramatically improve the [ Susie ] experience. We're very happy with improvements we're making there. For example, voice and text AI, we continue to roll out in beta form on multiple fronts where we're bringing AI in to handle a lot of the shopping process on behalf of the consumer until they're closer to application-ready process before we hand them off to the client. We're seeing lots of positive signs on multiple fronts there, really looking to more rapidly and aggressively roll that out as we head into '27.

AI overviews that we're providing mainly to our personal loans customers right now. We've rolled it out from just our log-in users to now all of our branded LendingTree.com users. We're looking to roll out new versions of it for personal loans that are even better and improved on helping when you're sitting on 30 to 50 offers, helping to understand which offer you should select based off of your personal situation. We're seeing a lot of engagement from the consumers there. Our plan is as we get into '27 is to early in '27 to have versions of AI overviews for every product we're offering to the consumers coming through our website.

Moving on, just to hit briefly on -- there's been a lot of conversations that I've had. I'm sure questions will come up here. So I'll just preemptively talk about a little bit, just the AI threat, mainly the LLM threat to our business and our competitors' business versus maybe the reality we're all seeing right now. And I'll start with we have -- as we've looked at it and all the consumers out there, we have the ability to generate way higher increases in traffic through social business development and publishers then we have the threat of losing traffic to LLMs for any in the near or midterm. As we look at the marketplaces out there, there's just -- we're under-indexed in a lot of those categories. We've had a lot of success this year growing those categories. We're going -- we're actively investing heavier to grow at a faster rate in those categories.

And then when you look at the LLMs, I mean, they have been growing. They're taking bigger share. But an analysis I was given a few months ago, if you really look at the overall bucket and if you include search with LLMs is just like a pie of consumers, all of the LLMs added up together are 5% of the search bucket. And as we've seen, like which gets a lot of media, like when new items come out like news, what we're seeing is they're taking share away from the other LLM much more so than they're taking share away from like a Google AI overview search result.

So it's still growing. We're still actively involved. We've got a lot of resources commit to it, whether it's like we're building apps for the LLMs, whether we're making our content available for LLMs to access, whether we're advertising on the LLMs. But I think it's just fair to set the precedent that we don't expect any sort of massive growth in traffic from the LLMs anytime in the near future, nor do we expect any major loss of traffic we're getting from other sources to the LLMs anytime in the near future. And we're excited about the growth we know we can achieve from other areas where consumers are every day in shopping for products that we're offering.

To add to that, LendingTree's carrier and lender network is a big structural moat. We have 700-plus carriers and lenders in our network. Roughly half to 3/4 of these only quote via back-end API access, not open online quoting. So this whole concept of an LLM agent just going and filling out forms on behalf of the consumer, yes, that's true to some extent, but it's very limited in most of the industries we're in, where they can actually get a very good and quality set of comparison quotes. That's where we provide huge advantage. We feel that we can be an extremely useful platform in this world, not just from the breadth of offerings, but also from a compute standpoint with the agents to be a go-to source for the financial product quoting via AI agents.

For example, why would an LLM agent [ use ] burn compute hitting 20 separate personal loan sites when they could just come to our site and get those same 20 quotes by filling out one form through us. And even when I say filling out a form, the protocols of the agents working together, it's not even really they need to fill out a form. They're just communicating with our specialty agents that can provide that on their behalf. Our specialty agents that can be on the phone on behalf to get other quotes that you can only get over the phone. Like we're going to be building a lot of this stuff that the big LLMs just simply aren't going to put the attention to over any time in the near future.

So I just to round that out, I mean, I would say we are very excited about the Agentic AI capabilities we're building to both improve the current shopping experience and transform the shopping experience in general, whether it's consumers using our web-based platform to shop, whether it's LLMs or other Agentic AIs accessing our specialty AI agents to shop or whether it's logged in members to get the benefit of our Agentic AI doing secret shopping and/or actively preparing updated offers in real time on their behalf. We're more confident by the day that we can provide huge value to the consumer in the age of AI.

So with that said, before passing over to Jason to comments on the bigger picture financial performance, I just want to reiterate our excitement about the growth we see ahead of us. The North Star is starting to really show real results on our consumers. We've done a lot of testing throughout '26 of millions of different things of how we can use AI and Agentic AI to transform the shopping experience. We feel like we've identified a number of things that can be used across all of the industries we operate in, and we'll be really investing heavily in rolling that all out on a broad macro basis in 2027 and beyond.

So with that, Jason, go ahead.

Thanks, Scott. And I think it's useful just to take a step back. And when you look at the midpoint of our guide versus 2023, you're looking at a 25% EBITDA CAGR. You're looking at expenses with a 3% CAGR, in line with inflation essentially. You're looking at net leverage moving from 5.3 to 1.7. So we've made tremendous progress over the last few years. And looking at 2026, we've had some headwinds in 2026, right, but we're still growing EBITDA well into double digits, 14% when you're looking at the midpoint of the guide. That's because we have a diversified portfolio, like Scott alluded to.

You're looking at within 2026, expenses growing around 3% at the midpoint. That's the result of discipline and a focus on driving internal efficiencies with the use of AI. We expect all that to continue into 2027. And I think what's also interesting is when you look at our cash flow, look at our Q3 LTM cash flow, free cash flow, excluding litigation, it's $100 million. So that's a lot of cash available to return to shareholders. And so coming back to the diversified business point, Insurance is performing extremely well, and we expect it to continue to perform extremely well. Home is in a difficult environment. Mortgage is hard right now. But when you look at that segment, you look at sort of the mid-cycle earnings averaging -- just averaging the peak and the trough of Home, that's about $50 million of VMD, higher than where we are today. And the majority of that would drop to EBITDA. We just can't really get confident that's going to happen soon, but there is a massive potential there for that segment because we have a diversified strong business with a great lender network.

This quarter, we paid down $60 million of debt. We saved $5 million in interest expense, bringing our gross debt down to $336 million, pretty -- approaching pretty close to our $200 million longer-term goal. You'll see in our financials, we did take a noncash goodwill impairment of $99 million in Home and Consumer. And that's really involving testing for impairment where we had to consider our market cap on and around September 30. That resulted in the charge. This doesn't reflect a change in our expectations for these segments, but it does reflect a market cap that implies a free cash flow yield ex litigation north of 25%. So we see the attractiveness in these numbers. We see the attractiveness and the upside in our stock. And so in Q4, we're going to be buying back stock, and we're going to continue paying down debt.

And so with that, I'll hand it over to the operator for Q&A.

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

Just diving into Insurance, I think one of your competitors last night said they expect this soft market cycle or higher favorable profitability cycle to continue potentially into '28, '29. Are you seeing like the same thing? And do you just have like a good multiyear visibility into insurance over the next couple of years?

Yes. I would -- thanks for the question, Jed. I would generally agree with that sentiment you heard yesterday, and it's a very stable industry at this point in the game. And I would say there's probably long term -- it's easier to look out long term and project continued long-term growth today than almost it's ever been. Not that there can't be a big turn where inflation goes way up again or which could affect the insurance companies or they start giving some rate back to the consumers, which affects their profitability.

But yes, I think the industry is more stable now than it's been in a long, long time. It's very profitable. In general, we're seeing -- and I'm sure not just us, our competitors as well are just seeing more players get more aggressive with budget, which is very good for a marketplace business like ours where you have more competition for those consumer clicks. Yes, I would say to '28 and beyond, I mean, outside of some major shift, there's a lot of continued growth, I would expect in that industry.

Another interesting thing I would comment there is like when we look at just the -- like when we look at our market share versus the overall industry, like in insurance, in online performance marketing, which is essentially where we sit in insurance, we probably actually have a lower market share than just about any other industry we're in, even with as big as insurance is for our business. My guess is we are well below 20% market share just within our group. So like there's the whole industry that's going to keep growing for the next few years, and then there's the ability to grow our market share within that industry. So yes, I would have very positive outlook for the insurance industry right now.

Great. And then I think, Jason, you mentioned expenses have grown about 3%. Just with AI, how do you feel like relative to your competitors, your opportunity, how do you think you're invested in AI? Do you think -- I mean, do you think you can continue growing expenses at 3%, 4%? Or do you think you're going to have to invest more so you can kind of better harvest this technology? Thanks.

Yes. I mean it's -- we're not -- we're still in the 2027 planning phases, I guess. So it's hard to put out a number at this point. But we've had a lot of success using tools that we have today to drive a lot of efficiency on the AI front. When you look at how we run marketing and just using data agents, for example, within marketing, the amount that we've been able to upskill our marketing team by using agents to handle sort of the data gathering and analysis part of their jobs allows them to become much, much more efficient marketers.

And so we're using the tools that we have today with a lot of success, and we fully intend to keep doing that. It is possible that as we move into 2027, we do wind up investing more in AI, but we would expect an outsized increase in productivity moving forward.

Yes. And I would just add in there. Yes, it's a little bit of both. Like there's areas we're going to invest into. Like data is a critically important area to have quality of data infrastructure for AI to work effectively, log-in experience, like I was saying. So -- but you can -- just like everyone, you can get so much more done with fewer people in this age of AI. And then at the same time, we're looking where AI can provide efficiencies. So it kind of levels out to some extent when you look at it that way.

Our next question comes from the line of Youssef Squali from Truist.

Scott, I was intrigued by your comments about working with LLM platforms, at least in theory to integrate some of your capabilities within the agent results. Are you actually talking to some of these platforms? And kind of what kind of feedback are you getting from? What kind of reception are you getting from? And I have a follow-up.

Yes. We're actively engaged in some platforms more so than others. But it's -- yes, honestly, these companies are growing so fast. They help you where they can. They give you directional information as far as like a lot of these times, they don't even know how their systems work any more than anyone else knows how it works. So they're trying to give you directional like, okay, here's where we believe the AI is finding value and not finding value. There's definitely a number of -- like -- and this is more of a recent thing. A number of, I guess I'll call them Internet protocols are starting to be developed that makes it easier for like AI agents to communicate with companies like ours.

And so I think the fact that we're making sure we're building our platforms to be able to easily communicate with LLM agents, like because not everyone is going to be doing that, obviously, not that we're the only ones doing it. But I mean, the group of us are going to be front end doing that, we'll do it. But yes, I mean, I would say all the major LLMs or just AI companies we've got relationships with. There's only so much they know or they can tell you, but they can help you direct you the way it should be going.

Got it. Okay. And then maybe on the other 2 subsegments, Home and Consumer, it's very encouraging to see that you guys still posted positive growth. As we look at 2027, can you maybe just kind of share your initial outlook as to kind of the potential growth prospects for these and still the headwinds ahead ex maybe just rates, which God knows what's going to happen there.

Yes. I mean I'll start and then Scott can chime in here. I mean, like I said, we're still a little early in our planning for 2027. So we're not putting out guidance or numbers really at this point. But just thinking about the backdrop, like Scott said, insurance, we expect continued tailwinds for a while. Combined ratios are still very low. I think carriers are going to very carefully manage those combined ratios. Competitiveness is very high. And so I think we'll have a very favorable environment in insurance moving into 2027 and beyond.

Home, like you said, it's a bit more challenging, right? Like it's -- mortgage is in a hard spot. The home sales are at a very, very low level. I want to say 20, 40-year low. So it's hard to be excited about mortgage. But at this point, is really driven by Home equity. And there are record home equity balances and people are renovating their homes. So like there's a real opportunity within home equity to drive growth.

I guess I would say we're really excited about the opportunity to drive traffic. And Scott touched on it, but we're under-indexed in several channels that we fully intend to lean into in 2027 and beyond. And our strategy is focused on driving organic traffic. And we think we can have a real impact moving into 2027 and beyond there as well. So it's a little bit early to be putting out numbers, but I think the backdrop is generally favorable for insurance. It's a little bit complex with home, but it's going to be home equity driven. Consumer, it's really about SMB. We did see a lot of headwinds in SMB early in the year. That's improved. It's been improving. I think we expect it to continue to improve, but it's hard to really guarantee that. So it's really more about how are we going to execute to find additional traffic moving into 2027 and make those investments to keep driving growth.

Yes. Then I would just add in briefly. Small business, if it continues to recover. I mean that's a big wildcard. If it gets back to where it was in Q4, Q1 this past year, which is very well good, that would be major growth in and of itself. So that's something we're excited about. And then as I said before, like a real focus on getting more and more users to sign up to become log-in members, which of LendingTree and active users, which increases our long-term value, decreases our cost of acquisition over the long run. Those are the major metrics. So I mean, so if we can start showing improving out those metrics, that will have a significant impact, not only on profitability, but just ability to drive more consumers on top of the funnel.

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

Hi, everyone. Thanks for taking the questions. Hearing a lot of comments about the focus on growing organic traffic and investing there and understand that makes sense over the long term. But I just want to make sure we're understanding that properly, if there's anything you're telegraphing there around incremental investment next year? And how should we think about the ability to continue to sustain double-digit EBITDA growth even if we do see some incremental investment in parts of the business like that?

Yes, I'll hit on it. There's basically 2 lens. We think there's ability to grow a lot of organic traffic by a number of the things we're building in the log-in experience and just being better about more proactively. We've already been doing some testing about more proactively getting consumers that are upfront shopping for whatever product they're shopping for to get them to become log-in members. And I would say we're pretty excited about our ability to onboard members. And so then you got to create that long-term value. That would be like the organic growth.

But then we also feel that there's a lot of growth just in areas where we've arguably been under-indexed compared to our competitors over the last number of years. And that would be social media, which is a massive world of consumers, business development, publishers. We've been building a lot of ad tech around that over the past 9 months, and we'll probably continue investing even more heavily in that to just really get -- to have really good platforms that good ad tech where we can go and place our ads and have publishers and partners more easy to work with us. We feel like that's just a major -- like I would almost call it, if you build it, they will come situation, like we just got to build more of the stuff, onboard more partners, and that will just drive a lot more traffic there as well.

Great. I appreciate that. And then as a follow-up on SMB. Maybe, Scott, if you can just put a finer point on the -- how the recovery trajectory looked in that business coming out of the second quarter, whether or not you learned anything incremental on the drivers of the earlier weakness, what questions might still be out there and how you're thinking about that recovery progressing into next year?

Yes. I would say -- so in Q2, the biggest drivers we had bad for at least early Q2, bad lender sentiment and mainly because these lenders have written a lot of loans in the previous like 6 to 9 months, and they just kind of wanted to -- Iran war started, et cetera, they just want to take a time out and just make sure the loans were performing. And then you had bad merchant sentiment, which a lot of it was gas prices and the Iran war stuff. And I think small and medium-sized businesses are probably honestly even more sensitive to that than consumer lending even is.

And so when we got out of Q2, what we saw the lender sentiment completely turned around, where they're like, "Okay, our loans are performing. Everything is going great. Let's get back to business." We're just -- we're offering loans at the same rate and term that we were a year ago. So that's fully recovered. So that's a really good part. The merchant sentiment has recovered, but not fully. That's where we're still seeing the take rates on loans are lighter than they were in our peak Q4, Q1 peaks and then the average size of loan is a little lighter. And we just feel that's still just kind of a little bit of merchant sentiment, just concern on the macro economy and stuff. But I mean, that's something we fully -- once the sentiment turns around, we -- I mean, we have a long-term history of like what the take rate on loans generally is and what the average loan size really is and no reason to believe we won't be right back there.

Any way to quantify how far below you are on those take rates and average loan sizes?

I mean, I guess one way to look at it is comparing to our original budget. And if SMB was performing at the original budget, we would be north of $160 million EBITDA this year.

Our next question comes from the line of Danny Pfeiffer from JPMorgan.

For the first, as you have discussions with insurance carriers, can you talk about what their mindset is as it relates to partnering versus blocking AI agents and where LendingTree might fit in that equation?

And then on the second, on the topic of making progress on logged-in member experience, can you talk about your ambitions here? And if you could share any stats on the member base today in terms of like size, return frequency or monetization?

I'll start with the first part of the question, just with the insurance carriers. And I would say like, yes, insurance carriers historically, they just -- they don't want their rate tables publicly available to the world because they don't want to start this downward spiral of everyone having to give rate and it's like everyone has to low ball on the upfront rate. If you rewind the insurance industry like 30 years ago, it was a similar problem where they were more public with the rates, but then it was just -- they had to low ball for the first 6 months and then jack everyone's insurance rate up by 50% after 6 months, horrible consumer experience, like, they don't want to get back to that world, and they've made it very clear.

So when they look at like some of these agents like a news coming out and being able to scrape sites that provide rates publicly, which honestly is not a ton of carriers that do that, but there are some that do that. I think like I was saying in the market share of LLMs overall right now, the quantity of consumers actually using LLMs to shop for insurance, I don't think it's -- I don't think they're seeing the quantity that it really concerns them yet.

Now if they started all of a sudden seeing hundreds of thousands of unique rate requests a day, my guess is they would pretty quickly shut that down. Now where they work with us and after working with us, getting back to the logged-in experience, we've had a number of carriers already tell them we're actively building with some. They're like, okay, you're logged in. We don't want to show rates on your public-facing site, but you're logged-in users that are your users, we're more than happy to show rates and let you do secret shopping and provide a lot of value that way. And that's a perfect example where I think our platform is a Specialty Agentic AI platform in the Insurance and Financial services space will be much greater than what any LLM that has honestly much bigger fish to fry will accomplish.

And could you -- what was your second question?

Yes. And maybe on the second, if you could provide any stats or anything on the log-in user base in terms of anything like the size or return frequency or monetization?

No, we're not currently providing any stats on those front publicly.

Got it. Thank you.

Just for competitive reasons.

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

A question on your 4Q guidance. Scott, would you say that, that pretty much reflects seasonality, typical seasonality in the business? Or is there, I don't know, a weakness in the business line you hadn't expected earlier in the year? Just trying to get a feel for how you're thinking about that 4Q.

Yes, I can start and then Scott will chime in. I mean we just go segment by segment, I guess, like Home is seasonally lower in Q4. It might be a little bit more low than normal seasonality just given the environment. Consumer is generally going to be flat sequentially Q3 to Q4 with sort of offsetting seasonality between personal loans and small business. Small business has a strong Q4. Personal loans tends to have a weaker Q4. The real uncertainty is with insurance. The last few years, we have gotten very large budgets towards the end of Q4, and so the guide isn't assuming the sort of budgets that we've gotten in prior years. We are assuming we do get sort of a seasonal uptick in insurance budgets, but just less than we have in the prior years. We're just being conservative there. So that is inherent in the guide. But no, there's no single business that's performing particularly poorly Q3 to Q4 to answer your question.

And just to add -- the only thing I would add on there is if you look year-over-year, the biggest driver probably is small business. So small business keeps improving from the Q2 trough. But again, I'll reiterate that Q4, Q1 were all-time highs last year for us. And so like even though we're improving and we're coming back, there's still a ways to go to get to those levels, and that's probably the single biggest driver if you look year-over-year.

Got it. That's helpful. And then on the buyback, it seems like you signaled you're going to be engaging in that here in 4Q. Is there 1 or 2 metrics? I mean, I imagine maybe it's debt to adjusted EBITDA has gotten to a level where you're comfortable. It seems like the cost structure, you've got your arms around really tight with inflation growth. Help us think about your kind of appetite for buyback and amongst those metrics.

Yes. I mean we're looking at a lot of things. Our debt -- we declared our target debt level is $200 million. In last quarter, we were sitting on $397 million of gross debt in a rising interest rate environment relative to our $200 million target. So we made a big dent in that debt, and we're going to continue paying down debt and returning money to shareholders that way.

When it comes to the buybacks, when you look at where our stock is and has been compared to our free cash flow, it's just pretty obvious that it is an attractive opportunity that we're going to take advantage of. We drove -- like I said, we drove looking back trailing 12 months, $100 million of free cash flow when you exclude litigation payments and you look at that relative to our market cap, it becomes pretty compelling pretty quickly. So that's a big one that we're looking at as well as our EBITDA multiple and the growth implied in it. It all points to a pretty easy decision to lean in and buy back shares in Q4.

Great. I know it's taken a lot of hard work in a couple of years to get there, but congratulations, guys.

Thank you. This concludes the question-and-answer session. I would now like to turn it back to CEO, Scott Peyree, for closing remarks.

Thank you. Just to close, we appreciate you all joining the call and asking the questions you asked. We're just looking forward to continuing to execute and being able to report on continued improvements in the business next quarter. Have a good evening.

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

Thank you. Good day and thank you for standing by. Welcome to the LendingTree, Inc. Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. a message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded.

I would like to end the conference over your speaker today. Andrew Wessel, please go ahead.

Thank you, Kevin, and hello to everyone joining us on the call to discuss LendingTree's second quarter, 2026 financial results. On with us today are Scott Parise, President and CEO, and Jason Bangle, CFO. This afternoon, we posted a detailed letter to shareholders on our investor relations website. We've also posted a new investor that we would encourage everyone to look at. For the purposes of today's discussion, we will assume that listeners have gone through those materials and will focus on Q&A. Before I hand the call over to Scott for his remarks, I remind everyone that during this call, we may discuss LendingTree's expectations for future performance. Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's actual results could differ materially from the views expressed today.

Many but not all of the risks we face are described in our periodic reports filed with the SEC. We will also discuss a variety of non-GAAP measures on the call, and I refer you to today's press release and shareholder letter, both available on our website. site for the comparable gap definitions and full reconciliations of non-gap measures to gaps. With.

Scott, please go ahead. Thank you, Andrew, and thank you, everyone, for joining the call today. We had a good quarter with strong growth led by insurance. Our insurance business revenue was up 25% year over year, and our adjusted EBITDA was up 11% year over year. Also, I'd like to call out that our adjusted EBITDA as a percentage of VMD was up 225 basis. basis points year over year to 40%, steadily moving toward our 45 to 50% long-term goal on that important metric. Stepping back for a second, from 2023 to 2026, we have roughly doubled our revenue in adjusted EBITDA, showing extremely consistent growth and consistency. Our diversity of product lines in this company has supported resilient and consistent growth regardless of certain industries, such as mortgage, being in a multi-year trough due to high interest rates. rates. Insurance is the standout. Revenue was up 42% and segment profit was up 25% year-on-year on strong carrier demands.

In our Our home business revenue was up 9% year-over-year and our segment profit was up 13% sequentially. I feel we are continuing to perform well in what remains near-trop earnings power from a macro environment with high interest rates, continuing to provide strong products to a strong client base. and position well for long-term growth as that industry comes back. Our OpEx held flat year over year. Both AI driven efficiency and just what I would call this operational efficiency in general is converting growth into earnings. We're sitting on very strong free cash flow, approximately $80 million after interest per year. Our net leverage improved to 1.9 from 3.0 a year ago. Whereas debt pay down does remain a strong focus of the business, we are now in a position in a comfortable level from a debt ratio perspective where we are also looking at other strategic uses of our free cash flow.

From a product and AI momentum standpoint, we're gaining, we're continuing to gain momentum on our North Star initiatives. In Q2 alone, we rolled out a chat GPT app called the Home Loan Rate Confidence Tool. We're offering six new products to consumers such as pet insurance, commercial insurance, and financial advising. Our homepage and Navigation design is proving 11% performance increase in sessions and 18% form starts off of our homepage. Voice AI continues to roll out across multiple products. We've added AI overviews within our product offering pages to help consumers more efficiently choose the right offer, which is show-off. showing positive performance. Now heading specifically on our consumer segment and more specifically calling out our SMB lending business and the softness there.

Now to start with, SMB has been a major growth engine for us over the past two to three years. We've had 40% year over year profit growth on average since early 2012. In Q2, as we alluded to in the last earnings call, we saw some headwinds coming in this industry due to Middle East tension, energy price spike. et cetera, making small business owners more cautious in general. And in all honesty, demand came in softer than we'd forecast, which drove the myths. Softness was initially driven by both merchant sentiment and lender pullback. I will say the lenders have largely come back and are writing and offering loans at similar levels to early Q1, but merchant sentiment does remain soft. You know, looking back at the SMB business in general, we've made significant changes significant investment into our SMB business over the past few years.

We've invested in growing the strongest sales force in the industry, growing our lender network and our internal platforms to make quoting more efficient for our sales team and our merchants. myriad AI efficiencies, and growing traffic sources generating more and more high quality merchants looking for loans. Those investments have generated significant profitable growth over the past two to three years. And we expect them to continue to provide profitable growth in the future. look at our original internal S&B budget we set at the beginning of the year, which, by the way, I'll call out in Q1 of this year, we actually outperformed to that budget. If If we would have hit that original budget for the entire year, we would be performing at the high end of the previous guidance we set. We feel that merchant sentiment issues are temporary and macro driven. They're not competitive or structural and fully expect to be back to growth and setting revenue and VMD records in the near future. The long-term macro outlook for the S&P 500 the SMB industry remains very strong in our opinion.

We're seeing some encouraging signs already. Improving closing rates, larger loan requests, favorable underwriting shifts. July will be our best sales month since Q1. Performance in July gives us confidence that Q2 was our trough and we have entered the recovery period. Expect stabilization, I'd say, through the second half of the year. S&P to eventually recover and surpass our Q1 record levels. We'll keep monitoring and update investors as that trend develops.

Hitting on North Shore's strategy, which remains unchanged, to become the number one destination to shop for financial products. We have a massive focus over the next few years on return customers, referred customers, and logged in user growth. This will create an even stronger and more durable business over the long run for the lending tree. AI is a real structural tailwind to make this happen. Not just efficiency, but consumer facing, such as the ChatGPT app, the rate confidence tool, AI for communication via voice or text or email, AI offer overviews, all driving increased engagement in applications and we feel there is a laundry list of additional things we can build over the next few years that will create even more and better customer engagement. Internally at AI tools such as AI agents we've built on our data infrastructure for marketing teams, sales team, finance teams, is actively compressing what was previously weeks worth of work into real time information, which is providing real efficiencies in the business. One of the key reasons OpEx grew less than 1% while our revenue grew by 25% year over year.

Our business model is highly cash generative and capital light. Like I said earlier, approximately $80 million in annual free cash flow after interest with minimal CapEx. Our balance sheet is getting more and more flexible our leverage down to 1.9 times, which gives us capacity for debt paydown, for buybacks, and accretive M&A. Insurance remains a core strength. Again, SMB is softness is temporary and not macro, and I'm sorry, temporary macro, not structural. And bottom line, long-term growth profiles intact. We've got a durable high margin, capital efficient, increasingly AI powered business.

With that, I'll hand it over to Q&A. Ladies and gentlemen, if you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered, or you wish to move yourself from the queue, please press star 1-1 again. We will pause for a moment while we compile our Q&A roster. Our first question comes from Ryan Tomsella with KBW. Your line is open.

Hi, thanks, everyone. Apologies, still juggling a few things with the release here, but maybe just to start off if you could put some guardrails around what the second half guidance assumes across the various segments. from both a revenue and variable margin standpoint. And then as a follow-up to that, regarding the lower variable margin, variable margin specifically in the insurance segment. If you could just elaborate on the specific drivers there and what you're baking into the second half on a margin front for insurance. Thanks.

Yes, Ryan, it's Jason. So I'm happy to talk through the guidance assumptions here. Like Scott said, if you take a big step back and look at the midpoint of our guidance, that does look at us almost doubling EBITDA in the last three years and growing 12% this year. And like Scott said, if SMB had performed as expected, according to budget, we would be at the high end of the prior guide. And to be totally transparent, we beat budget by almost 15% in small business in Q1. So the trajectory was very, very strong for small business until the headwinds. presented. So just talking a bit about each segment here, you know, home, rates have been going up. So that's a bit more of a headwind.

Margin has been down. I would say it's below what we'd consider normal historically. And that's just a function of home sales being 4 million units. There just aren't that many borrowers out there and the competition for those borrowers is just very, very high. So with home, I think long term, there's still lot of upside in home. I think margins would normalize when the market returns, but we're just not contemplating any real upside in the guide with home margins sort of where they are now. Consumer, like we said, you know, SMB, you know, had real headwinds. We talked about that on a call quite a bit.

When we saw this coming, it was just much worse than what we expected. So Q2 definitely underperformed our expectations. was just a large drop in lender appetite and merchant demand. Like Scott said, things like loan size, close rate, volume, we're just far below even our lowered expectations. But we've seen signs of improvement there. So lender demand has started to recover, but on the merchant side, it's still just not where it needs to be. There's a long way to go in merchant sentiment. And so the guide is only really looking at what we have line of sight into.

And so we're really only contemplating that return of lender demand that we've seen today. And so that will result in, you know, a sequential improvement in consumer revenue in VMD, but it's just not back to, you know, sort of SMB won't be back to Q1 levels that we were seeing before. You know, this was our growth engine. You know, like I said, it was growing 40% a year on average. And now for this year, it's looking like, you know, we might be flat to down. The good news is that should really be temporary. There's nothing structurally wrong with that business.

We operate very, very well in that business and the market opportunity is really strong. So that will recover. Once merchant sentiment returns, that will return to being a very, very strong growth driver for us. We're very optimistic with small business, but with a guide, we're just, we're not assuming any real return from what we have direct line of sight into today. With insurance, the backdrop is still very favorable. Carrier profitability is very strong, competition for policy is very strong. That helps us in the partner demand, but it does pressure immediate costs. So that's kind of what you see coming through in margin.

So, you know, we do expect, I would say, healthy growth in the second half for insurance. I think we're very happy with how insurance is doing, and we expect that to continue going forward.

And this is Scott, just to add on there. As we've always historically been, our first goal on insurance of this growth is like overall V&D growth. And that's what we plan to continue to see through. It's been very strong the first half of the year. We can continue to see growth next year. And also, as we've talked about, talked about before, if you look at our consumer segment from a margin perspective, small business is, within the consumer segment, is by far our highest margin business. And so when that's suppressed, it will inevitably affect the overall margins in the consumer business.

I appreciate all the color guys. Maybe just double clicking on insurance. I guess several part question here. One, the mid 20s variable margins, I think you posted in the quarter is that, a good assumption for kind of a new run right here in this environment. And then, you know, as you look out to what you're seeing with carriers, how confident are you that the insurance business can continue to grow VMD off of what you're assuming for the second half of this year into 2027? And then just given the tenure you have in this space, Scott, if you can just talk about what leading indicators you tend to focus on for signs that the cycle may be peaking and when we might start to see those signals.

and the signals emerging. Thanks. Okay, yes, so just to hit on a few of those, I mean, I would start like, you know, starting with like the leading indicators from the macro level. I mean, you would first start at the top level of just the insurance industry profitability in general. And there's a number of massive public companies out there. So, so you have a very good outlook into what the general profitability business is. And it is a very... stable profitable environment and in the end then and then the secondary signals below that I would say if you're seeing trends of carriers either increasing pricing, you know giving rate or taking rate, which is essentially either giving pricing, increasing pricing, or reducing pricing. Because from a company like ours, where we're very shopper dependent, we want shoppers coming through the network, when you have environments where pricing is changing for policies, that drives more shoppers, obviously. obviously. So, as I said in earlier calls, a bit the early part of the recovery was all about, are insurance even willing to offer insurance policies to consumers? That's largely, we're now at the point where insurance is healthy and every, they're offering insurance policies to everyone.

So now, we'll be looking at indicators of coming up in the next year or two, are they going to start giving rate back to the consumers, which means they're reducing pricing, which will drive another shopping cycle. But I would say, as we look at the environment today, It is extremely stable environment from an insurance industry standpoint, and there is strong demand and fighting over market share from some of the top companies in the industry. I would call it very healthy and stable and growth is largely dependent on us executing well as a company, driving a lot of active shoppers to our network, which I think we're very good at doing. Oh, and in the VMM margins, yes, I would say, like I said, first our primary goal is VMD. Some of these carriers, just the dollars they're spending are so high and growing so fast, you're starting with overall VMD and you want to make sure you're providing the best high quality product to them so I would say as we look at this since it is just still in such a growth mode as we're looking through the second half of the year yes I would expect margins to be probably similar to where they were at in Q2, with VMD hopefully growing a little bit sequentially. And yes, and again, I think it's kind of one that, super high revenue growth levels out is when you really start leaning into more of the But I think we're going to see strong revenue growth throughout the rest of this year in insurance. Hopefully that answers all your questions.

Great, thank you. One moment for our next question. Our next question comes from Jed Kelly with Oppenheimer. Your line is open.

Hey, great. Thanks for taking my questions. Just circling back to the consumer segment, we're trying to track the health of your small business products. product, is it more, are they more, are they kind of more sensitive to gas prices or is it more interest rates or is it a combination? And then just, just circling around your personal loans, you know, some of the bank earnings we've heard and the health of the consumer, that seems pretty stable. So can you just talk about where we are with personal.

personal loans and then I have a follow up. Okay, yes, Jed. I'll just start, I'll hit on personal loans briefly. I would say yes, I would echo that sentiment. Personal loans is a fairly stable business right now for us. You know, similar amount of revenue and consumer shopping. for personal loans and whatnot. Not a lot of change there year over year. On the small business side, specifically on that, I would say, you know, I think it starts more at a sentiment level than an interest rate sensitivity level.

And I think there's, you know, a lot of these... and I'm pontificating here a little bit, but a lot of these smaller and medium-sized businesses, they're kind of on the front lines of when you're seeing consumer sentiment change and people complaining about gas prices and maybe tightening their wallets on stuff they might spend with a lot small businesses and then that translates into a small business you know for example saying like you know i was going to hire those four people that maybe i won't or i was going to spend a hundred thousand dollars on that capital equipment you know that maybe i won't or at least i shouldn't say won't just like hold off on that's why that's why we call it temporary because i i think it's just a lot of right now there's a smaller number of merchants requesting loans. And then you look at the average loan size they're requesting is generally smaller than we historically see. And we've been doing this for a long time, so we've got good history here. And then I would say, and then there's a general lower percentage of people then accepting the loan offers they're getting. And I don't think that's rate sensitivity as much as just math. macro sentiment of like, ah, maybe I'll just hold off. Maybe I'll get a little bit less money or just hold off for another few months before I do this just to make sure we don't, you know, some major war, et cetera, et cetera. So that's where I'd say it.

That's where we have, I mean, and this isn't just us alone. This is like all of our big client lenders in the small lending space, some of our competitors slash frenemies. I mean, I think everyone's seen a lot of this office in Q2. but everyone just believe that it's going to come roaring back here sooner rather than later.

Okay. And then, Jack, can you just – yes. Sorry. I was just going to tack on with PL. You know, we – you know, in this environment, sequentially, PL performed very well. PL was definitely a strong grower from Q1 to Q2, so it's not like this environment has really held back here.

moving sequential. Got it. And then just as a follow up, you know, seeing some news about Google, this arbitration, Google case, can you give us an update on where you stand and how you kind of view that arbitration process?.

Yes, so with Google, we're aware of lawsuits and arbitration claims against Google related to federal court rulings that the company illegally monopolized online search and search advertising. Advertiser customers of Google, they're actively joining together for arbitration and other proceedings. And we've joined one such group. We've initiated a request for arbitration this year, and we filed the group's demand motion on July 17th. And we directed about $2.8 billion to Google through the impacted period dating back about a decade. We continue to and that timeframe is really what would be used to assess the damages through the arbitration process. And so we believe Google's overcharge accounted for a significant portion of our overall spend during the relevant period, which would be the basis for our right to damages.

So we're currently engaged with an expert economist to size out the potential damages. And I think one other important call out is with regard to tax. With tax, there's a lot of moving parts, very complicated. But we do have tax attributes. You can see in the 10-K that we expect that we can use to reduce tax liabilities on any future taxable income, including any possible recovery amount from Google. We have tax-effective NOLs. We have R&D tax credits, interest carry-forwards. When you look at all these attributes together, we expect them to be able to offset a substantial portion of federal income tax, otherwise payable and future taxable income, for around $300 million.

So, you know, hopefully that gives you an overview. Thank you. Good luck.

One moment for our next question. Our next question comes from Mike Rundahl with Northland. Hey, guys, just two questions on small business.

That business has grown a ton. It's still within consumer, but can you speak to just like what percent of revenue, what percent of adjusted EBITDA comes from that just so we can size it a little bit better? Sure. And secondly related to that, it sounds like lender demand, I don't know if the word is collapse, but lender demand was really, really weak. It really wasn't customer demand. It was just the lenders pulled back hard. Am I hearing that right?.

Yes, so it was really two factors that happened. It was both on the lender side and on what we call the merchant side. So the small businesses looking for cash, we call those merchants. So what really happened was lenders pulled back and they tightened their criteria. They or a higher rate for the same loan amount, we're just off, you know, tighten their buy boxes. That we have seen recover. The other end of that is merchant, call it the merchant demand. And that presents in the form of volume.

There's just fewer merchants shopping for loans out there today. And also in the form of close rates, so we call it booking rates. So if you give a merchant an offer, they're just less likely to take it. And so there's just less appetite out there in the form of close rate and volume. And that's the merchant side of it. That's the piece of it that we have yet seen to report. cover that should provide and when it does we fully expect that it will and when it does you know there should be significant upside and we expect small business to return to being a very, very strong growth. We don't disclose the revenue for small business, but that sequential decline is obviously driven by small business, and we had PL performing fairly well sequentially.

Got it. Got it. Yes, so just to put a button in that, we could use significant loan growth in small and the lenders would be more than happy to write those loans. So the lender demand is there. That's recovered. Got it.

And then just looking at profit segment margins kind of by major business as you break them out. know they're softer there's some challenges out there is any of that due to investments you're making or would you attribute it to competition and challenges in the marketplace and whatnot how would you allocate between those two.

I would say, good question, I appreciate it. I think there's a little bit of both. I would say there is investments. Like we are, I'll start with business development traffic has been a big focus area of ours. And we have, I don't have the exact stats in front of me, but we have grown that quite a bit. Our focus in 2026 is really just about growing the relationships and growing the revenue in our business development partnerships. We have not been focused much at all on the VMM or VMD perspective on the business development front.

We've had a lot of success on bringing in a lot of good partners and doing a lot of business. and our partners are telling us that we generally out-monetize other partners they were previously using. So we're very excited about that, and we think that will be a big part of our business over the next couple years. We'll probably focus more on VMD and margin in 27 and beyond in that area. So that's definitely a big part of it. a big part of it from the overall margin profile. And then the other part of it is, yes, there is, there's definitely like insurance, for example, there's really high competition out there right now. And it's not just our competitors, it's like the carriers themselves are advertising everywhere. It is a reflection, lower margins at some level are a reflection of everyone's out there getting in front of consumers.

Overall, we just want our cost of traffic to grow at a smaller rate than the revenue on our traffic at the end of the day. But yes, it is fair to say that. Google marketplaces, for example, are more expensive today than they were a year ago.

Got it. Lastly, any learnings on the AI side over the last 90 days that you want to share? Could you be a little more specific with that question? I'm just asking because there's always all sorts of routes we can go with AI. I guess what's most meaningful for you over the last 90 days? There's a couple. You got a bunch of slides on it. Educate us a little bit.

Yes, I would say there's – is there – you know, kind of the two ways that I look at AI is you've got operational efficiency and you've got consumer-facing AI. And so from operational efficiency, you know, I – The lots, I mean, I don't know if I would say learnings. I mean, it's becoming more and more effective for us. We've learned a lot, like one of our learnings, for example, which was big focus for the first six months of the year, is for AI to be really effective for internal operations, your data really has to be structured in a really good way. And your naming commissions have to be right. You need to really try the AI agents to understand all the vernacular, like a business and business people use on a day-to-day operations of a specific business. And so we have spent a lot of time building and structuring our data in the right way, committing a lot of energy and effort to doing that right, and now we're starting to see really significant benefits out of making sure we've structured our data in the right way for the use of AI agents.

That's been one big learning there. Another big learning, and you probably have heard this on a macro level, is just the cost of AI, the cost of token usage is going up up and up. We're a type of company where we want anyone and everyone within the company that has useful use for AI to be able to use it. We probably use four or five different AI platforms that people have access to. One of the learnings though, I think we've learned use the right model for the right thing. And that's where we track use and cost and expense. And we found there's a lot of things that maybe you're using an expensive frontier model on that you could be using a much cheaper model for.

You know, like my head of technology, we were talking, you know, theoretically like 90 plus percent of internal operational efficiency. So you can be using a much cheaper AI model that you don't need the really expensive frontier models on. So that's a learning and we've got good dashboards where we track it and if someone's spending a lot of money on tokens, it throws a flag up to at least have the confidence conversation of what's the business case of this usage. And if it's a good case, let's keep doing it. If it's not a good case, let's either find a cheaper model or not do it. You know, SaaS learnings are... On the consumer side, you know, there's been lots of learnings we've had. Like, for example, we've learned that, like, LLM chat tools as far as a way to have the consumer shop.

Consumers often don't like engaging with that just as more as a simple funnel. We've learned that AI overviews, like I talked about earlier, are highly effective of like, okay, you fill out your form, you've maybe you're sitting on 30 or 40% loan offers but let me just give you a paragraph at the top that just gives you the high level of like okay this company has the lowest interest rate this company will offer you the most money you know this this company will give you the lowest monthly payment because they'll give you the longest term loan and and that makes it just easier for the consumer to have more confidence in of the type of companies they want to apply to. And then the final thing I'd hit on, I don't want to drag this on forever, but like, you know, I think using AI as a tool communication tool with the consumer is very exciting. So, for example, like we just develop a lead instead of sending that lead out five times and having five different brokers call a consumer a bunch. It's like first have that, whether it's voice or text or email, have that AI agent engage and communicate with the consumer a little bit first to get a little further detail on, okay, what exactly are you fitting for? What's the right fit for you? and then directing that person to the one or two companies that are the best fit. And that's a dramatically better consumer experience, and it's a really useful way to use AI from a consumer-facing perspective.

Well, thanks, Dave. Those are all helpful. Thank you. Yes. All right. I'm not showing any further questions at this time. I'll turn the call back over to Scott for any further remarks.

All right, just in closing, we're very excited where we're at for the business, both just operations on our current core business and also our North Star strategy. We put that North Star together at the end of last year, did a lot of organization work. shifting in the first quarter to make sure that our teams were oriented around being able to produce along the North Star. I think Q2 was really the first quarter where we really saw the velocity of long-term strategic initiatives, AI initiatives getting rolled out. We fully expect the velocity of that to keep increasing throughout the second half of the year. So we're really excited about transforming this business over the next few years and having much higher return customers, referred customers, and active login users. With that, thank you. Talk to you all next quarter.

Thank you, ladies and gentlemen. So, that's going to conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good day, and thank you for standing by. Welcome to the LendingTree, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Andrew Wessel, Head of Investor Relations. Please go ahead.

Thank you, Kelly, and hello to everyone joining us on the call to discuss our first quarter 2026 financial results. On with us today are Scott Peyree, our President and CEO; and Jason Bengel, our CFO. This afternoon, we posted a detailed letter to shareholders on our Investor Relations website. We have also posted a new investor presentation that we would encourage everyone to look at, on our website.

For the purposes of today's discussion, we will assume that listeners have gone through those materials and we'll focus on Q&A. Before I hand over the call to Scott for his remarks, I'll remind everyone that during this call, we may discuss LendingTree's expectations for future performance.

Any forward-looking statements that we make are subject to risks and uncertainties. And LendingTree's actual results could differ materially from the views expressed today. Many, but not all of the risks we face are described in our periodic reports filed with the SEC.

We will also discuss a variety of non-GAAP measures on the call. And I refer you to today's press release and shareholder letter, both available on our website for comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP.

And with that, Scott, please go ahead.

Thanks, Andrew, and I appreciate everyone joining us on the call today. I'm going to start with some highlights from our first quarter results and then spend a few minutes on how we're executing on our strategy before opening up the line for questions. We've posted an updated presentation on our Investor Relations website that goes deeper on some of the remarks I have today.

We had an exceptional start to the year. Adjusted EBITDA grew 71% year-over-year on a 37% increase in revenue, driven by a very strong performance in our Insurance segment and a healthy contribution from Consumer. We had a record revenue quarter. And it was the highest quarterly adjusted EBITDA we've had in 6 years.

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

Stepping back, what these results reinforces is the strength of our model. We operate a high-margin, asset-light marketplace with a scalable cost structure. And we are demonstrating meaningful operating leverage as we grow. That combination, strong growth and expanding margin is core to our investment proposition.

Turning to our segments. Insurance continues to lead the way. Revenue and segment profit both achieved new records in the quarter, growing 51% and 50%, respectively, year-over-year. We are now the largest marketplace for consumers to shop for their insurance needs, be that auto, home, health, or other products.

Our scale with our largest carriers, combined with growing demand from mid-sized insurers competing for market share provides our network with unparalleled depth and breadth. That translates into better outcomes for consumers and optimizes our monetization.

Looking ahead, we expect price decreases in auto insurance across select states to further stimulate shopping activity and competition amongst carriers, which should support continued momentum. It is becoming clear and clear that the PMC industry has entered into a period of strong health and stability.

In Consumer, we delivered another quarter of healthy growth, led by small business lending. Revenue increased 49% year-over-year. As the quarter progressed, we did begin to see some softening in consumer demand for loans. We believe this is tied to the broader macro dynamics, including elevated tax refunds earlier in the year and more recently, a decline in consumer sentiment, which reached historically low levels in April. We are seeing similar patterns from small business borrowers as well.

While we are mindful of these near-term headwinds, we remain confident in the long-term growth opportunity in consumer. As broader macro uncertainty begins to normalize, we expect demand to recover and credit supply to be ample. In the meantime, we continue to invest in our small business concierge capabilities, which remains a key differentiator in driving conversion and customer satisfaction.

Home remains pressured by elevated mortgage rates. But we continue to view the current level of revenue and profit as cyclical lows. And we have meaningful upside as rates normalize and transaction volumes recover. After making a dedicated marketing investment during the first quarter, we expect revenue growth will continue and margins should expand in Q2.

Unlike most of our competitors that over-index to specific verticals, we lead with our diversified platform. Each of our operating segments has unique macroeconomic drivers. Insurance cycles tend to be uncorrelated with changes in interest rates and benefit from long-term secular shift towards digital acquisition.

Our Consumer segment is most closely tied to credit availability, while Home is most highly tied to rate and interest rates and tied to the mortgage cycles. This diversification enables us to navigate varying market and economic cycles while still offering a clear path to growth.

At the midpoint of our updated '26 outlook, adjusted EBITDA is running at a 3-year compound annual growth rate of 26%. We believe this growth profile, combined with our advantaged margin structure and capital efficiency are unique and valuable components of our business model.

Now, I'd like to provide an update on execution against our strategy. As a reminder, our North Star is to be the #1 destination to shop for financial products. Everything we do is anchored in that objective, which is focused on 4 pillars: Accelerating the core business, improving the consumer experience, expanding our product offerings, and rebuilding our brand.

At the heart of this strategy is a simple idea. If we deliver a better experience and build stronger brand awareness, we increase organic traffic, improve conversion, and drive better unit economics across the platform.

On the Consumer side, a compelling brand promise brings users into our ecosystem. We deliver an easy and memorable experience that helps them accomplish what they came to do, which improves satisfaction, repeat usage and referrals. That increases lifetime value while reducing customer acquisition costs.

On the partner side, more high-intent traffic leads to more monetization opportunities. As partners see better outcomes, they deepen integrations, increase spend, and compete more aggressively within our marketplace, which further improves pricing and selection for our consumers.

One of the clearest opportunities we see in shifting more of our traffic mix -- is shifting more of our traffic mix towards organic channels. Every 5-point increase in organic revenue mix represents about $40 million of incremental segment profit and roughly 400 basis point uplift in our variable marketing margin. This is the economic opportunity we're actively investing into through improvements in consumer experience that drive repeat visits and brand initiatives that increase unaided awareness.

AI is a critical enabler across all of these efforts. We understand investor focus on AI and its potential impact to our business. Our view is very clear. AI is a tailwind, not a disruptor. AI is changing how consumers discover information, but it is not changing how financial products are ultimately purchased. These are complex, highly regulated transactions that require trust, compliance, identity verification, and deep integration with providers.

In that context, marketplaces like ours become even more important. AI can guide consumers, but it cannot complete the transaction. It cannot underwrite a loan, find an insurance policy, or securely handle sensitive financial data across multiple providers. That is where our platform plays a critical role.

We are leaning into this shift. We are using AI to improve every stage of the consumer journey from personalized engagement and financial guidance to smarter matching and more efficient application handoffs. At the same time, we are deploying AI internally to drive efficiency across marketing, sales, and operations.

During the quarter, we launched an internally developed AI agent for our search marketing team that provides real-time optimization insights. Based on early success, we are expanding this capability across additional channels and into our sales organization. We are also continuing to see strong results from AI-powered voice tools in our call centers and are extending those capabilities into outbound and SMS engagement as well. Taken together, these initiatives are improving conversion, reducing costs, and reinforcing our role as the transaction layer in the financial ecosystem.

To wrap up, we believe our investment proposition is compelling. We are a high-margin asset-light marketplace with proven operating leverage. We have multiple growth engines with embedded upside across insurance, consumer, and home. We have a strengthened balance sheet that provides flexibility and resilience. And we are leveraging AI to enhance our platform.

We're encouraged by our strong results to start the year and remain confident in both our strategy and our ability to execute. While we are mindful of near-term macro headwinds, we believe we are well positioned to deliver durable growth and increased profitability over time.

With that, I'll pause here and open the line for questions.

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

Congrats on a strong start to the year. I guess just to maybe start on the slowdown, Scott, that you're highlighting in consumer loan demand, I guess, not all that surprising given the geopolitical backdrop. But just wanted to put a finer point around that, whether it's also being accompanied by tightening credit boxes at your partners? And is there any way to quantify the impact that you're baking into the guidance incorporating this new backdrop?

Yes. I mean maybe I'll have Jason talk to the exact quantifying, which is kind of hard during these wild geopolitical times we're in right now. But I mean, I would say, just on the credit availability side, we haven't seen as much impact on credit availability, especially, for example, like on the consumer -- the personal loan business. It's more have been around consumer shopping behavior.

And again, with consumer sentiment at all-time low, gas prices at an all-time high, a bunch of consumers getting extra tax refunds in kind of the February-March time frame. We just saw demand drop off for personal loans for many of those reasons. It has -- we have seen a start to increase again in April, which is good. But it is still -- is below what we would expect seasonal shopping behavior to be in Q2 at this point in time.

But it's definitely off of the March lows. When the war started in March, the gas prices went way up. That was kind of a shock to the system in that month specifically.

Now, on the small business lending side, I would say, we're seeing a little bit of both, where you're seeing fewer merchants, small merchants look for loans. And the size of loans that they're looking for is lower than normal. But we're also seeing on the lender side, a little bit of -- there's still -- the credit is still available. But it's typically they're offering lower loan amounts at higher interest rates.

And so when you have a cautious merchant to begin with. And then they're not getting the exact loan they want. It's a little bit higher interest rate. They're just -- it's just the sense that we're getting is they're just not as urgently looking for money right now because of macro geopolitical stuff that's going on.

But I still think -- I think this is a short-term thing that will go away. And once consumer sentiment comes back up, hopefully, things settle down geopolitically, I think we'll just be right back off to the races.

Yes. And I can...

And I can maybe just turn to guide a little.

Sorry, go ahead, Jason.

Oh, sorry, go ahead.

No, please finish.

Just with respect to the guide, like Scott said, January and February, we were doing really well. It was very strong. But then March and April, we did see headwinds, right? Like this is -- there's a lot of things we're talking about. With SMB, like Scott said, we did see decline in appetite from both merchants and lenders. And that resulted in the decrease in close rate, which has the effect of decreasing our RPL.

So coming out of the end of Q1, we did see a downward trend. And so normally, what we expect to see is Q2 and Q3 is the strongest in Consumer. That's just typical seasonality. But where consumer sentiment is now at record lows and elevated gas prices, like we said, what we're assuming in the guide is just conservative.

We're assuming very, very muted seasonality with the possibility of further credit tightening out there. So we're being very conservative. We're not hearing anything from our partners that would indicate more tightening. But we're just really assuming much more muted seasonality than we otherwise would.

And then, I guess, turning to insurance. If you can just elaborate on what you are seeing for run rate trends there and your expectations for the balance of the year. And in particular, I think last quarter, you had called out some nice stats around just the diversification of the carrier spend on the platform and the growth you are seeing from the #4 plus partners on the marketplace. So if you can provide any updated stats there, that would be helpful.

So yes, I mean, I'll let Scott speak to some of the Q1 records that we're seeing. We had some great performance in Q1. Like we talked about on the last call, Q1 Insurance performance was incredibly strong. Our prior record in Q4 was $48 million of VMD. You can see we beat that by a large margin, 20% or up $10 million.

So we did see that normalized a bit coming out of Q1, which we expected. But going forward, we still expect to be materially ahead of that prior record. So this really goes to the benefit of having a diversified product portfolio, right? Like where we're seeing some headwinds in consumer that we hope will abate.

Insurance, the backdrop is still very, very strong. Insurance carrier profitability is very, very high, and competition seems to be increasing at a rapid pace. So going forward, Q1 is not -- it is going to normalize a bit, but it's still going to be performing at very, very strong levels.

Yes. And just to add in there, just at a high level, the carrier demand just remains extremely strong. We've had even towards the end of the quarter, heading into Q2, there was a carrier that hadn't worked with in a long time, came back on the network, spending a decent amount of money.

Another carrier that historically spends pretty small amounts of money, increased their budget pretty dramatically. Another carrier that typically just buys one of our products. We've got a lead click and call product. They expanded and started buying another product to try to access like a higher overall quantity of our consumers.

So it's just a very, very healthy competitive marketplace in Insurance right now, which just makes it better and better for consumer choice, which helps drive further shopping as good consumer choice is there.

Another thing I'd throw in was health insurance was a very pleasant surprise for us in Q1. And we attribute a lot of that to a lot of the COVID health insurance subsidies that a lot of people were getting started coming to an end in Q1. And it was a surprising large amount of consumers who were out just shopping for health insurance and coming through our network and that was a very pleasant surprise for us in Q1.

Heading in, I think, as Jason said, we dramatically outperformed what our forecast and expectations were for Q1. So Q2, we're not expecting it to be at those same levels. And a little bit of it is also, if you look at seasonality, consumer shopping behavior for Insurance products come down a little bit in Q2. But I mean, big picture, very healthy marketplace. And we continue to expect Insurance to grow year-over-year for the indefinite future.

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

This is Owen on for Mike. In the Home section segment, sorry, you mentioned investing more aggressively in that higher-quality traffic despite the elevated mortgage rates and competitive marketing conditions. I guess how should we think about the balance between protecting margins versus continuing to invest through this weaker housing backdrop?

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

But you still have to -- like it means that you're fighting -- all of the companies in the industry are fighting over a smaller number of consumers that are out there shopping. But the advantage of us being diversified in insurance and consumer lending that are doing very well. That means we can invest and fight extra hard for that high-quality traffic because bottom line, we are continuing to grow our lender network. I mean that's actually one of our strategic focuses is to really grow a lot of our small and medium-sized brokers in the mortgage world. And that means you just need to be able to deliver quantity, as much high-quality consumers as you can. And they're out there.

And I think we did a successful job of testing into a few areas that now we know heading into Q2 and beyond. We have an idea of like, okay, what is it going to take to win in these certain areas long-term. Some of them are sustainable. That's why you're seeing revenue continue to go up with the margins will go up in Q2. Some of them we had to step back from. But we have a lot of knowledge now of like, okay, this is what it's going to take to grow that.

But I mean, bottom line, we need to be prepared. We need to have a big distribution and client network when the mortgage industry turns around to be able to have the revenue grow really rapidly. And so that's a big part of how we're supporting the platform right now.

And then lastly for me, the homepage redesign metrics you disclosed were pretty impressive. How early are these results? And where do you still see the biggest opportunities to improve that funnel conversion and personalization across the marketplace?

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

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

And we're just -- I think this is in -- this is some of our research we had in the LLM world and whatnot, this is a better approach at the end of the day. That's going to help us win that organic traffic long-term and create a much more sticky consumer that lands on our site and is getting valuable information from us versus just like having immediately being pushed through a funnel.

So we're very excited with how well that's performed. And also, as we're looking to do more proactively do some brand advertising in the second half of this year. It's also exciting to see how rolling out some of that messaging on the homepage has landed so well with consumers.

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

All right. That was pretty short and sweet. Thank you, everyone, for joining. Just to reiterate, we're very excited about the results of the first quarter. Also very excited with all the strategic areas we're focusing on and how that's going to help this company continue to grow at a high rate over the next few years. With that, have a good day, everyone.

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

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

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

Before I hand the call over to Scott for his remarks, I remind everyone that during this call, we may discuss LendingTree's expectations for future performance. Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's actual results could differ materially from the views expressed today.

Many but not all of the risks we face are described in our periodic reports filed with the SEC. We will also discuss a variety of non-GAAP measures on the call, and I refer you to today's press release and shareholder letter, both available on our website for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP. And with that, Scott, please go ahead. .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Just we kind of...

[indiscernible] this period.

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

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

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

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

And can I just sneak 1 more in?

Sure.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Before I hand the call over to Scott for his remarks, I remind everyone that during this call, we may discuss LendingTree's expectations for future performance. Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's actual results could differ materially from the views expressed today. Many but not all of the risks we face are described in our periodic reports filed with the SEC.

We will also discuss a variety of non-GAAP measures on the call. And I refer you to today's press release and shareholder letter, both available on our website for the comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP.

And with that, Scott, please go ahead.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We are happy to open the line to your questions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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