Exhibit 99.2

October 31, 2023

Fellow Shareholders:

Our company continues to generate strong adjusted EBITDA and free cashflow despite a difficult operating environment, allowing us to continue investing strategically ahead of the next economic cycle. We remain focused on expense discipline and optimizing execution across our core business to drive continued margin expansion. We believe that this work positions us for stronger financial results when the revenue environment begins to recover.

The markets we serve remained challenged in the third quarter, as rising interest rates and persistent inflation continue to hamper results at our lender and insurance partners. Consumer demand for loans and insurance remains high, but tighter overall financial conditions are pressuring our partners' ability to meet that demand.

During the quarter we successfully launched our rebranded and newly designed MyLendingTree customer app named Spring. The re-tooled experience provides more personalization based on consumer and lender preferences that we believe will help drive more tailored offers for our members and higher conversion for our partners. We have several enhancements in the development pipeline, with scheduled public launch by Q1.

We established our mortgage innovation lab during Q3. Staffed with a cross-functional team, the group is working on solutions to improve the customer experience throughout the mortgage application journey, and to help our partners close more loans. Given our leading position with consumers and partners in the mortgage industry, we are investing now to capitalize on an eventual recovery in the housing market.

We have also made steady progress reconfiguring our TreeQual platform, which was originally designed to match our authenticated MyLendingTree members with pre-approved credit card offers. Earlier this year we made the strategic decision to partner with a credit bureau to enable real-time credit decisioning for both authenticated and unauthenticated consumer traffic, while also providing enhanced fraud protection. Live testing with card issuers has already begun. We are excited about the opportunity this presents for our credit card business in 2024 and beyond.

Our third quarter adjusted EBITDA of $22 million, up 122% YoY, achieved the high end of our forecasted range. The sharp increase was driven by a $19 million decline in operating expenses from ongoing cost saving initiatives and a $16 million decrease in brand spend. Although revenue declined 35% YoY to $155 million, our variable marketing margin decreased 9% due to more efficient operating performance across segments.

We view the 14% adjusted EBITDA margin we earned in this challenging business environment as a testament to the strength of our business model and our commitment to expense discipline. Going forward

Q3.2023

1

we will continue to run the business with efficiency and capital discipline top of mind, while making small targeted investments to accelerate our revenue recovery when conditions eventually improve.

The current economic backdrop has negatively impacted our revenue for several quarters now, with successive Fed rate increases having their intended effect of tightening financial conditions. Consumers have remained consistent in their search for financial products, but the availability of credit has contracted. Lenders are less inclined to make loans in an environment with high inflation and a significantly increased cost of capital. Our team has responded by reducing expenses, driving efficiencies to improve segment margins, narrowing our growth initiatives to the most high conviction projects, and maintaining a significant cash balance to help address future debt maturities. Ultimately, we expect the benefit from this work will show up when the cycle turns through improving margins and higher revenue growth rates.

Thank you for your continued support.

Sincerely,

Doug Lebda

Trent Ziegler

Chairman & CEO

CFO

Q3.2023

2

SUMMARY CONSOLIDATED FINANCIALS

(millions, except per share amounts)

Total revenue

(Loss) income before income taxes Income tax benefit (expense)

Net (loss) income

Net (loss) income % of revenue

(Loss) income per share

Basic

Diluted

Variable marketing margin

Total revenue

Variable marketing expense (1) (2)

Variable marketing margin (2)

Variable marketing margin % of revenue (2)

Adjusted EBITDA (2)

Adjusted EBITDA % of revenue (2)

Adjusted net income (loss) (2)

Adjusted net income (loss) per share (2)

2023

2022

Y/Y

Q3

Q2

Q1

Q4

Q3

% Change

$

155.2

$

182.5

$

200.5

$

202.1

$

237.8

(35)%

$

(152.0)

$

0.1

$

13.9

$

(11.3)

$

(22.8)

(567)%

$

3.5

$

(0.2)

$

(0.4)

$

0.9

$

(135.9)

103%

$

(148.5)

$

(0.1)

$

13.5

$

(10.4)

$

(158.7)

6%

(96)%

-%

7%

(5)%

(67)%

$

(11.43)

$

(0.01)

$

1.05

$

(0.81)

$

(12.44)

$

(11.43)

$

(0.01)

$

1.04

$

(0.81)

$

(12.44)

$

155.2

$

182.5

$

200.5

$

202.1

$

237.8

(35)%

$

(87.5)

$

(106.0)

$

(124.4)

$

(124.0)

$

(163.1)

(46)%

$

67.7

$

76.5

$

76.1

$

78.1

$

74.7

(9)%

44%

42%

38%

39%

31%

$

21.8

$

26.7

$

14.5

$

16.7

$

9.8

122%

14%

15%

7%

8%

4%

$

7.9

$

14.7

$

3.2

$

4.9

$

(4.6)

272%

$

0.61

$

1.14

$

0.25

$

0.38

$

(0.36)

269%

  1. Represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related expenses. Excludes overhead, fixed costs and personnel-related expenses.
  2. Variable marketing expense, variable marketing margin, variable marketing margin % of revenue, adjusted EBITDA, adjusted EBITDA % of revenue, adjusted net income (loss) and adjusted net income (loss) per share are non-GAAP measures. Please see "LendingTree's Reconciliation of Non-GAAP Measures to GAAP" and "LendingTree's Principles of Financial Reporting" below for more information.

Q3.2023

3

Q3 2023 CONSOLIDATED RESULTS

Consolidated revenue of $155.2 million declined 35% over the prior year, driven by a 49% decline in Home revenue, a 22% decrease in Insurance revenue, and a 34% decline in Consumer.

We recorded a GAAP net loss of $(148.5) million or $(11.43) per diluted share. Included in that number is a $2.0 million restructuring and severance charge, primarily related to executive severance. During the quarter, we recorded an impairment charge on one of our investments in equity securities of $113.1 million and we recorded a goodwill impairment charge of $38.6 million related to our insurance reporting unit.

Variable Marketing Margin of $67.7 million declined 9% over prior year, due to the decline in revenue across all three operating segments, offset by improved segment profit margins in Insurance and Consumer.

Adjusted EBITDA was $21.8 million, a 14% margin on revenue.

Adjusted net income of $7.9 million translates to $0.61 per share.

Q3.2023

4

SEGMENT RESULTS

(millions)

Home (1)

Revenue

Segment profit

Segment profit % of revenue

Consumer (2)

Revenue

Segment profit

Segment profit % of revenue

Insurance (3)

Revenue

Segment profit

Segment profit % of revenue

Other Category (4)

Revenue (Loss) profit

Total

Revenue

Segment profit

Segment profit % of revenue

Brand marketing expense (5)

Variable marketing margin

Variable marketing margin % of revenue

2023

2022

Y/Y

Q3

Q2

Q1

Q4

Q3

% Change

$

33.4

$

41.6

$

43.7

$

48.6

$

64.9

(49)%

$

11.3

$

13.3

$

15.1

$

16.3

$

24.1

(53)%

34%

32%

35%

34%

37%

$

67.3

$

82.5

$

79.7

$

86.2

$

102.7

(34)%

$

34.4

$

40.7

$

34.9

$

41.7

$

45.8

(25)%

51%

49%

44%

48%

45%

$

54.5

$

58.4

$

77.1

$

67.0

$

70.2

(22)%

$

23.4

$

24.8

$

30.2

$

25.6

$

22.6

4%

43%

42%

39%

38%

32%

$

-

$

-

$

-

$

0.2

$

-

-%

$

-

$

(0.3)

$

(0.2)

$

(0.1)

$

(0.2)

100%

$

155.2

$

182.5

$

200.5

$

202.1

$

237.8

(35)%

$

69.1

$

78.5

$

80.0

$

83.4

$

92.3

(25)%

45%

43%

40%

41%

39%

$

(1.4)

$

(2.0)

$

(3.9)

$

(5.3)

$

(17.6)

(92)%

$

67.7

$

76.5

$

76.1

$

78.1

$

74.7

(9)%

44%

42%

38%

39%

31%

  1. The Home segment includes the following products: purchase mortgage, refinance mortgage, and home equity loans. We ceased offering reverse mortgage loans in Q4 2022.
  2. The Consumer segment includes the following products: credit cards, personal loans, small business loans, student loans, auto loans, deposit accounts, and debt settlement. We ceased offering credit repair with the closing of Ovation at the end of Q2 2023.
  3. The Insurance segment consists of insurance quote products and sales of insurance policies.
  4. The Other category primarily includes marketing revenue and related expenses not allocated to a specific segment.
  5. Brand marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related expenses that are not assignable to the segments' products. This measure excludes overhead, fixed costs and personnel-related expenses.

Q3.2023

5

HOME

Home segment revenue of $33.4 million and profit of $11.3 million were down 49% and 53% YoY, respectively. Lower close rates at our lenders increased their cost per funded loan, which in-turn pressures our revenue per lead, or RPL. Lower competition for digital advertising, which causes lower cost per lead, or CPL, helped offset most of our drop in pricing to generate a 34% segment margin, three points lower from a year ago. We continue to focus on driving CPL lower to improve efficiency while maintaining quality for our partners.

Home equity revenue was $20.1 million, a decline of 31% YoY. The Prime benchmark rate for home equity loans has climbed to 8.5% and is a typical rate for high quality borrowers, while lower credit score consumers expect to pay an additional mark-up. Although this cost of debt is lower than a personal loan or credit card, it still adds significant interest expense burden to already stretched household finances. As a result, we have seen customer demand for home equity loans recede the last few months.

Home equity loans remain the best opportunity for our lenders given the environment. The team has collaborated to cross-sell personal loan applicants who are homeowners and do not receive offers into home equity lenders. This solution can provide the consumer with access to funding and helps us maintain a robust home equity marketplace for our partners. Ultimately we believe the housing market will need to experience some combination of lower interest rates, lower home prices or more for sale inventory before the Home segment can sustainably improve performance.

CONSUMER

Our Consumer segment revenue of $67.3 million was down 34% YoY, while profit of $34.4 million was down 25%, as segment margin improved to 51% versus 45% a year ago.

Personal loans revenue of $26.5 million was down 30% YoY. We saw close rates decline modestly during the quarter, and expect this trend to continue in Q4 partially due to normal seasonality, but also as some lenders on our network have proactively tightened underwriting criteria further with the resumption of student loan payments in October. We are in the midst of multiple platform migrations that will enable more customization and optimization of personal lender offers on our platform. Our goal is to offer up the right options to the right customers at the right time to increase conversion rates which leads to incremental revenue based on our cost per funded loan model without incremental marketing costs.

Credit card generated Q3 revenue of $14.6 million, down 40% YoY. We have been increasingly strategic with our marketing spend, and have optimized our landing pages following our Lightspeed implementation to improve redirect and approval rate, which has led to improved margin performance.

Small business revenue also slowed from a year ago, decreasing 28%. A continuation of lower close rates due to tighter credit requirements at lenders remains the key headwind for the business. Not surprisingly, lenders are favoring business owners that have been operating for several years, have strong annual revenue generation and high credit scores. Competition for these borrowers remains strong, as does the cost to attract them to our platform. We have been working on several initiatives to solidify the business given the weaker economic backdrop. We also enhanced our application form by adding a connection to Plaid to enrich the applicants data for lenders, added four new lenders to our network to expand coverage, and have continued rightsizing affiliate partners based on cost and quality.

Q3.2023

6

INSURANCE

Revenue of $54.5 million was down 22% with segment profit of $23.4 million increasing 4% from the year ago period. Our carrier partners have been asking for and receiving successive price increases across most states over the last two years, as persistent loss cost inflation negatively impacted underwriting results. Recent commentary from carriers has been optimistic regarding marketing budgets as we enter 2024. The positive impact from premium increases on loss ratios, combined with broad declines in used car prices and other components of auto loss cost, should help our record volume of customers searching for auto insurance find an increasingly competitive partner marketplace moving into next year.

It appears inflationary pressure in the auto insurance market has abated. Specifically, used car prices tracked by the Manheim U.S. Used Vehicle Index has recorded YoY declines on a monthly basis dating back to September, 2022. Many carriers have also publicly commented that successive price increases over the last two years appear to have finally brought underwriting profitability closer to acceptable levels.

Segment margin improved to 43% in Q3, up 11 points from the year ago period. We have maintained a laser focus on efficiency and adapting to changing carrier needs throughout this hard market cycle. These efforts helped us control costs and improve quality despite industry profitability challenges.

During the quarter aggressive shopping from consumers resulted in all time high volume that increased 18% from Q3 2022. We continue to expand our network of local insurance agents which, coupled with the strong consumer demand, drove a 17% YoY increase in volume to local agents. Our non-P&C verticals, namely Medicare, Health and Life insurance, also generated a strong 32% YoY increase in volume.

We are encouraged by our ability to drive margin improvement and attract record consumer traffic. Coupled with the encouraging outlook from our carrier partners, we expect the business is well positioned to generate improved financial performance as we move into next year.

Q3.2023

7

SPRING (previously MyLendingTree)

The Spring membership base grew to 27.6 million at the end of Q3, increasing by 15% over the prior year period. We attribute $20.7 million of revenue in Q3 to registered Spring members across our platform, down 30.0% YoY. A decline in contribution from Mortgage accounted for most of the change.

We have re-platformed Spring to improve speed and allow us to build native app experiences for our members, which will allow us to create more engaging experiences for them as we roll-out new features. Our team also rebuilt Spring's analytics and reporting, allowing us better insight into how members are engaging with the experience.

We consider certain metrics related to Spring set forth below to help us evaluate our business and growth trends and assess operational efficiencies. The calculation of the metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts or investors.

(millions)

Spring

Cumulative Sign-ups(at quarter-end)

Revenue Contribution (1)

% of total revenue

2023

2022

Y/Y

Q3

Q2

Q1

Q4

Q3

% Change

27.6

26.9

25.8

24.8

23.9

15%

$ 20.7

$ 22.3

$ 19.6

$ 22.9

$

29.5

(30)%

13.3 %

12.2 %

9.8 %

11.3 %

12.4 %

  1. Includes revenue attributed to registered Spring members across the LendingTree platform, both in-App and outside of the App.

BALANCE SHEET & CASH FLOW

At quarter-end our cash balance grew to $176 million from $163 million in the second quarter. We continue to evaluate opportunities to repurchase our July, 2025 0.5% convertible notes at a discount, similar to the transaction we completed earlier this year. However, we remain disciplined on price given the low interest rate we pay on this debt relative to the current yield we earn on our cash. Management is focused on meeting this maturity in the most efficient way possible for shareholders.

During the quarter we generated $13 million of free cash flow (operating cash flow less capital expenditures). We believe our ability to continuously generate positive cash despite the significant revenue decline we have experienced is a testament to the flexibility of our business model and the level of fixed cost we have removed from the Company over the last year. For perspective, our headcount at the end of Q3 was down by over 30% from a year ago, and our fixed cost run-rate is now below 2019 levels. We expect the work we have done to right size our expense base will help generate strong operating leverage in an improving revenue environment.

Q3.2023

8

FINANCIAL OUTLOOK*

Today we are updating our outlook for full-year 2023.

  • Revenue of $670 - $680 million compared to the prior range of $680 - $700 million
  • Variable Marketing Margin of $275 - $285 million vs prior range of $275 - $290 million
  • Adjusted EBITDA of $74 - $80 million vs prior range of $70 - $80 million

Our updated outlook implies the following for fourth-quarter 2023:

  • Revenue: $132 - $142 million
  • Variable Marketing Margin: $55 - $65 million
  • Adjusted EBITDA: $11 - $17 million

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

Investor Relations:

investors@lendingtree.com

Media Relations:

press@lendingtree.com

Q3.2023

9

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

(in thousands, except per share amounts)

Revenue

$

155,188

$

237,836

$

538,149

$

782,937

Costs and expenses:

Cost of revenue (exclusive of depreciation and amortization shown

7,570

14,105

30,632

44,240

separately below) (1)

Selling and marketing expense (1)

97,244

176,875

350,420

565,569

General and administrative expense (1)

26,380

39,540

92,223

115,808

Product development (1)

10,840

14,043

36,096

42,413

Depreciation

4,760

5,274

14,239

15,024

Amortization of intangibles

1,981

6,582

6,012

21,574

Goodwill impairment

38,600

-

38,600

-

Restructuring and severance (1)

1,955

-

9,967

3,760

Litigation settlements and contingencies

(150)

(7)

350

(41)

Total costs and expenses

189,180

256,412

578,539

808,347

Operating loss

(33,992)

(18,576)

(40,390)

(25,410)

Other income (expense), net:

Interest (expense) income, net

(7,097)

(5,720)

10,992

(19,990)

Other (expense) income

(110,910)

1,523

(108,637)

1,806

Loss before income taxes

(151,999)

(22,773)

(138,035)

(43,594)

Income tax benefit (expense)

3,534

(135,911)

2,912

(133,954)

Net loss and comprehensive loss

$

(148,465)

$

(158,684)

$

(135,123)

$

(177,548)

Weighted average shares outstanding:

Basic

12,993

12,758

12,919

12,794

Diluted

12,993

12,758

12,919

12,794

Net loss per share:

Basic

$

(11.43)

$

(12.44)

$

(10.46)

$

(13.88)

Diluted

$

(11.43)

$

(12.44)

$

(10.46)

$

(13.88)

  1. Amounts include non-cash compensation, as follows:

Cost of revenue

$

66

$

417

$

311

$

1,252

Selling and marketing expense

1,127

2,198

4,207

6,522

General and administrative expense

5,828

11,212

19,721

32,685

Product development

1,571

1,748

4,760

6,448

Restructuring and severance

1,262

-

2,328

1,083

Q3.2023

10

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

LendingTree Inc. published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 11:15:45 UTC.