LendingTree, Inc. Second Quarter 2026 Earnings

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 flattened 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 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. So that helps us in the partner demand, but it does pressure immediate costs. And so, that's 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 to go out forward.

And this is Scott, just to add on there, you know, as we've always historically been, our first goal on insurance of this growth is like overall vmd growth and and that's 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 keep growth next year and then and also as we've 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 doesn't it will inevitably affect the overall margins in the consumer business I appreciate all that color, guys.

Maybe just double clicking on insurance. Scott, 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 rate 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, you know, 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, you know, we might start to see those signals emerging. Thanks.

Okay. Yeah. So just to hit on a few of those, I mean, I would start like Starting with the leading indicators from a macro level, you would first start at the top level of just the insurance industry profitability in general. There's a number of massive public companies out there, so you have a very good outlook into what the general profitability of the business is. It is a very stable, profitable environment. And then the secondary signals below that, I would say if you're seeing trends of carriers either increasing pricing, 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. So, you know, as I've said in an earlier call, 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 to the point where insurance is healthy and, you know, they're offering insurance policies to everyone. So now we'll be looking at indicators of coming up in the next year or two. or 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 so it's 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 through our network, which I think we're very good at doing.

VMM.

Oh, and then the VMM margins. Yeah, I would say, like I said, first, our primary goal is V&D. Like, some of these carriers, just the dollars they're spending are so high and growing so fast. You're starting with overall V&D and you want to make sure you're providing the best highest quality product to them. So I would say as we look at this, since this is just still in such a growth mode as we're looking through the second half of the year, yeah, I would expect margins to be probably similar to where they're at in Q2 with V&D hopefully growing a little bit sequentially. And, yeah, and, you know, and, again, I think it's kind of when that super high revenue growth levels out is when you really start leaning into more of the BMM growth. But I think we're going to see strong revenue growth throughout the rest of the tier in insurance. Hopefully that answers all your questions.

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, you know, we're kind of trying to track the health of like your small business 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 circling around your personal loans, you know, some of the bank earnings we've heard and the health of the consumer, it seems pretty stable. So can you just talk about where we are with personal loans and then have a follow-up?

Okay, yeah, Jet. 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 like a lot of these smaller and medium-sized businesses, you know, they're kind of on the front lines of when you're seeing, you know, consumer sentiment change, you know, and people complaining about gas prices and maybe, you know, tightening their wallets on stuff they might spend with a lot of 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 $100,000 on that capital equipment, you know, that maybe I won't, or at least, I shouldn't say won't, it's like hold off on. That's why we call it temporary, because 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 macro sentiment of like, maybe I'll just hold off or 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 aren't in some major war, et cetera, et cetera. So, that's where I say it. That's where we have – I mean, and this isn't just us alone. This is, like, all of our big clients, lenders in the small lending space, you know, some of our competitors slash frenemies. I mean, you know, I think everyone's seen a lot of the softness in Q2, but everyone just believes it's going to come roaring back here sooner rather than later. And then I can just – yeah.

Sorry, I was just going to tack on with PL. 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 PL moving sequentially.

Got it. And then just as a follow-up, 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? Thanks.

Yeah. So, with Google, you know, 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 are, you know, 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. And we continue to pay Google for advertising today. 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 10K 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-affected 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 Rondahl with Northland.

Your line is open. 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 and secondly related to that it sounds like lender demand, you know, I don't know if the word is collapsed, 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?

Yeah. So, you know, it's really two factors that happened. It was both on the lender side and on what we call the merchant side. So, you know, the small businesses looking for cash. We call those merchants. So what really happened was lenders pulled back and they tightened their criteria. They would offer a higher rate for the same loan amount or just 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, you know, also in the form of close rate. So we call it booking rate. 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 recover that should provide. And when it does, we fully expect that it will. And when it does, 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 And PL performing fairly well sequentially.

Yeah, so just to put a button in that, we could use significant loan growth, 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, you know, just looking at, you know, profit segment margins kind of by major business as you break them out. you 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 a good question appreciate it and i think there's a little bit of both i would say there is investments like we are i'll start with, you know, business development traffic has been a big focus area of ours, and we

have, I don't have the exact stats in front of you, we have grown that quite a bit, but 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 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 that 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 from the overall margin profile. And then the other part of it is, yeah, 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. So it is a reflection, lower margins at some level are a reflection of everyone's out there getting in front of consumers. And it's like, you know, just 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, yeah, it is fair to say Google marketplaces, for example, are more expensive today than they were a year ago.

Got it. And 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 all sorts of routes we can go with AI.

Well, I guess what's most meaningful for you over the last 90 days? There's a couple – you've got a bunch of slides on it. You know, educate us a little bit.

Yeah, 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'd say learnings. I mean, it's becoming more and more effective for us. You know, we've learned a lot. Like one of our learnings, for example, which was a 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 train 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 and 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 warning, and you probably have heard this on a macro level, is just the cost of AI, the cost of token usage is going up and up. And 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. My head of technology, we were talking about it. It's theoretically like 90 plus percent of internal operational efficiency you could be using a much cheaper AI model that you don't need the really expensive frontier models on. So, you know, that's a learning, and we've got good dashboards where we track it, and like if someone's, you know, spending a lot of money on tokens, I mean, it throws a flag up to, like, at least have the conversation of, like, what's the business case of this usage, and if it's a good case, like, let's keep doing it. If it's not a good case, it's like, let's either find a cheaper model or not do it. You know, it's that for me there. 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, like, have the consumer shot. Consumers, you know, honestly don't like engaging with that just as more as a simple funnel. We've learned the AI overviews, like I talked about earlier, highly effective of, like, okay, you fill out your form. Maybe you're sitting on 30 or 40 personal 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, this company will give you the lowest monthly payment because they'll give you the longest term loan. And that makes it just easier for the consumer to have more confidence of the type of company they want to apply for. 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 communication tool with the consumer is very exciting. So, for example, like we 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, Tate. Those are all helpful. Thank you.

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 organizational 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 or so. 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. That's going to conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.