Good day and thank you for standing by. Welcome to LendingTree, Inc.'s third quarter 2026 earnings 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 will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. 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 those risks we face are described in our periodic reports filed with the SEC. We'll 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. So 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 Thank you for joining us. As we expected and communicated in the Q2 earnings calls, 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 two best SMB concierge sales months 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 our 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 a 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 and HELOC have become a major part of that business, and that business is much less interest rate sensitive than purchase or refinance mortgage. And so we believe heading into the next year, we can continue to see growth in the home equity side of that business. On the North Star strategy, execution continued and stays strong. Just to remind everyone, our big focus is on return customers, referred customers, and login user growth. On the login 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 login 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, you know, the shopping experience, the Suzy experience, as we call it internally, which is just to transform and dramatically improve the Suzy experience, we're very happy with improvements we're making there. For example, voice and text AI, we're continuing 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 that are 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 login users to now all of our branded LendingTree.com users. We're looking to roll out new versions of it for personal loans. They're 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 engagements from the consumers there. Our plan is, as we get into 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, you know, there's been a lot of conversations that I've had, and I'm sure questions will come up here, so I'll just preemptively talk about it a little bit. It's 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. You know, 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 than we have the threat of losing traffic to LLMs 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. were 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 a 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 as just like a pie of consumers, all of the LLMs added up together are 5% of the search buckets. and as we've seen like which gets a lot of media like when new when new items come out like news what we're seeing is they're taking share away from the other LLMs much more so than they're taking share away from like a Google AI overview search search result um 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 uh 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 three quarters of these only quote via backend 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, yeah, that's true to some extent, but it's very limited in most of the industries we're in where they could 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 floating via AI agents. For example, why wouldn't an LLM agent, EG Muse, 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 agent 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, you know, 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 the any time in the near future. So just to round it 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. You know, whether it's consumers using our web-based platforms to shop, whether it's LLMs or other agentic AIs accessing our specialty AI agents to shop, or whether it's logged-in members that get the benefit of our agentic AI doing Thank you. Thank you, Scott.

I think it's useful just to take a step back. And when you look at the midpoint of our guide versus 2023, you know, you're looking at a 25% EBITDA CAGR. You're looking at expenses with a 3% CAGR, you know, 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, but we're still growing 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. 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, just averaging the peak in 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, approaching pretty close to our $200 million longer-term goal. You'll see in our financials, we did take a non-cash 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 30th. resulted in the charge. This doesn't reflect the change in our expectations for these segments, but it does reflect a market cap that implies a free cash flow yield X litigation north of 25%. So we see the attractiveness in these numbers. We see the attractiveness and the upside on 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.

Thank you.

At this time, we will conduct the question and answer session. To ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jed Kelly from Oppenheimer & Co. Jed, your line is now open.

Hey, great. Thanks for taking my question. Just diving into insurance, I think one of your competitors last night said they expect this soft market cycle or favorable profitability cycle to continue potentially into 28, 29. are you seeing like the same thing and you just have like a good multi-year visibility into insurance over the next couple of years? Thanks.

Yeah, 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 It's easier to look out long-term and project continued long-term growth today than almost has ever been. Not that there can't be a big turn where inflation goes way up again, which could affect the insurance companies, or they start giving some rate back to the consumers, which affects their profitability, but Yeah, 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. Yeah, I would say... 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 old, 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 Great. And then, you know,

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 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 harness this technology? Thanks.

Yeah, I mean, it's, you know, we're not, we're still in the 2027 planning phases, I guess. So it's hard to put out, you know, 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, you know, how we run marketing and, you know, 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's possible that, you know, as we move into 2027, we do wind up investing more in AI, but we would expect, you know, an outsized increase in productivity moving forward.

Thank you, and good course. Yeah, and I would just add in there, yeah, it's a little bit of, like, there's areas we're going to invest into.

Like, data is a critically important area to have, you know, quality of data infrastructure for AI to work effectively.

Logged-in experience, like I was saying. But just like everyone said, 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 efficiency. So it kind of levels out to some extent when you look at it that way.

Thank you. Thank you.

Our next question comes from the line of Yousef Squali from Truist. Yousef, your line is now open.

Great. Thank you so much. Scott, I was intrigued by your comment 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 What kind of feedback are you getting from them? What kind of reception are you getting from them?

Yeah, 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, you know, they're trying to be directional, like, okay, here's where we believe, you know, the AI is finding value and not finding value. There's definitely a number of, like, and it's more of a recent thing, you know, a number of, I guess I call them internet protocols are starting to be developed that makes it easier for, like, AI agents to communicate with companies like ours. I think the fact that we're making sure we're building our platforms to be able to easily communicate with LLM agents, because not everyone's going to be doing that, obviously. Not that we're the only ones doing it, but the group of us are going to be front-end doing that. We'll do it. 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 two sub-segments, 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, you know, these and still the headwinds ahead, you know, X may be just rates, which God knows what's going to happen there.

Yeah, I mean, I'll start and then, you know, Scott can chime in here. But, I mean, like I said, we're still a little early in our planning for 2027. So we're not, you know, we're not putting out guidance or numbers really at this point, but just, you know, thinking about the backdrop. Like Scott said, insurance, you know, we expect continued challenge for a while. You know, combined ratios are still very low. I think carriers are going to very carefully manage those combined ratios. Pet of investment is very high. And so, you know, I think we'll have a very favorable environment in insurance moving into 2027 and beyond. Home, you know, like you said, it's a bit more challenging, right? Like it's, you know, mortgage is in a hard spot. You know, the home market you know home sales are at you know very very low level I want to say 20 40 year low so it's hard to be you know excited about mortgage but you know at this point home is really driven by home equity and you know there are record home equity balances and people are you know renovating their homes so like there's there's a real opportunity within home equity to drive growth I guess I would say you know 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.

Yeah, then I would just add in briefly, you know, small business, if it continues to recover, I mean, that's a big wild card. If it gets back to where it was in Q4, Q1 this past year, which it very well could, that would be major growth in and of itself. So that's something we're excited about. And then, as I said before, a real focus on getting more and more users to sign up to become logged in members of LendingTree and active users, which increases our long-term value, decreases our cost of acquisition over the long run. Those are major metrics. So if we can start showing, improving out those metrics, that will have a significant impact, not only on profitability, but just Thank you both.

Thank you. Our next question comes from the line of Ryan Tomasello from KBW. Ryan, your line is now open.

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 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. Thanks.

Yeah, I'll hit on it. There's basically two ways. We think there's the ability to grow a lot of organic traffic by a number of the things we're building in the logging 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 login members. And I would say we're pretty excited about our ability to onboard members. And so then you've 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 nine months and we'll probably continue investing even more heavily in that to just really get to have really good platforms and 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 to 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.

Yeah, I would say, so in Q2, the biggest drivers were you had bad, or at least early Q2, bad lender sentiment, and mainly because these lenders have written a lot of loans. In the previous like six to nine months, and they just kind of wanted to, you know, the Iran war started, etc. They just wanted to take a timeout to make sure the loans were performing. And then you had bad merchant sentiment, which, you know, a lot of it was, you know, gas prices and the Iran war and stuff. And I think small, 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 offering loans at the same rate and term that we were a year ago. That's fully recovered. 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 Q4, Q1 peaks. and then the average size of loan is a little lighter. And we just feel that 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, you know, 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 How far below you are on those take rates and average loan sizes?

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

Great. Thanks for the call, guys. Yep.

Thank you.

Our next question comes from the line of Danny Pfeiffer from JPMorgan. Danny, your line is now open.

Hey, thanks for the questions. 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 agents and where LendingTree might fit in that equation? And then 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 size, return frequency, or monetization? Thanks.

I'll start with the first part of the question, just with the insurance carriers. And I would say, yeah, insurance carriers, historically, 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, you know, given rate and it's like everyone has to lowball on the upfront rate. If you rewind the insurance industry like 30 years ago, it was a similar problem where they, you know, they were more opposed to the rates, but then it was just they had to lowball for the first six months and then jack everyone's insurance rate up by 50% after six months. Horrible consumer experience. They don't want to get back to that world, and they've made it very clear. So when they look at some of these agents like Amuse 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 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 as they're 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 yours. We're more than happy. show rates and let you do secret shopping and provide a lot of value that way. And that's a perfect example of where I think our platform as 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.

What was your second question?

Yeah, and maybe on a second, if you could provide any stats or anything on the login user base in terms of anything like the size or return frequency or monetization.

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

Got it. Thank you.

Just for competitive reasons.

Thank you.

Our next question comes from the line of Mike Grondahl from Northland. Mike, your line is now open.

Hey, guys. Thanks. You know, 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 a business line you hadn't expected earlier in the year. Just trying to get a feel for how you're thinking about that 4Q.

Yeah, I can start and then Scott will chime in. I mean, you know, just go segment by segment. I guess like home, you know, 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, you know, 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 is probably 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 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 seemed like you signaled you're going to be engaging in that here in 4Q. Is there one or two 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 is You've got your arms around really tight with, you know, inflation growth. Help us think about your kind of appetite for buyback and, you know, amongst those metrics.

Yeah, I mean, yeah, we're looking at, you know, a lot of things. You know, we've declared our target debt levels $200 million. In, you know, last quarter, we were sitting on $397 million of gross debt. in a rising interest rate environment relative to our 200 targets. 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. 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 and a couple of years to get there, but congratulations, guys.

Thanks. 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

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