COO of LendingTree signals a shift in the insurance landscape

LendingTree hosted its Q3’23 earnings call on Oct 31, 2023.

The company’s insurance segment includes information tools and access to insurance quotes including auto, home, health, and medicare through which consumers are matched with insurance lead aggregators to obtain insurance offers, as well as insurance policies via its agency business. Its QuoteWizard business is one of the largest insurance comparison marketplaces and ValuePenguin is another site owned by LendingTree that offers insurance and financial products analysis.

Select highlights:

• Earned $22 million adjusted EBITDA in Q3 with a 14% operating margin.
• Maintained profitability.
• Implemented significant company changes, including leadership shifts.
• Reduced operating expenses by 30% due to management’s cost-saving initiatives.
• Redesigned product function with clear quarterly goals for transparency.
• Optimized the core marketplace business, emphasizing better monetization strategies.
• Launched live testing of the TreeQual platform with 6 credit card issuers. TreeQual offers full credit pre-qualification with fraud protection.
• Experienced growth in the credit card segment due to the Lightspeed implementation.
• Positive insurance outlook; gaining market share from competitors. “Our outlook for insurance has improved significantly over the last quarter. We know from publicly available data that we are taking share from competitors. Over a year ago, our team committed to delivering the highest quality volume in the face of reduced demand from carriers. That focus on quality and meeting each one of our insurance partners where they needed us most, drove those market share gains. Recent conversations with the marketing teams at large carriers reinforced that we are accounting for an increased portion of their budgets. The carriers also have indicated that underwriting results are supportive of increased marketing for customer acquisition, which we expect will be in the very near term. We aim to continue increasing our share of their growing budgets, which would provide a material uplift to our earnings profile.” – CEO Doug Lebda
• Over the past 18 months, there’s been a tightening in categories like personal and business loans.
• While monetization saw a decline, the company successfully maintained traffic and managed marketing costs.
• Despite the drop in revenue, consumer volume remained consistent.
• The company is now aiming to improve consumer monetization.
• Historically, they’ve been primarily product-focused, e.g., connecting those seeking personal loans directly to such products.
• They’re transitioning to a more versatile solution-based model, offering alternatives if a consumer can’t secure their initial choice, such as credit cards or home equity loans.
• They aim to provide various financial solutions for consumers in need of funds.
• The company’s advantage lies in having direct relationships across many financial sectors.
• Their objective is to enhance their cross-selling capabilities across multiple financial products.
• With improved monetization, the company can enhance its marketing strategies.
• Winds of change are apparent in the insurance industry. “… and there’s — definitely the winds are changing in the insurance industry.” – COO Scott Peyree
• In the recent months, multiple insurance clients indicate positive shifts.
• A major client plans to increase their budget significantly from January and expects it to grow throughout the year.
• Another major client, initially without a budget, now allocates funds for the last two months of the year.
• Several carriers feel increasingly profitable and confident.
• About four significant carriers have expanded their budgets or restarted previously halted ventures in the last three months.
• The trend is shifting from contraction to expansion in the industry.
• Feedback indicates the company outperforms competitors in market share and quality of service.
• The company is optimistic about securing a larger share of budgets as industry spending increases. “So we’re feeling really good about getting outsized pieces of budget as the money comes back.” – COO Scott Peyree