Lending Tree Reported Strong Q1 Results. Guides Higher for Q2

In contrast to what we are hearing from some other online lending platforms, Lending Tree (NASDAQ:TREE) reported strong Q1 results this morning. Earnings per share (EPS) came in at $0.76 topping the Capital IQ consensus number of $0.74/share.  The top line number was $94.7 versus the consensus estimate for revenue of $86.6million.  Lending Tree said mortgage products grew by 49% over same quarter year prior.  Non-Mortage products jumped by 186% to $39.7 million versus Q1 2015.  While the numbers were a clear “beat” the stock still suffered in a down market day.

doug lebdaDoub Lebda,Chairman and CEO, said they had an “outstanding start to the year.”

“Every lending category experienced both quarter-over-quarter and year-over-year growth, exceeding our guidance across the board. Mortgage performed exceptionally well with purchase and refinance each experiencing impressive growth, once again outpacing the overall mortgage market. In non-mortgage, the growth trajectory continued across all categories.  Personal loans, home equity and reverse mortgage each experienced triple-digit year over year growth and revenue from credit cards increased almost 40 times over the same quarter last year.  We are thrilled with this quarter’s results, and we are particularly excited about the long-term growth opportunities ahead,” stated Lebda.

The report by Lending Tree was in contrast to the other industry chatter alongside numbers delivered by OnDeck earlier this week. While very different types of platforms Lending Tree appeared to be better positioned to weather the stumbling economy – sufficiently enough to guide higher for the year. Lending Club, the doyenne of marketplace lending platforms, is scheduled to reveal Q1 results after the bell on May 9th.

Additional information below:

First Quarter 2016 Business Highlights

  • Revenue from mortgage products of $55.0 million represents an increase of 49% over first quarter 2015 and sequential growth of 17% compared to fourth quarter 2015.  These results reflect substantial growth in both new purchase and refinance and further demonstrate our ability to grow market share.  Mortgage originations nationwide increased 4% year over year and declined 14% sequentially, according toMortgage Bankers Association.
  • Revenue from non-mortgage products of $39.7 million in the first quarter represents an increase of 186% over the first quarter 2015 and now comprises 42% of total revenue.
  • Notably, revenue from all of our lending categories grew compared to both the prior year and prior quarter periods.
  • Enrollment growth in My LendingTree continued, as more than 3 million consumers have now joined the My LendingTree personalization platform.

First Quarter 2016 Financial Highlights

  • Record consolidated revenue of $94.7 million represents an increase of $43.8 million, or 86%, over revenue in the first quarter 2015.
  • Record Variable Marketing Margin of $34.1 million represents an increase of $12.9 million, or 61%, over first quarter 2015.  At 36% of revenue, Variable Marketing Margin percentage was consistent with the prior quarter.
  • Record Adjusted EBITDA of $15.8 million increased $6.9 million, or 78%, over first quarter 2015.  Adjusted EBITDA as percent of revenue improved to 17%, up from 15% in fourth quarter 2015.
  • Income per diluted share from continuing operations of $0.54.  Adjusted Net Income per share of $0.76 representing growth of 17% over first quarter 2015.  Both GAAP and Adjusted Net Income per share reflect  the full $4.8 million income tax expense recorded in accordance with GAAP.
  • During the first quarter 2015, the company repurchased 580 thousand shares of its stock at a weighted-average price per share of $69.97 for aggregate consideration of $40.6 million.  As of March 31, 2015, the company has $56.7 million in repurchase authorization remaining.

Business Outlook – 2016

LendingTree is providing Revenue, Variable Marketing Margin and Adjusted EBITDA guidance for second quarter 2016 and updating full-year 2016 guidance, as follows:

For second quarter 2016:

  • Revenue is anticipated to be $95.0 – $97.0 million, or 72% – 76% over second quarter 2015.
  • Variable Marketing Margin is anticipated to be in the range of $32.0 – $33.5 million.
  • Adjusted EBITDA is anticipated to be in the range of $13.5 – $15.0 million, implying year-over-year growth of 52% – 69%.

For full-year 2016:

  • Revenue is now anticipated to be in the range of $380 – $390 million, or 49% – 53% over full-year 2015, an increase from prior guidance of $370 – $380 million.
  • Variable Marketing Margin is now anticipated to be $134 – $137 million, or 41% – 44% over full-year 2015, an increase from prior guidance of $129 – $134 million.
  • Adjusted EBITDA is anticipated to remain in the range of $62 – $65 million, or 52% – 59% compared to full-year 2015.
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