LendingTree Q2 Earnings Call Highlights

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LendingTree (NASDAQ:TREE) reported second-quarter 2026 growth led by its insurance business, while management said softer demand in small-business lending weighed on the consumer segment and prompted a more cautious outlook for the remainder of the year.

President and CEO Scott Peyree said insurance revenue increased 25% year over year, while adjusted EBITDA rose 11%. Adjusted EBITDA as a percentage of variable marketing margin, or VMM, increased 225 basis points from a year earlier to 40%, moving toward the company’s long-term target range of 45% to 50%.

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Peyree said the company has roughly doubled revenue and adjusted EBITDA from 2023 through 2026, supported by a diverse set of product lines. Operating expenses were flat year over year, which he attributed to AI-driven and broader operational efficiencies. LendingTree generated approximately $80 million in annual free cash flow after interest, according to Peyree, and reduced net leverage to 1.9 times from 3.0 times a year earlier.

Insurance Drives Growth

Insurance was the company’s strongest segment during the quarter. Peyree said Insurance revenue rose 42% year over year and segment profit increased 25%, citing strong demand from Insurance carriers.

Management said the industry environment remains favorable as carriers compete for policies amid what Peyree described as stable and profitable conditions across the insurance sector. However, competition for consumer traffic has also pressured costs and margins.

“Our first goal on insurance growth is overall VMM growth,” Peyree said. He added that the company expects insurance margins in the second half to be broadly similar to the second quarter, while VMM is expected to grow sequentially.

Chief Financial Officer Jason Bengel said carrier demand supports the company’s insurance partner revenue, but the same competitive backdrop puts pressure on immediate traffic-acquisition costs. The company expects healthy insurance growth in the second half, he said.

Small-Business Lending Faces Demand Weakness

LendingTree’s consumer segment was affected by a slowdown in small-business lending, which management said was driven by both a pullback among lenders and softer sentiment among small-business borrowers, referred to by the company as merchants.

Peyree said the company had previously flagged potential headwinds tied to Middle East tensions and energy-price increases. Demand was weaker than management had forecast, leading to a second-quarter shortfall. While lender appetite has largely returned to levels seen early in the first quarter, merchant sentiment remains soft, he said.

Bengel said the weakness showed up in fewer merchants seeking loans, lower loan amounts, and lower rates of borrowers accepting loan offers. Lenders had tightened criteria or offered higher rates for similar loan amounts, but that condition has improved, according to management.

“The lender demand is there,” Peyree said, adding that lenders would be willing to write more small-business loans if loan demand improved.

Management said it does not disclose standalone small-business lending revenue. However, Bengel said the sequential decline in the consumer business was driven by small business, while personal loans performed well sequentially from the first to second quarter.

Management characterized the small-business slowdown as temporary and macroeconomic rather than competitive or structural. Peyree cited improving closing rates, larger loan requests and favorable underwriting shifts as encouraging signs. He said July is expected to be the company’s best small-business sales month since the first quarter, giving management confidence that the second quarter marked a trough.

Still, Bengel said the company’s outlook only assumes the lender-demand recovery already visible and does not assume a full return in merchant sentiment. Small-business lending is not expected to return to first-quarter levels within the company’s current guidance assumptions.

Home Lending and Margin Pressures

In the home segment, revenue increased 9% year over year and segment profit rose 13% sequentially. Peyree said the business continues to operate in a near-trough environment as high interest rates constrain the mortgage market.

Bengel said home-lending margins remain below historical norms because home sales are running at roughly 4 million units, limiting the available pool of borrowers and intensifying competition. LendingTree is not assuming meaningful upside in home margins in its guidance, he said, though management sees long-term potential if the housing market recovers.

Peyree also said the company is investing in business-development partnerships and traffic generation. While those efforts have brought in partners and revenue, the company has not been primarily focused on VMM or margin from those relationships during 2026. He said management expects to place more emphasis on margin in that area beginning in 2027.

AI Initiatives and Capital Allocation

LendingTree highlighted several product and AI initiatives launched during the quarter, including a ChatGPT application called the Home Loan Rate Confidence App, six new consumer offerings including pet insurance and commercial insurance, and homepage and navigation changes that Peyree said lifted sessions by 11% and form starts by 18%.

The company is also deploying voice AI, AI-generated offer overviews and internal AI tools for marketing, sales and finance teams. Peyree said internal AI agents have helped reduce work that previously took weeks into real-time processes, contributing to operating expenses rising less than 1% while revenue grew 25% year over year.

Management said it is also learning to match AI tasks with lower-cost models where appropriate and has invested in structuring internal data to improve AI effectiveness. On the consumer side, Peyree said LendingTree has found that AI summaries of available offers can help consumers more easily identify options based on interest rate, loan amount and payment terms.

With leverage lower and free cash flow strong, Peyree said the company has flexibility to continue debt repayment while also considering share repurchases and accretive acquisitions. He said LendingTree’s long-term strategy remains focused on becoming a leading destination for financial-product shopping by increasing return customers, referrals and logged-in users.

Separately, Bengel said LendingTree joined a group of advertisers pursuing arbitration claims against Google related to federal court rulings involving online search and search advertising. The company filed the group’s demand motion on July 17 and directed approximately $2.8 billion to Google during the affected period of roughly a decade, according to Bengel.

About LendingTree (NASDAQ:TREE)

LendingTree, Inc operates an online marketplace that connects consumers with a network of lenders and financial service providers. Through its platform, borrowers can compare loan offers for mortgages, home equity loans, personal loans, student loans, auto loans and small business financing. The company also offers tools for comparing credit cards and deposit accounts, allowing users to research rates and terms from a range of providers in one place.

Founded in 1996 by Doug Lebda, LendingTree pioneered the comparison-shopping model for consumer credit products.

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