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LendingTree (TREE) Reports Q3 Loss on Low Consumer Revenues

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Zacks Equity Research
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LendingTree TREE reported third-quarter 2020 adjusted net loss per share of 26 cents, wider than the Zacks Consensus Estimate of a loss of 15 cents. However, the company had recorded an income of $2.25 per share in the prior-year quarter.

Investors’ concerns highlighted soft consumer revenues on the prevailing coronavirus crisis, resulting in a share-price decline of 15.4% following the earnings release. Moreover, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) displayed a decline. However, the company’s results were aided by lower expenses and a strong cash position.

The bank reported GAAP net loss of $24.8 million or $1.90 per share, as against the net income of $24.5 million or $1.67 recorded in the year-ago quarter.

Revenues Decline, Costs Down

Total revenues slid 29% year over year to $220.3 million in the third quarter. This decrease primarily stemmed from lower consumer and other revenues, partly offset by higher home and insurance revenues. The reported figure, however, surpassed the Zacks Consensus Estimate of $207.8 million.

Total costs and expenses came in at $236.4 million, down 15.4% from the prior-year quarter. This decline chiefly resulted from fall in cost of revenues, and selling and marketing expense.

Adjusted EBITDA totaled $21.7 million, down 65.6% from the $63 million reported in the year-earlier quarter. Variable marketing margin was $78.1 million, down 32.4% year over year.

As of Sep 30, 2020, cash and cash equivalents were $187.3 million, surging significantly from $60.2 million recorded as of Dec 31, 2019. Long-term debt was up significantly from the prior-year end to $603.5 million. Total shareholders' equity was $361 million, down 10.3% from the Dec 31, 2019 level.

Outlook

Concurrent with the September-end quarter results, management has issued the fourth-quarter 2020 guidance.

Q4

  • Total revenues estimated at $200-$215 million.

  • Adjusted EBITDA anticipated in the $13-$18 million band.

  • Variable Marketing Margin projected at $72-$78 million.


Conclusion

LendingTree witnessed losses during the July-September period on disappointing revenues. Nevertheless, the company’s expansion strategy for its non-mortgage business seems to be working well. Though reduction in consumer revenues and rising debt level are concerns, the bank’s commitment to diversify its product offerings beyond mortgage-related products augurs well for the long haul. Moreover, controlled expenses are a tailwind.
 

LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. Price, Consensus and EPS Surprise
LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. price-consensus-eps-surprise-chart | LendingTree, Inc. Quote

Currently, LendingTree carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Performance of Other Finance Stocks

First Republic Bank FRC delivered an earnings surprise of 16.7% in the July-September quarter on solid top-line strength. Earnings per share of $1.61 outpaced the Zacks Consensus Estimate of $1.38. Additionally, the bottom line climbed 22.9% from the year-ago quarter.

Regions Financial RF reported third-quarter 2020 adjusted earnings of 49 cents per share, surpassing the Zacks Consensus Estimate of 34 cents. Also, results compared favorably with the prior-year period earnings of 39 cents.

Riding on solid mortgage banking, Synovus Financial SNV came up with third-quarter 2020 adjusted earnings of 89 cents per share, handily beating the Zacks Consensus Estimate of 48 cents. Nonetheless, the reported figure came in 8.7% lower than the prior-year quarter tally.

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Regions Financial Corporation (RF) : Free Stock Analysis Report
 
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First Republic Bank (FRC) : Free Stock Analysis Report
 
LendingTree, Inc. (TREE) : Free Stock Analysis Report
 
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