Q3 2023 Lendingtree Inc Earnings Call
Participants
Andrew Wessel; VP, IR; LendingTree, Inc.
Doug Lebda; Chairman. CEO & Founder; LendingTree, Inc.
Scott Peyree; President, Marketplace Businesses & COO; LendingTree, Inc.
Trent Ziegler; CFO; LendingTree, Inc.
Jed Kelly; Analyst; Oppenheimer & Co.
Ryan Tomasello; Analyst; Keefe, Bruyette & Woods, Inc.
John Campbell; Analyst; Stephens, Inc.
Chris Kennedy; Analyst; William Blair & Company
Youssef Squali; Analyst; Truist Securities
Robert Wildhack; Analyst; Autonomous Research
Jamie Friedman; Analyst; Susquehanna Financial Group
Melissa Wedel; Analyst; JPMorgan
Presentation
Operator
-- today, and thank you for standing by. Welcome to LendingTree Incorporated third-quarter 2023 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Andrew Wessel, Vice President, Investor Relations. Please go ahead, sir.
Andrew Wessel
Thank you, Dorma, and good morning to everyone joining us on the call to discuss LendingTree's third-quarter 2023 financial results. On the call today are Doug Lebda, LendingTree's Chairman and CEO; Scott Peyree, COO and President of Marketplace Businesses; and Trent Ziegler, CFO.
As a reminder to everyone, we posted a detailed letter to shareholders on our Investor Relations website earlier today, and for the purposes of the call, we will assume the listeners to read that letter and will focus on Q&A. Before I hand the call over to Doug for his remarks, I remind everyone that during today's call we may discuss LendingTree's expectations for future performance.
Any forward-looking statements that we make are subject to risks and uncertainties, and LendingTree's actual results could differ materially from the views expressed today. Many, but not all the risks we faced are described in our periodic reports filed with the SEC. We will also discuss a variety of non-GAAP measures on the call today and 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. With that, Doug, please go ahead.
Doug Lebda
Thank you, Andrew, and thank you to all of you who are joining us today. We earned $22 million of adjusted EBITDA in the third quarter, generating a 14% operating margin, which was at the high end of our forecast. We again generated strong segment margins in both consumer and insurance and continue to benefit from our focus on our operating efficiency.
We remain soundly profitable with a strong balance sheet despite the significant revenue challenges we've been navigating over the last few quarters. We have made significant changes at the company, most notably, including our senior leadership positions. Our operating expenses have decreased by 30% from peak levels. Thanks to proactive cost initiatives taken by management, which should generate strong operating leverage in a recovering revenue scenario.
We have redesigned our product function with dedicated project staffing and clearly defined quarterly goals by group that are tracked and published internally so that all employees can follow them. Finally, we focused our resources on optimizing our core marketplace business and remove distractions from our employees to accomplish targeted VMD improvements.
For example, during the quarter, we identified areas where we can increase monetization of consumer traffic through more effective routing and cross-selling. Also, we began recently live testing with six credit card issuers for our redesigned TreeQual platform. It is the first service to offer full credit prequalification to authenticated consumer traffic with complete fraud protection enabled by our partnership with the top credit bureau.
TreeQual has received significant interest from top credit card issuers in combination with the margin enhancements, we've seen from our Lightspeed implementation. We are quite optimistic about how our credit card business can improve going forward as we work and grow share in this very large market.
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 to drove those market share gains.
Recent conversations with the marketing teams at large carriers reinforce that we are accounting for an increased portion of their budgets. 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. We are also acutely aware of the pressure our July 2025 convertible note maturity has on our share price.
The management team continues to explore a variety of paths to repay this debt with capital that has an extended maturity profile providing us with an additional time for our numerous actions to improve the business to take hold. And now, operator, I'd be happy to open it for questions.
Question and Answer Session
Operator
(Operator Instructions) Jed Kelly, Oppenheimer & Co.
Jed Kelly
Hey. Great. Thanks for taking my question. Just two, if I may. Just digging into the consumer segment, I think personal loans were down. Can you just talk about the competition in that segment? One of your competitors that reported last week had pretty strong results in that product. So can you talk about the competition?
And then just circling back to on the convertible. Can you talk about the cash flow profile? I think 4Q is typically your strongest free cash flow profile. How much cash you need to run the business? I think you said $50 million historically and where we are in terms of wanting to do the debt refinance. Thanks.
Good morning, Jed. Scott, I think you take the first one there and then, Trent, if you could take the second one.
Scott Peyree
Yeah, sure, absolutely. I said I did this morning. Starting off on the consumer side with the personal loan categories or credit card small business loans, over the past 18 months, credit card participated with our clients, monetization has come down. We've done a good job of maintaining our traffic levels and controlling our marketing expenses to make equal to in off and greater margins on the traffic.
So I would say if you look at, our consumer volume has generally remained fairly steady over that time period. And you've seen the drop in revenue tied to the monetization for the consumer. So where we're focusing now is improving that monetization for consumer.
We have historically been a very specific product search focused company, right? So when I say that what I mean is if you're searching for a personal loan, we're going to try really hard to give you personal loan.
We're now shifting to more of a solution-based model. Where if you're looking for personal loans, we're going to try to give you personal loans but maybe a home equity loans is better option.
Maybe you can't get a personal loan but you can get a credit card. Maybe your debt relief candidate, if you want a car or maybe you get a cash out refi on your car loans, et cetera. We have a lot of ways to help solve the consumer problems, the problem being seeking money.
We have distinct advantages in the industry being that we have direct client relationships and distribution in so many different financial industries that we just need to be better as solutioning across the board and cross selling the other products. And that will be a win-win-win across the board with [Trina914] will provide a better offer to consumers, the more high-quality leads to our clients and see increased monetization.
Most importantly for us, which lets us crank up the marketing flywheel to start increasing traffic coming through our network of sites which I think is maybe one of the big key gaps is where, there is a lot of consumer demand out there. We just see that marketing flywheel to kick back in to start driving more of those consumers to our sites specifically.
Doug Lebda
Trent?
Trent Ziegler
Yeah. I guess on your question around cash flow, we obviously remain solidly profitable, right, in the Zip Code of $15 million, $20 million, $25 million of EBITDA every quarter. That EBITDA converts to cash flow at a really healthy clip and saved for a little bit of capitalization expense and then obviously our ongoing interest burden, that EBITDA basically converts one for one, and so we feel really good about our cash flow position and are optimistic that we are at the bottom here and are positioned for things to get better as we head into next year.
Jed Kelly
Thank you.
Operator
Ryan Tomasello, KBW.
Ryan Tomasello
Good morning, everyone. Thanks for taking the questions. I was hoping you can put a finer point just elaborating on the comments from your prepared remarks around what you're seeing from carriers regarding their 2024 growth plans.
Obviously, a recovery in the insurance business seems like the area you have most visibility around. So it would just be helpful if you could provide some guardrails around the different scenarios for that business next year. How fast it could inflect the margin profile? Whether that's sustainable as competition increases for that traffic? And just generally how you feel about the competitive positioning and the ability to take share as wallets increase?
Doug Lebda
So I'll just hit the high level and hand it off to Scott, who really -- he and his team have just done a magnificent job. And we think margin profile can, well, probably not stay at -- as your marketing flywheel starts going, you got to spend into demand, but our team has really done a remarkable job there. As I mentioned, we've had some carrier meetings that have given us some early indications. Scott wants to take the rest of that.
Scott Peyree
Yeah. Sure. Yeah, I would say we've had a lot of good conversations and definitely the wins are changing in the insurance industry. And really over the past two or three months, we've gotten a lot of positive indications from a lot of our clients, including our historically largest client that we're currently working on budget planning with for '24. But the short of it is they've made pretty clear that budgets are going to be increasing significantly starting in January and will continue. The plan is they will continue to snowball as far as growth throughout the year.
Not just them though. There's another big client of ours that -- two, three months ago, we thought there was going to be no budget until January and now, we're going to get a decent amount of budget for our November and December this year. So that just shows the indication that these carriers are just feeling better and better by the day that they're more consistently profitable.
I would say, another full quarter, pretty big carriers of ours have all either increased budget and/or reopened in States that they had previously shut down over the past three months. Nothing crazy significant at this point, but it just shows that overall macro trend shifting away from tightening up and shutting things down just getting back in the expansion mode.
From a quality and market share perspective, we have gotten very specific feedback from a number of carriers that we are outperforming both from a market share standpoint and the quality perspective as far as the product we're delivering compared to competitors. So we're feeling really good about getting outside of the pieces of budget as the money comes back.
Ryan Tomasello
Great. Thank for all that color. And then separate question on just typical seasonality, maybe for trend. How are you thinking about that heading into the fourth quarter? Does the 4Q guidance assume that typical seasonality plays out or maybe some different assumptions, variables you're assuming given just the nature of the current environment?
Doug Lebda
Yeah. Thanks Ryan. Yeah. Look, I mean, the guidance assumes typical seasonal patterns that we've observed historically. What I'd say is bacon of the guidance for the rest of the year is kind of a stabilization in fundamental, but it really is just the seasonal trends that we've seen, applied over the time.
We've had a lot of debate internally about given where the trends have been. Will the seasonality be as pronounced as it has been in prior years? We obviously don't know the answer to that yet, but we've taken a pretty conservative stance with regard to what's baked into the guide for the rest of the quarter.
Operator
John Campbell, Stephens.
John Campbell
Hey, guys, good morning.
Doug Lebda
Good morning.
John Campbell
Hey, for insurance, I want to touch back on Ryan's question there. Just based on the channel commentary, It feels like the arrows are certainly pointing in the right direction for recovery next year. But just on the segment, VMM outlook, I'm thinking maybe we should think about it like a seesaw effect maybe next year. Like you get the revenue rebound in the VMM, margin comes back in a bit or alternatively remains somewhat sluggish and then VMM stays at current levels. Is that generally the right way to think about it for next year?
Doug Lebda
I'm going to let these other guys commented too, but what I like to think about it is in VMD, not as much on the percentage. And as your demand kicks in, you're able to go obviously advertise while your cost of acquisition might go up a tad, as you keep it simple, bit higher in search terms that obviously might crimp a percentage margin, but it would drive a lot more dollars. Trent? Scott?
Scott Peyree
Yeah, I'll talk a bit quick. I would echo what Doug says. We look at total VMD. So as your client budgets are significantly increasing, as you're spending in the more traffic, your VMM margins will typically come down, but your overall VND will go up pretty significantly.
And so when we're in limited budget environments, it's easy to target the types of traffic, the high-quality traffic that clients want to make good margin of it. As the budgets move more towards that, what you would call it, an unlimited budget like CPA targets for clients, that's where you're more aggressively spending in the areas tend to generate revenue and traffic that -- our office has lowered VMM margins but higher overall VMD.
John Campbell
Okay. That makes sense. Appreciate that. And then to what extent do you guys can -- I'm hoping maybe you could run us through the strategic shifts and credit card. What you're looking to partner? How that economics work, maybe just at a high level? And then what do you think that credit bureau partnership can do for the business in the years ahead?
Doug Lebda
Scott?
Scott Peyree
Yeah, I would say with the partnership, what I'm really excited about the partnership with third-party is the consumer's ability to get (technical difficulty) for sub-prime and near-prime carts.
And from a business perspective, that's probably the most significant impact this will have where a lot of our card presentation right now on our sites, focus on more prime consumers, which throws out a lot of consumers that don't qualify for those cards. And now by doing this partnership and bringing more options that consumers allows us to onboard a lot more issuers and make for a very smooth and easy process for those consumers to get preapproved for those cards that would be otherwise a little nervous about filling out a full application on a card.
So a lot more consumer choice means, for every hundred consumers coming through the site, you're planning a solution for a lot more of them than we are today. And that's where I think, again, getting that marketing flywheel that will help us increase traffic a lot there.
John Campbell
Okay. Makes sense to me. Thanks, guys.
Operator
Chris Kennedy, William Blair.
Chris Kennedy
Good morning. Thanks for taking the questions. Doug, you've seen a lot of cycles in this business over time. Can you just talk about your competitive position today relative to prior cycles? And as the markets improve, talk about the earnings power of the business?
Doug Lebda
So I think our position is better in this one app. If it were not for the debt refinancing that we're facing, I would say we're in a much stronger position. And the past several cycles that have been to really that have been through this. Your monetization went down. We did not have the balance sheet that we had. And most importantly, we were concentrated in the 95% mortgage.
This business with the diversification that we've pulled off certainly at a cost has enabled us to weather the mortgage downturn. And then you can weather the personal loan downturn. This is the first time that I've experienced where literally everything is pulled back at once in every category, and we've still been able to make a good amount of money. And that's what I think differentiates this one from all the others.
From a competitive standpoint, I would only add that there's fewer competitors today. The LendingTree brand name is obviously very well known. And we got to improve our product that we bring to consumers, but that is underway.
I'm thrilled that TreeQual has finally made it out of the gates after talking to you all about it for the last couple of years. And it's going to be a knife fight among some other competitors that were up for it and ready.
Chris Kennedy
Got it. Thank you. And then just can you talk about the margin profile? You've taken a lot of expenses out of the business and as the macro improves, talk about the long-term margin profile. Thank you.
Trent Ziegler
Yeah, Chris, this is Trent. I'll hit on that one. Yeah, look, I mean, obviously, you've seen us take margins from mid- to high-single digit to mid-teens just over the course of the last years. So I think as we've unpacked our cost structure and continue to chip away, we've got a lot of really good work.
And as we sit here today, we feel like we are still perfectly resourced to continue to run this business and place a few focus bits, right? We're not strapped for resourcing in such a way that we can't continue to innovate and drive profit improvement. We're adequately staffed for that.
And as the macro continues to improve, there's not a lot of variable expense that we have to layer on top, right, until we feel really good about our ability to maintain and improve upon that mid-teens EBITDA margin profile that you're seeing today.
Chris Kennedy
Thanks for taking the questions.
Operator
Youssef Squali, Truist Securities.
Youssef Squali
Awesome. Thank you so much. So a quick question for Doug and maybe for Trent. So Doug, just as you look at the potential turnaround in 2024 across the businesses, maybe, what early indicators are you tracking to identify the reversion, maybe, and the right standards by lenders across the consumer segment and home segment, not as much as insurance segment you discussed that. And then Trent, can you just help us think through the Q4 guide and what's implied across growth across the three segments: home, consumer, and insurance please?
Doug Lebda
So in terms of metrics -- and Scott or Trent feel free to add in. And from a client's perspective, you need to look at their cost per funded loan. What is it getting? What is it costing them to get what they're looking for, which is a new loan? We look at that across all of our clients.
In mortgage, like prior quarters, that's been too high. That's merely because consumers don't get as much of a benefit from refinancing, obviously at much higher rates. So you look at your cost per funded loan or your cost per policy in insurance.
And then it's really the CPA, what's it costing us to get somebody to come and want a transaction? And then your RPL. What is your revenue that you're getting from that introduction on the other side, and then nine times the volume is what drives the whole thing. And that's the marketing flywheel that Scott talked about.
And then the only other thing I would add on top of that is, with the launch of spring on the web, and with the upcoming launch of it, this is the new name for my LendingTree with the launch of the app. And we think in November, plus TreeQual, we think we can move those numbers up appreciably. Youssef, and then -- go ahead, Scott.
Scott Peyree
Okay. Yeah. In another key metric, as I alluded earlier, we're going to be looking at, I like to call it the leaky bucket. But at the end of the day, it's like, looking at consumers that are falling out of our funnel currently. A quick, easy example of, someone comes looking for a personal loan, they may be looking for a personal loan to go on a vacation to the Bahamas.
18 months ago, you could get $10,000 personal loan for that. Today, it's hard to get personal loan for that. But they may be a homeowner with a good credit and perfect home equity candidate. So like really identifying how large is the leaky bucket, and how good are we at matching them to other products that can get them the money they're seeking.
Doug Lebda
Trent?
Trent Ziegler
And then on the Q4 guide Youssef, just framing it up sequentially relative to Q3, we expect insurance to be pretty stable, Q3 into Q4. We do expect some softness to come from both home and consumer. The consumer, that's where we've typically seen the most pronounced seasonality.
Historically, volumes just tend to drop off in Q4 and then begin to ramp back up in Q1. And then at home, we've all seen what's going on in the rate environment. We've seen home equities slowed down a little bit as a source of strength given the rate environment, and just the conversion aspects of that product. And so a little bit of weakness in both on the consumer pretty stable in insurance.
Doug Lebda
And the only thing I'd add is, over the last 25, 27 years, I think I've said this, pretty much every year that Q4, the consumer behavior on the lending side in particular is not in the borrowing mindset. They're more in ascending mindset, and then typically wake up in January and say, oh, shoot, what did I do? And then they start to get their financial house in order. And that's when we see a resumption of, call it normalcy.
Youssef Squali
Okay, good color. Thank you, all.
Operator
Robert Wildhack, Autonomous Research.
Robert Wildhack
Good morning, guys. Wanted to go back to an earlier question. Can you speak to how the changes you're making to TreeQual will lead the position to or position relative to competing products out there?
Doug Lebda
I'll let Scott chime in on some of the details of it. And some of the stuff we're not going to want to give out for competitive reasons. But we think this will be as good and probably better than any of the competing products out there.
The notion and credit card as Scott referred to the leaky bucket has a hugely leaky bucket because credit card companies taking in subprime and near prime only approve about 1 in 10 of the people that we send them because they're coming -- because they're self-grading their credit. And they don't always self-grade themselves accurately. So this is going to enable us to drive that number up in terms of the approval rate, but it also enables us to give the consumer a much, much better experience. Scott, you want to talk about the competitive -- where you think we stand versus competitors in TreeQual?
Scott Peyree
Yeah, I would say just, there's the two things that our product that I would really highlight, which I think is advantageous for us. The first thought, the fact that we're working through a third-party credit bureau, which a lot of our clients consider an independent party in this transaction that by the way, all the issuers are already working with. So, A, makes integrations way easier to onboard with us. If they don't have to onboard with a custom system that we've built in-house because we're both working with a mutual third party there.
And B, there's that level of trust like, we're not necessarily going to take specific information from their credit boxes and underwriting criteria and use it for our own purposes and fit. And so I think, at that level, it will allow us to bring on issuers at a really rapid pace. And they like this model, and how to spend money with us.
And then on the other side, this can be a live product. If someone is just on the website, they can actively go through this. It does not have to be a logged in user. It's definitely something that we can use for our login users, and we will use for our login users. But this is just a live pre-approval in real time these consumers can get, which I feel is a really advantageous component to this site.
Robert Wildhack
That's great. Thanks. And then can you just give some more detail on the investment impairment in the quarter? What was that in relation to it?
Doug Lebda
Yeah, Rob. It's Trent. So there were two. One was related to our investment in Stash. There was an observable event that caused us to relook at that valuation, and that shouldn't come as a huge surprise. Anyone of you follow the consumer fintech space, all right. Clearly, we marked that up very considerably when we sold part of our position. I think, it was fall of '21. And now multiples in that space have just come crashing back down to reality and that's what is being reflected in our mark.
The other write-down was related to our carrying value of goodwill. And that is really just a function of what we've observed in the market, right? It's not really a call on our long-term outlook for any of our various businesses. It's really just the stock price support the level of goodwill that you've got on the books. And in our scenario, unfortunately, it doesn't.
So we again, have a third party come in and look at the different segments. In this case, the impairment was attributed to the insurance business. That's largely because we built up goodwill as we did all those acquisitions from 2015 through 2019.
When we moved from one reportable segment to three reportable segments, insurance got the brunt of the carrying value of that goodwill. And so we'd have a higher bar to justify the carrying value. And so again, we have to test that goodwill annually. We went through that process with a third party and took a modest write down against the insurance segment.
Robert Wildhack
Okay, thanks. Just on that last piece, is it safe to assume that the majority of the goodwill impairment didn't come from your long-term outlook? Our projections for the business, but more from maybe the comparables or discount rates, things like that.
Doug Lebda
That's right. So there will be more details in the 10 Q when it comes out. But it's like 50% based on long-term outlook, 30% based on observable market events, right? And as you pointed out, clearly discount rate has gone up, stock prices come down, multiples across the space have gone down. And so that's really what's reflected.
Robert Wildhack
Got it. Thank you, guys.
Operator
Jamie Friedman, Susquehanna Financial Group
Jamie Friedman
Hi. So good morning. So it's helpful to have these early comments on 2024 in insurance. I'm just looking through the letter. And it sounds like you're optimistic about potential growth in that segment. I know it's early, but I was just wondering if you have any high-level comments on the potential for the other segments as well?
Doug Lebda
I don't think for 2024 anything that we're willing to reveal yet. However, I do think cards will be better. And Scott, you should add on, and Trent, feel free to. Cards will be better because of TreeQual. Personal ones, and the other ones will be better because of the cross selling that Scott referred to.
And that all obviously all depends on client demand. And you just heard, the early stuff about client demand. I'm not expecting much tremendous growth out of home, until the log jam in the home market really abates. We've got people who don't want to sell homes and people who don't want to buy homes. Now, there's always a market to make.
But in home, the consumer benefit, there's just not as much of a consumer benefit or they can't afford, what they see. So you have a leaky or bucket in home. That said, from a product standpoint, we've planned out our product pipeline for Q4 and Q1. And we are making some improvements and hope to grip and doing a lot of testing around that product to come up with new consumer experiences. And so that is very helpful for that one. Scott, what else would you add?
Scott Peyree
Yeah. I'll just hit on two very large categories: SMB and personal loans. Being, I would start with there's a lot of consumer demands for those products and a high level of client demand even though the credit criteria is tightened. The loans they are riding, they're happy to ride. And they are indicating they want to ride more and more of those loans with us.
So like, as we get better at fixing that leaky bucket and cross selling effectively, increasing our monetization, I think we can definitely see growth in those categories next year, just based off of high consumer demand for those products.
Jamie Friedman
Okay, thanks for that. And then, Trent was interpreting some of your prior comments about margin. Still you've got actually from the low single digits into the teens in terms of adjusted EBITDA margin. Do you view that as structurally sustainable for the company or asked another way, is there any reason why that where you are now would not be structurally sustainable?
Doug Lebda
We have no reason to believe that it's not sustainable. As I said, we've done a lot of thoughtful work on the cost structure. We've gotten that in a very good place, and we think it's scalable as the top line inflection and moves in the right direction as we get in the next year.
Jamie Friedman
Got it. Okay. Thank you all.
Operator
Melissa Wedel, JPMorgan.
Melissa Wedel
Good morning. Thanks for taking my call. I was hoping to circle back to some of your comments about TreeQual. I think Scott talked about expanding product offering to additional customers, providing a sub-prime and near-prime product or solution for customers through that TreeQual initiative. I just wanted to clarify, is that something that is entirely focused on subprime and near prime? Or would that extend into the prime offering as well?
Doug Lebda
Yeah. No, it's not entirely focused on subprime and near prime. That's just where the biggest opportunity is. And let's call that the biggest leak in the credit card bucket.
Scott Peyree
Yeah, and I would add. Our prime customers are very, very interested in integrating with this. We've just had to focus. As we line people up, we want to get the subprime and near prime first because that's a new product offering for our customers. But prime customers definitely want to integrate with this. And I would also say a lot of our personal loan customers want to integrate with this as well for the personal loan product.
Melissa Wedel
Okay. That's helpful. And then I think the shareholder letter, you mentioned that it is being tested right now a handful of partners on the platform. And could you give us a sense of what that testing timeline look like and when that might be rolled out more broadly?
Doug Lebda
Scott, you will take that?
Scott Peyree
Yeah. We're rolling out. We have four clients on the initial rollout that is happening imminently here. And we will be doing a lot of testing throughout the fourth quarter. Our hope is, if all goes well, we start really expanding where all the places that consumer could potentially be seeing as early as the beginning of the first quarter. And then it will just be a continual flow of onboarding new issuers as fast as we can, right?
Again, one of the advantages of this product is that it is pretty easy for issuers to onboard this product. It's not a lot of work, which is great. So we should be able to grow the number of issuers rapidly. And again, assuming the testing goes fine in the fourth quarter, we should be exposing it to a lot more traffic in the first quarter.
Melissa Wedel
Okay. Thanks for that. If I could follow-up on the rebranding and relaunch my LendingTree or now spring. I always had the impression that that was particularly focused or had particularly good engagement with personal loan consumers. Is there something that we should be thinking about differently with the recent launch of the app at that you're planning shortly?
Doug Lebda
No. So the of the hope with spring is -- so right now, the largest source of new members are people coming from our personal loan product. That's what you are referring to. But the hope would spring is as the product evolves that we can actually have its own traffic. And that you can be advertising for downloading the app. And we just need to make our alerts much better.
And one thing that I'm just thrilled with and the change that's happened over the last three months is our product organization. I refer to that somewhat. But we have a completely redone way of doing product. And it's really starting to work. So we're starting to see much better and faster progress on the tech and product front.
Operator
Thank you. I would now like to turn the conference back to Mr. Doug Lebda for closing remarks.
Doug Lebda
Thank you. I want to thank everybody on this call for your continued faith in our business. The outlook is beginning to turn positive, largely due to the operational improvements we've implemented, but also due to the inflection we expect in our insurances.
Our team is properly focused on the core of our marketplace, working on numerous discrete initiatives to drive additional VMD from our existing base of customers who come to us every day looking for the financial product that is right for them. We are leaning into our entrepreneurial culture by testing ideas quickly and inexpensively, and that helps optimize the business.
Our team is leaner and better. We are operationally faster. Our client relationships are strong. And we are very optimistic about the future. Thank you so much. And we look forward to talking to you in three months.
Operator
This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
