LendingTree Inc.
11/06/2026 | Press release | Distributed by Public on 11/06/2026 15:11
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement Regarding Forward-Looking Information
This report contains "forward-looking statements" within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements related to our anticipated financial performance, business prospects and strategy; anticipated trends and prospects in the various industries in which our businesses operate; new products, services and related strategies; and other similar matters. These forward-looking statements are based on management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. The use of words such as "anticipates," "estimates," "expects," "projects," "intends," "plans" and "believes," among others, generally identifies forward-looking statements.
Actual results could differ materially from those contained in the forward-looking statements. Factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include those matters discussed or referenced in Part II, Item 1A. Risk Factors included elsewhere in this Quarterly Report on Form 10-Q and Part I, Item 1A. Risk Factors of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report").
Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this Quarterly Report on Form 10-Q may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of LendingTree, Inc.'s management as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations, except as required by law.
Company Overview
LendingTree, Inc. is the parent of LT Intermediate Company, LLC, which holds all of the outstanding ownership interests of LendingTree, LLC, and its subsidiaries.
We operate what we believe to be the leading online consumer platform that connects consumers with the choices they need to be confident in their financial decisions. Our online consumer platform provides consumers with access to product offerings from our Network Partners, including mortgage loans, home equity loans and lines of credit, auto loans, credit cards, deposit accounts, personal loans, small business loans, insurance quotes and other related offerings. In addition, we offer consumers tools and resources, including free credit scores, that facilitate comparison shopping for loans, deposit products, insurance, and other offerings. We seek to match consumers with multiple providers, who can provide them competing quotes for the product(s) they are seeking. We also serve as a valued partner to insurance carriers, lenders and other providers seeking an efficient, scalable and flexible source of customer acquisition with directly measurable benefits, by matching the consumer inquiries we generate with these Network Partners.
We are focused on developing new product offerings and enhancements to improve the experience of consumers and Network Partners as they interact with us. By expanding our portfolio of financial services offerings, we are growing and diversifying our business and sources of revenue. We intend to capitalize on our expertise in performance marketing, product development and technology by leveraging the widespread recognition of the LendingTree brand.
We believe the consumer and insurance industries are in the middle stages of a fundamental shift to online product offerings, similar to the shift that started in retail and travel many years ago and is now well established. We believe that like retail and travel, as consumers continue to move towards online shopping and transactions for financial services, suppliers will increasingly shift their product offerings and advertising budgets toward the online channel. We believe the strength of our brands and of our Network Partners place us in a strong position to continue to benefit from this market shift.
Economic Conditions
We continue to monitor the current global economic environment, specifically including inflationary pressures and interest rates, and any resulting impacts on our financial position and results of operations. Refer to Part I, Item 1A. "Risk Factors" of our 2025 Annual Report for additional information.
During 2026, the interest rate environment and inflationary pressures have continued to present challenges for many of our mortgage lending partners. In our Home segment, mortgage rates increased in the third quarter of 2026 and remain significantly higher than the low rates seen in 2021. A shortage of in-the-money refinance borrowers persists given the current higher level of mortgage rates, and historically low existing home sales are suppressing consumer demand for purchase loans. The 10-year treasury rate (benchmark mortgage rates) increased in the third quarter to the highest rate in decades. In September 2026 we saw a shift in the Federal Reserve stance on interest rates as they increased the federal funds rate by 25 basis points and signaled the potential for additional increases which, with other continuing geopolitical events, could continue to pressure demand for new borrowing in the Consumer segment. In our Insurance segment, carriers are broadly experiencing strong automotive underwriting results following multiple quarters of premium increases and stable loss cost trends, and we continue to be optimistic about the remainder of 2026.
Segment Reporting
We have three reportable segments: Home, Consumer, and Insurance.
Recent Mortgage Interest Rate Trends
Interest rate and market risks are substantial in the mortgage lead generation business. Short-term fluctuations in mortgage interest rates primarily affect consumer demand for mortgage refinancings, while long-term fluctuations in mortgage interest rates, coupled with the U.S. real estate market, affect consumer demand for new mortgages. Consumer demand, in turn, affects lender demand for mortgage leads from third-party sources, as well as our own ability to attract online consumers to our website.
We dynamically adjust selling and marketing expenditures in all interest rate environments to optimize our results against these variables.
According to Freddie Mac, the monthly average 30-year mortgage interest rates increased from a monthly average of 6.2% in December 2025 to a monthly average of 6.9% in September 2026. On a quarterly basis, 30-year mortgage interest rates in the third quarter of 2026 averaged 6.7%, compared to 6.6% in the third quarter of 2025.
Typically, as mortgage interest rates rise, there are fewer consumers in the marketplace seeking refinancings and, accordingly, the mix of mortgage origination dollars will move toward purchase mortgages. According to Mortgage Bankers Association ("MBA") data, total refinance origination dollars decreased to 27% in the third quarter of 2026. In the third quarter of 2026, total refinance origination dollars decreased 29% from the fourth quarter of 2025 and decreased 6% from the third quarter of 2025. Industry-wide mortgage origination dollars in the third quarter of 2026 decreased 5% from the fourth quarter of 2025 and decreased 4% from the third quarter of 2025.
According to MBA projections, the mix of mortgage origination dollars is expected to continue to be weighted towards purchase mortgages with the refinance share representing approximately 33% for 2026 compared to 28% in 2025.
The U.S. Real Estate Market
The health of the U.S. real estate market and interest rate levels are the primary drivers of consumer demand for new mortgages. Consumer demand, in turn, affects lender demand for purchase mortgage leads from third-party sources. Typically, a strong real estate market will lead to reduced lender demand for leads, as there are more consumers in the marketplace seeking financing and, accordingly, lenders receive more organic lead volume. Conversely, a weaker real estate market will typically lead to an increase in lender demand, as there are fewer consumers in the marketplace seeking mortgages.
According to Fannie Mae data, existing home sales decreased approximately 2% in the third quarter of 2026 compared to the third quarter of 2025. Fannie Mae predicts overall existing-home sales to decrease approximately 1% in 2026 compared to 2025.
Results of Operations for the Three and Nine Months ended September 30, 2026 and 2025
Our discussion within Revenue provides the details of consolidated revenue by segment and significant products. In this section, we describe overall changes in revenue in our segments and significant products within each segment and increases or decreases in revenue from the prior period. We also provide insight into how changes in price and volume in each significant product impacted product revenue.
Our Segment Profit is a discussion of profitability within each segment of the business. It is impacted by segment revenues as well as segment cost of revenue and marketing expenses. In Segment Profit, we provide a discussion of the business within each segment, addressing both Company and market impacts on the profitability of each segment in addition to a discussion of segment margin.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 |
$ Change |
% Change |
2026 | 2025 |
$ Change |
% Change |
||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Home | $ | 41,454 | $ | 38,109 | $ | 3,345 | 9 | % | $ | 124,428 | $ | 115,546 | $ | 8,882 | 8 | % | |||||||||||||
| Consumer | 67,203 | 66,173 | 1,030 | 2 | % | 193,796 | 184,725 | 9,071 | 5 | % | |||||||||||||||||||
| Insurance | 234,931 | 203,512 | 31,419 | 15 | % | 666,053 | 497,321 | 168,732 | 34 | % | |||||||||||||||||||
| Other | - | (2) | 2 | 100 | % | - | 44 | (44) | (100) | % | |||||||||||||||||||
| Revenue | 343,588 | 307,792 | 35,796 | 12 | % | 984,277 | 797,636 | 186,641 | 23 | % | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||
|
Cost of revenue (exclusive of depreciation and amortization shown separately below)
|
11,670 | 11,017 | 653 | 6 | % | 34,635 | 30,954 | 3,681 | 12 | % | |||||||||||||||||||
| Selling and marketing expense | 260,508 | 225,051 | 35,457 | 16 | % | 735,529 | 574,555 | 160,974 | 28 | % | |||||||||||||||||||
| General and administrative expense | 26,437 | 26,229 | 208 | 1 | % | 80,137 | 81,923 | (1,786) | (2) | % | |||||||||||||||||||
| Product development | 10,243 | 11,297 | (1,054) | (9) | % | 31,742 | 34,674 | (2,932) | (8) | % | |||||||||||||||||||
| Depreciation | 4,147 | 3,995 | 152 | 4 | % | 12,609 | 12,533 | 76 | 1 | % | |||||||||||||||||||
| Amortization of intangibles | 1,258 | 1,288 | (30) | (2) | % | 3,834 | 3,902 | (68) | (2) | % | |||||||||||||||||||
| Goodwill impairment | 98,823 | - | 98,823 | - | % | 98,823 | - | 98,823 | - | % | |||||||||||||||||||
| Restructuring and severance | 519 | 80 | 439 | 549 | % | 3,297 | 1,235 | 2,062 | 167 | % | |||||||||||||||||||
| Litigation settlements and contingencies | 260 | 69 | 191 | 277 | % | 1,036 | 15,279 | (14,243) | (93) | % | |||||||||||||||||||
| Total costs and expenses | 413,865 | 279,026 | 134,839 | 48 | % | 1,001,642 | 755,055 | 246,587 | 33 | % | |||||||||||||||||||
| Operating (loss) income | (70,277) | 28,766 | (99,043) | (344) | % | (17,365) | 42,581 | (59,946) | (141) | % | |||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||||||||
| Interest expense, net | (9,129) | (17,907) | (8,778) | (49) | % | (26,178) | (37,393) | (11,215) | (30) | % | |||||||||||||||||||
| Other income | 1,009 | 732 | 277 | 38 | % | 2,210 | 2,368 | (158) | (7) | % | |||||||||||||||||||
| (Loss) income before income taxes | (78,397) | 11,591 | (89,988) | (776) | % | (41,333) | 7,556 | (48,889) | (647) | % | |||||||||||||||||||
| Income tax benefit (expense) | 6,033 | (1,426) | (7,459) | (523) | % | (4,191) | (904) | 3,287 | 364 | % | |||||||||||||||||||
| Net (loss) income and comprehensive (loss) income | $ | (72,364) | $ | 10,165 | $ | (82,529) | (812) | % | $ | (45,524) | $ | 6,652 | $ | (52,176) | (784) | % | |||||||||||||
Revenue
Revenue increased in the third quarter and first nine months of 2026 compared to the third quarter and first nine months of 2025 primarily due to increases in our Insurance, Home and Consumer segments.
Revenue from our Insurance segment increased $31.4 million, or 15%, to $234.9 million in the third quarter of 2026 from $203.5 million in the third quarter of 2025. The increase in revenue was due to a 36% increase in revenue earned per consumer, representing $73.9 million of the increase, offset by a 15% decrease in volume, representing $42.5 million of a decrease. Revenue from our Insurance segment increased $168.7 million, or 34%, to $666.1 million in the first nine months of 2026 from $497.3 million in the first nine months of 2025. The increase in revenue was due to a 22% increase in revenue earned per consumer, representing $110.2 million of the increase, and a 10% increase in volume, representing $58.5 million of the
increase. We measure volume for our insurance product as the number of consumer request forms and, in certain cases re-engagement with a consumer, the number of such subsequent consumer engagements through our platform.
Our Consumer segment includes the following products: credit cards, personal loans, small business loans, auto loans, deposit accounts, and other credit products. Many of our Consumer segment products are not individually significant to revenue. Revenue from our Consumer segment increased $1.0 million, or 2%, in the third quarter of 2026 from the third quarter of 2025 primarily due to an increase in personal loans partially offset by a decrease in credit cards. Revenue from our Consumer segment increased $9.1 million, or 5%, in the first nine months of 2026 from the first nine months of 2025 primarily due to increases in our small business loans and personal loans, partially offset by a decrease in credit cards.
For the current periods, no products in our Consumer segment represented more than 10% of revenue; however, certain Consumer products experienced notable changes. Revenue from small business increased $9.6 million, or 16%, in the first nine months of 2026 compared to the first nine months of 2025 due to increases in revenue earned per consumer, partially offset by a decrease in volume.
Our Home segment includes the following products: purchase mortgage, refinance mortgage, and home equity loans and lines of credit. Revenue from our Home segment increased $3.3 million, or 9%, in the third quarter of 2026 from the third quarter of 2025 and increased $8.9 million, or 8%, in the first nine months of 2026 from the first nine months of 2025 primarily due to increases in revenue from our home equity loans, partially offset by decreases in mortgage products. As more homeowners choose to stay in their homes and home equity levels remain near record highs, consumers are increasingly utilizing the value in their homes to fund renovations and other large ticket expenses, which we expect will continue in the current interest rate environment.
For the current periods, no products in our Home segment represented more than 10% of revenue; however, certain Home products experienced notable changes. Revenue from home equity loans increased $5.7 million, or 20%, in the third quarter of 2026 compared to the third quarter of 2025 due to increases in revenue earned per consumer.
Cost of revenue
Cost of revenue consists primarily of costs associated with compensation and other employee-related costs (including stock-based compensation) relating to internally-operated customer call centers, third-party customer call center fees, credit scoring fees, credit card fees, website network hosting, and server fees.
Cost of revenue increased $0.7 million in the third quarter of 2026 from the third quarter of 2025 primarily due to an increase in compensation and benefits. Cost of revenue increased $3.7 million in the first nine months of 2026 from the first nine months of 2025 primarily due to an increase in compensation and benefits of $3.2 million.
Cost of revenue as a percentage of revenue decreased to 3% in the third quarter of 2026 compared to 4% in the third quarter of 2025. Cost of revenue as a percentage of revenue was 4% in first nine months of 2026 which is consistent with the first nine months of 2025.
Selling and marketing expense
Selling and marketing expense consists primarily of advertising and promotional expenditures and compensation and other employee-related costs (including stock-based compensation) for personnel engaged in sales or marketing functions. Advertising and promotional expenditures primarily include online marketing, as well as television, print, and radio spending. Advertising production costs are expensed in the period the related ad is first run.
Selling and marketing expense increased $35.5 million in the third quarter of 2026 compared to the third quarter 2025, and increased $161.0 million in the first nine months of 2026 compared to the first nine months of 2025 primarily due to the changes in advertising and promotional expense discussed below.
Advertising and promotional expense is the largest component of selling and marketing expense, and is comprised of the following:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 |
$ Change |
% Change |
2026 | 2025 |
$ Change |
% Change |
||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Online | $ | 247,515 | $ | 213,661 | $ | 33,854 | 16 | % | $ | 699,270 | $ | 540,145 | $ | 159,125 | 29 | % | |||||||||||||
| Broadcast | 33 | 1 | 32 | 3,200 | % | 36 | 16 | 20 | 125 | % | |||||||||||||||||||
| Other | 1,092 | 906 | 186 | 21 | % | 3,137 | 2,876 | 261 | 9 | % | |||||||||||||||||||
| Total advertising expense | $ | 248,640 | $ | 214,568 | $ | 34,072 | 16 | % | $ | 702,443 | $ | 543,037 | $ | 159,406 | 29 | % | |||||||||||||
In the periods presented, advertising and promotional expenses are equivalent to the non-GAAP measure variable marketing expense. See Variable Marketing Expense and Variable Marketing Margin below for additional information.
Revenue is primarily driven by Network Partner demand for our products, which is matched to corresponding consumer requests. We adjust our selling and marketing expenditures dynamically in relation to anticipated revenue opportunities in order to ensure sufficient consumer inquiries to profitably meet such demand. An increase in a product's revenue is generally met by a corresponding increase in marketing spend, and conversely a decrease in a product's revenue is generally met by a corresponding decrease in marketing spend. This relationship exists for our Home, Consumer, and Insurance segments.
We adjusted our advertising expenditures in the third quarter and first nine months of 2026 compared to the third quarter and first nine months of 2025 in response to changes in Network Partner demand on our marketplace. We will continue to adjust selling and marketing expenditures dynamically in response to anticipated revenue opportunities.
General and administrative expense
General and administrative expense consists primarily of compensation and other employee-related costs (including stock-based compensation) for personnel engaged in finance, legal, tax, corporate information technology, human resources and executive management functions, as well as facilities and infrastructure costs and fees for professional services.
General and administrative expense was generally consistent in the third quarter of 2026 and the third quarter of 2025. General and administrative expense decreased $1.8 million in the first nine months of 2026 from the first nine months of 2025 primarily due to a decrease in compensation and benefits of $3.6 million, partially offset by an increase in professional fees of $1.3 million and technology costs of $0.8 million.
General and administrative expense as a percentage of revenue decreased to 8% in the third quarter of 2026 compared to 9% in the third quarter of 2025, and decreased to 8% in the first nine months of 2026 compared to 10% in the first nine months of 2025.
Product development
Product development expense consists primarily of compensation and other employee-related costs (including stock-based compensation) and third-party labor costs that are not capitalized, for employees and consultants engaged in the design, development, testing and enhancement of technology.
Product development expense decreased $1.1 million in the third quarter of 2026 compared to the third quarter of 2025 and decreased $2.9 million in the first nine months of 2026 from the first nine months of 2025. We continued to invest in internal development of new and enhanced features, functionality and business opportunities that we believe will enable us to better and more fully serve consumers and Network Partners.
Goodwill impairment
In the third quarter of 2026, we incurred goodwill impairment charges of $75.5 million in our Consumer reporting unit and $23.3 million in our Home reporting unit. See Note 5-Goodwill and Intangible Assets for additional information.
Litigation Settlements and Contingencies
In the first quarter of 2025, we incurred $15.2 million of expenses for litigation contingencies due to the Mantha litigation. See Note 11-Contingencies in the notes to the consolidated financial statements for additional information on litigation matters.
Interest expense, net
In the third quarter of 2026, we repurchased approximately $20.0 million in principal amount of our 2025 Term Loan (as defined herein) for $19.7 million, plus accrued and unpaid interest, and made a voluntary principal prepayment of $40.0 million on the 2025 Term Loan. As a result, we recognized a loss on the extinguishment of $0.7 million primarily due to the write-off of unamortized debt issuance costs and original issue discount costs, which is included in interest expense, net in the consolidated statement of operations and comprehensive income.
In the third quarter of 2025, we refinanced our September 15, 2021 credit agreement and our March 27, 2024 first lien term loan facility, which collectively had $402.8 million outstanding, with proceeds from the $400.0 million 2025 Term Loan and cash on hand at par plus accrued and unpaid interest. As a result of the refinancing, we recognized a loss on the extinguishment of $7.9 million due to the write-off of unamortized debt issuance costs and original issue discount costs which are included in interest expense, net in the consolidated statement of operations and comprehensive income.
In the first quarter of 2025, we repurchased approximately $20.0 million in principal amount of our 0.50% Convertible Senior Notes due July 15, 2025 (the "2025 Notes") for $19.7 million plus accrued and unpaid interest. As a result of the repurchase, we recognized a gain on the extinguishment of $0.3 million in the first nine months of 2025, which is included in interest expense, net in the consolidated statement of operations and comprehensive income. See Note 10-Debt for additional information.
Income tax expense
For the third quarter of 2026, the effective tax rate varied from the federal statutory rate of 21% primarily due to a non-cash discrete tax benefit resulting from the write-off of a deferred tax liability related to a goodwill impairment. This benefit is partially offset by state taxes and permanent non-deductible items. For the first nine months of 2026, these offsetting factors exceeded the discrete goodwill benefit.
Certain out-of-the-money stock options expired unexercised in October 2026, and as a result we are required to write-off the related deferred tax asset for share-based compensation, which will increase income tax expense by approximately $16.6 million in the fourth quarter of 2026, and increase the effective tax rate. See Note 9-Income Taxes for further information.
For the third quarter and first nine months of 2025, the effective tax rate varied from the federal statutory rate of 21% primarily due the change in the valuation allowance, net of the current period change in tax effected net indefinite-lived intangibles and current tax expense on taxable income.
Segment Profit
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 |
$ Change |
% Change |
2026 | 2025 |
$ Change |
% Change |
||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Home | |||||||||||||||||||||||||||||
| Revenue | $ | 41,454 | $ | 38,109 | $ | 3,345 | 9 | % | $ | 124,428 | $ | 115,546 | $ | 8,882 | 8 | % | |||||||||||||
|
Segment marketing expense (1)
|
29,053 | 26,327 | 2,726 | 10 | % | $ | 90,787 | $ | 77,562 | $ | 13,225 | 17 | % | ||||||||||||||||
| Segment profit | $ | 12,401 | $ | 11,782 | $ | 619 | 5 | % | $ | 33,641 | $ | 37,984 | $ | (4,343) | (11) | % | |||||||||||||
| Segment margin | 30% | 31% | 27% | 33% | |||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| Revenue | 67,203 | 66,173 | 1,030 | 2 | % | 193,796 | 184,725 | 9,071 | 5 | % | |||||||||||||||||||
|
Segment marketing expense (1)
|
37,628 | 30,970 | 6,658 | 21 | % | 103,668 | 90,315 | 13,353 | 15 | % | |||||||||||||||||||
| Segment profit | 29,575 | 35,203 | (5,628) | (16) | % | 90,128 | 94,410 | (4,282) | (5) | % | |||||||||||||||||||
| Segment margin | 44% | 53% | 47% | 51% | |||||||||||||||||||||||||
| Insurance | |||||||||||||||||||||||||||||
| Revenue | 234,931 | 203,512 | 31,419 | 15 | % | 666,053 | 497,321 | 168,732 | 34 | % | |||||||||||||||||||
|
Segment marketing expense (1)
|
180,709 | 155,864 | 24,845 | 16 | % | 503,902 | 370,967 | 132,935 | 36 | % | |||||||||||||||||||
| Segment profit | 54,222 | 47,648 | 6,574 | 14 | % | 162,151 | 126,354 | 35,797 | 28 | % | |||||||||||||||||||
| Segment margin | 23% | 23% | 24% | 25% | |||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Revenue | - | (2) | 2 | 100 | % | - | 44 | (44) | (100) | % | |||||||||||||||||||
|
Segment marketing expense (1)
|
58 | 68 | (10) | (15) | % | 200 | 138 | 62 | 45 | % | |||||||||||||||||||
| Other | (58) | (70) | 12 | 17 | % | (200) | (94) | (106) | (113) | % | |||||||||||||||||||
| Total | |||||||||||||||||||||||||||||
| Revenue | 343,588 | 307,792 | 35,796 | 12 | % | 984,277 | 797,636 | 186,641 | 23 | % | |||||||||||||||||||
|
Segment marketing expense (1)
|
247,448 | 213,229 | 34,219 | 16 | % | 698,557 | 538,982 | 159,575 | 30 | % | |||||||||||||||||||
| Segment profit | $ | 96,140 | $ | 94,563 | $ | 1,577 | 2 | % | $ | 285,720 | $ | 258,654 | $ | 27,066 | 10 | % | |||||||||||||
| Segment margin | 28% | 31% | 29% | 32% | |||||||||||||||||||||||||
|
(1)Segment marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related expenses, that are directly attributable to the segments' products. This measure excludes overhead, fixed costs and personnel-related costs.
|
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Segment profit is our primary segment operating metric. Segment profit is calculated as segment revenue less segment selling and marketing expenses attributed to variable costs paid for advertising, direct marketing and related expenses that are directly attributable to the segments' products. See Note 13-Segment Information in the notes to the consolidated financial statements for additional information on segments and a reconciliation of segment profit to pre-tax income.
Home
Home segment revenue increased 9% to $41.5 million in the third quarter of 2026 from the third quarter of 2025 and segment profit increased 5% to $12.4 million in the third quarter of 2026 from the third quarter of 2025. Segment margin decreased slightly to 30% in the third quarter of 2026 compared to 31% in the third quarter of 2025.
Our refinance product within our mortgage business matches consumers in the market looking to refinance their existing mortgages with our network lenders. Our purchase product within our mortgage business matches consumers in the market looking to buy a new home with our network lenders. Our mortgage business is directly impacted by the mortgage market in
which we participate and continues to see headwinds from a lack of in-the-money refinance borrowers given the current higher level of mortgage rates, and subdued home sales have pressured the volume of consumers searching for purchase loans. Existing home sales have been around the four million annual level in the United States, which has been steady for the last three years and is similar to the level of transactions recorded during the financial crisis in 2008 and 2009. We expect this environment to continue in 2026.
Consumer
Our Consumer segment revenue increased 2% to $67.2 million in the third quarter of 2026 from the third quarter of 2025, and segment profit decreased 16% to $29.6 million in the third quarter of 2026 from the third quarter of 2025. Segment margin decreased to 44% in the third quarter of 2026 compared to 53% in the third quarter of 2025 primarily due to lower close rates and an increase in marketing costs in our small business product. After the initial reactions to the Middle East hostilities and spiking oil prices, demand from small business owners improved in the third quarter of 2026 compared to the second quarter of 2026 and lender approval rates have stabilized.
See the section titled "Revenue" above for additional discussion of declines in product revenues within the Consumer segment.
Insurance
Insurance revenue increased 15% to $234.9 million in the third quarter of 2026 from the third quarter of 2025 and segment profit increased 14% to $54.2 million in the third quarter of 2026 from the third quarter of 2025. Segment margin was consistent at 23% in the third quarter of 2026 compared to the third quarter of 2025.
Insurance carriers continue to broadly generate strong underwriting results. Auto rate decreases in numerous states has led to increased competition for market share. The increased demand has created a competitive market to acquire customers seeking an auto policy, which has led to strong growth in both revenue as well as associated media costs. We expect advertising costs to remain elevated for the remainder of 2026. Our strategy is to capture the maximum level of carrier advertising budgets when we have an opportunity to drive incremental segment profit and take share from competitors. These incremental dollars have pressured overall segment margin while simultaneously contributing to robust segment profit.
Variable Marketing Expense and Variable Marketing Margin
We report variable marketing expense and variable marketing margin as supplemental measures to accounting principles generally accepted in the United States of America ("GAAP"). These related measures are the primary metrics by which we measure the effectiveness of our marketing efforts. Variable marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing, and related expenses, and excludes overhead, fixed costs, and personnel-related expenses. Variable marketing margin is a measure of the efficiency of our operating model, measuring revenue after subtracting variable marketing expense. Our operating model is highly sensitive to the amount and efficiency of variable marketing expenditures, and our proprietary systems are able to make rapidly changing decisions concerning the deployment of variable marketing expenditures (primarily but not exclusively online and mobile advertising placement) based on proprietary and sophisticated analytics. We believe that investors should have access to the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. We provide and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures discussed below.
Variable marketing expense is defined as the expense attributable to variable costs paid for advertising, direct marketing and related expenses, and excluding overhead, fixed costs and personnel-related expenses. The majority of these variable advertising costs are expressly intended to drive traffic to our websites and these variable advertising costs are included in selling and marketing expense on our consolidated statements of operations and comprehensive income. Variable marketing margin is defined as revenue less variable marketing expense.
The following shows the calculation of variable marketing margin:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenue | $ | 343,588 | $ | 307,792 | $ | 984,277 | $ | 797,636 | |||||||||||||||
| Variable marketing expense | 248,640 | 214,568 | 702,443 | 543,037 | |||||||||||||||||||
| Variable marketing margin | $ | 94,948 | $ | 93,224 | $ | 281,834 | $ | 254,599 | |||||||||||||||
Below is a reconciliation of selling and marketing expense, the most directly comparable GAAP measure, to variable marketing expense:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Selling and marketing expense | $ | 260,508 | $ | 225,051 | $ | 735,529 | $ | 574,555 | |||||||||||||||
| Non-variable selling and marketing expense | (11,868) | (10,483) | (33,086) | (31,518) | |||||||||||||||||||
| Variable marketing expense | $ | 248,640 | $ | 214,568 | $ | 702,443 | $ | 543,037 | |||||||||||||||
The following is a reconciliation of net (loss) income, the most directly comparable GAAP measure, to variable marketing margin:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Net (loss) income | $ | (72,364) | $ | 10,165 | $ | (45,524) | $ | 6,652 | |||||||||||||||
| Adjustments to reconcile to variable marketing margin: | |||||||||||||||||||||||
| Cost of revenue | 11,670 | 11,017 | 34,635 | 30,954 | |||||||||||||||||||
|
Non-variable selling and marketing expense (1)
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11,868 | 10,483 | 33,086 | 31,518 | |||||||||||||||||||
| General and administrative expense | 26,437 | 26,229 | 80,137 | 81,923 | |||||||||||||||||||
| Product development | 10,243 | 11,297 | 31,742 | 34,674 | |||||||||||||||||||
| Depreciation | 4,147 | 3,995 | 12,609 | 12,533 | |||||||||||||||||||
| Amortization of intangibles | 1,258 | 1,288 | 3,834 | 3,902 | |||||||||||||||||||
| Goodwill impairment | 98,823 | - | 98,823 | - | |||||||||||||||||||
| Restructuring and severance | 519 | 80 | 3,297 | 1,235 | |||||||||||||||||||
| Litigation settlements and contingencies | 260 | 69 | 1,036 | 15,279 | |||||||||||||||||||
| Interest expense, net | 9,129 | 17,907 | 26,178 | 37,393 | |||||||||||||||||||
| Other (income) expense | (1,009) | (732) | (2,210) | (2,368) | |||||||||||||||||||
| Income tax (benefit) expense | (6,033) | 1,426 | 4,191 | 904 | |||||||||||||||||||
| Variable marketing margin | $ | 94,948 | $ | 93,224 | $ | 281,834 | $ | 254,599 | |||||||||||||||
| (1) | Represents the portion of selling and marketing expense not attributable to variable costs paid for advertising, direct marketing and related expenses. Includes overhead, fixed costs and personnel-related expenses. | ||||
Adjusted EBITDA
We report Adjusted EBITDA as a supplemental measure to GAAP. This measure is the primary metric by which we evaluate the performance of our businesses, on which our marketing expenditures and internal budgets are based and by which,
in most years, management and many employees are compensated. We believe that investors should have access to the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. We provide and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures discussed below.
Definition of Adjusted EBITDA
We report Adjusted EBITDA as net income adjusted to exclude interest, income tax, amortization of intangibles and depreciation, and to further exclude (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) gain/loss on investments, (5) restructuring and severance expenses, (6) litigation settlements and contingencies, (7) acquisitions and dispositions income or expense (including with respect to changes in fair value of contingent consideration), (8) contributions to the LendingTree Foundation, (9) dividend income, and (10) one-time items. Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations of certain expenses, including depreciation, non-cash compensation and acquisition-related accounting. We endeavor to compensate for the limitations of the non-GAAP measures presented by also providing the comparable GAAP measures with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measures. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.
One-Time Items
Adjusted EBITDA is adjusted for one-time items, if applicable. Items are considered one-time in nature if they are non-recurring, infrequent, or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. For the periods presented below, there are no adjustments for one-time items.
Non-Cash Expenses that are Excluded from Adjusted EBITDA
Non-cash compensation expense consists principally of expense associated with grants of restricted stock, restricted stock units and stock options, some of which awards have performance-based vesting conditions. Non-cash compensation expense also includes expense associated with employee stock purchase plans. These expenses are not paid in cash, and we include the related shares in our calculations of fully diluted shares outstanding. Upon settlement of restricted stock units, exercise of certain stock options or vesting of restricted stock awards, the awards may be settled, on a net basis, with us remitting the required tax withholding amount from our current funds.
Amortization of intangibles are non-cash expenses relating primarily to intangible assets acquired through acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as purchase agreements, technology and customer relationships, are valued and amortized over their estimated lives.
The following table is a reconciliation of net (loss) income, the most directly comparable GAAP measure, to Adjusted EBITDA.
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Net (loss) income | $ | (72,364) | $ | 10,165 | $ | (45,524) | $ | 6,652 | |||||||||||||||
| Adjustments to reconcile to Adjusted EBITDA: | |||||||||||||||||||||||
| Amortization of intangibles | 1,258 | 1,288 | 3,834 | 3,902 | |||||||||||||||||||
| Depreciation | 4,147 | 3,995 | 12,609 | 12,533 | |||||||||||||||||||
| Restructuring and severance | 519 | 80 | 3,297 | 1,235 | |||||||||||||||||||
| Loss on impairments and disposal of assets | 3 | 593 | 6 | 847 | |||||||||||||||||||
| Loss on investments | - | - | 359 | 1,225 | |||||||||||||||||||
| Goodwill impairment | 98,823 | - | 98,823 | - | |||||||||||||||||||
| Non-cash compensation expense | 4,896 | 5,002 | 14,160 | 19,836 | |||||||||||||||||||
| Contribution to LendingTree Foundation | - | - | 400 | - | |||||||||||||||||||
| Litigation settlements and contingencies | 260 | 69 | 1,036 | 15,279 | |||||||||||||||||||
| Interest expense, net | 9,129 | 17,907 | 26,178 | 37,393 | |||||||||||||||||||
| Dividend income | (1,008) | (730) | (2,568) | (3,592) | |||||||||||||||||||
| Income tax (benefit) expense | (6,033) | 1,426 | 4,191 | 904 | |||||||||||||||||||
| Adjusted EBITDA | $ | 39,630 | $ | 39,795 | $ | 116,801 | $ | 96,214 | |||||||||||||||
Financial Condition, Liquidity and Capital Resources
General
As of September 30, 2026, we had $82.7 million of cash and cash equivalents, compared to $81.1 million of cash and cash equivalents as of December 31, 2025.
We expect our cash and cash equivalents, cash flows from operations to be sufficient to fund our operating needs for the next twelve months and beyond. We will continue to monitor the impact of the current economic conditions, including interest rates and inflation on our liquidity and capital resources.
In the third quarter of 2026, we repurchased $20.0 million in outstanding principal of the 2025 Term Loan and made a voluntary principal prepayment of $40.0 million on the 2025 Term Loan.
For additional information, See Note 10-Debt, in the note to the consolidated financial statements included elsewhere in this report.
Equity Distribution Agreement
In July 2024, we entered into an Equity Distribution Agreement in connection with the establishment of an ATM Equity Program under which we may sell up to an aggregate of $50.0 million of shares of our common stock. No sales have been made under the Equity Distribution Agreement since its inception.
Credit Facilities
On August 21, 2025, we entered into a credit agreement (the "2025 Credit Agreement"), consisting of a $75.0 million revolving credit facility (the "2025 Revolving Facility") and a $400.0 million term loan facility (the "2025 Term Loan" and together with the 2025 Revolving Facility, the "2025 Credit Facility"), which matures on August 21, 2030. Proceeds from the 2025 Term Loan were used to refinance two previously outstanding term loans and for working capital and general corporate purposes.
As of November 6, 2026, we had $336.0 million borrowings outstanding under the 2025 Term Loan and we have $75.0 million available for borrowing under the 2025 Revolving Facility.
See Note 10-Debt for additional information.
Cash Flows
Our cash flows are as follows:
|
Nine Months Ended September 30, |
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| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by operating activities | $ | 76,448 | $ | 56,575 | |||||||
| Net cash used in investing activities | (8,825) | (6,926) | |||||||||
| Net cash used in financing activities | (65,987) | (87,665) | |||||||||
Cash Flows from Operating Activities
Our largest source of cash provided by our operating activities is revenues generated by our products. Our primary uses of cash from our operating activities include advertising and promotional payments. In addition, our uses of cash from operating activities include compensation and other employee-related costs, other general corporate expenditures, litigation settlements and contingencies, and income taxes.
Net cash provided by operating activities increased in the first nine months of 2026 from the first nine months of 2025 primarily due to increases in revenue, partially offset by operating costs.
Cash Flows from Investing Activities
Net cash used in investing activities in the first nine months of 2026 and 2025 of $8.8 million and $6.9 million, respectively, consisted of capital expenditures primarily related to internally developed software, partially offset by proceeds from the sale of fixed assets in the first nine months of 2025.
Cash Flows from Financing Activities
Net cash used in financing activities in the first nine months of 2026 of $66.0 million consisted primarily of $62.7 million of payments on the 2025 Term Loan and $3.3 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options.
Net cash used in financing activities in the first nine months of 2025 of $87.7 million consisted primarily of the repurchase of the 2025 Notes for $115.0 million, term loan repayments of $409.4 million, and $2.8 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options, partially offset by net proceeds from term loans of $439.5 million.
New Accounting Pronouncements and Critical Accounting Estimates
For information regarding new accounting pronouncements and critical accounting estimates, see Note 2-Significant Accounting Policies, in Part I, Item 1 Financial Statements.
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