LendingTree 2025 Q1 Earnings Misses Targets as Net Income Declines 1340%

LendingTree (TREE) reported its fiscal 2025 Q1 earnings on May 5th, 2025. The company posted a significant increase in revenue, reaching $239.73 million, a 42.9% rise from the previous year. However, the earnings report fell short of expectations, with a net loss of $12.38 million, translating to a loss of $0.92 per share. This marked a dramatic decline from a profit of $1.02 million ($0.08 per share) reported in Q1 2024. LendingTree adjusted its guidance downward for the fiscal year amidst challenging market conditions.

Revenue

In the first quarter of 2025, LendingTree experienced a strong revenue growth of 42.9%, bringing in $239.73 million compared to $167.77 million in the same period last year. The Insurance segment stood out with a remarkable 71% increase, generating $146.7 million. Meanwhile, the Consumer segment contributed $56 million, while the Home segment added $37 million. Other revenue sources provided an additional $24,000, culminating in the overall robust growth.

Earnings/Net Income

LendingTree reported a net loss of $12.38 million in Q1 2025, a sharp reversal from the $1.02 million net income in Q1 2024. The EPS dropped to a loss of $0.92 per share, indicating a challenging earnings period for the company.

Post-Earnings Price Action Review

LendingTree's stock experienced notable volatility following its earnings release. The strategy of purchasing TREE shares post-earnings and holding for 30 days resulted in significant financial losses over the past five years. The backtest revealed a dismal return of -83.78%, with a Sharpe Ratio of -0.67 and a staggering maximum drawdown of -88.74%. The share price demonstrated considerable volatility, with fluctuations reaching 48.22%. Such volatility underscores the high-risk nature of investing in LendingTree shares based on post-earnings strategies.

CEO Commentary

LendingTree's CEO highlighted the company's strong performance in the first quarter, noting that adjusted earnings per share reached 99 cents, significantly surpassing analyst expectations. The revenue growth of 43% year-over-year to $239.7 million was emphasized, though it slightly missed the consensus estimate. The CEO pointed out key growth drivers, particularly in the Insurance segment, which saw a remarkable 71% increase in revenue. However, challenges were acknowledged, especially regarding the revenue outlook for the full year, which was revised downward. The CEO conveyed a cautious yet optimistic tone, focusing on strategic investments to enhance market positioning and drive future growth.

Guidance

LendingTree has provided updated guidance for the second quarter of 2025, expecting revenue between $241 million and $248 million, with adjusted EBITDA projected at $29 million to $31 million. For the full year, the company has lowered its revenue expectations to a range of $955 million to $995 million, down from the previous estimate of $985 million to $1.025 billion. Adjusted EBITDA guidance for the year has also been revised to $116 million to $124 million, reflecting a more cautious outlook amidst changing market conditions.

Additional News

In recent developments, LendingTree experienced a notable shift in stock ratings, as StockNews.com downgraded the stock from a strong-buy to a buy rating, leading to a gap down in share price. The stock opened at $44.00 after closing at $54.12, and last traded at $38.90. Meanwhile, insider trading activity was observed as COO Scott Peyree acquired 9,794 shares, bolstering his position by 11.16%. This purchase, valued at approximately $451,797, reflects insider confidence in the company's future. Institutional trading saw changes with Nuveen Asset Management LLC and Tower Research Capital LLC TRC adjusting their holdings, indicating ongoing interest among institutional investors.