Core Insights - Pagaya Technologies Ltd. (PGY) and LendingTree, Inc. (TREE) are fintech firms aiming to innovate the lending sector through different approaches [1][2] - PGY leverages AI for credit underwriting and securitization, while TREE operates an online marketplace connecting borrowers and lenders [1][2] Pagaya's Case - Pagaya's adaptable business model and capital-efficient structure allow it to diversify beyond personal loans into auto lending and point-of-sale financing, enhancing resilience [3][11] - The company has established a network of over 135 institutional partners and utilizes forward flow agreements for funding stability during market disruptions [4][6] - Pagaya's proprietary technology, including the Pre-screen solution, enables lenders to offer pre-approved loans, improving credit access with minimal marketing costs [5] - The capital-light model limits credit and market risk, maintaining liquidity and minimizing loan write-downs, with $206.5 million in cash against $507.8 million in debt as of March 31, 2025 [6][7] LendingTree's Case - LendingTree has evolved its strategy to diversify into non-mortgage products, including personal, auto, small business, and student loans, enhancing its marketplace offerings [8][9] - The launch of the WinCard in 2023 marks its entry into the branded credit market, while initiatives like SPRING and TreeQual improve cross-selling opportunities [9][10] - LendingTree's investment in EarnUp reflects its commitment to a tech-enabled ecosystem for financial health management [10] Financial Performance and Projections - Pagaya expects 2025 revenues between $1.175 billion and $1.3 billion, with year-over-year growth of 19.9% and 15.7% for 2025 and 2026, respectively [19] - The consensus estimate for Pagaya's earnings indicates a significant increase of 195.2% for 2025 [19] - In contrast, LendingTree projects 2025 revenues between $955 million and $995 million, with lower growth rates of 9.2% and 6.4% for 2025 and 2026, respectively [20] - LendingTree's earnings growth is expected to be 43.9% for 2025, but a decline of 3.5% for 2026 [21] Market Performance and Valuation - Pagaya's stock has surged 130.3% this year, while LendingTree's has decreased by 4.6% [13] - Pagaya's price-to-book (P/B) ratio is 3.66X, compared to LendingTree's 4.66X, indicating a more attractive valuation for Pagaya [14][15] - Pagaya's return on equity (ROE) is 9.28%, lower than LendingTree's 14.76%, suggesting LendingTree is more efficient in generating profits [15] Investment Outlook - Pagaya's rapid scaling, capital-light model, and strong growth outlook make it a compelling investment opportunity compared to LendingTree [23][24] - While LendingTree has a well-established marketplace, its growth is slowing, making Pagaya appear better positioned for long-term gains [24]

Revenue Growth - Revenue for the first quarter of 2025 increased by 43% to $239.7 million compared to $167.8 million in the first quarter of 2024[145] - The Insurance segment saw a revenue increase of $60.8 million, or 71%, reaching $146.7 million in Q1 2025, driven by a 41% increase in revenue per consumer and a 22% increase in volume[147] - The Home segment's revenue rose by $6.6 million, or 22%, to $37.0 million in Q1 2025, attributed to growth in home equity loans and mortgage products[148] - Revenue from home equity loans and lines of credit increased by $5.0 million, or 24%, to $25.8 million, with a 50% increase in volume[149] - The Consumer segment's revenue increased by $4.6 million, or 9%, to $56.0 million in Q1 2025[145] - Revenue from mortgage products increased by $1.6 million, or 16%, to $11.2 million in Q1 2025 from Q1 2024, driven by the refinance mortgage product[151] - Consumer segment revenue rose by $4.6 million, or 9%, to $56.0 million in Q1 2025, primarily due to increases in personal and small business loans[152] - Personal loans revenue increased by $3.3 million, or 16%, to $23.4 million in Q1 2025, supported by a 36% increase in volume[153] - Small business revenue surged by $6.4 million, or 48%, in Q1 2025, attributed to more consumers completing request forms and higher revenue per consumer[154] - Total revenue for the company increased by $71.96 million, or 43%, to $239.73 million in Q1 2025 compared to Q1 2024[172] Costs and Expenses - Total costs and expenses rose by 54% to $246.8 million in Q1 2025, compared to $160.6 million in Q1 2024[145] - Selling and marketing expenses increased by $64.6 million in Q1 2025, primarily due to higher advertising and promotional expenditures[158] - General and administrative expenses rose by $4.9 million in Q1 2025, with compensation and benefits increasing by $4.8 million[163] - Variable marketing expense increased to $162.0 million in Q1 2025 from $98.3 million in Q1 2024, reflecting a 64.8% rise[185] Profitability and Loss - Operating loss for Q1 2025 was $7.1 million, a significant decline from an operating income of $7.2 million in Q1 2024[145] - Net loss for Q1 2025 was $12.4 million, compared to a net income of $1.0 million in Q1 2024, marking a 1,318% decrease[145] - Adjusted EBITDA for Q1 2025 was $24.6 million, up from $21.6 million in Q1 2024, marking a 13.9% increase[192] User Growth and Engagement - The company added 0.8 million new users to its Spring platform, bringing total sign-ups to 32.1 million as of March 31, 2025[140] - Approximately $3.7 million of revenue, or 2% of total revenue, in Q1 2025 was attributed to registered Spring users who initiated transactions from the Spring platform[140] Cash Flow and Financing - As of March 31, 2025, cash and cash equivalents were $126.4 million, an increase from $106.6 million as of December 31, 2024[193] - Net cash provided by financing activities in Q1 2025 was $23.4 million, primarily from the 2024 Term Loan delayed draw[207] - The company repurchased approximately $20.0 million in principal amount of its 2025 notes for $19.7 million, resulting in a gain of $0.3 million[194] - The company expects cash flows from operations to be sufficient to fund operating needs for the next twelve months and beyond[195] Debt and Interest Rates - The company had $243.1 million outstanding under the 2021 Term Loan as of May 2, 2025[199] - A hypothetical 100-basis point change in market interest rates would result in a $2.4 million annual effect on interest paid under the Credit Facility and a $1.6 million annual effect on the 2024 Term Loan[210] - As of May 2, 2025, the Company had $243.1 million outstanding on its 2021 Term Loan Facility and $162.5 million outstanding on its 2024 Term Loan[210] Market Conditions - Fluctuations in interest rates significantly impact consumer demand for new mortgages and refinancing activity, affecting lender demand for mortgage leads[211] - When interest rates decline, consumer demand for mortgage refinancing increases, leading to higher website traffic and lower selling and marketing costs[211] - Conversely, when interest rates increase, consumer demand for refinancing decreases, resulting in lower website traffic and higher selling and marketing efforts[211] - Increased lender demand for leads occurs in a rising rate environment, which can lead to higher revenue earned per matched lead despite reduced refinancing demand[211] Insurance Segment Performance - Insurance revenue increased by 71% to $146.7 million in Q1 2025, with segment profit rising by 16% to $38.7 million[180] - The Insurance segment margin decreased to 26% in Q1 2025 from 39% in Q1 2024, attributed to re-entering higher cost marketing channels to meet increased carrier demand[181] - Cost of revenue as a percentage of revenue decreased to 4% in Q1 2025 from 5% in Q1 2024[156]

Core Insights - LendingTree, Inc. (TREE) reported an adjusted net income per share of 99 cents for Q1 2025, exceeding the Zacks Consensus Estimate of 74 cents and up from 70 cents in the prior-year quarter [1] - The company's total revenues grew by 43% year over year to $239.7 million, although this figure missed the Zacks Consensus Estimate by 1.8% [3] - A significant increase in total costs, which rose by 15.9% to $9.9 million, negatively impacted overall performance [3] Financial Performance - The adjusted EBITDA for Q1 2025 was $24.6 million, reflecting a 14.3% increase from the previous year [3] - The variable marketing margin increased to $77.7 million, up 11.9% year over year [3] - The company reported a GAAP net loss of $12.4 million, contrasting with a net income of $1 million in the same quarter last year [2] Cash and Debt Position - As of March 31, 2025, cash and cash equivalents stood at $126.4 million, an increase from $106.6 million as of December 31, 2024 [4] - Long-term debt rose to $387.7 million from $344.1 million as of December 31, 2024 [4] Future Outlook - For Q2 2025, total revenues are projected to be between $241 million and $248 million, with adjusted EBITDA expected to be in the range of $29-$31 million [6] - The 2025 revenue outlook has been updated to between $955 million and $995 million, down from the previous estimate of $985-$1.03 billion [7] - Adjusted EBITDA for 2025 is projected to be $116-$124 million, slightly revised from the earlier estimate of $116-$126 million [7] Strategic Insights - The company is focusing on inorganic growth to strengthen its online lending platform, with first-quarter results benefiting from increased EBITDA [8] - Efforts to diversify non-mortgage product offerings are expected to support future revenue growth [8]

Core Insights - Tree.com reported revenue of $239.7 million for the quarter ended March 2025, reflecting a year-over-year increase of 42.9% [1] - The company's EPS was $0.99, up from $0.70 in the same quarter last year, with an EPS surprise of +33.78% compared to the consensus estimate of $0.74 [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $244.03 million, resulting in a revenue surprise of -1.77% [1] Revenue Breakdown - Consumer segment revenue was $56 million, slightly below the average estimate of $56.87 million, with a year-over-year change of +8.7% [4] - Home segment revenue reached $37 million, exceeding the average estimate of $34.74 million, representing a year-over-year increase of +21.7% [4] - Insurance segment revenue was $146.70 million, below the average estimate of $152.75 million, but showed a significant year-over-year increase of +70.8% [4] Segment Profit Analysis - Home segment profit was reported at $13.10 million, surpassing the average estimate of $10.88 million [4] - Insurance segment profit was $38.70 million, which was lower than the estimated $41.58 million [4] - Consumer segment profit was $27.10 million, slightly below the average estimate of $27.92 million [4] Stock Performance - Tree.com shares have returned -3.5% over the past month, compared to a -0.7% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating potential for outperformance in the near term [3]

Company Performance - Tree.com reported quarterly earnings of $0.99 per share, exceeding the Zacks Consensus Estimate of $0.74 per share, and up from $0.70 per share a year ago, representing an earnings surprise of 33.78% [1] - The company posted revenues of $239.7 million for the quarter ended March 2025, which was 1.77% below the Zacks Consensus Estimate, but an increase from $167.8 million year-over-year [2] - Over the last four quarters, Tree.com has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance - Tree.com shares have increased approximately 33.1% since the beginning of the year, contrasting with the S&P 500's decline of 5.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.85 on revenues of $244.31 million, and for the current fiscal year, it is $3.85 on revenues of $1.01 billion [7] Industry Outlook - The Financial - Mortgage & Related Services industry, to which Tree.com belongs, is currently ranked in the bottom 9% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Tree.com may be influenced by the overall outlook for the industry, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than a factor of 2 to 1 [8]

Financial Data and Key Metrics Changes - All three business segments generated solid revenue growth in Q1 2025, but adjusted EBITDA came in just below forecast due to temporary regulatory headwinds in the insurance business and one-time expenses [5][6] - Insurance revenue grew 71% year over year in Q1 2025, despite challenges [6] Business Line Data and Key Metrics Changes - The insurance segment faced temporary regulatory challenges but is expected to recover, with continued annual revenue and VMD growth forecasted [6] - The lending segment benefited from growth in small business and personal loan products, with expectations for record revenue in small business for 2025 [7][36] - Home equity lending demand increased, driving performance in the home segment, despite high mortgage rates suppressing new home buyer demand [8] Market Data and Key Metrics Changes - The insurance segment was impacted by the FCC's pending one-to-one consent rule, which has since been rescinded, allowing for expected recovery [6] - The mortgage marketplace remains largely dormant, with significant growth potential once interest rates decrease [39] Company Strategy and Development Direction - The company is committed to managing operating expenses while investing in growth initiatives to achieve positive operating leverage [8] - The business model is resilient, allowing for adjustments in marketing strategies based on lender or carrier demand [23][67] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about strong adjusted EBITDA growth of 15% at the midpoint of the annual outlook [5] - There are no immediate concerns regarding tariffs impacting the business, although secondary effects from interest rates or inflation are monitored [9] - The company is prepared to manage costs and adjust marketing spend if necessary, ensuring flexibility in response to market conditions [66][67] Other Important Information - The company has reached a settlement related to litigation with QuoteWizard, with a liability of $19 million payable in installments [71] - The student loan business has been largely exited due to declining demand, but the company is prepared to re-enter if market conditions improve [77][80] Q&A Session Summary Question: Potential headwinds to profitability from tariffs - Management indicated that insurance clients feel confident about profitability and can manage potential tariff impacts without affecting marketing strategies [13][15] Question: Revised guidance and macroeconomic considerations - The company is not baking in macroeconomic changes into guidance but will monitor delinquencies and consumer spending closely [18][20] Question: Small business revenue projections - Small business revenue is expected to continue growing, with a strong direct sales team contributing to improved unit economics [31][36] Question: Mortgage marketplace growth potential - Management believes that a shift in mortgage rates to a five-handle could unlock significant growth in the mortgage marketplace [39] Question: VMM margin expectations in insurance - Long-term expectations for VMM margins are in the low to mid-30s as revenue normalizes [43] Question: Home segment margin sustainability - The home segment margin is expected to remain strong due to effective home equity monetization [50][51] Question: Consumer behavior changes post-quarter end - Consumer demand across most products remains strong, with some caution observed in mortgage purchase and refinance traffic [56][58] Question: Expense management in a downturn - The company has identified cost-saving levers and is prepared to respond quickly to any downturns in demand [66][67] Question: Update on the student loan business - The company has largely exited the student loan business due to low demand but is prepared to re-enter if conditions improve [77][80]

Financial Data and Key Metrics Changes - All three business segments generated solid revenue growth in Q1 2025, but adjusted EBITDA came in just below forecast due to temporary regulatory headwinds in the insurance business and one-time expenses related to benefits and legal fees [5][6] - The company is forecasting strong adjusted EBITDA growth of 15% at the midpoint of its annual outlook [5] Business Line Data and Key Metrics Changes - The insurance segment grew revenue by 71% year over year in Q1 2025 despite facing challenges from regulatory changes and a marketing correction from a specific carrier [6] - The consumer lending segment benefited from growth in small business and personal loan products, with expectations for record revenue in small business for 2025 [7][8] - The home segment performed well due to increased demand for home equity loans, although high mortgage rates continue to suppress demand for new home buyers and refinancing [8] Market Data and Key Metrics Changes - The insurance segment is expected to see annual revenue and VMD growth despite recent challenges, with optimism for improved performance in the second half of the year [21][22] - The mortgage marketplace remains largely dormant, with significant growth anticipated if interest rates drop to around 5% [39] Company Strategy and Development Direction - The company remains committed to managing operating expenses while investing in growth initiatives to achieve positive operating leverage on future revenue growth [10] - The focus on small business lending is expected to continue, with plans to grow the lender network and improve unit economics [30][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the remainder of 2025, highlighting the resilience of the business model and the ability to adjust to market changes [81] - There are no immediate concerns regarding tariffs impacting the business, although secondary effects from interest rates or inflation could arise [10] Other Important Information - The company has reached a settlement in principle regarding the QuoteWizard litigation, with a liability of $19 million on the balance sheet payable in three installments [69] Q&A Session Summary Question: Potential headwinds to profitability from tariffs - Management indicated that insurance carriers feel confident about their profitability and are monitoring the situation closely, suggesting that tariffs may not significantly impact marketing strategies [14][16] Question: Revised guidance and macroeconomic considerations - The company is not baking in any macroeconomic changes into its guidance but will monitor delinquencies and consumer spending closely [18][20] Question: Small business revenue expectations - Management confirmed strong growth in the small business segment, with expectations to maintain quarterly revenue levels throughout the year [30][35] Question: Mortgage marketplace growth potential - Management acknowledged the dormant state of the mortgage marketplace but indicated that a drop in interest rates could unlock significant growth [39] Question: Insurance segment VMM margin expectations - Management expects the VMM margin to normalize in the low to mid-30s over time, with continued improvement anticipated [44][46] Question: Home segment margin sustainability - The company expects home equity monetization to remain strong, supporting sustainable margins going forward [50][51] Question: Changes in consumer behavior and search activity - Management reported that consumer demand across most products remains strong, with some caution observed in the mortgage purchase and refinance traffic [55][56] Question: Expense management in a challenging macro environment - Management highlighted the ability to manage expenses effectively through zero-based budgeting and the flexibility to adjust marketing spend based on demand [64][66] Question: Update on the student loan business - The company has largely exited the student loan business due to declining demand but remains open to re-entering if market conditions improve [74][76]

Financial Performance - Q1 2025 consolidated revenue reached $239.7 million, a 43% increase year-over-year, with Insurance revenue growing 71%, Home segment up 22%, and Consumer segment up 9%[8] - Adjusted EBITDA for Q1 2025 was $24.6 million, representing a 10% margin on revenue, despite regulatory headwinds and non-recurring expenses[10] - Adjusted net income for Q1 2025 was $13.5 million, translating to $0.99 per share, reflecting a 47% increase year-over-year[11] - For Q1 2025, total revenue was $239.7 million, an increase from $167.8 million in Q1 2024, representing a year-over-year growth of approximately 42.8%[33] - The company reported a net loss of $12.4 million in Q1 2025, compared to a net income of $1.0 million in Q1 2024[33] - Net loss for Q1 2025 was $12,375,000, representing a net loss margin of 5% of revenue[41] - Adjusted EBITDA for Q1 2025 was $24,626,000, which is 10% of revenue[43] - Adjusted net income per share is calculated by dividing adjusted net income by adjusted weighted average diluted shares outstanding, with specific treatment for potentially dilutive securities during GAAP loss periods[56] Segment Performance - The Insurance segment is expected to continue its growth trajectory in 2025, supported by a favorable carrier profitability backdrop and optimized marketing strategies[3] - The Consumer segment's small business loan revenue grew 48% year-over-year, driven by a 50% increase in the concierge sales team, enhancing service levels and conversion rates[4] - Home segment revenue was $37.0 million, up 22% year-over-year, with segment profit increasing 36% to $13.1 million[16] - The Insurance segment is positioned for continued growth following last year's record performance despite regulatory changes[29] - The Home segment has seen consistent demand for home equity loans, contributing to overall revenue growth[29] - The Consumer segment's results are improving, driven by increased demand for small business and personal loans[29] Cash and Assets - The company held $126 million in cash at the end of the quarter, with plans to meet the remaining $95 million convertible note balance at maturity[24] - Cash and cash equivalents increased to $126.4 million as of March 31, 2025, from $106.6 million at the end of 2024[35] - Total assets rose to $777.1 million as of March 31, 2025, compared to $767.7 million at the end of 2024[35] - The company’s balance sheet continues to strengthen, which is expected to help lower interest expenses over time[29] Expenses and Costs - General and administrative expenses increased to $30,660,000 in Q1 2025 from $29,111,000 in Q4 2024[41] - Non-variable selling and marketing expenses were $10,750,000 in Q1 2025, slightly down from $11,084,000 in Q4 2024[41] - Interest expense for Q1 2025 was $9,084,000, compared to $9,950,000 in Q4 2024[43] - Litigation settlements and contingencies amounted to $15,212,000 in Q1 2025, significantly higher than $6,000 in Q4 2024[43] - The company reported a significant increase in non-cash compensation to $9,867,000 in Q1 2025 from $6,494,000 in Q4 2024[43] Market Outlook and Strategy - The company anticipates ongoing expense discipline and targeted growth initiatives to drive strong performance throughout the year[5] - Full-year 2025 revenue is projected to be between $955 million and $995 million, down from the previous range of $985 million to $1,025 million[28] - The second-quarter 2025 revenue is expected to be between $241 million and $248 million[28] - The corporate credit rating was upgraded to "B" with a positive outlook by S&P, indicating improved EBITDA profile and reduced leverage[25] - Forward-looking statements highlight potential risks including adverse mortgage market conditions, interest rates, and competition, which could impact future performance[61] - The company emphasizes the importance of maintaining brand recognition and attracting consumers cost-effectively as part of its strategic outlook[61] - Future product development and service enhancements are critical for maintaining competitive advantage in the market[61] - The company is focused on integrating potential acquisitions successfully to enhance operational efficiency and market presence[61] - Risks related to regulatory compliance and network security are acknowledged as significant factors that could affect business operations[61]

Core Insights - LendingTree, Inc. reported a strong performance for Q1 2025, with total revenue reaching $239.7 million, a 43% increase year-over-year [5][9] - The company experienced growth across all three business segments, demonstrating the resilience of its financial performance [2][3] Financial Performance - Adjusted EBITDA for the quarter was $24.6 million, reflecting a 14% year-over-year growth [2][6] - The net loss for the quarter was $(12.4) million, or $(0.92) per diluted share, compared to a net income of $1.0 million in Q1 2024 [5][6][9] - Variable marketing margin was $77.7 million, a 12% increase from the previous year [8][9] Segment Performance - Home segment revenue was $37.0 million, up 22% year-over-year, with segment profit increasing by 36% to $13.1 million [7][9] - Consumer segment revenue reached $56.0 million, a 9% increase, with personal loans revenue growing by 16% [7][9] - Insurance segment revenue surged by 71% to $146.7 million, translating into a segment profit of $38.7 million, up 16% [7][9] Marketing and Operational Efficiency - The company emphasized its commitment to operational excellence, which has led to broad growth across all segments [3] - Fixed costs are being managed carefully while strategically investing in growth initiatives, establishing a culture of efficiency [3] Outlook - LendingTree updated its full-year 2025 outlook, projecting revenue between $955 million and $995 million [18] - The second-quarter revenue is expected to be between $241 million and $248 million [18]

Core Viewpoint - LendingTree, Inc. (TREE) and NerdWallet, Inc. (NRDS) are competing in the online lending market, each with distinct strategies and product offerings, facing challenges from changing consumer behaviors and market uncertainties [1][2]. Summary by Company NerdWallet, Inc. (NRDS) - NRDS operates primarily as an affiliate marketing provider, generating revenue through partnerships when users engage with financial products [3]. - The company has a strong market presence in personal finance, offering tools that help individuals and small to medium businesses make informed financial decisions [4]. - NRDS's application platform provides value across various financial products, including credit cards, mortgages, and personal loans [5]. - The user base has significantly grown, aided by strategic partnerships and the recent acquisition of Next Door Lending, enhancing its mortgage offerings [6]. - NRDS is expanding internationally, with growth opportunities in the U.K., Canada, and Australia, and expects adjusted EBITDA of $106-$116 million for 2025, slightly down from $108 million in 2024 [10]. LendingTree, Inc. (TREE) - TREE functions as an online marketplace connecting consumers with financial service providers, focusing on products like mortgages and personal loans [11]. - The company is diversifying its offerings, particularly in non-mortgage products, and has seen a compound annual growth rate of 3.3% in these revenue streams over the past three years [12][13]. - TREE is leveraging technology to enhance user experience and has made strategic investments, such as in EarnUp, to build a comprehensive financial health management ecosystem [14]. - The company anticipates adjusted EBITDA of $116-$126 million for 2025, indicating an increase of 11-21% from 2024 [14]. Financial Estimates Comparison - For NRDS, the Zacks Consensus Estimate for 2025 sales and EPS indicates year-over-year growth of 9.1% and 410%, respectively [15]. - For TREE, the estimates suggest year-over-year growth of 11.9% in sales and 20.7% in EPS [16]. Price Performance and Valuation - Both TREE and NRDS have underperformed the industry over the past year, with TREE showing modest gains while NRDS shares have significantly declined [20]. - TREE is trading at a forward price-to-sales (P/S F12M) multiple of 0.69X, below its five-year median of 0.74X, while NRDS is at 0.88X, below its median of 1.35X [21]. Final Thoughts - NRDS offers a scalable, content-driven platform with strong partner credibility and international growth potential, benefiting from a diversified product base [24]. - TREE is positioned as a lead-driven marketplace with a focus on technology and product expansion, making it attractive for monetizing user data and enhancing engagement [25].