LendingTree Falls On Earnings Report: Surprising Profit But At What Cost?

Online loan marketplace LendingTree Inc TREE issued its earnings report for the fourth quarter of 2022, surpassing analyst expectations, though the news was not all positive for the personal and mortgage loan lender.

The company laid off about 200 employees amid the high rate environment, and its earnings are another example of how the Federal Reserve’s rate hikes are affecting lenders.

By The Numbers: LendingTree reported earnings of 38 cents per share, beating consensus estimates of a loss of 34 cents per share. Revenues came in at $202.1 million, which missed consensus estimates by 2.9% according to Benzinga Pro.

LendingTree is not alone in making job cuts, as mortgage divisions in leading banks such as JPMorgan Chase JPM and most recently Wells Fargo & Co WFC have also laid off employees. Last week, Wells Fargo cut 500 mortgage bankers, according to Bloomberg.

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Sour Guidance: Despite the better-than-expected earnings report, LendingTree issued first-quarter guidance and a widespread full-year guidance that came in under analyst expectations.

The company expects first-quarter revenue to be between $200 million and $210 million, falling short of the $231.56 million estimate. For the full year of 2023, LendingTree expects revenue to be between $935 million and $985 million, also missing the estimated $985.62 million.

The financial report and downbeat guidance come as LendingTree navigates a challenging market environment. With higher interest rates and increased competition from other loan providers, the company has been forced to consolidate, which includes the recent job cuts.

Despite these challenges, LendingTree remains focused on its balance sheet. In a statement released with the earnings report, the company emphasized its commitment to "remain acutely focused on our operating expense levels given the length of this current market cycle, and will continue to actively manage them as a key lever of financial performance that is fully within our control."

Price action: Shares of LendingTree are trading 12.21% lower to $32.70, according to data from Benzinga Pro.

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