- LendingTree Inc TREE shares are plunging Tuesday morning following a mixed bag of Q1 results. The company, which is winding down its Ovation Credit Services business, also reduced its FY23 outlook.
- TREE reported Q1 2023 revenues of $200.5 million, down 29% Y/Y, missing the consensus of $207.0 million.
- Home segment revenue fell 57% Y/Y to $43.7 million, and consumer segment revenue declined 21% Y/Y to $79.7 million in Q1. Also, Insurance segment revenue was down 4% Y/Y to $77.1 million in the quarter.
- Around 25.8 million consumers signed up for MyLendingTree through March 31, 2023.
- Variable marketing margin decreased 19% Y/Y to $76.1 million in Q1. Adjusted EBITDA declined 51% Y/Y to $14.5 million in the quarter.
- Adjusted EPS declined 46% Y/Y to $0.25 but surpassed the consensus of $(0.10).
- In April, subsequent to quarter end, the company made the decision to close its Ovation Credit Services business, with the financial impact incorporated in the forecast.
- The company said its Ovation Credit Services business faced challenges due to COVID, with the industry facing increased regulatory pressure more recently.
- 2023 Outlook Cut: The company now expects revenues of $760 million - $800 million (vs. $935 million - $985 million earlier and consensus of $945.6 million), variable marketing margin of $290 million - $310 million (vs. prior range of $325 million - $350 million) and adjusted EBITDA of $80 million - $90 million (vs. $85 million - $95 million earlier).
- Q2 2023 Guidance: TREE expects revenues of $190 million - $200 million (vs. consensus of $244.27 million), variable marketing margin of $75 million - $80 million, and adjusted EBITDA of $17 million - $22 million.
- "During the first quarter we completed a strategic expense reduction that impacted 13% of our workforce. The plan targeted parts of our business that are more capital intensive, as well as those areas where the revenue outlook has become less certain in light of the challenging economic environment," said Doug Lebda, Chairman and CEO.
- Price Action: TREE shares are trading lower by 28.3% at $16.74 on the last check Tuesday.
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