LendingTree Inc at William Blair Growth Stock Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : But just to start us off, Doug, you founded LendingTree, have been running it for over 2 decades. Can you just give us a quick background on the company and the notable changes to the model over the last few years as it's continued to evolve?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. That's helpful. And so obviously, it's been a more challenged operating environment over the last few months. But there have been some mixed trends within the different businesses that you guys have talked about. Home and insurance saw some choppiness late in the first quarter, but sounded like it stabilized some in early April. Consumer businesses saw some weakness that you expected to continue. So in personal loans, credit cards, small business. So I just wanted to ask if anything you've seen lately has maybe changed your visibility and outlook for the different segments as we think about the rest of the year. And particularly, have you seen any early signs that the capacity constraints could be trending more favorably within the client base?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. Makes sense. That's helpful. So within it, when I think about the different consumer experiences on your platform, I know you've been making some changes or trying out some new things for the consumer experience on the mortgage side, and maybe in some other parts of the business with things like the preselection model. But can you talk about those consumer experiences, the tweaks into the model that you're making and how lender adoption for those has trended since you've been testing them? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 09, 2020 / 9:40PM, TREE.OQ - LendingTree Inc at William Blair Growth Stock Conference

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. And so are you doing this -- so clearly, you've been doing this in mortgage. Are you still -- are you testing some of these other models out in insurance and personal loans, some of these other categories as well?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. So I wanted to dig in a little bit on the insurance side. It seems like there are many secular tailwinds in that business as we think about the next few years, especially with the continued shift in advertising budgets online. So I guess, how are you thinking about the revenue growth drivers in insurance over the medium term between adding new customers, increasing wallet share, pricing dynamics, et cetera? Can you just talk about the growth outlook?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. One of the other things you've started to -- or you've integrated insurance with My LendingTree. So I wanted to ask how that integration has gone so far and what it could mean for the business as we think through the next few years. And how do you envision My LendingTree members engaging with the insurance product?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. And you talked about the -- 80% of insurance being auto, home and health, obviously doing well. Is that -- on the other -- on the smaller components of the insurance business, is that something that you think you can grow organically? Or do you need to supplement in those areas to really see stronger traction in some of the smaller categories?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Acquisition for the most part. Yes.

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. So I guess for My LendingTree, you've always talked about the importance of personal loan and to kind of being a strong conversion into My LendingTree members. As you get more products integrated into My LendingTree, does that reliance on personal loans go down at all? I guess can you talk about that dynamic zone?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Yes.

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. So one of the -- within the consumer segment, one of the rising stars you talked about a little bit is the small business category, which has been doing very well and doing very consistently well, it seems like for a period of time. So can you kind of frame how big that is, overall, for you now and the growth drivers there we thought about the next few years?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : That's helpful. I wanted to ask a little bit on the cost side. I think you talked about the cost of getting traffic right now, the lower customer acquisition costs, just given -- I think there's less people out there advertising right now. So do you continue to see that trend play out here, where at least you're seeing some benefit on the -- on how much you're spending on the variable marketing side to find relevant consumers?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Okay. That's helpful. And then just on the margin side, can you talk some about how you're managing costs in this lower kind of revenue environment that we -- that will probably play out in at least 2Q, potentially 3Q...

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : What did you say? Sorry.

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : More on -- I mean I think you guys have -- I don't know if there's been any change to your marketing budget, but I was talking more on the operating cost.

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Yes. Makes sense.

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. Helpful. And then just, I guess, the last one, we're kind of running out of time here. The brand marketing spend that you guys had talked about for this, I think you originally targeted $50 million, I think, heavily focused on My LendingTree, given the traction and the success we're seeing there. I think you had maybe talked about spending now updated, maybe half roughly of that, I guess, any updated plans on that?

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it.

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Got it. Well, I think we're out of time here. Doug, J.D., Trent, thank you so much for joining us. Wish we could see you in person, but obviously I had to make the necessary shift here to virtual. Thanks, again, and we'll talk again soon. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 09, 2020 / 9:40PM, TREE.OQ - LendingTree Inc at William Blair Growth Stock Conference

Question: Stephen Hardy Sheldon - William Blair & Company L.L.C., Research Division - Analyst : Sounds good. Thanks, guys.