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LendingTree (TREE) Up 3.1% as Q2 Earnings Beat on Revenues


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Shares of LendingTreeTREE gained 3.1% following the release of second-quarter 2018 results. The company reported adjusted net income per share of $1.47, surpassing the Zacks Consensus Estimate of $1.25. The figure compares favorably with the prior-year quarter's income of 90 cents.

The company's results primarily benefited from higher revenues, with major contribution from non-mortgage products revenues. Also, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) displayed impressive growth. However, flaring up expenses was a major headwind.

The company reported GAAP net income of $42.5 million or $3.01 per share compared with $7.3 million or 54 cents in the year-ago quarter.

Rise in Revenues Partially Offset by Higher Expenses

Total revenues grew 20% year over year to $184.1 million. The rise primarily stemmed from higher non-mortgage product revenues.

Total costs and expenses were $166 million, up 15.4% from the prior-year quarter. This upswing primarily resulted from rise in almost all components of cost. However, fair value change of contingent consideration came in negative, which was a mitigating factor amid the increase of all expenses.

Adjusted EBITDA totaled $37.1 million, up 37% from $27 million reported in the prior-year quarter.

As of Jun 30, 2018, cash and cash equivalents were $293.3 million, down nearly 15.3% from the prior quarter. Long-term debt inched up 1.3% sequentially to $244.8 million. Total shareholders' equity was $347.4 million, up 5.3% from the Mar 31, 2018 level.

Outlook

Concurrent with the Q2 results, management provided guidance for third-quarter 2018 and revised its full-year 2018 estimates.

Third-Quarter 2018

•    Total revenues in the range of $195-$205 million.

•    Adjusted EBITDA in the range of $43-$46 million. The guidance reflects an estimated $0.5-$1.5 million of expense related to payroll taxes owed upon the exercise of employee stock options and vesting of restricted stock units.

•    Variable Marketing Margin is anticipated to be $76-$81 million.

Full-Year 2018

•    Total revenues of $745-$765 million, down from the previous projection of $770-$790 million.

•    Adjusted EBITDA in the $148-$152 million band, up from the previous projection of $145-$150 million.

•    Variable Marketing Margin is projected at $275-$285 million, up from the prior estimate of $270-$280 million.

Conclusion

Lending Tree put up an impressive second-quarter performance. The company's expansion strategy for its non-mortgage business seems to be working well, mirrored by the consistent rise in its non mortgage revenues. Also, LendingTree's commitment to diversify product offerings beyond mortgage-related products augurs well for the long term.

Nevertheless, escalating expenses remain a concern.

LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. Price, Consensus and EPS Surprise | LendingTree, Inc. Quote



Lending Tree currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Among other stocks in the same industry, TPG Specialty Lending, Inc. TSLX is scheduled to release second-quarter earnings on Aug 1, while PennyMac Financial Services, Inc. PFSI and Essent Group Ltd. ESNT will release their quarterly numbers on Aug 2 and Aug 3, respectively.

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LendingTree, Inc. (TREE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: TREE , ESNT , TSLX , PFSI



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