First Look at Lendingtree

I took an interest in this company after Denny (captainccs) brought it up a few weeks ago. It caught my attention because I used Lendingtree’s platform when I refinanced my mortgage a few years ago and know several others who have as well. For those unfamiliar with the company, in layman’s terms, the company offers a market place where those seeking mortgage, auto, personal, student, or credit card loans can go to view competing offers. In other words, when I wanted to refinance, I used Lendingtree’s platform and punched in some preliminary personal information. Within minutes of submitting, I received several different offers from companies offering loans at different rates. Hundreds of such vendors participate in their network, making the process of shopping for different types of loans far easier.

From the company’s 10-K:

LendingTree, Inc. (“LendingTree”, the “Company”, “we” or “us”) operates what we believe to be the leading online loan marketplace for consumers seeking loans and other credit-based offerings. Our online marketplace provides consumers with access to product offerings from over 450 active lenders (which we refer to as “Network Lenders”), including mortgage loans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, personal loans, student loans, small business loans and other related offerings. In addition, we offer tools and resources, including free credit scores, that facilitate comparison shopping for these loans and other credit-based offerings. We seek to match consumers with multiple lenders, who can provide them with competing quotes for the product they are seeking. By providing consumers access to a broad array of credit-based offerings directly from multiple lenders, rather than just multiple quotes from the same lender or indirectly through intermediaries, we believe our marketplace is differentiated from other providers operating loan comparison-shopping marketplaces.

Though brief, here is more good info from a recent Fool article on the company:

LendingTree is an overnight success that was just 19 years in the making. Since launching in 1998, it has survived both the tech bubble collapse and the housing market crisis to emerge as the leading platform connecting consumers seeking loans with banks that have excess cash to lend.

Until recently, those credit instruments were mainly mortgage related. But LendingTree’s expansion into unsecured debt such as auto, credit card, and personal loans has helped spark big sales gains. Revenue is up 61% over the last nine months as an 81% spike in the non-mortgage segment pushed it up to 57% of the business from 43% in last year’s third quarter. LendingTree’s diversification strategy is giving it a far broader customer base, and that includes the 6.5 million users it has added just since launching its credit score platform in mid-2014.

Meanwhile, the core business continues to deliver market share gains as consumers move their mortgage shopping online. Its purchase and refinancing revenues rose 38% last quarter despite a 16% contraction in the broader industry.


Here’s a look at the company’s numbers. It’s going for a rich valuation, but its growth is fantastic. Note: The company scored a huge tax benefit in the fourth quarter of 2015, throwing off the EPS numbers in YOY comparisons, so I didn’t even bother for now calculating the YOY EPS growth rates.

Total Revenue (millions)		Q1		Q2		Q3		Q4
2015											78.3
2016					94.7		94.3		94.6		100.8
2017					132.5		152.8		171.5

Diluted EPS (GAAP)			Q1		Q2		Q3		Q4
2015											2.47
2016					0.54		0.71		0.57		0.63
2017					0.58		0.59		0.74

Adjusted EPS				Q1		Q2		Q3		Q4
2015											2.69
2016					0.67		0.83		0.71		0.77
2017					0.85		0.90		1.17

Total Revenue Growth
2016 Q3 TTM Revenue = 361.9
2017 Q3 TTM Revenue = 557.6
YOY TTM Revenue Growth = 54%

Diluted EPS Growth (GAAP)

2017 Q3 TTM EPS = 2.54

Adjusted EPS Growth

2017 Q3 TTM EPS = 3.69

GAAP P/E (Check Current Price) = 340.45/2.54 = 134

Adjusted P/E (Check Current Price) = 340.45/3.69 = 92.3

Here’s a breakdown of the company’s revenue by mortgage products and non-mortgage products.

Mortgage Products (millions)		Q1		Q2		Q3		Q4
2016					55.0		56.0		53.5		55.4
2017					62.9		71.5		73.8

Non-Mortgage Products	(millions)	Q1		Q2		Q3		Q4
2016					39.7		38.3		41.0		45.4
2017					69.6		81.3		97.7

Other notes

With interest rates rising, I think refinancing will continue to go down, but home buying (as LGIH shareholders know) seems like it will be going up for the foreseeable future.

Lendingtree is still making inroads in the auto/student/personal/credit card loan markets, so explosive growth might continue for a while in that segment.

More than 6.5 million consumers have now signed up for free credit scores and savings alerts through My LendingTree, and the volume of new enrollments accelerated. Revenue contribution from MyLendingTree grew 96% in the third quarter compared to the prior year period as management said new features and smarter savings alerts were driving increased engagement.

It sports such a rich valuation that I’m not sure if this the right time to initiate a position. But I love that it seemingly sports a pretty wide network effects moat, especially in its mortgage product segment. There are no other companies, that I am aware of, that offer this type of service and, certainly, not one that has 450 mortgage lenders participating on it.

A few weeks (months?) ago, I believe Tinker and some others were looking at Trivago. To me, this is a similar service to Trivago (in a different industry obviously) except without the competition from Priceline, Expedia, and Trip Advisor.

This is all the time I have for this now, but would love further thoughts and opinions obviously. There’s also more work that needs to be done, but I like my first glance at the company.

Again, thanks to captainccs (Denny) for bringing it to my attention.

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Again, thanks to captainccs (Denny) for bringing it to my attention.


Thank you for the mention! I love finance companies that don’t have a credit risk. All the upside of finance and none of the downside of defaults. MasterCard and VISA are in the same category but face more competition with all the new methods of point of sale payment methods.

I have a small starter position in TREE bought last month and it is on my shopping list for this year. I’ve been working on that list these past few days. Can you believe I found an 84 year old trucking company growing the share price at over 20% a year?

Old Dominion Freight Line, Inc. (ODFL)

Look how well it withstood the 2008 crash!

Denny (keep on trucking) Schlesinger


Hi Matt, Denny,

Thanks for this dialogue.
I took small position in TREE after it was brought up here.

I love market place businesses, I like the network effect of the TRREE, however, I am not sure if it’s less competitive space. Zillow has mortgage / Refi market place. I haven’t searched deep enough but top of my head I can think of Quicken’s Rocket mortgage and going heavily after this space.

And it’s not clear to me if there is strong winner emerging or even a possibility of strong winner emerging.

I hold Z for multiple years now and like the way they grow (and acquire) multiple income streams. TREE seems to be on that path which is makes it much more solid then highly competitive mortgage / refi marketplace.

BTW - I looked Trivago and couldn’t figure out what was really going to be a big difference from (consumer perspective) compared to many other services. Glad I didn’t jump on it!