TREE Q2 Earnings Call Highlights AI Push Amid SMB Weakness

LendingTree Leans on Insurance Strength

Chief executive officer Scott Peyree said LendingTree delivered another quarter of strong revenue growth, supported primarily by the Insurance segment. Revenues increased 25% year over year to $313.42 million, which came in below the Zacks Consensus Estimate of $315.07 million.

The company reported adjusted earnings per share of $1.27, below the Zacks Consensus Estimate of $1.46. million. Adjusted EBITDA rose 11% year over year to $35.2 million.

Peyree highlighted insurance as the strongest contributor, with segment revenues rising 42% year over year to $209.3 million and segment profit increasing 25% to $50 million. He said carrier demand remains strong and supports continued growth opportunities.

TREE Sees SMB Lending Pressure

LendingTree identified small business lending weakness as the primary factor behind the quarterly shortfall. Peyree said SMB demand weakened as business owners became more cautious amid broader economic uncertainty.

The Consumer segment posted revenues of $60.3 million, down 4% year over year, while segment profit declined 14%. Management attributed the decline primarily to lower merchant demand and earlier lender pullbacks in SMB lending.

CFO Jason Bengel said lenders have largely returned to the previous activity levels, but merchant sentiment remains the main area requiring improvement. He noted that SMB had previously been a major growth engine, averaging roughly 40% year-over-year profit growth since early 2024.

LendingTree Expects SMB Recovery

Management said recent trends indicate stabilization in the small business segment. Peyree noted improving closing rates, larger loan requests and favorable underwriting shifts as early signs of recovery.

The company expects SMB performance to improve through the second half of 2026 and eventually return above the first-quarter record levels. Bengel said current guidance assumes only the recovery already visible from lender demand, rather than a full return of merchant demand.

An Oppenheimer analyst asked about SMB sensitivity to economic conditions and whether weakness was related more to interest rates or business confidence. Peyree said the issue was primarily sentiment-driven, with smaller businesses delaying hiring and capital spending decisions.

TREE Expands AI Product Strategy

LendingTree continued advancing its AI initiatives during the quarter, including consumer-facing tools and internal productivity applications. Peyree said the company launched a ChatGPT app featuring a Home Loan Rate Confidence tool and introduced six new consumer products.

The company’s homepage and navigation redesign increased sessions by 11% and form starts by 18%, according to management. AI-generated product overviews and communication tools are also being deployed to improve consumer engagement.

Peyree said internal AI agents are helping teams convert weeks of work into real-time insights, contributing to operating efficiency. He noted that operating expenses increased less than 1% while revenue grew 25% year over year.

LendingTree Maintains Growth Targets

Management reiterated its strategy of becoming the leading destination for consumers shopping for financial products. The company is focusing on increasing return customers, referred customers and logged-in users to create a stronger marketplace.

The Home segment generated revenues of $43.9 million, up 9% year over year, although segment profit declined 14% due to continued pressure from the challenging mortgage environment. Management said long-term upside remains tied to market recovery.

LendingTree also highlighted balance sheet improvements. Peyree said annual free cash flow after interest is approximately $80 million and net leverage improved to 1.9x from 3.0x a year ago.

TREE Updates 2026 Outlook

LendingTree provided full-year 2026 guidance for revenues of $1.3 billion to $1.32 billion, variable marketing margin of $364 million to $374 million and adjusted EBITDA of $145 million to $152 million.

For the third quarter of 2026, the company expects revenues of $325 million to $335 million, variable marketing margin of $88 million to $93 million and adjusted EBITDA of $34 million to $36 million.

Management said insurance growth should remain healthy, while Consumer improvement depends on the recovery of SMB borrower demand. The company continues to balance growth investments with margin discipline.

Zacks Rank and Style Signals

TREE carries a Zacks Rank #3 (Hold). The Zacks Rank is based on earnings estimate revisions and is designed to help identify stocks with stronger or weaker near-term earnings momentum. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has a Value Score of A, Growth Score of B, Momentum Score of B and VGM Score of A. Zacks Style Scores range from A to F, with higher scores indicating stronger characteristics for the related investment style.

A combination of favorable Style Scores and the Zacks Rank can provide additional context when evaluating stocks. However, the Zacks Rank can change as earnings estimates are revised after quarterly results and other company developments.

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