(Nasdaq: TREE) Stephens Real Estate Field Trip. September 16, Tree.com, Inc.

Transcription

1 (Nasdaq: TREE) Stephens Real Estate Field Trip September 16, Tree.com, Inc.

2 Forward-Looking Statements Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 The matters contained in this presentation may be considered to be "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of Those statements include statements regarding the intent, belief or current expectations or anticipations of Tree.com and members of our management team. Factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following: adverse conditions in the primary and secondary mortgage markets and in the economy, particularly interest rates; seasonality of results; potential liabilities to secondary market purchasers; changes in the Company's relationships with network lenders; breaches of network security or the misappropriation or misuse of personal consumer information; failure to provide competitive service; failure to maintain brand recognition; ability to attract and retain customers in a cost-effective manner; ability to develop new products and services and enhance existing ones; competition; allegations of failure to comply with existing or changing laws, rules or regulations, or to obtain and maintain required licenses; failure of network lenders or other affiliated parties to comply with regulatory requirements; failure to maintain the integrity of systems and infrastructure; liabilities as a result of privacy regulations; failure to adequately protect intellectual property rights or allegations of infringement of intellectual property rights; and changes in management. These and additional factors to be considered are set forth under "Risk Factors" in our Annual Report on Form 10-K for the period ended December 31, 2013, our Quarterly Report on Form 10-Q for the period ended June 30, 2014 and in our other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations. ABOUT TREE.COM, INC. Tree.com, Inc. (NASDAQ: TREE) is the parent of several brands and businesses that provide information, tools, advice, products and services for critical transactions in consumers lives. Our family of brands includes: LendingTree, GetSmart, LendingTreeAutos SM, LendingTree Education SM, and LendingTree HomePros SM. Together, these brands serve as an ally for consumers who are looking to comparison shop for loans, autos, education, home services and other services from multiple businesses and professionals who will compete for their business. Tree.com, Inc. is headquartered in Charlotte, N.C. and maintains operations solely in the United States. For more information, please visit

3 Section 1 Introduction

4 An 18-Year History of Innovation and Growth LendingTree founded 2/00: LendingTree $44M IPO Introduced LendingTree.com website 5/03: Acquired by IAC for $726M 9/06: Reached 20M consumer loan requests 8/08: Tree.com spun out from IAC; returns to standalone public company 11/11: Reached 30M consumer loan requests 7/14: Personal Loan revenue > $1M 6/12: Completed sale of HLC assets to Discover for $56M Q2 14: Launched new MyLendingTree personalization platform /00: Launched When Banks Compete You Win campaign 9/04: Acquired Home Loan Center ( HLC ; principal mortgage lender) 7/09: Launched new You to the Rescue ad campaign 4/14: >50% Lending segment traffic via mobile 7/09: Launched Education, Home Services verticals Q2 13: Launched Len & Lenny brand campaign 1

5 Multi-Category Branded Performance Marketer Full suite of loan/credit-based offerings and related services All lines of business unified under the LendingTree brand Lending Related/Other Services Secured Unsecured Mortgage Home Equity Reverse Mortgage Autos Personal Loans Small Biz Loans Credit Cards Student Loans Real Estate Home Services Education Credit Services Credit Scores Credit Repair Debt Consolidation 2

6 Section 2 Business Profile

7 Business Model: Match Consumers with Businesses Seeking to Serve Them Facilitated 45M+ consumer inquiries / $225B+ closed loan transactions since inception Marketing Conversion Funnel Matching/Monetization Platform MARKETING CHANNELS Offline TV Radio Print PR Digital Search Display Syndication Social Information Tools Access to Multiple Offers Exchanges Matching Platform Online dashboard Analytics Filters Retail Banks Universities Credit Cards Credit Repair Credit Scores Mortgage Companies Auto Dealers Other Specialty, P2P Finance Home Services Professionals Debt Consolidation Insurance Real Estate Services 3

8 The Economics are Simple: Maximize variable marketing margin on a dollar basis $$ Variable Marketing Margin $ Profitability Revenue Margin per Lead ' Revenue Cost per per Lead Lead Cost Margin per Lead 4

9 How We Expand the Funnel and Improve Conversion Marketing Deploy leading-edge, proprietary marketing techniques to drive ROI Brand Leverage iconic brand to drive marketing efficiencies Product Continuously innovate our best-inclass user experience Customer Relationship Management (CRM) Cross-sell multiple offerings Re-market to internal consumer database Consumer s Lead Pull-Through % Transact % ( Conversion ) Small % Conversion Large Incremental $ 5

10 Innovation Notable Product Roll-Outs/Enhancements Small Business Loans (Q3 14) New MyLendingTree (Q2 14) Local Introductions (Q1 14) Loan Officer Directory (Q1 14) Personal Loans (Q3 13) Mobile Experience (Q2 13) Reverse Mortgage (Q1 13) Loan Explorer Rate Table (Q1 13) 6

11 All-New My LendingTree Personalization Platform Free credit score offering to attract consumers Consumers permission (1) (and validate identity via out-of-wallet verification) to: Pull soft credit Proactively present market-based alerts to loan and credit opportunities Enables: More frequent consumer engagement Exposure to broader scope of offerings Launched late June 14 Mortgage Refi Mortgage Purchase New MyLendingTree Auto Purchase Home Equity Auto Refi Reverse Mortgage Personal Loans Student Loans Free Credit Scores Credit Cards (1) Written consent under Fair Credit Reporting Act. 7

12 Section 3 Mortgage

13 Mortgage The Ultimate Considered Purchase Often the single-most important financial decision consumers make in their lifetimes 88% of home buyers financed their recent home purchase (1) Typically 90% LTV The largest component of US consumer debt 7x the #2 category (2) US Consumer Debt (2) $11.5 Trillion (1) National Association of REALTORS, Profile of Home Buyers and Sellers, (2) Source: FRB of NY Quarterly Report (Q2 14) on Household Debt and Credit, August

14 The Brand The Gold Standard in Mortgage 71% brand awareness $1+ billion lifetime investment 100% Aided Awareness (1) National brand campaign Q2 13 with fresh creative in Q1 14 #3 most effective ad (#1 in Mortgage) in Q2 13 Ace Metrix 2013 Inman Innovator Award Most Innovative Digital Real Estate Marketing Campaign or Strategy 80% 80.0% 78.0% 71.0% 69.0% 62.0% 60% 40% 20% 18.0% 14.0% 9.0% 0% Bank Of America Wells Fargo LendingTree CitiBank Quicken Loans Zillow Bankrate Lower-My-Bills Source: LendingTree Consumer Research Study conducted by S. Radoff Associates, LLC, January ,860 online surveys. Prospects defined as creditworthy current or prospective homeowners who are in the market for either a primary mortgage or refinancing. (1) Awareness and Familiarity of Selected Companies within category defined by companies that offer mortgages online. 9

15 Ranked #1 in Mortgage Best Quality, Conversion, & Compliance LEADER Awards Lasting Impact Award A pioneer in conceiving the very notion of online mortgage shopping Highest Qualification Rates Mortgage Lead Provider Award (2010) Best in Lead Quality Online Lead Quality Summit awards (2008, 2009 (1) ) LendingTree has done more than any other company to advance the online lead generation industry (2) (1) Award ceased after (2) Source: General Manager of Interactive Markets for TARGUSinfo; press release dated 9/18/08. 10

16 While Mortgage Originations are Projected to Decline Mortgage Originations (1)(2) ($ Tril.) $3.0 $ $2.7 Purchase Refinance $ $2.3 $2.0 $1.5 $1.0 $0.5 $ $2.0 $ $ $1.5 $ $ $1.1 $ P 2015P (1) Source of historical data through 2013: Mortgage Bankers Association. (2) Source of 2014 & 2015 projections: Survey of MBA, Fannie Mae and Freddie Mac. 11

17 We Have a Small Share of the Market With Significant Opportunity to Grow LendingTree is capturing ~1.3% market share of total mortgage originations (1) Recent LendingTree revenue growth has exceeded growth in industry originations (2) Y/Y % Changes (1) Source: LendingTree estimates and Mortgage Bankers Association MBA Mortgage Finance Forecast (8/22/14). (2) Source: Survey of MBA, Fannie Mae and Freddie Mac. (3) TREE Mortgage revenue includes purchase mortgage, refinance mortgage and rate table products. 12

18 Hypothetical Illustrative Effects of Rising Rates Low Rates Marketing Spend $800 # Leads 20.0 Cost per Lead $40.00 $ Marketing Spend Consumers/Leads Rising Rates Marketing Spend $1,000 # Leads 20.0 Cost per Lead $50.00 Avg Revenue per Lead $75.00 Revenue $1,500 Match Rate (%) Matches per (x times) Match Fee ($) $ Revenue Avg Revenue per Lead $85.00 Revenue $1,700 VMM $ $700 VMM % 47% $ VMM VMM $ $700 VMM % 41% In tighter market, anticipate improved monetization provides fuel to spend and drive more consumer volume 13

19 Section 4 Other Verticals

20 Personal Loans Focused on: Serving consumers well and responsibly Expanding the market through greater efficiency and transparency Primary borrower objectives include: Debt consolidation Credit card refinance Home improvement Serving high quality lenders capitalizing on market innovation Surpassed $1M in revenues July 14 New personal loan TV spot launched August 14 14

21 Auto (Finance + Sales) Auto Finance New and used auto purchases, existing auto refinancing Large national network of credit unions, banks and specialty lenders Serve full credit spectrum of consumers Facilitated 6.8M+ loan requests, $3.5B+ closed loan transactions to date New & Used Vehicle Sales New & Used car lead distribution into 3,000+ dealerships (direct/groups), 10 OEMs 900k individual cars and light trucks for sale Launched Sept

22 Education (Post-Secondary) 20+ active lead sales relationships with top-tier US institutions and agencies For-profit, non-profit Campus-based, online 4 leading publicly-traded operators 1,200+ programs Associate to Doctorate degrees Proven social media expertise with 130K+ likes on Facebook Data-driven approach to optimizing supply & demand using enhanced matching platform Facilitated 800k+ leads since launching vertical in July 09 16

23 Home Services Pre-screened, guaranteed home improvement referral service Online marketing Phone + digital leads Local focus + national coverage in multiple service categories Re-branded Nov. 13 (fka DoneRight) Facilitated 1M+ consumer inquiries since acquisition 17

24 Section 5 Financial Discussion

25 Quarterly Financial Metrics Revenue & Variable Marketing Margin ($ Mil) Adjusted EBITDA (1) ($ Mil) (2) $36.8 $37.3 $3.7 $4.4 $36.4 $4.7 $40.0 $5.8 $42.1 $7.5 $40.3- $42.2 $5.4 $5.9 $4.5 $5.5 $5.0- $6.0 $33.1 $33.0 $31.7 $34.2 $34.7 $3.4 $13.7 $15.1 $16.3 $15.2 $15.8 $16.0- $17.0 Launched national ad campaign 9.0% 14.0% 16.0% National ad campaign (phase 2) 11.0% 13.0% Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr Guidance Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr Guidance Adj. EBITDA Adj. EBITDA % of Revenue (1) Adjusted EBITDA and Adjusted EBITDA % of Revenue are non-gaap measures. Please see Tree.com s Reconciliation of Non-GAAP Measures to GAAP and Tree.com s Principles of Financial Reporting contained in the Q earnings press release for more information on these non-gaap measures. The press release can be found at (2) Excludes $0.6M of Corporate revenue attributable to certain marketing services. 18

26 2014 Guidance Summary 2014 Guidance '13-'14 % Growth Revenue $160 - $164 15% - 18% VMM $ $62 - $66 6% - 13% Adj. EBITDA $20 - $21 7% - 12% Key Growth Drivers Product and Technology Internally-developed, new and improved product rollouts expand revenue streams, while leveraging trusted brand Improved conversion through ongoing loan request form testing & site enhancements Marketing Launched new national brand campaign Q Aired new creative in 2014 Promoting additional offerings beyond Mortgage Continue to scale digital channels and increase lead quality Sales Expand wallet share with existing clients Add new partners 19

27 Selected Balance Sheet Items ($ in mil.) 6/30/2014 Cash & Equivalents $87.6 Restricted Cash & Equivalents 22.0 Accounts Receivable 13.3 Total Current Assets PP&E 5.6 Goodwill 3.6 Intangible assets 11.2 Total Assets $145.8 Working capital of $63.1M Significant NOLs (1) $30M Federal $301M State Accounts Payable $5.9 Accrued Expenses and Other Current 23.5 Current Liabilities of Discontinued Ops 33.6 Total Current Liabilities 62.1 Total Liabilities 67.3 Shareholders Equity 78.6 Total Liabilities + Shareholders Equity $145.8 (1) As of 12/31/13. 20

28 Section 6 Conclusion

29 Summary Pre-eminent branded performance marketer Specialized in high-value Considered Purchase transactions #1 in Mortgage lead-gen Expanding portfolio of loan/credit-based offerings and related services Provide compelling value propositions for: Consumers trusted ally & advocate Businesses measurable, ROI-based customer acquisition support Iconic brand unique in the industry Leading-edge Marketing, Technology & Analytics For more information please contact: Investor Relations Alex Mandel Chief Financial Officer Doug Lebda CEO and Chairman 2014 Guidance of $20-$21M Adj. EBITDA $87.6M cash, $63.1M working capital balance 21

30 (Nasdaq: TREE) Stephens Real Estate Field Trip September 16, Tree.com, Inc.