- 1LendingTree's SMB business underperformed in Q2 on merchant sentiment and lender pullback.
- 2CEO Scott Peyree says Q2 was the trough; July is its best sales month since Q1.
- 3The unit grew about 40% a year on average and may now be flat to down this year.
LendingTree's small business lending marketplace underperformed in the second quarter, and management says the worst is over. CEO Scott Peyree said July performance gives the company confidence that Q2 was the trough.
What went wrong
The SMB unit was hurt by "both merchant sentiment and lender pullback." LendingTree pointed to tension in the Middle East, energy price spikes and other factors, and concluded that the merchant sentiment problems, slower to recover, are macro-driven and temporary.
Peyree said lenders have largely returned and are offering and writing loans at levels similar to early Q1, while merchant sentiment remains soft. He sees encouraging early signs, including better closing rates, larger loan requests and favorable underwriting shifts, and expects July to be the best sales month since Q1. He described the long-term macro outlook for the SMB industry as very strong.
A growth engine pauses
LendingTree does not lend itself. It connects borrowers with partners that do. The business has been very profitable and had grown about 40% a year on average until now. CFO Jason Bengel called it the company's growth engine and said this year may be flat to down. He described that as temporary, with nothing structurally wrong, and expects it to return as a strong growth driver once merchant sentiment recovers.
Source reporting: deBanked.
