LendingTree Inc (TREE) Q4 2020 Earnings Call Transcript

LendingTree Inc  (NASDAQ: TREE) Q4 2020 earnings call dated Feb. 25, 2021

Corporate Participants:

Trent Ziegler — Vice President, Head of Investor Relations and Treasurer

Douglas Lebda — Chairman, Chief Executive Officer and Founder

J.D. Moriarty — Chief Financial Officer

Analysts:

Youssef Squali — Truist Securities — Analyst

Jed Kelly — Oppenheimer — Analyst

Stephen Sheldon — William Blair — Analyst

John Campbell — Stephens — Analyst

Melissa Wedel — J.P. Morgan — Analyst

Rob Wildhack — Autonomous Research — Analyst

Jamie Friedman — Susquehanna — Analyst

Kunal Madhukar — Deutsche Bank — Analyst

Presentation:

Operator

Good afternoon, ladies and gentlemen and welcome to the LendingTree, Inc. Fourth Quarter Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host, Mr. Trent Ziegler, VP of Investor Relations. Please go ahead.

Trent Ziegler — Vice President, Head of Investor Relations and Treasurer

Great. Thank you and thanks everybody for joining the call this morning to discuss LendingTree’s fourth quarter 2020 financial results. On call with me this morning are Doug Lebda, LendingTree’s Chairman and CEO; and J.D. Moriarty, Chief Financial Officer. As a reminder, once again, we posted a detailed letter to shareholders on our Investor Relations website earlier the morning. And with that we will keep our prepared remarks relatively brief and spend both of our time addressing your questions.

Before I hand the call over, I also want to remind everyone that during today’s call, we may discuss LendingTree’s expectations for future performance. Any forward-looking statements are subject to risks and uncertainties and LendingTree’s actual results could differ materially from the views expressed today. Many, but not all of the risks we face are described in LendingTree’s periodic reports filed with the SEC. We will also discuss a variety of non-GAAP measures on the call today and I refer you to today’s press release and shareholder letter both available on our website at investors.lendingtree.com for the comparable GAAP measures, definitions and full reconciliations of non-GAAP measures to GAAP.

And with that, I will turn it to Doug.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Thanks, Trent and thank you everyone for joining our call. Before we get into questions, I’d like to spend a few minutes giving you my perspective on the business and a few of the reasons, why I increasingly encouraged by our prospects as we successfully navigated the challenges of the past year and we enter 2021 with positive momentum and clear focus on our strategic priorities. 2020 was a year like any — unlike any other, the pandemic brought havoc on public health and safety that brought massive unemployment and economic strength. In part countered by unprecedented fiscal monetary policy. While we’ve seen far-reaching changes in the way people live, work, consume and manage their money, past has also provided many challenges and it has created great opportunity.

Headwinds in certain continues areas or aspects of our business in 2020. We were able to maintain a healthy and productive workforce along with a strong balance sheet, sustained positive cash flows. Thanks to our diversified portfolio of businesses. Because of that, we were able to remain focused on execution. Serving our customers and our partners without losing sight on our — of our broader strategic objectives around innovation and scale. Our fourth quarter’s results reflect increasing momentum at strength in our home and insurance segments combined with sustained recovery in consumer, drove sequential growth in both revenue and adjusted EBITDA during what is typically a seasonally slower quarter.

As we head into 2021, and the world begins to return to normal as we all hope, we are focused on a broad range of strategic objectives across each and every one of our business segments that all serve to accomplish the greater objective of growing, engaging and delighting our customers while serving our partners in a integrated and automated fashion.

We look forward to highlighting those initiatives and our continued momentum as the year unfolds. And with that, we’d love to take your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from the line of Youssef Squali with Truist Securities. Please go ahead.

Youssef Squali — Truist Securities — Analyst

Great, thank you very much and good morning, folks. So questions. One, maybe Doug, just stepping back and look at the — looking at the competitive front, just curious to know how, do you think about competition, particularly in the auto insurance, home loan and etc. And maybe, how you think about competitors like Credit Karma, now that they’re part of into — what advantages you guys see yourself having as competition ramps up for larger players. And then J.D., I know you guys are obviously not guiding to 2021, but can you maybe just flesh out for us, the biggest areas of investment, you’re planning for this year, because if I look at your margin guide for Q1, it looks like, it’s much lower than you guys have posted in a few years. So maybe if you can just flesh that out for us that will be terrific. Thanks, guys.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Perfect. So on competition, we are obviously very, very mindful, and we always want to be winning even if the market is growing. We don’t want just take credit for tailwinds. A couple that obviously, they talk about the one that you focused on Credit Karma, we think we are at least now, the good news is, now everybody see numbers and I think it’s safe to say they’re about our size and I think it’s safe to say we’re more diversified and they’re more concentrated. And so we feel really solid in our position there.

Now will they have a great product? We have a great product. We hope ours is better. We think ours is. We think our brand name is exceedingly strong. And there’s a lot of things going on in that area that will expand in products even from just loans and alerts as you’ve seen us — and it’ll go beyond free credit scores into cash management and how you’re doing budgeting, which we’ve done already. So I was honestly really happy to see our pacing versus them in the first on the public numbers.

The other one that I would say that just moved to another subject would be EverQuote which now we’ve got, obviously, they’re a public company and a tie — and in the past few quarters, what we know they’re a little bigger than us. We’re a little bigger than them. But I can tell you as our companies I think our biggest shareholder. I am thrilled with where they’re going and the things that they’re doing and expanding me agency business expand new lines of insurance and their integration with My LendingTree that’s all really coming together.

So I think unless you’re a diversified product set in fintech it’s going to be really hard to compete with a company that is more diversified across loans, insurance and all the partnerships we’ve gotten investing etc., etc. so it’s just beginning. J.D. you want to take the next?

J.D. Moriarty — Chief Financial Officer

Yeah. Sure. Thanks, Youssef. So they’re both good question. So let me just expand a little bit on the competitive landscape because when you talk about auto insurance specifically relative to ever quote and obviously they’ve been public since the middle of 2018. We have businesses that on a revenue scale basis as Doug points out. We had trade quarters and that’s bigger. We do enjoy better VM and margins generally.

We also do admittedly have a little bit more dependent on SCM and we’re diversifying that as with all of our acquisitions the strategy has been to acquire a really good business and make it better through a diversification of marketing channels. And so within our QuoteWizard business which is our insurance business that’s exactly what we’re doing. And that’s not the only diversification going on. We’re actually expanding our agent business. We’re expanding our Medicare business.

And so I think as 2021 goes on, you’re going to see us continue the diversification within insurance and that will just we’re going to take a very good business and make even better for diversification. So when you ask the question about investments that’s absolutely one of the areas where you’re going to see us invest until that will tie into the next answer as it relates to margin.

We certainly as Doug points out now interestingly we have some public comparable competitors out there Carmo being one of them. We see what they’re doing in for instance auto insurance and they’ve talked about some of those initiatives. That’s not new information to us. It’s just new public information. So, the strategy is not tremendously different.

When we think about insurance and specifically auto insurance, we look to whatever quote is doing. We look to a couple other players in the space and we think we’re a real leader in that space, we know we’re real leader in that space. So, we’re really happy with the diversification efforts in insurance specifically and we see some great growth areas. I mentioned EDC and Medicare specifically, but that’s what you’re going to see throughout 2021.

As it relates to the margin question that you asked about investments, recognize that our guide is informed not just by investments that will go on throughout the year, but I think what’s going on in Q1 specifically is really mix. And one of the things that we make an effort to do since we run a diversified portfolio of businesses is let them all operate independently with regard to strategy in the moment.

So, right now, in mortgage as you’ve seen from us times again, there’s a great opportunity to drive VMD growth, but that VMD is going to come at probably lower VMM percentages as we enjoy great revenue growth. That’s happening at the same time as we are rebuilding certain of our consumer businesses. So, we highlighted pretty exceptional percentage growth in credit card in the fourth quarter and we expect some of that growth to continue in the first quarter as we rebuild that business. But I made the point on the last call, but that card business may not contribute at all to the bottom line as we rebuild it.

And so, recognize that you’ve got a mortgage business where you’re getting incremental revenue growth at lower percentage margin, a card business that we’re rebuilding at very modest margin because that’s the right strategy for the business at the time. So, it’s really mix, but it’s also our desire to let these business do the right thing strategically to grow. And so, as you look at that card business I need to remind everybody in 2019 that was $212 million business for us.

And it was down at the trough 85% and we are growing it back but at small margins initially and we’re really happy with the progress in Q4. But as we pencil that out in Q1 that contributions can be very modest and when you combine that with the trend in mortgage you can understand the guide. So that’s really what’s going on with Q1. There are number of investments we’re going to make throughout the year. We’re really happy about the strategic plan for all of the businesses my LendingTree included. But in terms of the margin in the Q1 guide that’s really the influence.

Youssef Squali — Truist Securities — Analyst

Okay. Very helpful. Thank you, both.

Operator

Your next question is from the line of Jed Kelly [Phonetic] with Oppenheimer. Please go ahead.

Jed Kelly — Oppenheimer — Analyst

Great. Thanks for taking my question. Two if I may. One just circling back on My LendingTree, I think at your Analyst Day in twenty nineteen you admitted that’s the key to sort of expanding your terminal margin. So just where are we with the my LendingTree strategy and how do you see driving increased consumer engagement. Is there any way to take advantage of sort of some of the enthusiasm we’ve seen with retail investing? And then just on the home segment JD you said it’s expected to accelerate in 1Q. I mean how should we see that trending throughout the balance of the year?

Douglas Lebda — Chairman, Chief Executive Officer and Founder

So I’ll take My LendingTree first on a — from a product standpoint we feel very, very, very good from a strategic standpoint we also feel good. And the reason as it is just like how LendingTree diversified and when we were 90% mortgage and 10% every other loan type. As we’ve brought in other loan types those not only add to the individual like credit card business or personal loans business as it adds to the overall. On My LendingTree, the same thing is happening.

So while we don’t have the largest source of revenue for My LendingTree users which is personal loans because during a pandemic appropriately so people took their stimulus money paid down their balances and so they weren’t necessarily shopping for credit cards and personal loans. Totally fine but we’re seeing members do well, we’re seeing engagement do now and we see a lot of new products that we couldn’t slot in there.

So we’re looking at a number of individual product apps that could be folded into something even more broader. Everything from identity theft, obviously credit repair and we think that is a powerful source in that base as we can help improve people’s credit. But even as if interest rates rise which they will that we can refinance people as they move up the credit. So I’m very happy with where that’s going right now. J.D.?

J.D. Moriarty — Chief Financial Officer

As part of your — yeah. So Jed, part of — it has two parts in My LendingTree question right, one is are we happy with the progress on the product? To answer that, yes, absolutely. When we look back however 2020, our strategy for sign-ups for driving members to My LendingTree has been depend on personal loans as Doug points out and when personal loans goes backwards, we’re — our new signups is going to flatten.

We’re happy with the — with the fourth quarter signups, right. That’s a pretty meaningful jump from 15.7% to 16.6% and certainly the most meaningful jump that we’ve had. Now, how is that happening in an environment where personal loans are still weak? We’ve — you’ve heard us talk about syndicating our platform and working with partners and we’ve mentioned each on our block and there are many other partners actually there are other partners that are on board and some that are in the pipeline. But effectively what we’re talking about is the syndication of my LendingTree, and managed marketplaces. And right now between each in our block and one other key partner we’ve driven $1.5 million new signups.

So, that’s the strategy that we’ve been talking about for well over a year is starting to bear fruit, which we’re really excited about. Then, there’s got to be the engagement of the product and we talked about Plaid and the Plaid integration and we’ve got to drive people to connect to their accounts there. But the product is unquestionably much, much better than it was a year ago and we’re really excited about the new features that will add this year. So, we actually look at the growth in signups in Q4 amid an environment that was tough for personal loans.

It’s a real bright spot for my LT and I think it suggests that strategy of syndicating the platform is a good one. In terms of your question around mortgage, we’ve made a real effort to make sure that people understand the mortgage cycle for our mortgage lenders and our mortgage cycle, right. And that earlier in 2020 when there was tons of organic volume, that’s a tough environment for us when lenders are flushed with organic volume. Well, as the year has progressed, our services have been more dearly valued and you see that in our RPOs.

Hard to say what inning we’re in, obviously we’re very mindful of this increase in rates which is going to make the value proposition of a refinance a bit more challenging. Right now we’re certainly seeing a good RPO environment and we need to work with our lenders to make sure that our leads convert. And that’s really what’s been going on under the hood.

We talked about different products that lenders can choose from an exclusive matches and the like. Those are all intended to drive conversion and that’s the subtle thing that’s been going on within our own business so we’re really excited about because we think our product is just working better for our lenders. Certainly better than it was in the last cycle where it’s kind of one product that you can either succeed with or not we think we’ve really evolved our home products specifically.

So hard to call it a cycle but we’re certainly seeing that there’s — as we’ve talked about in the past as the refi cycle progresses for our lenders, we tend to lag that a bit and you’re seeing our outperformance right now. So that was evident in Q4 and as we said it’s accelerating here in Q1 which is great to see.

Jed Kelly — Oppenheimer — Analyst

Thank you.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

And all I would add there is as people heard in the past in a refi boom LendingTree low rate interest rate environment in mortgage, LendingTree will tend to underperform because lenders don’t need us because of the product changes and all the stuff that J.D. said talked about we’ve been able to dramatically increase lender capacity through this. And we have strong indications that volume discount that their needs and their volume is going to stick.

In addition to that, you’ve now got new mortgage companies who are springing up and the first place they’re calling to get volume is us. And we’ve also talked to other even startups since who are trying to build a brand, any brand new thing inside of mortgage and their biggest problem is you know you’ve got to get customers to trust you. We’ve already got them.

So we can now lean into marketing at lower percentages but we maximize the dollars. And now with My LendingTree LTVs, we can not only be marketing against the ball — the payoff today but we can be marketing as we know it in terms of the payoff tomorrow and whether tomorrow is a day, a month, a quarter or six months, we’ve now got the ability to do that.

Operator

Your next question is from the line of Stephen Sheldon with William Blair. Please go ahead.

Stephen Sheldon — William Blair — Analyst

Good morning. Thanks. Want to follow-up on My…

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Hey, Stephen.

Stephen Sheldon — William Blair — Analyst

My — hey — want to follow-up on My LendingTree. Clearly great sequential member growth. Monetization there has been lower for the last three quarters and that’s almost entirely from the pullback in personal loans. As you think about this year 2022 potentially into 2023, is stronger monetization there highly dependent upon personal loans recovering? Or with some of the added member touch points prior to integration is better monetization there becoming much less dependent upon personal loans? Could we be hitting that point over the next couple of years?

Douglas Lebda — Chairman, Chief Executive Officer and Founder

So, the short answer is absolutely not going to be dependent on personal loans. We’re working on some new feature — I don’t want to say features, but even consumer experiences like inside of mortgage and inside a purchased mortgage, inside of more longer term alerts that we can give to people. So, the answer is we’re definitely not going to be dependent on personal loans.

Personal loans happens to be the easiest thing, right, that you can say to a consumer, you’ve got a bunch of credit card debt and we can tell you right now we can consolidate that you’re paying this percent interest, you’re going to pay a lot less over here, consolidate, get it done, right. That’s an easy thing to do. And as I said during COVID, a lot of consumers did that on their own, did that on their own. Seven years ago, none of us would ever have been talking about personal loans because it was sort of this, was something that was done by a sort of subprime finance companies.

Anytime people are providing financing, we’re going to provide a market for it and so we’re right there. And so, now the my lending to revenue is — in the cycle we’ve seen it dependent on personal loans with everything else and the conversion and the after and the after application touch point to the engagement is very, very good and I’m happy with it. I wish everybody in America had a my LendingTree account and someday we’re going to get there because it’ll just tell you when to save money across every financial institution in the United States across lending. Clearly we’re not there but we’re definitely at war. J.D.?

J.D. Moriarty — Chief Financial Officer

Yeah. Let me — Stephen, let me give you a good example. Like you said — the answer to your question is no. As you look out to 2021, 2022, later in 2021 and 2022, the dependence on personal loans should reduce fairly significantly. But one of the things that we’re focused on obviously we want each of our businesses to drive new sign up. That’s one thing. But we’re really focused on making sure that we can actually have the consumer have a really good experience within loyalty and across our products.

So there are some foundational things you have to build first. So one big question we often get is insurance integration and it’s not just driving sign ups but that’s saying okay you’re somebody who’s in market this is great insurance platform that we have why — what are we doing to make that work with My LT. Well, the agency initiative that we have within insurance when we talked in our letter in our shareholder letter about the app that the in auto dealer app, well the agency technology is the key to that.

Okay. So we have built this technology for the agency that supports the dealership app. But guess what it also supports the ability to show a rate within My LT and any other cross-sell opportunities and being able to show rate is really important. So as we build out that agency within insurance it will not only help diversify our insurance business which is wonderful but it supports the cross-sell opportunity.

It supports the integration with My LT. And so we’re really happy with that when does that manifest itself in terms of results, probably the timeline that you’re talking about later 2021, 2022 in terms of my LTE results. But I think you’re sitting here a year from now talking about My LT. That dependent on personal loans is quite a bit lower and you should see actually insurance and card and other business is far better integrated with My LT, which will be awesome and obviously as you point out, that should actually really help our natural margin profile.

Stephen Sheldon — William Blair — Analyst

Great. Thanks.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

And J.D. hit on the B2B aspects of this a little bit, the co-branded with other partners is definitely working and that is — that will work not only with lending, it also works with insurance, the auto dealer app for example while it’s me and a few other dealers it is having a great impact and when we look at the unit economics and the future of that, if it works at three auto dealers it will work at 300 and there are things coming behind that and that auto dealer for example can get some quality with fully bondable quotes for auto insurance that we will — we’re much more integrated on Lending Tree. But those types of products can now migrate across everything else we have as we build out our ecosystem.

Stephen Sheldon — William Blair — Analyst

Great. I appreciate all the color. Thanks.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Thanks, Stephen.

Operator

Your next question is from the line of John Campbell with Stephens. Please go ahead.

John Campbell — Stephens — Analyst

Hey, guys. Good morning.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Hey, John.

John Campbell — Stephens — Analyst

Hey, I know this is probably impossible to directly piece out, but J.D or Doug I’m just curious about some bigger picture thoughts around stimulus and how much that might be playing a factor kind of in the pace of recovery in consumer.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

So I think I alluded to it before. I think it’s definitely have a major impact. We’ve got lenders ready to lend and we’ve got consumers that aren’t necessarily in as they were before needing or wanting to borrow. And as much as that might not have our EBITDA higher in the year from a company that’s trying to help that our mission is really to help consumers get their help, everybody get their finances right.

That’s Okay. So I’m fine with it. If people are paying down debt because the government’s giving them free money that’s certainly better than borrowing it from a credit card company that hurts our business for a few months. That’s fine. It’s good to put them in a position where their net they now can become homeowners they can start small businesses, how they can engage with us a much more valuable products in the future.

J.D. Moriarty — Chief Financial Officer

Yeah. John I guess — yeah I would just say it’s really the stimulus if it helps people get through wonderful. But the uncertainty around it is what we need to get past for our partners right. So let’s talk about each business. If your credit card issuer and you’re trying to you’re looking at credit card balances but you’re trying to assess the impact on the consumer and how creditworthy are they, right. That influences how aggressive you’re going to be in growing credit card, new card issuance right. And so we’re definitely seeing a number of our credit card issuers.

We have I think two now back to pre-COVID underwriting standards. Okay. So they obviously pulled back quite a bit. But we’re now seeing finally a couple of them get back to the same underwriting standard. That’s great. We’re starting to see in credit card better offers, better product right, so instead of a 12 month balance transfer with 18 months, and so more inducement for the consumer.

So we’re seeing a little bit more aggressive behavior on the part of the credit card issuer which is great to see and it’s certainly a sign of confidence. In personal loans as we point out if people don’t have credit card balances they’re not going to — they’re not going to have as much desire for a personal loan. And the stimulus obviously has definitely impacted that business. Interestingly in small business which had a great fourth quarter that we were very happy with. We definitely see the PPP impact, what we see is a lot of small businesses inquiring about loans, but the conversion rates impacted by the uncertainty of PPP, right. So what are they going to get from the government impacts the follow through of a small business owner to proceed with a non-PPP loan because they don’t know what they’re — what’s going to be available to them.

So I think the common ground on each of these is really a little bit of uncertainty. Personal loans are a little bit different. Every lender who was on the network pre-COVID is back on. I think we disclosed that last quarter. We were thrilled with that. But really personal loans that will be unique just because there’s not as much consumer desire for that product right now given the stimulus. So it’s certainly having an impact. But as Doug pointed out if it’s helping our consumers get through this that’s going to be great for us long term.

John Campbell — Stephens — Analyst

Okay, that’s great color. Quick follow up here on the brand spend I think last year if I recall correctly you guys had some committed spend and then obviously a portion of those kind of you were able to flex. But just curious for this year you guys have kind of earmarked a particularly level of spend and if so how much of that is fully committed versus truly variable?

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Yeah so we kind of went into this year assuming it would be similar to last. But we’ve taken steps so that we can flex it higher based on how certain businesses trend. And so you might see us later in the year stepping that up. It certainly — it stepped up a little bit quarter on quarter here in the first quarter relative to the fourth reflective of our business. But as the year progresses you might see a step up a little bit.

John Campbell — Stephens — Analyst

Okay. Great. Thanks again.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

And the only thing I would add to that is we are always going to deliver — we’re always going to do our best to deliver profits to our shareholders. And if we’ve got opportunities to invest for the future that are truly investments, not just spending money, but J.D. Moriarty or somebody from our finance team says yes, let’s go spend this much money on this above and beyond what we were thinking about because we’re seeing new numbers and it’s going to have a return. We’re going to do it and we’re going to tell you about it.

John Campbell — Stephens — Analyst

Makes sense. Thanks, guys.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Thanks, John.

Operator

Your next question is from the line of Melissa Wedel with J.P. Morgan. Please go ahead.

Melissa Wedel — J.P. Morgan — Analyst

Good morning, guys. Thanks for taking my questions, today.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Hey.

Melissa Wedel — J.P. Morgan — Analyst

Thank you. I wanted to focus on customers while I’m trying to reconcile some of the comments you’ve made about — so I think it’s particularly in part with having sort of a lower margin on that business to as card issuers come back. I’m trying to reconcile if that was actually what was pretty strong margin in the consumer category as a whole.

In 4Q I’m wondering what sort of offsetting areas of strengths that were in that segment? And then I guess second question would be around the partnership with Westlake and sort of understanding that better how that differs from current in auto and how we should think about that J.D.? Thank you.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

J.D. you want to take that?

J.D. Moriarty — Chief Financial Officer

Yeah, absolutely. So, overall the consumer category does carry high margin because it also includes our — of our big businesses our personal loan business is our highest margin business. So that business normally is weak in the fourth quarter relative to the third, right, because typically people run up credit card balances and in the fourth quarter and then it’s strong in the first quarter, okay. So that seasonality did not play out and actually personal loan was modestly bigger in the fourth quarter than it was in the third. And card obviously grew.

Now the card business as we look at each of our businesses and we’ve been doing this since on a daily basis in light of COVID, one of the nice things about our model is obviously when the revenue opportunity goes down so does our cost structure. And so we’ve watched each of our businesses and you saw that in our mortgage business for instance in the second and third quarter when that margin expanded. Well, the card business is the only business that had days in 2020 where it actually lost money, right, where the cost to deliver volume to our card issuers exceeded the revenue opportunity. And so as payouts compressed in card that was a tougher business to manage.

Now it wasn’t losing money on a daily basis, but I’d say every kind of fifth day throughout 2020 it would seem to have a day where it might lose a little bit of money throughout 2020, it would seem to have a day where it might lose a little bit of money. And recognize that with card it’s a month to month business. And as issuers want to profile new cards and we get certain payouts for those cards and we learn about those for the month ahead and what their goals are. We’re trying to meet their volume goals. And the cost environment has been high.

We’ve had to in the fourth quarter we’ve got competitors in card who are driving that cost up. And now I would say that we are probably I mentioned that a couple issuers are back to pre-COVID levels with respect to underwriting. That’s the first sign. If they’re underwriting criteria is back, that’s great. What should follow from there is enthusiasm to grow. And when the RPOs or pardon me when they’re payouts I should say move up a little bit. And when we get I’d say a couple more one or two more issuers who want to grow that should flip, meaning that the revenue opportunity will exceed the cost environment.

We are strategically deciding to grow that business right now meeting volume targets for issuers to take more of their market share as the months proceed and recognizing that it might be a breakeven proposition in the card business as we try to build it back right. So with any one issuer we’re saying to them okay in January how much of your spend could we get, okay, great. Maybe we did that at a breakeven level for us in January what can we do in February.

Can we grow it? That’s the strategy. And when the network gets a little bit more robust, we’ll start to be a profitable business. But card specifically is going to drag on margin in Q1 relative to what consumer is typically, the personal and business continues to enjoy pretty good margin profile, which need revenue growth there. So, it’s really a mix of business, now the other thing I would point out. Sorry, sorry, go ahead, Doug.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

No, you, sorry. Sorry, go ahead.

J.D. Moriarty — Chief Financial Officer

Yeah. No, I mean if you look at those businesses that’s called personal loan, small business was very strong in the fourth quarter, but we’re preparing for that card business is going to grow with modest contributions. Sorry, go ahead.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

The only other thing I would add to sort of the conundrum of why you can have like the comments in card and then still have very good merges in consumer, it goes back to in My LendingTree even with consumer balance sheets being better. We can get a lot of “free” or already paid for transactions happening later in their mortgage markets. So, that’s these longer term My LendingTree strategy, which — which is why you’re seeing consumer margins a little bit higher. But you’re also not seeing as yet saying come to LendingTree and get a personal loan like that would be a direct thing around personal loans and that comes and is that those economics work we improve those.

But in the meantime, you’ve got — you still have a lot of My LendingTree traffic that is fed from all of those other loan types coming through and that’s what’s enabling us to be able still say is that let’s grow the credit card business and for the lenders are paying us enough money that we can go market grade. We’re certainly not going to lose money. But if we make a dollars, but losing dollar and we’re going to get sign ups and lifetime value and add more customers in the front door engaging with us that’s the plan.

Operator

Your next question is from the line of Rob Wildhack with Autonomous Research. Please go ahead.

Rob Wildhack — Autonomous Research — Analyst

Good morning, guys. I wanted to follow up on My LT and engagement there, I’m wondering if you can share any additional color around usage interactions our MY LT users interacting with the platform more and more and if so how fast that they increase?

Douglas Lebda — Chairman, Chief Executive Officer and Founder

J.D., do you want to give like numbers and then I’ll hit overall.

J.D. Moriarty — Chief Financial Officer

Sure.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Signs of goodness in there. And it’s still no perfect.

J.D. Moriarty — Chief Financial Officer

Yeah. The biggest thing Rob is really this planned integration getting people to become connected accounts. So of those who are connecting their accounts and the real thing that we’ve got to drive this year is that what’s the call to action to get somebody to connect their accounts with plaid. We’re seeing their engagement up almost 30%. So that’s great. And then we’re seeing revenue per active user as a result of that connected account that’s up 20%.

So strategically we want to drive people to engage their accounts that’s really important to us but the monthly active users we’ve got to get them to connect accounts we think that’s really the driver strategically throughout the year. So we’re not — we don’t have a new set of like public metrics that we’re going out with but that strategy is certainly working and we’re really happy to see that.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

And then the reason for that is if we can get you to connect your accounts, we have more opportunities to give you alerts. So the more we know We can get you to connect your accounts, we have more opportunities to give you alerts. So the more we know about you the more we can tell you how to save money, but we have — and we have to get consumers to sort of take that next step. So the beautiful thing about our business model as we can drive you in to say come and get a mortgage, come and get a personal loan, come and get a credit card comparison shop for this.

And we can also say get a free credit score if you want. We can say get identity theft insurance and we can say get it all together. So we’ve got many different marketable opportunities. But ultimately we want you to whether you engage with whether you complete that first transaction or not. We want to make sure that we’ve got an account for you so that we can engage with you over other transactions and that is starting to grip.

Rob Wildhack — Autonomous Research — Analyst

Got it. That’s really helpful. It’s just a follow up, you’ve talked in the past about expanding the product set and the offering on the assets side of the consumer balance sheet, but also today has highlighted a lot of current investment in existing businesses. So where does that asset side of the consumer balance sheet rank as a priority, you guys, just any updated thoughts you might have on the opportunity there.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

So right on deposits, our deposits business is obviously not doing great, because deposit rates are low right now. So it doesn’t make sense to say hey deposit here versus there. However, longer term I think that the trends there are very good. J.D. do you want to add on?

J.D. Moriarty — Chief Financial Officer

Yeah. I mean right now if you think about the asset side for us Rob it’s — it started with deposits. That’s a modest business at this point. We’ve talked about two things around investments. One is, obviously you’ve got an ownership stake in Stash and we will continue to evolve how we partner with them. We’re happy with some of the partnerships thus far, but they haven’t yet manifested themselves in opportunities for MyLT customers, that’s a little bit more complicated. But we — over time we think there will be the opportunity to offer investment products to the MyLT base through that partnership which will be great.

We also have, and we’ve talked about this, a business around investments. And so, we’ve been developing content around investments, we’re in the early stages of it. But we actually have partners who are engaging with us and in the fourth quarter we had a small amount of revenue in that investments vertical. So, that — think about that as providing customer acquisition services for the RIA channel. Okay. So, that will be a growing business at Lending Tree over time as well.

But we’re early days, but we think it’s important and we think it is something it’s a natural extension of our business, but that’s the way to think about it, it’s kind of — there’s the Stash which is a product for a first time person to save and invest, that’s a specific product and we’ll partner with them for that. And then kind of the marketplace experience for the registered investment advisor community and we talked about that, that’s not a new opportunity but we think it’s a very natural [Indecipherable].

Douglas Lebda — Chairman, Chief Executive Officer and Founder

And I would just add on by saying the Stash integration is going very well on both of us helping monetize their users and help and their investment product helping us or our users get engaged. The auto’s product while it’s to the insurance could very quickly going to helping you buy a car which is also obviously an asset. The overall cash flow analysis that we’re doing…

Rob Wildhack — Autonomous Research — Analyst

Yes.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Very strong into savings and then is JD point out the RIA business. We think that for a certain segment of customers they should be using a robo adviser. For another set of customers, they can be working with somebody at a different a very high end. And for the middle, there’s a lot of people who want registered investment advisors to help them through retirement. They get very good earnings from those accounts and it’s a brand new channel for us that is early stages showing very, very good signs of life.

Rob Wildhack — Autonomous Research — Analyst

Good. Great. Thank you, guys.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Thank you.

Operator

Your next question is from the line of Jamie Friedman with Susquehanna. Please go ahead.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Hey, J.D.

Jamie Friedman — Susquehanna — Analyst

Hi. Good morning, guys. So you mentioned in the second page of the shareholder — shareholder letter that the strength that you saw trying to find a year ahead, the trend that is persisting into the new year, in terms of the strike that you saw earlier I was hoping you could just elaborate on what it is that you may have seen quarter to date.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

I believe you were. Yeah I believe you’re referring to the mortgage segment, is that? It’s home, sorry it’s in the second paragraph. So it says as previously discussed much the fourth quarter our performance was driven by strength in the home segment. I’m specific to home. Yeah.

J.D. Moriarty — Chief Financial Officer

Yeah. So it’s — listen it’s specific to home. It’s played out as we expected it would right? And we’ve talked about that we effectively as the year 2020 progressed with rates and organic volume in the beginning of the year. We knew that there would be more desire for our services as year progressed and we knew that we would be able to drive revenue per lead, right? So as increase capacity as we say among our lenders, we expanded capacity and when we expand capacity what do we see?

We see increase in our RPO okay? So our mortgage revenue per lead was up 35% over the prior year. And then volume was up 15%. So how are we getting that right? That’s year-over-year growth in the business of 51%. That has continued in the first quarter and we’re really happy with the performance. And so that’s the mortgage cycle. I think we evolved the product over the last year and we came into this cycle well-prepared for it and we’re trying to make the most of it and work with our partners to be a more critical partner.

So as I said before hard to say where we are in that cycle. We’ve obviously seen rates tick up recently. That will make it a little bit harder for our lenders if they continue to be higher. But what it does in the short run is obviously make our services that much more valuable.

Jamie Friedman — Susquehanna — Analyst

Okay. If I could just follow up with what one on card, I know a lot of the questions are folks on card, but are we generally in a balance transfer environment or are we more rewards driven environment. How would you characterize what’s going on right now?

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Yeah. I think what you will see as card issuers come to the fore is more of a balance transfer focus. Having said that, credit card balances themselves are not high at the moment, right. So — but they can make a lot of money on that product when they grow to expand their portfolios. Now the reward programs have been probably challenged a bit, because of the absence of travel right. So much of that is travel centric.

Having said that, I would expect that when people get back to more normalized travel let’s all hope that the card issuers will be focused on reward cards. It’s sort of hard to say right now Jamie, we’re principally focused on helping them grow again and on underwriting criteria and product. So we’re starting to see as I mentioned before the balance transfer card that moves from 12 months to 18 months with zero interest. That’s the beginning of we want to grow cards. That’s what we need to see that the anecdotal or partly be anecdotal something of a desire to grow. And I think it will probably beat balance transfer at the outset.

Operator

And your final question is from the line of Kunal Madhukar with Deutsche Bank. Please go ahead.

Kunal Madhukar — Deutsche Bank — Analyst

Hi. Thanks for squeezing me in. One of the longer term, bigger picture. Want to understand where you stand in the comparative landscape for marketing spend from financial services firms. Most of them have been spending online for the longest time. You’ve been around for the past over 20 — almost 25 years. So, it’s not as if there is lack of preparedness. So, how do you get a bigger share of the advertising spend from the financial services firms.

And then second, and this is something more from personal experience is, I see a lot of like LendingTree ads all the time whenever I go online and most of them are basically about refinancing. But I just refi it, I just refi it and I refi it through LendingTree. So, you should know that I’m no longer in the market for refi. Why am I still getting those ads?

Douglas Lebda — Chairman, Chief Executive Officer and Founder

So, here’s why and let me cut out the advertising works and you’re sort of experiencing there in the short run, the marketplace. So, our ads will — let’s take online and offline a little bit separately. So, in the online space we are — because of our asset and because of the long tail of all those lenders, those ads payoff and there you’re seeing there some generalized ads, not necessarily targeted because you’re prior LendingTree customer and they’re more general and we do them because they work.

And right now, they’d be more refi focused bigger that’s what our lenders demand, right. And then when they’re not demanding that you would see those generalize to some hopefully. Well you would also be seeing in addition to ads on the Internet is that now that you’re a customer and you refi through us you should be getting hopefully more targeted alerts and less of that.

I will tell you that the ability to know a customer who’s already there and then not and then show them either more highly targeted ads so for example you could go all the way to saying hey you don’t need to see it as hard to refinance because always though your refinance customer but you might be interested next it gets a little sort of creepy and we talked — so we felt necessary to go there. So current customers will see ads across the Internet and they definitely work. So that’s how that works. Does that make sense?

Kunal Madhukar — Deutsche Bank — Analyst

I’ll take the word for it.

J.D. Moriarty — Chief Financial Officer

So Kunal, right, Kunal, it’s J.D. Let me just — the only thing I would expand on there is there’s another part to your question as well. So I’ll maybe address that. We just were constantly trying to develop channels and I think what you were reflecting is when you’re seeing display ads, well we’ve seen great success in display over the last year and we certainly wish that every that all of our channels became more — become more personalized. We’re principally focused on making sure that the mile to experience is more personal ads right.

So there we should have more control over showing you an ad and then we’re going to necessarily in display. Display is going to be a function most often of what you’re reading when you see it right. So that’s just the display channel. And we’ve seen great success there. We try to grow every channel as the year goes on and that’s what you’re seeing is our — when you see us have more presence in display, it means that it’s working as Doug points out. Now again not as personalized display it’s going to be a function most often of what you’re reading when you see it, right. So that’s just the display channel and we’ve seen great success there. We try to grow every channel as the year goes on and that’s what you’re seeing is our — is our — when we — you see us have more presence in display, it aims it’s working as Doug points out. Now, again not as personalized as we’d like. We have longer-term goals that’s one of them.

The other question you asked is how do we get bigger more committed spend from partners. And over time that should be one of our great opportunities given our diversification. And we have certain partners where they are structuring themselves certain big bank partners where they’re structuring themselves to be more holistic and more comprehensive, right. So they want to talk about deposits combined with mortgage, combined with personal loans. But they’re few and far between.

We’re trying to drive them there but they tend to have people who are responsible for customer acquisition by product they tend our partners tend to be more siloed. So we try to drive change and we try to get to more committed spend. But it’s just — you have to have organizational change on the partner side to get there. We also tend to have partners who exceed in one product more than another, right. But the biggest opportunity exists within those big financial institution partners. And actually if you look at our Company versus five years ago today what you’re — what you’d find is the top 10 customer base is a much healthier base than it was five years ago.

Five years ago in our top 10 customer base you would have seen some non-bank mortgage originators that the average investors never heard of. And today everybody’s pretty much a brand name financial institution whether it’s an insurance carrier or a credit card issuer or obviously the rockets and loan depots of the world that are newly public. So, we’ve certainly seen our top 10 customers become bigger, more stable organizations over time and the next leg of that should be the ability to drive to more holistic relationships with them.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

And the only thing I would add is among those big customers, you’re going to see those companies whether they’re banks, mortgage companies we’re seeing more of that, credit card companies etc. if they’re advertising both online and offline that is both — it’ll rip our marketing costs because they want to build their brands too. And we also see that when they do that, it helps their conversion rates on Lending Tree just like when we’re doing brand advertising on TV. It helps us inside of Google.

So, if we’re the search engine for money, we’re going to have some companies that are going to be more I’d say reliant in a negative way on Lending Tree or call — partnered and you’re going to have companies where we’re out of their business and they’re also going to do their own advertising. What we hear from things like mortgage side right now because of the improvements in products that JD talked about, we’ve talked about in the past. We’ve got a lot of capacity from lenders and we just need to be able to deliver it to them. And so, you’re seeing more marketing because we’re marketing in to that demand that they’ve got from us.

Kunal Madhukar — Deutsche Bank — Analyst

Great. Thanks, Doug.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

Thank you, Kunal.

Operator

And I’m showing no further questions at this time. I would like to turn the conference back to Doug Lebda for closing remarks.

Douglas Lebda — Chairman, Chief Executive Officer and Founder

So just a couple of closing thoughts, these are all coming from your questions and just reflections as we’ve had this call. I am thrilled with how our team has come through COVID. During this past year we have had ups and we’ve had downs and we’ve had people working very, very hard and we’ve come out at a better company. We’ve come out leaner. We’ve come out with much more understanding of the right ways to do things and that we’re a company that’s on a continuous improvement cycle.

Second thing I would say the core businesses are solid with you. You can run every individual loan type. You can add on my LendingTree everything is solid. Some will do better in times and some will do worse in times and that is nearly the supply and demand economics of what’s going on. Expect to see us continue to hopefully deliver and also invest because at the end of the day you don’t end up with 10 marketplaces in any industry you end up with one or two.

Next thing I would say which is somewhat boring here but it’s really impactful is that throughout this last year and throughout the planning process we went through and the processes that we have laid in place I think that we are now at a place where we’ve got the team and the processes the brand and the capabilities to scale this Company to a much larger company. And we intend to do that. And then the last I would say to you all is always please know that particularly now that Liberty Media is not our largest shareholder that I am always talking to you as a CEO and I’m also talking to you as a shareholder who has my entire net worth in this basically and has a passion to succeed and more importantly than me every single employee at LendingTree sees the mission the same way.

So you’ve got 1,200 fired up shareholders who are waking up every day trying to not only increase the value of our enterprise, but to do it the right way by helping consumers save them money and by helping our partners build big and enduring businesses around them. And I am really happy with where we are. So thank you all very much for your time. Thank you for your attention to our Company and we look forward to talking to you soon.

Operator

[Operator Closing Remarks]