LendingTree Slashes 13% of Workforce Amid Rising Interest Rates
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Summary:
Online lending platform LendingTree, announced on Wednesday that it would cut around 13% of its workforce in an effort to lower costs. The company said in a filing that it had committed to a workforce reduction plan on Friday intended to shrink expenses. This comes on the back of a previous announcement from the lending marketplace to lay off approximately 200 employees, that left the company with approximately 1,407 employees as of June 2022.
LendingTree anticipates incurring approximately $5.6 million in severance expenses due to the workforce reduction plan. In the SEC filing (see below), the company expects to recognize these charges during the first and second quarters of 2023, with the execution of the plan, including cash disbursements, completed by the end of the second quarter of 2024. LendingTree has not made any changes to its first-quarter and full-year financial projections at this time. The company’s shares remained unchanged in after-hours trading.
LendingTree, based in Charlotte, previously cut around 200 jobs across the company in the face of a rising interest rate environment. The cuts were disclosed in a letter to shareholders on November 3rd. This is just the most recent event in a series of layoffs, with others like LendingClub eliminating 14% of their workforce in mid-January.
That isn’t the only massive layoff for LendingTree. Compared to its workforce in mid-2021, the marketplace has had to lay off over 20% of its employees. According to a letter to its shareholders, LendingTree commented that:
Elevated interest rates and inflation at 40-year highs in the U.S. further pressured consumer demand for mortgage loans and carrier appetite for new insurance policies. Managing our non-marketing operating expenses remains a top priority, and we held these flat in the third quarter compared to the prior year.”
According to LinkedIn posts, the positions affected included software engineers, marketing, analytics, and operations.
In Q3 2022, LendingTree reported a net loss of $158.7 million, or $12.44 per diluted share. This followed losses of $8 million in Q2 and $4.4 million in Q3 2021. Its revenue in Q3 2022 was $237.8 million, down from $297.4 million in the same quarter the previous year and $261.9 million in Q2 2022.
LendingTree stated in a letter to shareholders that it was committed to generating positive operating leverage and had completed a review of its fixed costs after the quarter-end. The company also identified third-party cost-saving opportunities and savings totaling $25 million to be used in its growth strategy for 2023.
LendingTree was not the only mortgage lender to reduce its headcount in 2022. Other companies such as Real Genius, Movement Mortgage, and Better.com have also cut jobs due to the challenging environment.
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