Slide 1: LendingTree Business & Financial Overview June 2003
This presentation shall not be deemed to be an offer or a solicitation of an offer to buy any securities of LendingTree. LendingTree Business & Financial Overview June 2003
Slide 2: Forward-looking statements
This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements relating to our anticipated financial performance, business prospects, new developments, new merchandising strategie
Slide 3: Proposed Merger Transaction notice
In connection with the proposed transaction to combine the Company with USA Interactive, USA Interactive will file a Prospectus, and the Company will file a Proxy Statement with the SEC. Investors and security holders are urged to read carefully the Proxy Statement/Prospectus regarding the proposed
Slide 4: Agenda
LendingTree, Inc. Agenda Business Overview - Lending Business Overview - Real Estate Operating & Financial Results Long-Term Financial Projections
Slide 5: The U.S. Consumer Lending Market is Extremely Large
Source: Federal Reserve Statistical Release, National Mortgage News Quarterly Report, 2002, SMR Home Equity & Subprime Mortgage Loans, 2002. 2002 Total Debt Outstanding $9.1 Trillion 2002 Total Originations by Product The U.S. Consumer Lending Market is Extremely Large... Business Overview - Lending
Slide 6: Mortgage Originations Are Highly Fragmented
Source: Inside Mortgage Finance 2003, Wall Street Journal 2003, MBAA. Mortgage Originations by Source 50,000 Institutions $2.46 Trillion LendingTree Mortgage Market Share ....and Highly Fragmented. Business Overview - Lending Mortgage Brokers Top 15 Banks Small/Medium Lenders Mortgage 0.6 0.29 0.11
Slide 7: Internet Can Help Streamline an Inefficient Mortgage Lending Value Chain
L e n d i n g T r e e E x c h a n g e Like Other Industries, the Internet Can Help Streamline an Inefficient Mortgage Lending Value Chain... Business Overview - Lending
Slide 8: Efficient Exchange Between Consumers and Lenders
....By Creating an Efficient Exchange Between Consumers and Lenders. Business Overview - Lending
Slide 9: A Simple and Understandable Process
A Simple and Understandable Process... Consumer Access Loan Request Filters Lender Evaluation and Response Loan Offer Communication and Consumer Acceptance "Over the last 15 years, I've purchased three homes, refinanced and made equity loans, and have never had such a pleasant experience as I am now
Slide 10: A Simple and Understandable Business Model
A Simple and Understandable Business Model. Business Overview - Lending Completed QFs Transmitted QFs Transmit Rate Transmits Per $1-$10 per Lender per Transmit Approval Rate Close Rate $36 - $750 per Closing Variable Marketing Expense
Slide 11: Standard Fees for Loan Products
Standard Fees for Loan Products Loan Pricing Structure is Aligned with Consumer and Lender Goals. (1) Mortgage Closed Loan Fees are tiered depending on loan size ranging from $300.00 for loan amounts below $125,000 and $750.00 for loan amounts over $300,700. Business Overview - Lending
Slide 12: Leading Lending Exchange; Competition Primarily Offline Players
LendingTree is the Leading Lending Exchange and Competition is Primarily with Offline Players. Exchanges / Referral Sites • CreditLand • IMX • LendingTree • Get Smart • HomeAdvisor • LoanTrader • QuickenLoans • Ultraprise • Mortgage Bid • LendingTree Online Lenders • eLoan • eLoan • iOwn • Mortgage.
Slide 13: Agenda
LendingTree, Inc. Agenda Business Overview - Lending Business Overview - Real Estate Operating & Financial Results Long-Term Financial Projections
Slide 14: The Real Estate Market is Very Large
1997 1998 1999 2000 2001 2002 Existing Homes Sold 4.382 4.97 5.2 5.2 5.3 5.56 New Homes Sold 0.804 0.886 0.88 0.877 0.909 0.976 Total Home Sales (units in millions) 5.2 5.9 6.1 6.0 6.2 Source: U.S. Bureau of the Census, Construction Reports Broker Commissions ($ in billions) The Real Estate Market i
Slide 15: Highly Fragmented Real Estate Brokerage Market
NRT Century 21 Coldwell Banker ERA Other Prudential RE/MAX GMAC Home Services Percentage of business online 45000 100000 75000 28000 416000 43000 73000 20000 REALTOR? Breakdown (% of total ) ....and Highly Fragmented with over 80,000 Brokerage Companies and 860,000 REALTORS?. Cendant Source: Real Tr
Slide 16: Consumers More Inclined to Find a REALTOR on the Internet
Consumers are 7.3x More Inclined to Find a REALTOR? on the Internet than Originate a Loan, Highlighting the Real Estate Opportunity for LendingTree. How Consumers Use the Internet to Facilitate Real Estate Transactions % of Internet Consumers Using Function Source: California Association of REALTORS
Slide 17: Realty Services Exchange Between Consumers and REALTORS
Realty Services is an Efficient Exchange Between Consumers and REALTORS?. Business Overview - Real Estate
Slide 18: How LendingTree Makes Money in Real Estate
How LendingTree Makes Money in Real Estate. Assume Home Price = $225,000 One Sided Transaction (Buy or Sell) Total Commission @ 3% = $6,750 Double Sided Transaction (Buy and Sell) Total Commission @ 6% = $13,500 Note: Illustrated consumer rebate is for the LendingTree.com channel. Business Overview
Slide 19: Well Positioned Compared to Other Real Estate Competitors
1st Qtr 2nd Qtr East 50 50 1st Qtr 2nd Qtr East 75 25 1st Qtr 2nd Qtr East 25 75 1st Qtr 2nd Qtr East 0 100 1st Qtr 2nd Qtr East 100 0 Not offered Basic Average Above Average Comprehensive LendingTree is Well Positioned Compared to Other Real Estate Competitors. 1st Qtr 2nd Qtr East 50 50 1st Qtr 2n
Slide 20: Significant Brand Awareness
Year 1 Year 2 Year 3 0.41 0.59 0.67 LendingTree Total Brand Awareness Source: LendingTree Sponsored Surveys Conducted by Chadwick Martin & Bailey LendingTree Has Achieved Significant Brand Awareness That Can Be Leveraged for Both Real Estate and Lending. Business Overview - Summary
Slide 21: Agenda
LendingTree, Inc. Agenda Business Overview - Lending Business Overview - Real Estate Operating & Financial Results Long-Term Financial Projections
Slide 22: Exchange Volume Has Grown Substantially
Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 # Loans Closed 134.06 178.263 211.876 192.067 343.992 313.14 349.674 412.418 382.161 366.677 555.395 541.43 661 Total Transmitted QFs Exchange Volume Has Grown Substantially... (in thousands) Total $ Funded Q1 00 Q2 00 Q3
Slide 23: Real Estate QFs Continue to Grow
Realty QFs Static Pool Close Rate .... and Real Estate QFs Continue to Grow, with Close Rates Steadily Improving. Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Guidance 1.116 8.162 15.61 16.333 12.789 11.331 19.809 17.743 15.182 12.248 35.156 (in 000's) Note: Commenced Real Estat
Slide 24: Top Line Continues to Grow
Total Revenue Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Guidance 3.5 6.298 8.022 9.39 12 15.5 16.3 17.5 20 23 26 33.5 35 Actual Revenue 4.483 7.699 8.962 9.601 12.256 15.809 17.203 18.751 21.267 24.467 30.941 34.7 39.2 Top Line Continues
Slide 25: The Path to Significant Profitability is Clear
....and the Path to Significant Profitability is Clear. Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Guidance -2.07 -1.04 -0.81 -0.75 -0.52 -0.66 -0.2 -0.29 -0.15 -0.05 0.12 0.19 0.18 Earnings Per Share Operating & Financial Results - LendingTree
Slide 26: Agenda
LendingTree, Inc. Agenda Business Overview - Lending Business Overview - Real Estate Operating & Financial Results Long-Term Financial Projections
Slide 27: Long-Term Financial Projections: Synergies with USAI
Long-Term Financial Projections Our Combination with USAI Could Yield Numerous Synergies. More Efficient Media Buying Improved Distribution Realty Services Offerings Linked to USAI Properties Loan Centers on USAI Properties Incremental Capital and Investment Accelerate Realty Services product expans
Slide 28: LendingTree Business & Financial Overview June 2003
This presentation shall not be deemed to be an offer or a solicitation of an offer to buy any securities of LendingTree. LendingTree Business & Financial Overview June 2003
Slide 29: Supplemental Data
Supplemental Data Lendifigiiee
Slide 30: Volume in a rising interest rate environment
Supplemental Data Common Questions About LendingTree's Business Model Are: Question How will volume be impacted in a rising interest rate environment? Response As an exchange, we anticipate a series of dynamics that will take place in a rising interest rate environment: Refinance loan requests go do
Slide 31: Conservative Purchase/Refinance Mix Assumptions
Total Refinance Completed QF Mix Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Working Media 0.25 0.218 0.263 0.316 0.563 0.521 0.56 0.716 0.446 0.406 0.68 0.714 0.675 0.58 0.46 0.33 LendingTree Has Made Conservative Planning Assumptions Regarding Pu
Slide 32: Managing Mortgage Product in Different Interest Rate Environments
LendingTree Has Successfully Managed its Mortgage Product in Different Interest Rate Environments. Low/Declining Interest Rates - Q4 2001 Completed QFs 100 QFs Transmit Rate - 50% 50 QFs Multiple Transmits per QF 2.07 Close Rate 8.0% Multiple Referrals - 104 Total Closings - 4 Low/Declining Interest
Slide 33: Why close rate trends are a key metric
Supplemental Data Common Questions About LendingTree's Business Model Are: Question Why are close rate trends a key metric for the business and what do they show? Response Since customer acquisition costs are already incurred to attract consumers, close rates have a significant impact on the upside
Slide 34: Growing purchase mortgage business as refinance diminishes
Supplemental Data Common Questions About LendingTree's Business Model Are: Question How will LendingTree continue to increase the purchase mortgage business when refinance volume begins to diminish? Response There are several key drivers of purchase mortgage growth: Volume initiatives Lender focus o
Slide 35: Volume Initiatives for purchase mortgage volume
Volume Initiatives: LendingTree will drive purchase mortgage volume to partially offset the loss of refinance. We have several volume initiatives in place to do that and are ahead of budget on purchase volume in early 2003. Expansion into Broadcast TV networks; Introduction of Direct Response TV; En
Slide 36: Dependence on Real Estate listings
Supplemental Data Common Questions About LendingTree's Business Model Are: Question How dependent is LendingTree on Real Estate listings? Response LendingTree's business model is not dependent on Real Estate listings as we do not directly monetize them. Home listings are being made available to our
Slide 37: LendingTree, Inc. Balance Sheets
LendingTree, Inc. Balance Sheets ($ in thousands) Supplemental Data
Slide 38: LendingTree Business & Financial Overview June 2003
This presentation shall not be deemed to be an offer or a solicitation of an offer to buy any securities of LendingTree. LendingTree Business & Financial Overview June 2003