Tree.com Inc., which runs the LendingTree lead-generation site and a mortgage lender, said its second-quarter profit fell 76% from the first quarter, to $700,000, or 7 cents a share, as it invested in an advertising campaign.
Revenue rose 6% compared with the year-earlier period, to $61 million, buoyed by refinancing volume, Tree.com said Thursday. However, Doug Lebda, the Charlotte company's chairman and chief executive, said in a press release that "we have begun to see the fall-off in refinance volume that we have been predicting for some time now" as interest rates begin to climb.
He said the situation underscores the company's need to diversify away from mortgage-related businesses. "We expect it will take some time, but we are beginning to establish footholds in a couple of new" industries — Tree.com recently announced it had acquired DoneRight, an online directory that helps users select and hire home improvement professionals, and LeadRelevance, a marketing company focused on lead generation in the post-secondary for-profit education market.
For last year's second quarter Tree.com reported a loss of $162.9 million.
In this year's second quarter revenue at the lending arm, LendingTree Loans, jumped 44% from a year earlier, to $36.3 million, as the number of loans closed increased by more than 20%, to 4,000.
But as low interest rates have boosted volume for home lenders across the industry, demand has weakened for Tree.com's leads on prospective borrowers. Revenue in this line of business dropped 32% from a year earlier, to $30.1 million, though it rose 8% from the first quarter as the company raised its fees on flat volume.