CHARLOTTE, N.C., Oct. 30,
2019 /PRNewswire/ -- LendingTree, Inc. (NASDAQ: TREE),
the parent of LendingTree, LLC and several companies owned by
LendingTree, LLC, today announced results for the quarter ended
September 30, 2019.
"LendingTree continued its run of strong results in the third
quarter, achieving record levels of revenue, variable marketing
margin, and adjusted EBITDA," said Doug
Lebda, Chairman and CEO. "While top-line revenue
trends have been terrific all year, we were particularly pleased to
drive expanded profitability in the quarter while continuing to
invest in projects to position the company for success in the
quarters and years to come."
J.D. Moriarty, Chief Financial Officer, added "The team executed
incredibly well across our portfolio of businesses. We saw
some resurgence in the mortgage environment relative to earlier in
the year. In student loans, we delivered for our partners in
a big way during the peak fall enrollment period. And our
small business offering is emerging as a real driver of
growth. While the day-to-day execution has been fantastic,
we're equally excited about the strategic initiatives and
investments that our diversified business has enabled us to make in
2019. These should position us well and catalyze the business
in 2020 and beyond."
Third Quarter 2019 Business Highlights
- Insurance revenue of $74.8
million, representing growth of 57% over third quarter 2018
on a pro forma basis.
- Mortgage revenue of $62.0 million
returned to year-over-year growth, up 12% over third quarter
2018.
- Credit card revenue of $54.8
million grew 28% over third quarter 2018.
- Revenue from personal loans of $43.9
million grew 14% over third quarter 2018.
- In "Other," revenue from small business and student loans grew
71% and 64% year-over-year, respectively.
- More than 13.2 million consumers have now signed up for My
LendingTree. The revenue contribution from My LendingTree grew to
$23.9 million, up 40% year-over-year
and 19% sequentially. Quarterly active users grew 56% over third
quarter 2018.
LendingTree
Selected Financial Metrics
|
(In millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Y/Y
|
|
|
Three Months
Ended June
30,
|
|
Q/Q
|
|
|
2019
|
|
2018
|
|
%
Change
|
|
|
2019
|
|
%
Change
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage products
(1)
|
$
|
62.0
|
|
|
$
|
55.3
|
|
|
12
|
%
|
|
|
$
|
54.6
|
|
|
14
|
%
|
|
Non-mortgage products
(2)
|
248.6
|
|
|
141.8
|
|
|
75
|
%
|
|
|
223.8
|
|
|
11
|
%
|
|
Total
revenue
|
$
|
310.6
|
|
|
$
|
197.1
|
|
|
58
|
%
|
|
|
$
|
278.4
|
|
|
12
|
%
|
|
Non-mortgage % of
total
|
80
|
%
|
|
72
|
%
|
|
|
|
|
80
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
$
|
26.4
|
|
|
$
|
17.8
|
|
|
48
|
%
|
|
|
$
|
7.3
|
|
|
262
|
%
|
|
Income tax (expense)
benefit
|
$
|
(1.9)
|
|
|
$
|
10.5
|
|
|
|
|
|
$
|
5.7
|
|
|
|
|
Net income from
continuing operations
|
$
|
24.5
|
|
|
$
|
28.4
|
|
|
(14)
|
%
|
|
|
$
|
13.0
|
|
|
88
|
%
|
|
Net income from
continuing operations % of revenue
|
8
|
%
|
|
14
|
%
|
|
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.90
|
|
|
$
|
2.22
|
|
|
(14)
|
%
|
|
|
$
|
1.01
|
|
|
88
|
%
|
|
Diluted
|
$
|
1.67
|
|
|
$
|
2.05
|
|
|
(19)
|
%
|
|
|
$
|
0.87
|
|
|
92
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable marketing
margin
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
|
310.6
|
|
|
$
|
197.1
|
|
|
58
|
%
|
|
|
$
|
278.4
|
|
|
12
|
%
|
|
Variable marketing
expense (3) (4)
|
$
|
(195.0)
|
|
|
$
|
(120.3)
|
|
|
62
|
%
|
|
|
$
|
(184.6)
|
|
|
6
|
%
|
|
Variable marketing
margin (4)
|
$
|
115.6
|
|
|
$
|
76.8
|
|
|
50
|
%
|
|
|
$
|
93.8
|
|
|
23
|
%
|
|
Variable marketing
margin % of revenue (4)
|
37
|
%
|
|
39
|
%
|
|
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(4)
|
$
|
63.0
|
|
|
$
|
45.3
|
|
|
39
|
%
|
|
|
$
|
46.3
|
|
|
36
|
%
|
|
Adjusted EBITDA %
of revenue (4)
|
20
|
%
|
|
23
|
%
|
|
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income (4)
|
$
|
32.9
|
|
|
$
|
26.6
|
|
|
24
|
%
|
|
|
$
|
17.6
|
|
|
87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income per share (4)
|
$
|
2.25
|
|
|
$
|
1.92
|
|
|
17
|
%
|
|
|
$
|
1.18
|
|
|
91
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes purchase
mortgage and refinance mortgage products.
|
(2)
|
Includes home equity,
reverse mortgage, personal loan, credit card, small business loan,
student loan, auto loan, home services, insurance, deposit and
personal credit products and income from the re-sale of advertising
to third parties.
|
(3)
|
Represents the
portion of selling and marketing expense attributable to variable
costs paid for advertising, direct marketing and related expenses.
Also includes the portion of cost of revenue attributable to costs
paid for advertising re-sold to third parties. Excludes overhead,
fixed costs and personnel-related expenses.
|
(4)
|
Variable marketing
expense, variable marketing margin, variable marketing margin % of
revenue, adjusted EBITDA, adjusted EBITDA % of revenue, adjusted
net income and adjusted net income per share are non-GAAP measures.
Please see "LendingTree's Reconciliation of Non-GAAP Measures to
GAAP" and "LendingTree's Principles of Financial Reporting" below
for more information.
|
Third Quarter 2019 Financial Highlights
- Record consolidated revenue of $310.6
million represents an increase of 58% over revenue in the
third quarter 2018.
- GAAP net income from continuing operations of $24.5 million, or $1.67 per diluted share.
- Record variable marketing margin of $115.6 million represented 37% of revenue and
grew 50% over third quarter 2018.
- Record adjusted EBITDA of $63.0
million increased 39% over third quarter 2018.
- Record adjusted net income per share of $2.25.
- After borrowing an initial total of $215
million against our revolving credit facility to fund
acquisitions, we have since re-payed $140
million, bringing total revolving debt down to $75 million as of October
29, 2019.
Business Outlook - 2019
LendingTree is revising full year 2019 guidance, as follows:
- Revenue is now anticipated to be in the range of $1,100 - $1,115
million, up from prior range of $1,080 - $1,100
million.
- Variable marketing margin is expected in the range of
$395 - $405
million, compared to prior range of $390 - $405
million.
- Adjusted EBITDA is anticipated in the range of $197 - $205
million, compared to prior range of $195 - $205
million.
LendingTree is not able to provide a reconciliation of projected
variable marketing margin or adjusted EBITDA to the most directly
comparable expected GAAP results due to the unknown effect, timing
and potential significance of the effects of legal matters, tax
considerations, and income and expense from changes in fair value
of contingent consideration from acquisitions. Expenses associated
with legal matters, tax consequences, and income and expense from
changes in fair value of contingent consideration from acquisitions
have in the past, and may in the future, significantly affect GAAP
results in a particular period.
Quarterly Conference Call
A conference call to discuss LendingTree's third quarter 2019
financial results will be webcast live today, October 30, 2019
at 5:00 PM Eastern Time (ET). The
live audiocast is open to the public and will be available on
LendingTree's investor relations website at
http://investors.lendingtree.com/. The call may also be accessed
toll-free via phone at (877) 606-1416. Callers outside the United States and Canada may dial (707) 287-9313. Following
completion of the call, a recorded replay of the webcast will be
available on LendingTree's investor relations website until 7:00 PM
ET on Wednesday, November 6, 2019. To
listen to the telephone replay, call toll-free (855) 859-2056 with
passcode #8574406. Callers outside the
United States and Canada
may dial (404) 537-3406 with passcode #8574406.
LENDINGTREE, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(in thousands, except per share
amounts)
|
Revenue
|
$
|
310,605
|
|
|
$
|
197,057
|
|
|
$
|
851,416
|
|
|
$
|
562,193
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization shown separately
below) (1)
|
17,671
|
|
|
10,838
|
|
|
51,651
|
|
|
22,577
|
|
Selling and marketing
expense (1)
|
200,818
|
|
|
124,400
|
|
|
567,338
|
|
|
374,390
|
|
General and
administrative expense (1)
|
30,323
|
|
|
22,980
|
|
|
89,391
|
|
|
70,553
|
|
Product development
(1)
|
10,200
|
|
|
6,608
|
|
|
30,541
|
|
|
18,835
|
|
Depreciation
|
2,696
|
|
|
1,895
|
|
|
7,737
|
|
|
5,199
|
|
Amortization of
intangibles
|
13,778
|
|
|
5,701
|
|
|
41,485
|
|
|
13,628
|
|
Change in fair value
of contingent consideration
|
3,839
|
|
|
2,105
|
|
|
21,221
|
|
|
1,197
|
|
Severance
|
179
|
|
|
2,328
|
|
|
636
|
|
|
2,331
|
|
Litigation
settlements and contingencies
|
(92)
|
|
|
(88)
|
|
|
(291)
|
|
|
(280)
|
|
Total costs and
expenses
|
279,412
|
|
|
176,767
|
|
|
809,709
|
|
|
508,430
|
|
Operating
income
|
31,193
|
|
|
20,290
|
|
|
41,707
|
|
|
53,763
|
|
Other (expense)
income, net:
|
|
|
|
|
|
|
|
Interest expense,
net
|
(4,845)
|
|
|
(2,393)
|
|
|
(15,408)
|
|
|
(8,305)
|
|
Other income
(expense)
|
4
|
|
|
(69)
|
|
|
143
|
|
|
(106)
|
|
Income before
income taxes
|
26,352
|
|
|
17,828
|
|
|
26,442
|
|
|
45,352
|
|
Income tax (expense)
benefit
|
(1,889)
|
|
|
10,534
|
|
|
11,552
|
|
|
63,716
|
|
Net income from
continuing operations
|
24,463
|
|
|
28,362
|
|
|
37,994
|
|
|
109,068
|
|
Loss from
discontinued operations, net of tax
|
(20,199)
|
|
|
(2,634)
|
|
|
(22,024)
|
|
|
(9,269)
|
|
Net income and
comprehensive income
|
$
|
4,264
|
|
|
$
|
25,728
|
|
|
$
|
15,970
|
|
|
$
|
99,799
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
12,890
|
|
|
12,799
|
|
|
12,805
|
|
|
12,437
|
|
Diluted
|
14,632
|
|
|
13,850
|
|
|
14,629
|
|
|
14,299
|
|
Income per share
from continuing operations:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.90
|
|
|
$
|
2.22
|
|
|
$
|
2.97
|
|
|
$
|
8.77
|
|
Diluted
|
$
|
1.67
|
|
|
$
|
2.05
|
|
|
$
|
2.60
|
|
|
$
|
7.63
|
|
Loss per share
from discontinued operations:
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.57)
|
|
|
$
|
(0.21)
|
|
|
$
|
(1.72)
|
|
|
$
|
(0.75)
|
|
Diluted
|
$
|
(1.38)
|
|
|
$
|
(0.19)
|
|
|
$
|
(1.51)
|
|
|
$
|
(0.65)
|
|
Net income per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.33
|
|
|
$
|
2.01
|
|
|
$
|
1.25
|
|
|
$
|
8.02
|
|
Diluted
|
$
|
0.29
|
|
|
$
|
1.86
|
|
|
$
|
1.09
|
|
|
$
|
6.98
|
|
|
|
|
|
|
|
|
|
(1) Amounts include
non-cash compensation, as follows:
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
208
|
|
|
$
|
123
|
|
|
$
|
558
|
|
|
$
|
260
|
|
Selling and
marketing expense
|
835
|
|
|
1,577
|
|
|
4,867
|
|
|
4,511
|
|
General and
administrative expense
|
8,627
|
|
|
8,388
|
|
|
30,534
|
|
|
25,617
|
|
Product
development
|
1,127
|
|
|
2,009
|
|
|
4,873
|
|
|
3,996
|
|
LENDINGTREE, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
|
|
September
30,
2019
|
|
December 31,
2018
|
|
(in thousands, except par value
and share amounts)
|
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
50,497
|
|
|
$
|
105,102
|
|
Restricted cash and
cash equivalents
|
259
|
|
|
56
|
|
Accounts receivable,
net
|
140,843
|
|
|
91,072
|
|
Prepaid and other
current assets
|
12,914
|
|
|
16,428
|
|
Assets held for
sale
|
—
|
|
|
21,328
|
|
Current assets of
discontinued operations
|
—
|
|
|
185
|
|
Total current
assets
|
204,513
|
|
|
234,171
|
|
Property and
equipment, net
|
31,192
|
|
|
23,175
|
|
Goodwill
|
419,935
|
|
|
348,347
|
|
Intangible assets,
net
|
195,337
|
|
|
205,699
|
|
Deferred income tax
assets
|
90,983
|
|
|
79,289
|
|
Other non-current
assets
|
29,278
|
|
|
2,168
|
|
Non-current assets of
discontinued operations
|
7,953
|
|
|
3,266
|
|
Total
assets
|
$
|
979,191
|
|
|
$
|
896,115
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
Revolving credit
facility
|
$
|
85,000
|
|
|
$
|
125,000
|
|
Accounts payable,
trade
|
19,492
|
|
|
15,074
|
|
Accrued expenses and
other current liabilities
|
109,618
|
|
|
93,190
|
|
Current contingent
consideration
|
32,955
|
|
|
11,080
|
|
Current liabilities
of discontinued operations
|
31,721
|
|
|
17,609
|
|
Total current
liabilities
|
278,786
|
|
|
261,953
|
|
Long-term
debt
|
260,973
|
|
|
250,943
|
|
Non-current
contingent consideration
|
21,103
|
|
|
27,757
|
|
Deferred income tax
liabilities
|
711
|
|
|
894
|
|
Other non-current
liabilities
|
28,354
|
|
|
8,360
|
|
Total
liabilities
|
589,927
|
|
|
549,907
|
|
Commitments and
contingencies
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Preferred stock $.01
par value; 5,000,000 shares authorized; none issued or
outstanding
|
—
|
|
|
—
|
|
Common stock $.01 par
value; 50,000,000 shares authorized; 15,635,268 and
15,428,351 shares issued, respectively, and 12,998,101 and
12,809,764 shares outstanding, respectively
|
156
|
|
|
154
|
|
Additional paid-in
capital
|
1,165,597
|
|
|
1,134,227
|
|
Accumulated
deficit
|
(594,512)
|
|
|
(610,482)
|
|
Treasury stock;
2,637,167 and 2,618,587 shares, respectively
|
(181,977)
|
|
|
(177,691)
|
|
Total
shareholders' equity
|
389,264
|
|
|
346,208
|
|
Total liabilities
and shareholders' equity
|
$
|
979,191
|
|
|
$
|
896,115
|
|
LENDINGTREE, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
(in thousands)
|
Cash flows from
operating activities attributable to continuing
operations:
|
|
|
|
Net income and
comprehensive income
|
$
|
15,970
|
|
|
$
|
99,799
|
|
Less: Loss from
discontinued operations, net of tax
|
22,024
|
|
|
9,269
|
|
Income from
continuing operations
|
37,994
|
|
|
109,068
|
|
Adjustments to
reconcile income from continuing operations to net cash provided by
operating activities attributable to continuing
operations:
|
|
|
|
(Gain) loss on
impairments and disposal of assets
|
(1,119)
|
|
|
1,986
|
|
Amortization of
intangibles
|
41,485
|
|
|
13,628
|
|
Depreciation
|
7,737
|
|
|
5,199
|
|
Rental amortization
of intangibles and depreciation
|
—
|
|
|
554
|
|
Non-cash compensation
expense
|
40,832
|
|
|
34,384
|
|
Deferred income
taxes
|
(11,532)
|
|
|
(64,435)
|
|
Change in fair value
of contingent consideration
|
21,221
|
|
|
1,197
|
|
Bad debt
expense
|
1,865
|
|
|
922
|
|
Amortization of debt
issuance costs
|
1,463
|
|
|
1,308
|
|
Amortization of
convertible debt discount
|
8,959
|
|
|
8,497
|
|
ROU asset
amortization, offset by change in operating lease
liabilities
|
302
|
|
|
—
|
|
Changes in current
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(50,030)
|
|
|
(23,387)
|
|
Prepaid and other
current assets
|
(865)
|
|
|
(2,970)
|
|
Accounts payable,
accrued expenses and other current liabilities
|
11,047
|
|
|
(7,910)
|
|
Current contingent
consideration
|
(3,000)
|
|
|
(21,900)
|
|
Income taxes
receivable
|
4,513
|
|
|
4,223
|
|
Other, net
|
8
|
|
|
(137)
|
|
Net cash provided
by operating activities attributable to continuing
operations
|
110,880
|
|
|
60,227
|
|
Cash flows from
investing activities attributable to continuing
operations:
|
|
|
|
Capital
expenditures
|
(15,151)
|
|
|
(10,640)
|
|
Proceeds from sale of
fixed assets
|
24,060
|
|
|
—
|
|
Acquisition of
ValuePenguin, net of cash acquired
|
(105,578)
|
|
|
—
|
|
Acquisition of
QuoteWizard, net of cash acquired
|
482
|
|
|
—
|
|
Acquisition of
Student Loan Hero, net of cash acquired
|
—
|
|
|
(57,448)
|
|
Acquisition of
Ovation, net of cash acquired
|
—
|
|
|
(11,683)
|
|
Acquisition of
SnapCap
|
—
|
|
|
(10)
|
|
Other investing
activities
|
—
|
|
|
(12)
|
|
Net cash used in
investing activities attributable to continuing
operations
|
(96,187)
|
|
|
(79,793)
|
|
Cash flows from
financing activities attributable to continuing
operations:
|
|
|
|
Payments related to
net-share settlement of stock-based compensation, net of proceeds
from exercise of stock options
|
(9,459)
|
|
|
3,236
|
|
Contingent
consideration payments
|
(3,000)
|
|
|
(26,600)
|
|
Net repayment of
revolving credit facility
|
(40,000)
|
|
|
—
|
|
Purchase of treasury
stock
|
(4,286)
|
|
|
(57,018)
|
|
Other financing
activities
|
(34)
|
|
|
(100)
|
|
Net cash used in
financing activities attributable to continuing
operations
|
(56,779)
|
|
|
(80,482)
|
|
Total cash used in
continuing operations
|
(42,086)
|
|
|
(100,048)
|
|
Discontinued
operations:
|
|
|
|
Net cash used in
operating activities attributable to discontinued
operations
|
(12,316)
|
|
|
(7,352)
|
|
Total cash used in
discontinued operations
|
(12,316)
|
|
|
(7,352)
|
|
Net decrease in
cash, cash equivalents, restricted cash and restricted cash
equivalents
|
(54,402)
|
|
|
(107,400)
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at
beginning of period
|
105,158
|
|
|
372,641
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at end
of period
|
$
|
50,756
|
|
|
$
|
265,241
|
|
LENDINGTREE'S
RECONCILIATION OF NON-GAAP MEASURES TO GAAP
|
|
Variable Marketing
Expense
|
|
Below is a
reconciliation of selling and marketing expense to variable
marketing expense. See "Lending Tree's Principles of Financial
Reporting" for further discussion of the Company's use of this
non-GAAP measure.
|
|
|
Three Months
Ended
|
|
September
30,
2019
|
June 30,
2019
|
September
30,
2018
|
|
(in
thousands)
|
Selling and
marketing expense
|
$
|
200,818
|
|
$
|
191,629
|
|
$
|
124,400
|
|
Non-variable selling
and marketing expense (1)
|
(11,580)
|
|
(12,079)
|
|
(7,770)
|
|
Cost of advertising
re-sold to third parties (2)
|
5,809
|
|
5,053
|
|
3,628
|
|
Variable marketing
expense
|
$
|
195,047
|
|
$
|
184,603
|
|
$
|
120,258
|
|
|
|
|
(1)
|
|
Represents the
portion of selling and marketing expense not attributable to
variable costs paid for advertising, direct marketing and related
expenses. Includes overhead, fixed costs and personnel-related
expenses.
|
(2)
|
|
Represents the
portion of cost of revenue attributable to costs paid for
advertising re-sold to third parties. Excludes overhead, fixed
costs, and personnel-related expenses.
|
LENDINGTREE'S
RECONCILIATION OF NON-GAAP MEASURES TO GAAP
|
|
Variable Marketing
Margin
|
|
Below is a
reconciliation of net income from continuing operations to variable
marketing margin and net income from continuing operations % of
revenue to variable marketing margin % of revenue. See
"LendingTree's Principles of Financial Reporting" for further
discussion of the Company's use of these non-GAAP
measures.
|
|
|
Three Months
Ended
|
|
September
30,
2019
|
June 30,
2019
|
September
30,
2018
|
|
(in
thousands)
|
Net income from
continuing operations
|
$
|
24,463
|
|
$
|
12,981
|
|
$
|
28,362
|
|
Net income from
continuing operations % of revenue
|
8
|
%
|
5
|
%
|
14
|
%
|
|
|
|
|
Adjustments to
reconcile to variable marketing margin:
|
|
|
|
Cost of
revenue
|
17,671
|
|
16,310
|
|
10,838
|
|
Cost of advertising
re-sold to third parties (1)
|
(5,809)
|
|
(5,053)
|
|
(3,628)
|
|
Non-variable selling
and marketing expense (2)
|
11,580
|
|
12,079
|
|
7,770
|
|
General and
administrative expense
|
30,323
|
|
27,951
|
|
22,980
|
|
Product
development
|
10,200
|
|
10,175
|
|
6,608
|
|
Depreciation
|
2,696
|
|
2,559
|
|
1,895
|
|
Amortization of
intangibles
|
13,778
|
|
14,280
|
|
5,701
|
|
Change in fair value
of contingent consideration
|
3,839
|
|
2,790
|
|
2,105
|
|
Severance
|
179
|
|
403
|
|
2,328
|
|
Litigation
settlements and contingencies
|
(92)
|
|
8
|
|
(88)
|
|
Interest expense,
net
|
4,845
|
|
5,095
|
|
2,393
|
|
Other (income)
expense
|
(4)
|
|
(71)
|
|
69
|
|
Income tax expense
(benefit)
|
1,889
|
|
(5,689)
|
|
(10,534)
|
|
Variable marketing
margin
|
$
|
115,558
|
|
$
|
93,818
|
|
$
|
76,799
|
|
Variable marketing
margin % of revenue
|
37
|
%
|
34
|
%
|
39
|
%
|
|
|
|
(1)
|
|
Represents the
portion of cost of revenue attributable to costs paid for
advertising re-sold to third parties. Excludes overhead, fixed
costs and personnel-related expenses.
|
(2)
|
|
Represents the
portion of selling and marketing expense not attributable to
variable costs paid for advertising, direct marketing and related
expenses. Includes overhead, fixed costs and personnel-related
expenses.
|
LENDINGTREE'S
RECONCILIATION OF NON-GAAP MEASURES TO GAAP
|
|
Adjusted
EBITDA
|
|
Below is a
reconciliation of net income from continuing operations to adjusted
EBITDA and net income from continuing operations % of revenue to
adjusted EBITDA % of revenue. See "LendingTree's Principles of
Financial Reporting" for further discussion of the Company's use of
these non-GAAP measures.
|
|
|
Three Months
Ended
|
|
September
30,
2019
|
June 30,
2019
|
September
30,
2018
|
|
(in
thousands)
|
Net income from
continuing operations
|
$
|
24,463
|
|
$
|
12,981
|
|
$
|
28,362
|
|
Net income from
continuing operations % of revenue
|
8
|
%
|
5
|
%
|
14
|
%
|
Adjustments to
reconcile to adjusted EBITDA:
|
|
|
|
Amortization of
intangibles
|
13,778
|
|
14,280
|
|
5,701
|
|
Depreciation
|
2,696
|
|
2,559
|
|
1,895
|
|
Severance
|
179
|
|
403
|
|
2,328
|
|
(Gain) loss on
impairments and disposal of assets
|
609
|
|
(2,196)
|
|
97
|
|
Non-cash compensation
expense
|
10,797
|
|
15,982
|
|
12,097
|
|
Change in fair value
of contingent consideration
|
3,839
|
|
2,790
|
|
2,105
|
|
Acquisition
expense
|
18
|
|
60
|
|
765
|
|
Litigation
settlements and contingencies
|
(92)
|
|
8
|
|
(88)
|
|
Interest expense,
net
|
4,845
|
|
5,095
|
|
2,393
|
|
Rental amortization
of intangibles and depreciation
|
—
|
|
—
|
|
158
|
|
Income tax expense
(benefit)
|
1,889
|
|
(5,689)
|
|
(10,534)
|
|
Adjusted
EBITDA
|
$
|
63,021
|
|
$
|
46,273
|
|
$
|
45,279
|
|
Adjusted EBITDA %
of revenue
|
20
|
%
|
17
|
%
|
23
|
%
|
LENDINGTREE'S
RECONCILIATION OF NON-GAAP MEASURES TO GAAP
|
|
Adjusted Net
Income
|
|
Below is a
reconciliation of net income from continuing operations to adjusted
net income and net income per diluted share from continuing
operations to adjusted net income per share. See "LendingTree's
Principles of Financial Reporting" for further discussion of the
Company's use of these non-GAAP measures.
|
|
|
Three Months
Ended
|
|
September
30,
2019
|
June 30,
2019
|
September
30,
2018
|
|
(in thousands,
except per share amounts)
|
Net income from
continuing operations
|
$
|
24,463
|
|
$
|
12,981
|
|
$
|
28,362
|
|
Adjustments to
reconcile to adjusted net income:
|
|
|
|
Non-cash
compensation
|
10,797
|
|
15,982
|
|
12,097
|
|
(Gain) loss on
impairments and disposal of assets
|
609
|
|
(2,196)
|
|
97
|
|
Acquisition
expense
|
18
|
|
60
|
|
765
|
|
Change in fair value
of contingent consideration
|
3,839
|
|
2,790
|
|
2,105
|
|
Severance
|
179
|
|
403
|
|
2,328
|
|
Litigation
settlements and contingencies
|
(92)
|
|
8
|
|
(88)
|
|
Income tax benefit
from adjusted items
|
(4,132)
|
|
(4,663)
|
|
(4,760)
|
|
Excess tax benefit
from stock-based compensation
|
(2,816)
|
|
(7,723)
|
|
(14,321)
|
|
Adjusted net
income
|
$
|
32,865
|
|
$
|
17,642
|
|
$
|
26,585
|
|
|
|
|
|
Net income per
diluted share from continuing operations
|
$
|
1.67
|
|
$
|
0.87
|
|
$
|
2.05
|
|
Adjustments to
reconcile net income from continuing operations to adjusted net
income
|
0.58
|
|
0.31
|
|
(0.13)
|
|
Adjusted net
income per share
|
$
|
2.25
|
|
$
|
1.18
|
|
$
|
1.92
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
14,632
|
|
14,908
|
|
13,850
|
|
LENDINGTREE'S PRINCIPLES OF FINANCIAL REPORTING
LendingTree reports the following non-GAAP measures as
supplemental to GAAP:
- Variable marketing margin, including variable marketing
expense
- Variable marketing margin % of revenue
- Earnings Before Interest, Taxes, Depreciation and Amortization,
as adjusted for certain items discussed below ("Adjusted
EBITDA")
- Adjusted EBITDA % of revenue
- Adjusted net income
- Adjusted net income per share
Variable marketing margin is a measure of the efficiency of the
Company's operating model, measuring revenue after subtracting
variable marketing and advertising costs that directly influence
revenue. The Company's operating model is highly sensitive to the
amount and efficiency of variable marketing expenditures, and the
Company's proprietary systems are able to make rapidly changing
decisions concerning the deployment of variable marketing
expenditures (primarily but not exclusively online and mobile
advertising placement) based on proprietary and sophisticated
analytics. Variable marketing margin and variable marketing margin
% of revenue are primary metrics by which the Company measures the
effectiveness of its marketing efforts.
Adjusted EBITDA and adjusted EBITDA % of revenue are primary
metrics by which LendingTree evaluates the operating performance of
its businesses, on which its marketing expenditures and internal
budgets are based and, in the case of adjusted EBITDA, by which
management and many employees are compensated.
Adjusted net income and adjusted net income per share supplement
GAAP income from continuing operations and GAAP income per diluted
share from continuing operations by enabling investors to make
period to period comparisons of those components of the nearest
comparable GAAP measures that management believes better reflect
the underlying financial performance of the Company's business
operations during particular financial reporting periods. Adjusted
net income and adjusted net income per share exclude certain
amounts, such as non-cash compensation, non-cash asset impairment
charges, gain/loss on disposal of assets, severance, litigation
settlements and contingencies, acquisition and disposition income
or expenses including with respect to changes in fair value of
contingent consideration, one-time items which are recognized and
recorded under GAAP in particular periods but which might be viewed
as not necessarily coinciding with the underlying business
operations for the periods in which they are so recognized and
recorded, the effects to income taxes of the aforementioned
adjustments and any excess tax benefit or expense associated with
stock-based compensation recorded in net income in conjunction with
FASB pronouncement ASU 2016-09. LendingTree believes that
adjusted net income and adjusted net income per share are useful
financial indicators that provide a different view of the financial
performance of the Company than adjusted EBITDA (the primary metric
by which LendingTree evaluates the operating performance of its
businesses) and the GAAP measures of net income from continuing
operations and GAAP income per diluted share from continuing
operations.
These non-GAAP measures should be considered in addition to
results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP results.
LendingTree provides and encourages investors to examine the
reconciling adjustments between the GAAP and non-GAAP measures set
forth above.
Definition of LendingTree's Non-GAAP Measures
Variable marketing margin is defined as revenue less variable
marketing expense. Variable marketing expense is defined as the
expense attributable to variable costs paid for advertising, direct
marketing and related expenses, including the portion of cost of
revenue attributable to costs paid for advertising re-sold to third
parties, and excluding overhead, fixed costs and personnel-related
expenses. The majority of these variable advertising costs are
expressly intended to drive traffic to our websites and these
variable advertising costs are included in selling and marketing
expense on the
company's consolidated statements of operations and consolidated
income. When advertising inventory is re-sold to third parties, the
proceeds of such transactions are included in revenue for the
purposes of calculating variable marketing margin, and the costs of
such re-sold advertising are included in cost of revenue in the
company's consolidated statements of operations and consolidated
income and are included in variable marketing expense for purposes
of calculating variable marketing margin.
EBITDA is defined as net income from continuing operations
excluding interest, income taxes, amortization of intangibles and
depreciation.
Adjusted EBITDA is defined as EBITDA excluding (1) non-cash
compensation expense, (2) non-cash impairment charges, (3)
gain/loss on disposal of assets, (4) restructuring and severance
expenses, (5) litigation settlements and contingencies, (6)
acquisitions and dispositions income or expense (including with
respect to changes in fair value of contingent consideration), and
(7) one-time items.
Adjusted net income is defined as net income (loss) from
continuing operations excluding (1) non-cash compensation expense,
(2) non-cash impairment charges, (3) gain/loss on disposal of
assets, (4) restructuring and severance expenses, (5) litigation
settlements and contingencies, (6) acquisitions and dispositions
income or expense (including with respect to changes in fair value
of contingent consideration), (7) one-time items, (8) the effects
to income taxes of the aforementioned adjustments, and (9) any
excess tax benefit or expense associated with stock-based
compensation recorded in net income in conjunction with FASB
pronouncement ASU 2016-09.
Adjusted net income per share is defined as adjusted net income
divided by the adjusted weighted average diluted shares
outstanding. For periods which the Company reports GAAP loss from
continuing operations, the effects of potentially dilutive
securities are excluded from the calculation of net loss per
diluted share from continuing operations because their inclusion
would have been anti-dilutive. In periods where the Company reports
GAAP loss from continuing operations but reports positive non-GAAP
adjusted net income, the effects of potentially dilutive securities
are included in the denominator for calculating adjusted net income
per share.
LendingTree endeavors to compensate for the limitations of these
non-GAAP measures by also providing the comparable GAAP measures
with equal or greater prominence and descriptions of the
reconciling items, including quantifying such items, to derive the
non-GAAP measures. These non-GAAP measures may not be comparable to
similarly titled measures used by other companies.
One-Time Items
Adjusted EBITDA and adjusted net income are adjusted for
one-time items, if applicable. Items are considered one-time in
nature if they are non-recurring, infrequent or unusual, and have
not occurred in the past two years or are not expected to recur in
the next two years, in accordance with SEC rules. For the periods
presented in this report, there are no adjustments for one-time
items.
Non-Cash Expenses That Are Excluded From LendingTree's
Adjusted EBITDA and Adjusted Net Income
Non-cash compensation expense consists principally of expense
associated with the grants of restricted stock, restricted stock
units and stock options. These expenses are not paid in cash and
LendingTree includes the related shares in its calculations of
fully diluted shares outstanding. Upon settlement of restricted
stock units, exercise of certain stock options or vesting of
restricted stock awards, the awards may be settled on a net basis,
with LendingTree remitting the required tax withholding amounts
from its current funds. Cash expenditures for employer payroll
taxes on non-cash compensation are included within adjusted EBITDA
and adjusted net income.
Amortization of intangibles are non-cash expenses relating
primarily to acquisitions. At the time of an acquisition, the
intangible assets of the acquired company, such as purchase
agreements, technology and customer relationships, are valued and
amortized over their estimated lives. Amortization of intangibles
are only excluded from adjusted EBITDA.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995
The matters contained in the discussion above may be considered
to be "forward-looking statements" within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934, as
amended by the Private Securities Litigation Reform Act of 1995.
Those statements include statements regarding the intent, belief or
current expectations or anticipations of LendingTree and members of
our management team. Factors currently known to management that
could cause actual results to differ materially from those in
forward-looking statements include the following: adverse
conditions in the primary and secondary mortgage markets and in the
economy, particularly interest rates; default rates on loans,
particularly unsecured loans; demand by investors for unsecured
personal loans; the effect of such demand on interest rates for
personal loans and consumer demand for personal loans; seasonality
of results; potential liabilities to secondary market purchasers;
changes in the Company's relationships with network partners,
including dependence on certain key network partners; breaches of
network security or the misappropriation or misuse of personal
consumer information; failure to provide competitive service;
failure to maintain brand recognition; ability to attract and
retain consumers in a cost-effective manner; the effects of
potential acquisitions of other businesses, including the ability
to integrate them successfully with LendingTree's existing
operations; accounting rules related to contingent consideration
and excess tax benefits or expenses on stock-based compensation
that could materially affect earnings in future periods; ability to
develop new products and services and enhance existing ones;
competition; allegations of failure to comply with existing or
changing laws, rules or regulations, or to obtain and maintain
required licenses; failure of network partners or other affiliated
parties to comply with regulatory requirements; failure to maintain
the integrity of systems and infrastructure; liabilities as a
result of privacy regulations; failure to adequately protect
intellectual property rights or allegations of infringement of
intellectual property rights; and changes in management. These and
additional factors to be considered are set forth under "Risk
Factors" in our Annual Report on Form 10-K for the period ended
December 31, 2018, in our Quarterly
Report on Form 10-Q for the period ended June 30, 2019, and in our other filings with the
Securities and Exchange Commission. LendingTree undertakes no
obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events
or changes to future operating results or expectations.
About LendingTree, Inc.
LendingTree, Inc. is the parent of LendingTree, LLC
and several companies owned by LendingTree, LLC (collectively,
"LendingTree" or the "Company").
LendingTree operates what it believes to be the leading online
consumer platform that connects consumers with the choices they
need to be confident in their financial decisions. The Company
offers consumers tools and resources, including free credit scores,
that facilitate comparison-shopping for mortgage loans, home equity
loans and lines of credit, reverse mortgage loans, auto loans,
credit cards, deposit accounts, personal loans, student loans,
small business loans, insurance quotes and other related offerings.
The Company primarily seeks to match in-market consumers with
multiple providers on its marketplace who can provide them with
competing quotes for loans, deposit products, insurance or other
related offerings they are seeking. The Company also serves as a
valued partner to lenders and other providers seeking an efficient,
scalable and flexible source of customer acquisition with directly
measurable benefits, by matching the consumer inquiries it
generates with these providers.
LendingTree, Inc. is headquartered in Charlotte, NC. For more information, please
visit www.lendingtree.com.
Investor Relations
Contact:
trent.ziegler@lendingtree.com
704-943-8294
Media Contact:
megan.greuling@lendingtree.com
704-943-8208
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SOURCE LendingTree, Inc.