CHARLOTTE, N.C., Nov. 5,
2020 /PRNewswire/ -- LendingTree, Inc. (NASDAQ: TREE),
operator of LendingTree.com, the nation's leading online financial
services marketplace, today announced results for the quarter ended
September 30, 2020.
The company has posted a letter to shareholders on the company's
website at investors.lendingtree.com.
"We're pleased to report another strong quarter at LendingTree,"
said Doug Lebda, Chairman &
CEO. "I'm incredibly proud of the resiliency our Company has
shown during this difficult period. While some of our
businesses have been challenged as a result of the pandemic, other
businesses are thriving and we continue make great strides in
enhancing our My LendingTree offering. While 2020 has
certainly not played out the way we expected, this period of time
has given us an opportunity to renew our focus on strategy,
innovation, and execution, and I'm increasingly confident in our
market-leading position."
J.D. Moriarty, CFO, added, "While demand from our partners
remains muted in some of our key Consumer verticals, we're
encouraged by the momentum we've seen over the last few
months. Our Home segment is solid, and Insurance
performed particularly well in the third quarter. The merits
of the diversification we've put in place have never been more
apparent, and we're using that strength to position the company to
excel in 2021 and beyond."
Third Quarter 2020 Business Highlights
- Insurance revenue of $92.5
million grew 24% over third quarter 2019 and translated into
Insurance segment profit of $37.0
million, up 23% over the same period.
- Home segment revenue of $78.9
million grew 2% over third quarter 2019 and produced segment
profit of $25.2 million.
-
- Within Home, mortgage products revenue grew 14% over the prior
year period.
- Consumer segment revenue of $48.4
million improved 30% sequentially over second quarter 2020
as personal loans revenue improved and student loans contributed
seasonal strength.
-
- Within Consumer, personal loans revenue of $12.5 million improved from $8.8 million in second quarter 2020.
- Credit card revenue of $6.7
million remains depressed compared to prior year
levels.
- Through September 30, 15.7
million consumers have signed up for My LendingTree.
LendingTree
Summary Financial Metrics
|
(In millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Y/Y
|
|
|
Three Months
Ended
June 30,
|
|
Q/Q
|
|
|
2020
|
|
2019
|
|
%
Change
|
|
|
2020
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
|
220.3
|
|
|
$
|
310.6
|
|
|
(29)
|
%
|
|
|
$
|
184.3
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes
|
$
|
(32.7)
|
|
|
$
|
26.4
|
|
|
(224)
|
%
|
|
|
(12.5)
|
|
|
162
|
%
|
|
Income tax benefit
(expense)
|
7.9
|
|
|
(1.9)
|
|
|
(516)
|
%
|
|
|
3.9
|
|
|
103
|
%
|
|
Net (loss) income
from continuing operations
|
$
|
(24.8)
|
|
|
$
|
24.5
|
|
|
(201)
|
%
|
|
|
$
|
(8.6)
|
|
|
188
|
%
|
|
Net (loss) income
from continuing operations % of revenue
|
(11)
|
%
|
|
8
|
%
|
|
|
|
|
(5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income per
share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.90)
|
|
|
$
|
1.90
|
|
|
(200)
|
%
|
|
|
$
|
(0.66)
|
|
|
188
|
%
|
|
Diluted
|
$
|
(1.90)
|
|
|
$
|
1.67
|
|
|
(214)
|
%
|
|
|
$
|
(0.66)
|
|
|
188
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable marketing
margin
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
|
220.3
|
|
|
$
|
310.6
|
|
|
(29)
|
%
|
|
|
$
|
184.3
|
|
|
20
|
%
|
|
Variable marketing
expense (1) (2)
|
$
|
(142.2)
|
|
|
$
|
(195.0)
|
|
|
(27)
|
%
|
|
|
$
|
(101.8)
|
|
|
40
|
%
|
|
Variable marketing
margin (2)
|
$
|
78.1
|
|
|
$
|
115.6
|
|
|
(32)
|
%
|
|
|
$
|
82.5
|
|
|
(5)
|
%
|
|
Variable marketing
margin % of revenue (2)
|
35
|
%
|
|
37
|
%
|
|
|
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
$
|
21.7
|
|
|
$
|
63.0
|
|
|
(66)
|
%
|
|
|
$
|
30.8
|
|
|
(30)
|
%
|
|
Adjusted EBITDA %
of revenue (2)
|
10
|
%
|
|
20
|
%
|
|
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
(loss) income (2)
|
$
|
(3.4)
|
|
|
$
|
32.9
|
|
|
(110)
|
%
|
|
|
$
|
6.4
|
|
|
(153)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
(loss) income per share (2)
|
$
|
(0.26)
|
|
|
$
|
2.25
|
|
|
(112)
|
%
|
|
|
$
|
0.46
|
|
|
(157)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
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.
|
(2)
|
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.
|
LendingTree
Segment Results
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Y/Y
|
|
|
Three Months
Ended
June 30,
|
|
Q/Q
|
|
|
2020
|
|
2019
|
|
%
Change
|
|
|
2020
|
|
%
Change
|
|
Home
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
78.9
|
|
|
$
|
77.3
|
|
|
2
|
%
|
|
|
$
|
74.1
|
|
|
6
|
%
|
|
Segment
profit
|
$
|
25.2
|
|
|
$
|
28.1
|
|
|
(10)
|
%
|
|
|
$
|
38.7
|
|
|
(35)
|
%
|
|
Segment profit %
of revenue
|
32
|
%
|
|
36
|
%
|
|
|
|
|
52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
(2)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
48.4
|
|
|
$
|
151.9
|
|
|
(68)
|
%
|
|
|
$
|
37.1
|
|
|
30
|
%
|
|
Segment
profit
|
$
|
21.6
|
|
|
$
|
65.2
|
|
|
(67)
|
%
|
|
|
$
|
19.4
|
|
|
11
|
%
|
|
Segment profit %
of revenue
|
45
|
%
|
|
43
|
%
|
|
|
|
|
52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
(3)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
92.5
|
|
|
$
|
74.8
|
|
|
24
|
%
|
|
|
$
|
72.9
|
|
|
27
|
%
|
|
Segment
profit
|
$
|
37.0
|
|
|
$
|
30.0
|
|
|
23
|
%
|
|
|
$
|
30.1
|
|
|
23
|
%
|
|
Segment profit %
of revenue
|
40
|
%
|
|
40
|
%
|
|
|
|
|
41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(4)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
0.5
|
|
|
$
|
6.6
|
|
|
(92)
|
%
|
|
|
$
|
0.2
|
|
|
150
|
%
|
|
Profit
|
$
|
—
|
|
|
$
|
0.4
|
|
|
(100)
|
%
|
|
|
$
|
0.1
|
|
|
(100)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
|
220.3
|
|
|
$
|
310.6
|
|
|
(29)
|
%
|
|
|
$
|
184.3
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment
profit
|
$
|
83.8
|
|
|
$
|
123.7
|
|
|
(32)
|
%
|
|
|
$
|
88.3
|
|
|
(5)
|
%
|
|
Brand marketing expense
(5)
|
$
|
(5.7)
|
|
|
$
|
(8.1)
|
|
|
(30)
|
%
|
|
|
$
|
(5.8)
|
|
|
(2)
|
%
|
|
Variable marketing
margin
|
$
|
78.1
|
|
|
$
|
115.6
|
|
|
(32)
|
%
|
|
|
$
|
82.5
|
|
|
(5)
|
%
|
|
Variable marketing
margin % of revenue
|
35
|
%
|
|
37
|
%
|
|
|
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Home segment
includes the following products: purchase mortgage, refinance
mortgage, home equity loans and lines of credit, reverse mortgage
loans, and real estate.
|
(2)
|
The Consumer segment
includes the following products: credit cards, personal loans,
small business loans, student loans, auto loans, deposit accounts,
and other credit products such as credit repair and debt
settlement.
|
(3)
|
The Insurance segment
consists of insurance quote products.
|
(4)
|
The Other category
primarily includes revenue from the resale of online advertising
space to third parties and revenue from home improvement referrals,
and the related variable marketing and advertising
expenses.
|
(5)
|
Brand marketing
expense represents the portion of selling and marketing expense
attributable to variable costs paid for advertising, direct
marketing and related expenses that are not assignable to the
segments' products. This measure excludes overhead, fixed costs and
personnel-related expenses.
|
Business Outlook
On April 14, LendingTree withdrew
its full-year 2020 guidance due to economic uncertainty related to
COVID-19. Today, the company is providing revenue, variable
marketing margin and adjusted EBITDA guidance for the fourth
quarter of 2020, as follows:
For fourth quarter 2020:
- Revenue is expected in the range of $200 - $215
million.
- Variable marketing margin is expected in the range of
$72 - $78
million.
- Adjusted EBITDA is expected in the range of $13 - $18
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 2020
financial results will be webcast live today, November 5, 2020 at 9:00
AM Eastern Time (ET). The live audiocast is open to the
public and will be available on LendingTree's investor relations
website at 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 12:00
PM ET on Friday, November 13, 2020.
To listen to the telephone replay, call toll-free (855) 859-2056
with passcode #3455333. Callers outside the United States and Canada may dial (404)
537-3406 with passcode #3455333.
LENDINGTREE, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(in thousands, except per share
amounts)
|
Revenue
|
$
|
220,251
|
|
|
$
|
310,605
|
|
|
$
|
687,661
|
|
|
$
|
851,416
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization shown separately
below) (1)
|
13,220
|
|
|
17,671
|
|
|
40,936
|
|
|
51,651
|
|
Selling and marketing
expense (1)
|
154,670
|
|
|
200,818
|
|
|
464,129
|
|
|
567,338
|
|
General and
administrative expense (1)
|
33,705
|
|
|
30,323
|
|
|
94,276
|
|
|
89,391
|
|
Product development
(1)
|
11,477
|
|
|
10,200
|
|
|
33,252
|
|
|
30,541
|
|
Depreciation
|
3,535
|
|
|
2,696
|
|
|
10,463
|
|
|
7,737
|
|
Amortization of
intangibles
|
13,090
|
|
|
13,778
|
|
|
40,603
|
|
|
41,485
|
|
Change in fair value
of contingent consideration
|
6,658
|
|
|
3,839
|
|
|
7,711
|
|
|
21,221
|
|
Severance
|
—
|
|
|
179
|
|
|
190
|
|
|
636
|
|
Litigation
settlements and contingencies
|
13
|
|
|
(92)
|
|
|
(983)
|
|
|
(291)
|
|
Total costs and
expenses
|
236,368
|
|
|
279,412
|
|
|
690,577
|
|
|
809,709
|
|
Operating (loss)
income
|
(16,117)
|
|
|
31,193
|
|
|
(2,916)
|
|
|
41,707
|
|
Other (expense)
income, net:
|
|
|
|
|
|
|
|
Interest expense,
net
|
(16,617)
|
|
|
(4,845)
|
|
|
(26,406)
|
|
|
(15,408)
|
|
Other
income
|
—
|
|
|
4
|
|
|
7
|
|
|
143
|
|
(Loss) income
before income taxes
|
(32,734)
|
|
|
26,352
|
|
|
(29,315)
|
|
|
26,442
|
|
Income tax benefit
(expense)
|
7,925
|
|
|
(1,889)
|
|
|
14,866
|
|
|
11,552
|
|
Net (loss) income
from continuing operations
|
(24,809)
|
|
|
24,463
|
|
|
(14,449)
|
|
|
37,994
|
|
Income (loss) from
discontinued operations, net of tax
|
166
|
|
|
(20,199)
|
|
|
(25,550)
|
|
|
(22,024)
|
|
Net (loss) income
and comprehensive (loss) income
|
$
|
(24,643)
|
|
|
$
|
4,264
|
|
|
$
|
(39,999)
|
|
|
$
|
15,970
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
13,033
|
|
|
12,890
|
|
|
12,992
|
|
|
12,805
|
|
Diluted
|
13,033
|
|
|
14,632
|
|
|
12,992
|
|
|
14,629
|
|
(Loss) income per
share from continuing operations:
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.90)
|
|
|
$
|
1.90
|
|
|
$
|
(1.11)
|
|
|
$
|
2.97
|
|
Diluted
|
$
|
(1.90)
|
|
|
$
|
1.67
|
|
|
$
|
(1.11)
|
|
|
$
|
2.60
|
|
Income (loss) per
share from discontinued operations:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.01
|
|
|
$
|
(1.57)
|
|
|
$
|
(1.97)
|
|
|
$
|
(1.72)
|
|
Diluted
|
$
|
0.01
|
|
|
$
|
(1.38)
|
|
|
$
|
(1.97)
|
|
|
$
|
(1.51)
|
|
Net (loss) income
per share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.89)
|
|
|
$
|
0.33
|
|
|
$
|
(3.08)
|
|
|
$
|
1.25
|
|
Diluted
|
$
|
(1.89)
|
|
|
$
|
0.29
|
|
|
$
|
(3.08)
|
|
|
$
|
1.09
|
|
|
|
|
|
|
|
|
|
(1) Amounts include
non-cash compensation, as follows:
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
372
|
|
|
$
|
208
|
|
|
$
|
947
|
|
|
$
|
558
|
|
Selling and marketing
expense
|
1,678
|
|
|
835
|
|
|
4,431
|
|
|
4,867
|
|
General and
administrative expense
|
10,356
|
|
|
8,627
|
|
|
29,208
|
|
|
30,534
|
|
Product
development
|
1,755
|
|
|
1,127
|
|
|
4,650
|
|
|
4,873
|
|
LENDINGTREE, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
|
|
September 30,
2020
|
|
December 31,
2019
|
|
(in thousands, except par value and share
amounts)
|
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
187,261
|
|
|
$
|
60,243
|
|
Restricted cash and
cash equivalents
|
112
|
|
|
96
|
|
Accounts receivable,
net
|
96,631
|
|
|
113,487
|
|
Prepaid and other
current assets
|
27,585
|
|
|
15,516
|
|
Current assets of
discontinued operations
|
1,172
|
|
|
84
|
|
Total current
assets
|
312,761
|
|
|
189,426
|
|
Property and
equipment, net
|
48,877
|
|
|
31,363
|
|
Operating lease
right-of-use assets
|
86,193
|
|
|
25,519
|
|
Goodwill
|
420,139
|
|
|
420,139
|
|
Intangible assets,
net
|
140,977
|
|
|
181,580
|
|
Deferred income tax
assets
|
92,649
|
|
|
87,664
|
|
Equity
investment
|
80,000
|
|
|
—
|
|
Other non-current
assets
|
5,262
|
|
|
4,330
|
|
Non-current assets of
discontinued operations
|
16,731
|
|
|
7,948
|
|
Total
assets
|
$
|
1,203,589
|
|
|
$
|
947,969
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
Revolving credit
facility
|
$
|
—
|
|
|
$
|
75,000
|
|
Accounts payable,
trade
|
4,895
|
|
|
2,873
|
|
Accrued expenses and
other current liabilities
|
106,333
|
|
|
112,755
|
|
Current contingent
consideration
|
25,068
|
|
|
9,028
|
|
Current liabilities
of discontinued operations
|
300
|
|
|
31,050
|
|
Total current
liabilities
|
136,596
|
|
|
230,706
|
|
Long-term
debt
|
603,520
|
|
|
264,391
|
|
Operating lease
liabilities
|
87,597
|
|
|
21,358
|
|
Non-current
contingent consideration
|
10,107
|
|
|
24,436
|
|
Other non-current
liabilities
|
4,760
|
|
|
4,752
|
|
Total
liabilities
|
842,580
|
|
|
545,643
|
|
|
|
|
|
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; 15,759,235 and
15,676,819 shares issued, respectively, and 13,117,917 and
13,035,501 shares outstanding, respectively
|
158
|
|
|
157
|
|
Additional paid-in
capital
|
1,176,664
|
|
|
1,177,984
|
|
Accumulated
deficit
|
(632,652)
|
|
|
(592,654)
|
|
Treasury stock;
2,641,318 shares
|
(183,161)
|
|
|
(183,161)
|
|
Total
shareholders' equity
|
361,009
|
|
|
402,326
|
|
Total liabilities
and shareholders' equity
|
$
|
1,203,589
|
|
|
$
|
947,969
|
|
LENDINGTREE, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
2020
|
|
2019
|
|
(in
thousands)
|
Cash flows from
operating activities attributable to continuing
operations:
|
|
|
|
Net (loss) income
and comprehensive (loss) income
|
$
|
(39,999)
|
|
|
$
|
15,970
|
|
Less: Loss from
discontinued operations, net of tax
|
25,550
|
|
|
22,024
|
|
(Loss) income from
continuing operations
|
(14,449)
|
|
|
37,994
|
|
Adjustments to
reconcile income from continuing operations to net cash provided by
operating activities attributable to continuing
operations:
|
|
|
|
Loss (gain) on
impairments and disposal of assets
|
686
|
|
|
(1,119)
|
|
Amortization of
intangibles
|
40,603
|
|
|
41,485
|
|
Depreciation
|
10,463
|
|
|
7,737
|
|
Non-cash compensation
expense
|
39,236
|
|
|
40,832
|
|
Deferred income
taxes
|
(15,489)
|
|
|
(11,532)
|
|
Change in fair value
of contingent consideration
|
7,711
|
|
|
21,221
|
|
Bad debt
expense
|
1,314
|
|
|
1,865
|
|
Amortization of debt
issuance costs
|
2,241
|
|
|
1,463
|
|
Amortization of
convertible debt discount
|
12,429
|
|
|
8,959
|
|
Loss on
extinguishment of debt
|
7,768
|
|
|
—
|
|
Reduction in carrying
amount of ROU asset, offset by change in operating lease
liabilities
|
2,490
|
|
|
302
|
|
Changes in current
assets and liabilities:
|
|
|
|
Accounts
receivable
|
15,541
|
|
|
(50,030)
|
|
Prepaid and other
current assets
|
(335)
|
|
|
(865)
|
|
Accounts payable,
accrued expenses and other current liabilities
|
(9,733)
|
|
|
11,047
|
|
Current contingent
consideration
|
(2,670)
|
|
|
(3,000)
|
|
Income taxes
receivable
|
65
|
|
|
4,513
|
|
Other, net
|
(1,655)
|
|
|
8
|
|
Net cash provided
by operating activities attributable to continuing
operations
|
96,216
|
|
|
110,880
|
|
Cash flows from
investing activities attributable to continuing
operations:
|
|
|
|
Capital
expenditures
|
(20,386)
|
|
|
(15,151)
|
|
Proceeds from sale of
fixed assets
|
—
|
|
|
24,060
|
|
Equity
investment
|
(80,000)
|
|
|
—
|
|
Acquisition of
ValuePenguin, net of cash acquired
|
—
|
|
|
(105,578)
|
|
Acquisition of
QuoteWizard, net of cash acquired
|
—
|
|
|
482
|
|
Net cash used in
investing activities attributable to continuing
operations
|
(100,386)
|
|
|
(96,187)
|
|
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
|
(1,421)
|
|
|
(9,459)
|
|
Proceeds from the
issuance of 0.50% Convertible Senior Notes
|
575,000
|
|
|
—
|
|
Repurchase of 0.625%
Convertible Senior Notes
|
(233,862)
|
|
|
—
|
|
Payment for
convertible note hedge on the 0.50% Convertible Senior
Notes
|
(124,200)
|
|
|
—
|
|
Termination of
convertible note hedge on the 0.625% Convertible Senior
Notes
|
109,881
|
|
|
—
|
|
Proceeds from the
sale of warrants related to the 0.50% Convertible Senior
Notes
|
61,180
|
|
|
—
|
|
Termination of
warrants related to the 0.625% Convertible Senior Notes
|
(94,292)
|
|
|
—
|
|
Net repayment of
revolving credit facility
|
(75,000)
|
|
|
(40,000)
|
|
Payment of debt
issuance costs
|
(16,398)
|
|
|
(31)
|
|
Contingent
consideration payments
|
(3,330)
|
|
|
(3,000)
|
|
Purchase of treasury
stock
|
—
|
|
|
(4,286)
|
|
Other financing
activities
|
(183)
|
|
|
(3)
|
|
Net cash provided
by (used in) financing activities attributable to continuing
operations
|
197,375
|
|
|
(56,779)
|
|
Total cash
provided by (used in) continuing operations
|
193,205
|
|
|
(42,086)
|
|
Discontinued
operations:
|
|
|
|
Net cash used in
operating activities attributable to discontinued
operations
|
(66,171)
|
|
|
(12,316)
|
|
Total cash used in
discontinued operations
|
(66,171)
|
|
|
(12,316)
|
|
Net increase
(decrease) in cash, cash equivalents, restricted cash and
restricted cash equivalents
|
127,034
|
|
|
(54,402)
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at
beginning of period
|
60,339
|
|
|
105,158
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at end
of period
|
$
|
187,373
|
|
|
$
|
50,756
|
|
|
|
|
|
Non-cash investing
activities:
|
|
|
|
Capital additions
from tenant improvement allowance
|
$
|
—
|
|
|
$
|
1,490
|
|
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,
2020
|
June 30,
2020
|
September 30,
2019
|
|
(in
thousands)
|
Selling and
marketing expense
|
$
|
154,670
|
|
$
|
113,921
|
|
$
|
200,818
|
|
Non-variable selling
and marketing expense (1)
|
(12,541)
|
|
(12,091)
|
|
(11,580)
|
|
Cost of advertising
re-sold to third parties (2)
|
—
|
|
—
|
|
5,809
|
|
Variable marketing
expense
|
$
|
142,129
|
|
$
|
101,830
|
|
$
|
195,047
|
|
|
(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 (loss) income from continuing
operations to variable marketing margin and net (loss) 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,
2020
|
June 30,
2020
|
September 30,
2019
|
|
(in thousands,
except percentages)
|
Net (loss) income
from continuing operations
|
$
|
(24,809)
|
|
$
|
(8,616)
|
|
$
|
24,463
|
|
Net (loss) income
from continuing operations % of revenue
|
(11)
|
%
|
(5)
|
%
|
8
|
%
|
|
|
|
|
Adjustments to
reconcile to variable marketing margin:
|
|
|
|
Cost of
revenue
|
13,220
|
|
13,464
|
|
17,671
|
|
Cost of advertising
re-sold to third parties (1)
|
—
|
|
—
|
|
(5,809)
|
|
Non-variable selling
and marketing expense (2)
|
12,541
|
|
12,091
|
|
11,580
|
|
General and
administrative expense
|
33,705
|
|
28,489
|
|
30,323
|
|
Product
development
|
11,477
|
|
10,812
|
|
10,200
|
|
Depreciation
|
3,535
|
|
3,550
|
|
2,696
|
|
Amortization of
intangibles
|
13,090
|
|
13,756
|
|
13,778
|
|
Change in fair value
of contingent consideration
|
6,658
|
|
9,175
|
|
3,839
|
|
Severance
|
—
|
|
32
|
|
179
|
|
Litigation
settlements and contingencies
|
13
|
|
(1,325)
|
|
(92)
|
|
Interest expense,
net
|
16,617
|
|
4,955
|
|
4,845
|
|
Other
income
|
—
|
|
(7)
|
|
(4)
|
|
Income tax (benefit)
expense
|
(7,925)
|
|
(3,880)
|
|
1,889
|
|
Variable marketing
margin
|
$
|
78,122
|
|
$
|
82,496
|
|
$
|
115,558
|
|
Variable marketing
margin % of revenue
|
35
|
%
|
45
|
%
|
37
|
%
|
|
|
(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 (loss) income from continuing
operations to adjusted EBITDA and net (loss) 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,
2020
|
June 30,
2020
|
September 30,
2019
|
|
(in thousands,
except percentages)
|
Net (loss) income
from continuing operations
|
$
|
(24,809)
|
|
$
|
(8,616)
|
|
$
|
24,463
|
|
Net (loss) income
from continuing operations % of revenue
|
(11)
|
%
|
(5)
|
%
|
8
|
%
|
Adjustments to
reconcile to adjusted EBITDA:
|
|
|
|
Amortization of
intangibles
|
13,090
|
|
13,756
|
|
13,778
|
|
Depreciation
|
3,535
|
|
3,550
|
|
2,696
|
|
Severance
|
—
|
|
32
|
|
179
|
|
Loss on impairments
and disposal of assets
|
134
|
|
22
|
|
609
|
|
Non-cash
compensation
|
14,161
|
|
13,158
|
|
10,797
|
|
Change in fair value
of contingent consideration
|
6,658
|
|
9,175
|
|
3,839
|
|
Acquisition
expense
|
205
|
|
20
|
|
18
|
|
Litigation
settlements and contingencies
|
13
|
|
(1,325)
|
|
(92)
|
|
Interest expense,
net
|
16,617
|
|
4,955
|
|
4,845
|
|
Income tax (benefit)
expense
|
(7,925)
|
|
(3,880)
|
|
1,889
|
|
Adjusted
EBITDA
|
$
|
21,679
|
|
$
|
30,847
|
|
$
|
63,021
|
|
Adjusted EBITDA %
of revenue
|
10
|
%
|
17
|
%
|
20
|
%
|
LENDINGTREE'S RECONCILIATION OF NON-GAAP
MEASURES TO GAAP
Adjusted Net Income
Below is a reconciliation of net (loss) income from continuing
operations to adjusted net (loss) income and net (loss) income per
diluted share from continuing operations to adjusted net (loss)
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,
2020
|
June 30,
2020
|
September 30,
2019
|
|
(in thousands,
except per share amounts)
|
Net (loss) income
from continuing operations
|
$
|
(24,809)
|
|
$
|
(8,616)
|
|
$
|
24,463
|
|
Adjustments to
reconcile to adjusted net (loss) income:
|
|
|
|
Non-cash
compensation
|
14,161
|
|
13,158
|
|
10,797
|
|
Loss on impairments
and disposal of assets
|
134
|
|
22
|
|
609
|
|
Acquisition
expense
|
205
|
|
20
|
|
18
|
|
Change in fair value
of contingent consideration
|
6,658
|
|
9,175
|
|
3,839
|
|
Severance
|
—
|
|
32
|
|
179
|
|
Litigation
settlements and contingencies
|
13
|
|
(1,325)
|
|
(92)
|
|
Loss on
extinguishment of debt
|
7,768
|
|
—
|
|
—
|
|
Income tax benefit
from adjusted items
|
(7,361)
|
|
(5,357)
|
|
(4,132)
|
|
Excess tax benefit
from stock-based compensation
|
(175)
|
|
(753)
|
|
(2,816)
|
|
Adjusted net
(loss) income
|
$
|
(3,406)
|
|
$
|
6,356
|
|
$
|
32,865
|
|
|
|
|
|
Net (loss) income
per diluted share from continuing operations
|
$
|
(1.90)
|
|
$
|
(0.66)
|
|
$
|
1.67
|
|
Adjustments to
reconcile net (loss) income from continuing operations to adjusted
net (loss) income
|
1.64
|
|
1.15
|
|
0.58
|
|
Adjustments to
reconcile effect of dilutive securities
|
—
|
|
(0.03)
|
|
—
|
|
Adjusted net
(loss) income per share
|
$
|
(0.26)
|
|
$
|
0.46
|
|
$
|
2.25
|
|
|
|
|
|
Adjusted weighted
average diluted shares outstanding
|
13,033
|
|
13,814
|
|
14,632
|
|
Effect of dilutive
securities
|
—
|
|
830
|
|
—
|
|
Weighted average
diluted shares outstanding
|
13,033
|
|
12,984
|
|
14,632
|
|
Effect of dilutive
securities
|
—
|
|
—
|
|
1,742
|
|
Weighted average
basic shares outstanding
|
13,033
|
|
12,984
|
|
12,890
|
|
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, gain/loss on extinguishment of debt,
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) gain/loss on extinguishment of
debt, (8) one-time items, (9) the effects to income taxes of the
aforementioned adjustments, and (10) 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, except for the $6.1 million
income tax benefit from the CARES Act in Q1 2020.
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: uncertainty
regarding the duration and scope of the coronavirus referred to as
COVID-19 pandemic; actions governments and businesses take in
response to the pandemic, including actions that could affect
levels of advertising activity; the impact of the pandemic and
actions taken in response to the pandemic on national and regional
economies and economic activity; the pace of recovery when the
COVID-19 pandemic subsides; 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 lenders, including dependence
on certain key network lenders; 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 lenders 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, 2019, in our Form 10-Q for the
period ended June 30, 2020, 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 partners 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
trent.ziegler@lendingtree.com
704-943-8294
Media Contact:
Megan
Greuling
megan.greuling@lendingtree.com
704-943-8208
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SOURCE LendingTree, Inc.