Second quarter results in-line with revised
guidance range - Macroeconomic headwinds continue to impact
Home and Insurance, Consumer remains resilient
- Consolidated revenue of $261.9
million
- GAAP net loss from continuing operations of $8.0 million or $(0.63) per diluted share
- Variable marketing margin of $90.8
million
- Adjusted EBITDA of $28.6
million
- Adjusted net income per share of $0.58
CHARLOTTE, N.C., July 28,
2022 /PRNewswire/ -- LendingTree, Inc. (NASDAQ:
TREE), operator of LendingTree.com, the nation's leading online
financial services marketplace, today announced results for the
quarter ended June 30, 2022.
The company has posted a letter to shareholders on the company's
website at investors.lendingtree.com.
"We made significant progress on our main strategic initiatives
and are committed to improving the experience for LendingTree
customers," said Doug Lebda,
Chairman and CEO. "This month we launched an omnichannel
celebrity-led marketing campaign. We are returning to TV
advertising after a three year absence when many of our competitors
are pulling back, taking advantage of decreased rates to gain
maximum exposure and draw attention to the early results of our
strategic work. We have endured multiple business cycles and
economic recessions since the company was founded over 25 years
ago, and each time we emerged as a stronger and more profitable
business. We are investing into this period of historically
elevated inflation and higher interest rates with an eye towards
the other side of this cycle, using our strong balance sheet to
position ourselves as the premiere destination for consumers
looking for help with all of their financial decisions."
Trent Ziegler, CFO, added, "Our
second quarter results were squarely in-line with the revised
ranges provided in late June, and Adjusted EBITDA was relatively
flat to the first quarter's results despite continued worsening of
the macroeconomic climate. We expect the environment to
remain challenging in Home and Insurance through the remainder of
the year and acknowledge the prospects for our Consumer segment are
increasingly uncertain. These concerns are appropriately
reflected in our revised outlook for the remainder of year.
Despite these concerns, we remain focused on delivering structural
improvements to our business, renewing our commitment to consumers
and enhancing the value we add for our partners."
Second Quarter 2022 Business Highlights
• Home segment revenue of $73.9 million decreased 30% over second quarter
2021 and produced segment profit of $26.7
million, down 32% over the same period.
° Within Home, mortgage products
revenue of $44.4 million declined 49%
over prior year.
• Consumer segment revenue of $106.1 million grew 40% over second quarter 2021
as trends continue to improve.
° Within Consumer, credit card revenue
of $27.3 million was up 22% over
prior year.
° Personal loans revenue of
$42.3 million grew 68% over prior
year.
° Revenue from our small business
offering grew 81% over prior year.
• Insurance segment revenue of $81.8 million decreased 8% over second quarter
2021 and translated into segment profit of $22.6 million, down 32% over the same period.
• Through June 30,
2022, 23.1 million consumers have signed up for
MyLendingTree.
LendingTree Summary
Financial Metrics
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June
30,
|
|
Y/Y
|
|
|
Three Months
Ended
March 31,
|
|
Q/Q
|
|
|
2022
|
|
2021
|
|
%
Change
|
|
|
2022
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
261.9
|
|
$
270.0
|
|
(3) %
|
|
|
$
283.2
|
|
(8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes
|
$
(10.4)
|
|
$ 0.7
|
|
(1586) %
|
|
|
$
(10.4)
|
|
— %
|
|
Income tax benefit
(expense)
|
$ 2.4
|
|
$ 9.1
|
|
(74) %
|
|
|
$
(0.4)
|
|
(700) %
|
|
Net (loss) income
from continuing operations
|
$
(8.0)
|
|
$
9.8
|
|
(182) %
|
|
|
$
(10.8)
|
|
26 %
|
|
Net (loss) income
from continuing operations % of revenue
|
(3) %
|
|
4 %
|
|
|
|
|
(4) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income per
share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.63)
|
|
$ 0.74
|
|
(185) %
|
|
|
$
(0.84)
|
|
25 %
|
|
Diluted
|
$
(0.63)
|
|
$ 0.71
|
|
(189) %
|
|
|
$
(0.84)
|
|
25 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable marketing
margin
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
261.9
|
|
$
270.0
|
|
(3) %
|
|
|
$
283.2
|
|
(8) %
|
|
Variable marketing
expense (1) (2)
|
$ (171.1)
|
|
$ (171.6)
|
|
— %
|
|
|
$
(189.1)
|
|
(10) %
|
|
Variable marketing
margin (2)
|
$ 90.8
|
|
$ 98.4
|
|
(8) %
|
|
|
$
94.1
|
|
(4) %
|
|
Variable marketing
margin % of revenue (2)
|
35 %
|
|
36 %
|
|
|
|
|
33 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
$ 28.6
|
|
$ 38.2
|
|
(25) %
|
|
|
$
29.4
|
|
(3) %
|
|
Adjusted EBITDA %
of revenue (2)
|
11 %
|
|
14 %
|
|
|
|
|
10 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
(2)
|
$
7.6
|
|
$ 10.4
|
|
(27) %
|
|
|
$
6.1
|
|
25 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
per share (2)
|
$ 0.58
|
|
$ 0.76
|
|
(24) %
|
|
|
$
0.46
|
|
26 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the portion
of selling and marketing expense attributable to variable costs
paid for advertising, direct marketing and related expenses.
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
June
30,
|
|
Y/Y
|
|
|
Three Months
Ended
March 31,
|
|
Q/Q
|
|
|
2022
|
|
2021
|
|
%
Change
|
|
|
2022
|
|
%
Change
|
|
Home (1)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 73.9
|
|
$
104.9
|
|
(30) %
|
|
|
$
101.9
|
|
(27) %
|
|
Segment
profit
|
$ 26.7
|
|
$ 39.0
|
|
(32) %
|
|
|
$
35.9
|
|
(26) %
|
|
Segment profit % of
revenue
|
36 %
|
|
37 %
|
|
|
|
|
35 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer (2)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
106.1
|
|
$ 75.7
|
|
40 %
|
|
|
$
101.1
|
|
5 %
|
|
Segment
profit
|
$ 44.6
|
|
$ 33.4
|
|
34 %
|
|
|
$
42.5
|
|
5 %
|
|
Segment profit % of
revenue
|
42 %
|
|
44 %
|
|
|
|
|
42 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance (3)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 81.8
|
|
$ 89.3
|
|
(8) %
|
|
|
$
80.0
|
|
2 %
|
|
Segment
profit
|
$ 22.6
|
|
$ 33.2
|
|
(32) %
|
|
|
$
21.1
|
|
7 %
|
|
Segment profit % of
revenue
|
28 %
|
|
37 %
|
|
|
|
|
26 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 0.1
|
|
$ 0.2
|
|
(50) %
|
|
|
$
0.1
|
|
— %
|
|
(Loss)
profit
|
$ (0.1)
|
|
$
—
|
|
— %
|
|
|
$
(0.1)
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
261.9
|
|
$
270.0
|
|
(3) %
|
|
|
$
283.2
|
|
(8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment
profit
|
$ 93.8
|
|
$
105.6
|
|
(11) %
|
|
|
$
99.5
|
|
(6) %
|
|
Brand marketing expense
(5)
|
$ (3.0)
|
|
$ (7.2)
|
|
(58) %
|
|
|
$
(5.4)
|
|
(44) %
|
|
Variable marketing
margin
|
$ 90.8
|
|
$ 98.4
|
|
(8) %
|
|
|
$
94.1
|
|
(4) %
|
|
Variable marketing
margin % of revenue
|
35 %
|
|
36 %
|
|
|
|
|
33 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Home segment
includes the following products: purchase mortgage, refinance
mortgage, home equity loans, 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 and sales of insurance
policies.
|
(4)
|
The Other category
primarily includes marketing revenue and related expenses not
allocated to a specific segment.
|
(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.
|
Financial Outlook*
Today we're issuing an outlook for the third-quarter 2022 and
updating our previous guidance for full-year 2022.
Third-quarter 2022:
• Revenue: $235 - $245
million
• Variable Marketing Margin: $64 - $74
million
• Adjusted EBITDA: $2 - $8 million
We expect both the Home and Insurance segments to soften
modestly vs. 2Q while Consumer continues to grow, albeit at a
slower pace YoY as we remain cognizant of partner demand in a
slowing economic environment.
We have chosen to re-invest in our brand in 3Q as we have
underinvested for the last few years due to the implications of
COVID on our end markets. Our brand has proven to be a
differentiator over time. We are using this opportunity to
call attention to our significantly improved brand experience and
customer journey that are being implemented, at a time when we can
capture increased efficiency from our spend due to the lower
overall demand for broadcast advertising.
The combination of production expense, television and OTT media,
and ancillary launch expenses will weigh heavily on 3Q
results. However, a significant portion of this spend is one
time in nature. Excluding the cost of our brand investment,
the combined segment profit from our three operating segments is
expected to be roughly flat relative to 2Q, despite continued
challenges across the Home and Insurance end markets.
Full-year 2022:
• Revenue is anticipated to be in the range
of $985 - $1,015 million, representing a decline of 8% -
10% over full-year 2021 results.
• Variable Marketing Margin is expected to be
in the range of $325 - $345 million, representing a margin range
of 32% - 35% on projected revenue.
• Adjusted EBITDA is now anticipated to be in
the range of $75 - $85 million, down 37% - 44% YoY.
In what is becoming a very difficult and uncertain environment,
we remain focused on maintaining the balance between near-term
profitability and positioning the company for long-term
success. Fortunately, given the strength of our balance sheet
and the flexibility & diversification of our model, we can
afford to do so.
We are conscious of the macroeconomic risks and uncertainty
ahead and we feel our annual guidance is reflective of those
challenges. However, we believe the implied AEBITDA range for 4Q of
$15M - $20M represents trough-level earnings capacity
for our business in the absence of discretionary investments.
We have made significant progress in managing our non-marketing
operating expenses over the last year, and that discipline will
continue. Our efforts to more efficiently staff our business
have led to a nearly 15% reduction in headcount from the peak in
the middle of 2021. These savings were achieved through a
combination of workforce reductions, reduced hiring and backfilling
only high priority positions due to employee attrition.
*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 and tax considerations. Expenses associated with legal
matters and tax considerations 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 second quarter 2022
financial results will be webcast live today, July 28, 2022 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. Following completion of the call, a
recorded replay of the webcast will be available on the
website.
LENDINGTREE, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE
INCOME (Unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(in thousands, except per share
amounts)
|
Revenue
|
$ 261,923
|
|
$ 270,014
|
|
$ 545,101
|
|
$ 542,764
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization shown separately
below) (1)
|
14,574
|
|
13,934
|
|
30,135
|
|
27,829
|
Selling and marketing
expense (1)
|
184,537
|
|
185,206
|
|
388,694
|
|
382,668
|
General and
administrative expense (1)
|
40,289
|
|
39,811
|
|
76,262
|
|
74,800
|
Product development
(1)
|
14,318
|
|
13,290
|
|
28,370
|
|
25,758
|
Depreciation
|
4,896
|
|
4,443
|
|
9,750
|
|
8,161
|
Amortization of
intangibles
|
7,075
|
|
11,310
|
|
14,992
|
|
22,622
|
Change in fair value
of contingent consideration
|
—
|
|
(8,850)
|
|
—
|
|
(8,053)
|
Restructuring and
severance (1)
|
135
|
|
—
|
|
3,760
|
|
—
|
Litigation settlements
and contingencies
|
(7)
|
|
322
|
|
(34)
|
|
338
|
Total costs and
expenses
|
265,817
|
|
259,466
|
|
551,929
|
|
534,123
|
Operating (loss)
income
|
(3,894)
|
|
10,548
|
|
(6,828)
|
|
8,641
|
Other (expense) income,
net:
|
|
|
|
|
|
|
|
Interest expense,
net
|
(6,765)
|
|
(9,840)
|
|
(14,270)
|
|
(20,055)
|
Other
income
|
284
|
|
—
|
|
283
|
|
40,072
|
(Loss) income before
income taxes
|
(10,375)
|
|
708
|
|
(20,815)
|
|
28,658
|
Income tax
benefit
|
2,337
|
|
9,092
|
|
1,954
|
|
454
|
Net (loss) income
from continuing operations
|
(8,038)
|
|
9,800
|
|
(18,861)
|
|
29,112
|
Loss from discontinued
operations, net of tax
|
—
|
|
(3,199)
|
|
(3)
|
|
(3,462)
|
Net (loss) income
and comprehensive (loss) income
|
$
(8,038)
|
|
$
6,601
|
|
$ (18,864)
|
|
$
25,650
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
12,723
|
|
13,243
|
|
12,812
|
|
13,157
|
Diluted
|
12,723
|
|
13,719
|
|
12,812
|
|
13,913
|
(Loss) income per
share from continuing operations:
|
|
|
|
|
|
|
|
Basic
|
$
(0.63)
|
|
$
0.74
|
|
$
(1.47)
|
|
$
2.21
|
Diluted
|
$
(0.63)
|
|
$
0.71
|
|
$
(1.47)
|
|
$
2.09
|
Loss per share from
discontinued operations:
|
|
|
|
|
|
|
|
Basic
|
$
—
|
|
$
(0.24)
|
|
$
—
|
|
$
(0.26)
|
Diluted
|
$
—
|
|
$
(0.23)
|
|
$
—
|
|
$
(0.25)
|
Net (loss) income
per share:
|
|
|
|
|
|
|
|
Basic
|
$
(0.63)
|
|
$
0.50
|
|
$
(1.47)
|
|
$
1.95
|
Diluted
|
$
(0.63)
|
|
$
0.48
|
|
$
(1.47)
|
|
$
1.84
|
|
|
|
|
|
|
|
|
(1) Amounts
include non-cash compensation, as follows:
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
442
|
|
$
463
|
|
$
835
|
|
$
860
|
Selling and marketing
expense
|
2,285
|
|
1,976
|
|
4,324
|
|
3,778
|
General and
administrative expense
|
11,873
|
|
13,254
|
|
21,473
|
|
25,425
|
Product
development
|
2,735
|
|
2,601
|
|
4,700
|
|
4,667
|
Restructuring and
severance
|
—
|
|
—
|
|
1,083
|
|
—
|
LENDINGTREE, INC.
AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited)
|
|
|
June 30,
2022
|
|
December 31,
2021
|
|
(in thousands, except par value and share
amounts)
|
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$ 279,108
|
|
$ 251,231
|
Restricted cash and
cash equivalents
|
125
|
|
111
|
Accounts receivable,
net
|
115,441
|
|
97,658
|
Prepaid and other
current assets
|
27,419
|
|
25,379
|
Total current
assets
|
422,093
|
|
374,379
|
Property and
equipment
|
68,315
|
|
72,477
|
Operating lease
right-of-use assets
|
71,336
|
|
77,346
|
Goodwill
|
420,139
|
|
420,139
|
Intangible assets,
net
|
70,772
|
|
85,763
|
Deferred income tax
assets
|
130,174
|
|
87,581
|
Equity
investment
|
174,580
|
|
158,140
|
Other non-current
assets
|
6,693
|
|
6,942
|
Non-current assets of
discontinued operations
|
—
|
|
16,589
|
Total
assets
|
$
1,364,102
|
|
$
1,299,356
|
|
|
|
|
LIABILITIES:
|
|
|
|
Current portion of
long-term debt
|
$
2,491
|
|
$ 166,008
|
Accounts payable,
trade
|
7,850
|
|
1,692
|
Accrued expenses and
other current liabilities
|
94,925
|
|
106,731
|
Current liabilities of
discontinued operations
|
—
|
|
1
|
Total current
liabilities
|
105,266
|
|
274,432
|
Long-term
debt
|
813,252
|
|
478,151
|
Operating lease
liabilities
|
92,557
|
|
96,165
|
Deferred income tax
liabilities
|
2,265
|
|
2,265
|
Other non-current
liabilities
|
276
|
|
351
|
Total
liabilities
|
1,013,616
|
|
851,364
|
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; 16,140,889 and
16,070,720 shares issued, respectively, and 12,785,423 and
13,095,149 shares outstanding, respectively
|
161
|
|
161
|
Additional paid-in
capital
|
1,162,714
|
|
1,242,794
|
Accumulated
deficit
|
(546,211)
|
|
(571,794)
|
Treasury stock;
3,355,466 shares and 2,975,571, shares respectively
|
(266,178)
|
|
(223,169)
|
Total shareholders'
equity
|
350,486
|
|
447,992
|
Total liabilities
and shareholders' equity
|
$
1,364,102
|
|
$
1,299,356
|
LENDINGTREE, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited)
|
|
|
Six Months
Ended
June
30,
|
|
2022
|
|
2021
|
|
(in thousands)
|
Cash flows from
operating activities attributable to continuing
operations:
|
|
|
|
Net (loss) income
and comprehensive (loss) income
|
$
(18,864)
|
|
$
25,650
|
Less: Loss from
discontinued operations, net of tax
|
3
|
|
3,462
|
Net (loss) income from
continuing operations
|
(18,861)
|
|
29,112
|
Adjustments to
reconcile net (loss) income from continuing operations to net cash
provided by operating activities attributable to continuing
operations:
|
|
|
|
Loss on impairments
and disposal of assets
|
3,427
|
|
1,400
|
Amortization of
intangibles
|
14,992
|
|
22,622
|
Depreciation
|
9,750
|
|
8,161
|
Non-cash compensation
expense
|
32,415
|
|
34,730
|
Deferred income
taxes
|
(2,026)
|
|
(455)
|
Change in fair value
of contingent consideration
|
—
|
|
(8,053)
|
Gain on
investments
|
—
|
|
(40,072)
|
Bad debt
expense
|
2,029
|
|
1,145
|
Amortization of debt
issuance costs
|
4,454
|
|
2,547
|
Amortization of debt
discount
|
1,475
|
|
14,670
|
Reduction in carrying
amount of ROU asset, offset by change in operating lease
liabilities
|
(333)
|
|
11,079
|
Changes in current
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(19,812)
|
|
(35,381)
|
Prepaid and other
current assets
|
(5,593)
|
|
(680)
|
Accounts payable,
accrued expenses and other current liabilities
|
(5,223)
|
|
3,845
|
Income taxes
receivable
|
(293)
|
|
10,322
|
Other, net
|
(302)
|
|
(412)
|
Net cash provided by
operating activities attributable to continuing
operations
|
16,099
|
|
54,580
|
Cash flows from
investing activities attributable to continuing
operations:
|
|
|
|
Capital
expenditures
|
(6,346)
|
|
(23,585)
|
Equity
investment
|
(16,440)
|
|
(1,180)
|
Net cash used in
investing activities attributable to continuing
operations
|
(22,786)
|
|
(24,765)
|
Cash flows from
financing activities attributable to continuing
operations:
|
|
|
|
Proceeds from term
loan
|
250,000
|
|
—
|
Repayment of 0.625%
Convertible Senior Notes
|
(169,659)
|
|
—
|
Payments related to
net-share settlement of stock-based compensation, net of proceeds
from exercise of stock options
|
(2,745)
|
|
(4,771)
|
Purchase of treasury
stock
|
(43,009)
|
|
—
|
Payment of debt
issuance costs
|
(3)
|
|
(168)
|
Other financing
activities
|
—
|
|
(31)
|
Net cash provided by
(used in) financing activities attributable to continuing
operations
|
34,584
|
|
(4,970)
|
Total cash provided
by continuing operations
|
27,897
|
|
24,845
|
Discontinued
operations:
|
|
|
|
Net cash (used in)
provided by operating activities attributable to discontinued
operations
|
(6)
|
|
8,353
|
Total cash (used in)
provided by discontinued operations
|
(6)
|
|
8,353
|
Net increase in
cash, cash equivalents, restricted cash and restricted cash
equivalents
|
27,891
|
|
33,198
|
Cash, cash equivalents,
restricted cash and restricted cash equivalents at beginning of
period
|
251,342
|
|
170,049
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at end
of period
|
$ 279,233
|
|
$ 203,247
|
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 "LendingTree's Principles of
Financial Reporting" for further discussion of the Company's use of
this non-GAAP measure.
|
Three Months
Ended
|
|
June 30,
2022
|
March 31,
2022
|
June 30,
2021
|
|
(in
thousands)
|
Selling and
marketing expense
|
$
184,537
|
$
204,157
|
$
185,206
|
Non-variable selling
and marketing expense (1)
|
(13,385)
|
(15,081)
|
(13,610)
|
Variable marketing
expense
|
$
171,152
|
$
189,076
|
$
171,596
|
|
|
(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.
|
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
|
|
June 30,
2022
|
March 31,
2022
|
June 30,
2021
|
|
(in thousands,
except percentages)
|
Net (loss) income
from continuing operations
|
$
(8,038)
|
$ (10,823)
|
$
9,800
|
Net (loss) income
from continuing operations % of revenue
|
(3) %
|
(4) %
|
4 %
|
|
|
|
|
Adjustments to
reconcile to variable marketing margin:
|
|
|
|
Cost of
revenue
|
14,574
|
15,561
|
13,934
|
Non-variable selling
and marketing expense (1)
|
13,385
|
15,081
|
13,610
|
General and
administrative expense
|
40,289
|
35,973
|
39,811
|
Product
development
|
14,318
|
14,052
|
13,290
|
Depreciation
|
4,896
|
4,854
|
4,443
|
Amortization of
intangibles
|
7,075
|
7,917
|
11,310
|
Change in fair value
of contingent consideration
|
—
|
—
|
(8,850)
|
Restructuring and
severance
|
135
|
3,625
|
—
|
Litigation settlements
and contingencies
|
(7)
|
(27)
|
322
|
Interest expense,
net
|
6,765
|
7,505
|
9,840
|
Other (income)
expense
|
(284)
|
1
|
—
|
Income tax (benefit)
expense
|
(2,337)
|
383
|
(9,092)
|
Variable marketing
margin
|
$
90,771
|
$
94,102
|
$
98,418
|
Variable marketing
margin % of revenue
|
35 %
|
33 %
|
36 %
|
|
|
(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.
|
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
|
|
June 30,
2022
|
March 31,
2022
|
June 30,
2021
|
|
(in thousands,
except percentages)
|
Net (loss) income
from continuing operations
|
$
(8,038)
|
$ (10,823)
|
$
9,800
|
Net (loss) income
from continuing operations % of revenue
|
(3) %
|
(4) %
|
4 %
|
Adjustments to
reconcile to adjusted EBITDA:
|
|
|
|
Amortization of
intangibles
|
7,075
|
7,917
|
11,310
|
Depreciation
|
4,896
|
4,854
|
4,443
|
Restructuring and
severance
|
135
|
3,625
|
—
|
Loss on impairments
and disposal of assets
|
2,996
|
431
|
1,052
|
Non-cash
compensation
|
17,335
|
13,997
|
18,294
|
Franchise tax caused
by equity investment gain
|
—
|
1,500
|
—
|
Change in fair value
of contingent consideration
|
—
|
—
|
(8,850)
|
Acquisition
expense
|
58
|
9
|
1,110
|
Litigation settlements
and contingencies
|
(7)
|
(27)
|
322
|
Interest expense,
net
|
6,765
|
7,505
|
9,840
|
Dividend
income
|
(282)
|
—
|
—
|
Income tax (benefit)
expense
|
(2,337)
|
383
|
(9,092)
|
Adjusted
EBITDA
|
$
28,596
|
$
29,371
|
$
38,229
|
Adjusted EBITDA %
of revenue
|
11 %
|
10 %
|
14 %
|
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 income and net (loss) 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
|
|
June 30,
2022
|
March 31,
2022
|
June 30,
2021
|
|
(in thousands,
except per share amounts)
|
Net (loss) income
from continuing operations
|
$
(8,038)
|
$ (10,823)
|
$
9,800
|
Adjustments to
reconcile to adjusted net income:
|
|
|
|
Restructuring and
severance
|
135
|
3,625
|
—
|
Loss on impairments
and disposal of assets
|
2,996
|
431
|
1,052
|
Non-cash
compensation
|
17,335
|
13,997
|
18,294
|
Franchise tax caused
by equity investment gain
|
—
|
1,500
|
—
|
Change in fair value
of contingent consideration
|
—
|
—
|
(8,850)
|
Acquisition
expense
|
58
|
9
|
1,110
|
Litigation settlements
and contingencies
|
(7)
|
(27)
|
322
|
Income tax benefit
from adjusted items
|
(5,364)
|
(5,106)
|
(3,024)
|
Excess tax expense
(benefit) from stock-based compensation
|
438
|
2,468
|
(8,261)
|
Adjusted net
income
|
$
7,553
|
$
6,074
|
$
10,443
|
|
|
|
|
Net (loss) income
per diluted share from continuing operations
|
$
(0.63)
|
$
(0.84)
|
$
0.71
|
Adjustments to
reconcile net (loss) income from continuing operations to adjusted
net income
|
1.22
|
1.31
|
0.05
|
Adjustments to
reconcile effect of dilutive securities
|
(0.01)
|
(0.01)
|
—
|
Adjusted net income
per share
|
$
0.58
|
$
0.46
|
$
0.76
|
|
|
|
|
Adjusted weighted
average diluted shares outstanding
|
12,936
|
13,167
|
13,719
|
Effect of dilutive
securities
|
213
|
266
|
—
|
Weighted average
diluted shares outstanding
|
12,723
|
12,901
|
13,719
|
Effect of dilutive
securities
|
—
|
—
|
476
|
Weighted average
basic shares outstanding
|
12,723
|
12,901
|
13,243
|
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 in most years.
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, gain/loss on investments,
restructuring and 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, 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.
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) gain/loss on investments, (5)
restructuring and severance expenses, (6) litigation settlements
and contingencies, (7) acquisitions and dispositions income or
expense (including with respect to changes in fair value of
contingent consideration), (8) dividend income, and (9) 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) gain/loss on investments, (5) restructuring and
severance expenses, (6) litigation settlements and contingencies,
(7) acquisitions and dispositions income or expense (including with
respect to changes in fair value of contingent consideration), (8)
gain/loss on extinguishment of debt, (9) one-time items, (10) the
effects to income taxes of the aforementioned adjustments, and (11)
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 if their inclusion would be dilutive.
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 $1.5 million
franchise tax caused by the equity investment gain in Stash.
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, 2021, in our Quarterly Report on
Form 10-Q for the period ended March 31,
2022, 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 (NASDAQ: TREE) is one of the
nation's largest, most experienced online marketplaces,
created to give power to consumers so more people can win
financially. LendingTree strives to provide consumers with
easy access to the best offers on home loans, personal
loans, insurance, credit cards, student loans, business loans, home
equity loans/lines of credit, auto loans and more, through its
network of over 500 partners. Founded in 1996 and launched
nationally in 1998, LendingTree has helped over 111 million
consumers obtain financing, save money, and improve their financial
and credit health with transparency, education, and support
throughout their financial journey.
LendingTree, Inc. is headquartered in Charlotte, NC. For more information, please
visit www.lendingtree.com..
Investor Relations
Contact:
investors@lendingtree.com
Media Contact:
press@lendingtree.com
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SOURCE LendingTree, Inc.