Trough AEBITDA Levels Set to Inflect as
Insurance Recovery Gathers Pace
- Consolidated revenue of $134.4 million
- GAAP net income of $12.7 million
or $0.98 per diluted share
- Variable marketing margin of $60.6
million
- Adjusted EBITDA of $15.5
million
- Adjusted net income per share of $0.28
CHARLOTTE, N.C., Feb. 27,
2024 /PRNewswire/ -- LendingTree, Inc. (NASDAQ:
TREE), operator of LendingTree.com, the nation's leading online
financial services marketplace, today announced results for the
quarter ended December 31, 2023. The Company has posted a
shareholder letter on its investor relations website at
investors.lendingtree.com.
"Our company continues to prove durable to adverse economic
conditions, as we generated another quarter of solid results
despite ongoing pressure from higher interest rates and persistent
inflation," said Doug Lebda,
Chairman and CEO. "We have taken decisive action to simplify our
company, reduce operating costs, improve our technology and data
infrastructure, and fortify our balance sheet. The business
is well positioned to benefit from an improved economic environment
going forward."
Scott Peyree, President and COO,
commented, "The recovery that began in our Insurance segment during
Q4 has continued into the new year. We are very excited to be
returning to growth. Our lending businesses, including both
Home and Consumer, have reached a level of stability over the past
three months from a credit tightening perspective that we have not
seen in over a year. With the changes we have undertaken to
make our company more efficient and agile, we now have a solid
foundation to begin leaning into sequential growth opportunities in
multiple lending categories."
Trent Ziegler, CFO, added,
"Despite the numerous external challenges we faced in 2023, the
business generated $78.5 million
of AEBITDA and $55 million of
free cashflow for the year. During the quarter we repurchased
$100 million of our 2025 convertible
notes at a discount to par, and maintain $112 million of cash on balance sheet. We
are committed to addressing the remainder of this maturity in
the most efficient manner possible for our shareholders."
Fourth Quarter 2023 Business Highlights
- Home segment revenue of $25.1 million decreased 48% over fourth
quarter 2022 and produced segment profit of $8.1 million, down 50% over the same period.
- Within Home, mortgage revenue of $9.2 million declined 59% over the prior
year period.
- Consumer segment revenue of $49.5 million decreased 43% over fourth
quarter 2022.
- Within Consumer, credit card revenue of $8.1 million decreased 57%
year-over-year.
- Personal loans revenue of $21.9 million decreased 24% over prior
year.
- Insurance segment revenue of $59.6 million decreased 11% from fourth
quarter 2022 and translated into segment profit of $25.2 million, a decrease of 2% over the
same period.
LendingTree Summary
Financial Metrics
|
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Y/Y
|
|
|
Three Months
Ended
September 30,
|
|
Q/Q
|
|
|
2023
|
|
2022
|
|
%
Change
|
|
|
2023
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
134.4
|
|
$
202.1
|
|
(33) %
|
|
|
$
155.2
|
|
(13) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
$ 13.1
|
|
$
(11.3)
|
|
216 %
|
|
|
(152.0)
|
|
109 %
|
|
Income tax (expense)
benefit
|
(0.4)
|
|
0.9
|
|
(144) %
|
|
|
3.5
|
|
(111) %
|
|
Net income
(loss)
|
$ 12.7
|
|
$
(10.4)
|
|
222 %
|
|
|
$
(148.5)
|
|
109 %
|
|
Net income (loss) %
of revenue
|
9 %
|
|
(5) %
|
|
|
|
|
(96) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$ 0.98
|
|
$
(0.81)
|
|
|
|
|
$
(11.43)
|
|
|
|
Diluted
|
$ 0.98
|
|
$
(0.81)
|
|
|
|
|
$
(11.43)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable marketing
margin
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
134.4
|
|
$
202.1
|
|
(33) %
|
|
|
$
155.2
|
|
(13) %
|
|
Variable marketing
expense (1) (2)
|
$
(73.8)
|
|
$ (124.0)
|
|
(40) %
|
|
|
$
(87.5)
|
|
(16) %
|
|
Variable marketing
margin (2)
|
$ 60.6
|
|
$ 78.1
|
|
(22) %
|
|
|
$
67.7
|
|
(10) %
|
|
Variable marketing
margin % of revenue (2)
|
45 %
|
|
39 %
|
|
|
|
|
44 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
$ 15.5
|
|
$ 16.7
|
|
(7) %
|
|
|
$
21.8
|
|
(29) %
|
|
Adjusted EBITDA %
of revenue (2)
|
12 %
|
|
8 %
|
|
|
|
|
14 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
(2)
|
$
3.6
|
|
$
4.9
|
|
(27) %
|
|
|
$
7.9
|
|
(54) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
per share (2)
|
$ 0.28
|
|
$ 0.38
|
|
(26) %
|
|
|
$
0.61
|
|
(54) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
December 31,
|
|
Y/Y
|
|
|
Three Months
Ended
September 30,
|
|
Q/Q
|
|
|
2023
|
|
2022
|
|
%
Change
|
|
|
2023
|
|
%
Change
|
|
Home (1)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 25.1
|
|
$ 48.6
|
|
(48) %
|
|
|
$
33.4
|
|
(25) %
|
|
Segment
profit
|
$ 8.1
|
|
$ 16.3
|
|
(50) %
|
|
|
$
11.3
|
|
(28) %
|
|
Segment profit % of
revenue
|
32 %
|
|
34 %
|
|
|
|
|
34 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
(2)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 49.5
|
|
$ 86.2
|
|
(43) %
|
|
|
$
67.3
|
|
(26) %
|
|
Segment
profit
|
$ 28.9
|
|
$ 41.7
|
|
(31) %
|
|
|
$
34.4
|
|
(16) %
|
|
Segment profit % of
revenue
|
58 %
|
|
48 %
|
|
|
|
|
51 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
(3)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 59.6
|
|
$ 67.0
|
|
(11) %
|
|
|
$
54.5
|
|
9 %
|
|
Segment
profit
|
$ 25.2
|
|
$ 25.6
|
|
(2) %
|
|
|
$
23.4
|
|
8 %
|
|
Segment profit % of
revenue
|
42 %
|
|
38 %
|
|
|
|
|
43 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (4)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 0.1
|
|
$ 0.2
|
|
(50) %
|
|
|
$
—
|
|
— %
|
|
(Loss)
profit
|
$
(0.1)
|
|
$ (0.1)
|
|
— %
|
|
|
$
—
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
134.4
|
|
$
202.1
|
|
(33) %
|
|
|
$
155.2
|
|
(13) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment
profit
|
$ 62.2
|
|
$ 83.4
|
|
(25) %
|
|
|
$
69.1
|
|
(10) %
|
|
Brand marketing expense
(5)
|
$
(1.6)
|
|
$ (5.3)
|
|
(70) %
|
|
|
$
(1.4)
|
|
14 %
|
|
Variable marketing
margin
|
$ 60.6
|
|
$ 78.1
|
|
(22) %
|
|
|
$
67.7
|
|
(10) %
|
|
Variable marketing
margin % of revenue
|
45 %
|
|
39 %
|
|
|
|
|
44 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Home segment
includes the following products: purchase mortgage, refinance
mortgage, and home equity loans. We ceased offering reverse
mortgage loans in Q4 2022.
|
(2)
|
The Consumer segment
includes the following products: credit cards, personal loans,
small business loans, student loans, auto loans, deposit accounts,
and debt settlement. We ceased offering credit repair in Q2 2023
with the closure of Ovation.
|
(3)
|
The Insurance segment
consists of insurance quote products and sales of insurance
policies.
|
(4)
|
The Other category
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 are issuing our outlook for the first-quarter and
full-year 2024.
For first-quarter 2024:
- Revenue: $158 -
$168 million
- Variable Marketing Margin: $66 - $72
million
- Adjusted EBITDA: $17 -
$21 million
For full-year 2024:
- Revenue is anticipated to be in the range of $650 - $690
million, representing a decline of 3% to an increase of 3%
compared to 2023.
- Variable Marketing Margin is expected to be in the range of
$280 - $300
million, which is flat to an increase of 7% versus
2023.
- Adjusted EBITDA is anticipated to be in the range of
$85 - $95
million, an increase of 8% to 21% from 2023. This outlook
implies positive year-over-year operating leverage driven by our
commitment to holding fixed costs near current levels.
Our full-year 2024 outlook assumes Home segment revenue remains
depressed, with higher interest rates continuing to impact
origination volumes. Our Consumer segment is expected to
decline as well, as we expect lender appetite for new customers
will not strengthen until the second half of 2024. We
anticipate strong revenue growth in our Insurance segment driven by
the uptick in carrier demand for new policy growth. In
aggregate, we expect Variable Marketing Margin as a percent of
revenue to remain in the range of 40-45%. Finally, our fixed
costs are expected to remain relatively flat as compared to
full-year 2023.
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
consequences 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 fourth-quarter 2023
financial results will be webcast live today, February 27, 2024 at 9:00
AM Eastern Time (ET). The live webcast 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 LendingTree's
investor relations website.
LENDINGTREE'S RECONCILIATION OF NON-GAAP
MEASURES TO GAAP
Variable Marketing Expense
Below is a reconciliation of selling and marketing expense, the
most directly comparable GAAP measure, 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
|
|
Twelve Months
Ended
|
|
December 31,
2023
|
September
30,
2023
|
December 31,
2022
|
|
December 31,
2023
|
December 31,
2022
|
|
(in
thousands)
|
Selling and
marketing expense
|
$
83,168
|
$
97,244
|
$ 136,669
|
|
$ 433,588
|
$ 702,238
|
Non-variable selling
and marketing expense (1)
|
(9,407)
|
(9,805)
|
(12,717)
|
|
(42,031)
|
(54,914)
|
Variable marketing
expense
|
$
73,761
|
$
87,439
|
$ 123,952
|
|
$ 391,557
|
$ 647,324
|
|
|
(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 income (loss), the most
directly comparable GAAP measure, to variable marketing margin and
net income (loss) % 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
|
|
Twelve Months
Ended
|
|
December 31,
2023
|
September
30,
2023
|
December 31,
2022
|
|
December 31,
2023
|
December 31,
2022
|
|
(in thousands,
except percentages)
|
Net income
(loss)
|
$
12,719
|
$
(148,465)
|
$
(10,404)
|
|
$
(122,404)
|
$
(187,952)
|
Net income (loss) %
of revenue
|
9 %
|
(96) %
|
(5) %
|
|
(18) %
|
(19) %
|
|
|
|
|
|
|
|
Adjustments to
reconcile to variable marketing margin:
|
|
|
|
|
|
|
Cost of
revenue
|
8,126
|
7,570
|
13,529
|
|
38,758
|
57,769
|
Non-variable selling
and marketing expense (1)
|
9,407
|
9,805
|
12,717
|
|
42,031
|
54,914
|
General and
administrative expense
|
25,477
|
26,380
|
36,575
|
|
117,700
|
152,383
|
Product
development
|
11,101
|
10,840
|
13,140
|
|
47,197
|
55,553
|
Depreciation
|
4,831
|
4,760
|
5,071
|
|
19,070
|
20,095
|
Amortization of
intangibles
|
1,682
|
1,981
|
3,732
|
|
7,694
|
25,306
|
Goodwill
impairment
|
—
|
38,600
|
—
|
|
38,600
|
—
|
Restructuring and
severance
|
151
|
1,955
|
668
|
|
10,118
|
4,428
|
Litigation settlements
and contingencies
|
38
|
(150)
|
23
|
|
388
|
(18)
|
Interest (income)
expense, net
|
(10,693)
|
7,097
|
6,024
|
|
(21,685)
|
26,014
|
Other (income)
expense
|
(2,644)
|
110,910
|
(2,037)
|
|
105,993
|
(3,843)
|
Income tax expense
(benefit)
|
397
|
(3,534)
|
(935)
|
|
(2,515)
|
133,019
|
Variable marketing
margin
|
$
60,592
|
$
67,749
|
$
78,103
|
|
$
280,945
|
$
337,668
|
Variable marketing
margin % of revenue
|
45 %
|
44 %
|
39 %
|
|
42 %
|
34 %
|
|
|
(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 income (loss), the most
directly comparable GAAP measure, to adjusted EBITDA and net income
(loss) % 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
|
|
Twelve Months
Ended
|
|
December 31,
2023
|
September
30,
2023
|
December 31,
2022
|
|
December 31,
2023
|
December 31,
2022
|
|
(in thousands,
except percentages)
|
Net income
(loss)
|
$
12,719
|
$
(148,465)
|
$
(10,404)
|
|
$
(122,404)
|
$
(187,952)
|
Net income (loss) %
of revenue
|
9 %
|
(96) %
|
(5) %
|
|
(18) %
|
(19) %
|
Adjustments to
reconcile to adjusted EBITDA:
|
|
|
|
|
|
|
Amortization of
intangibles
|
1,682
|
1,981
|
3,732
|
|
7,694
|
25,306
|
Depreciation
|
4,831
|
4,760
|
5,071
|
|
19,070
|
20,095
|
Restructuring and
severance
|
151
|
1,955
|
668
|
|
10,118
|
4,428
|
Loss on impairments
and disposal of assets
|
182
|
88
|
2,329
|
|
5,437
|
6,590
|
Loss on impairment of
investments
|
—
|
113,064
|
—
|
|
114,504
|
—
|
Goodwill
impairment
|
—
|
38,600
|
—
|
|
38,600
|
—
|
Non-cash
compensation
|
8,177
|
8,592
|
11,634
|
|
37,176
|
58,541
|
Franchise tax caused
by equity investment gain
|
—
|
—
|
—
|
|
—
|
1,500
|
Contribution to
LendingTree Foundation
|
—
|
—
|
500
|
|
—
|
500
|
Acquisition
expense
|
—
|
—
|
106
|
|
(5)
|
277
|
Litigation settlements
and contingencies
|
38
|
(150)
|
23
|
|
388
|
(18)
|
Interest (income)
expense, net
|
(10,693)
|
7,097
|
6,024
|
|
(21,685)
|
26,014
|
Dividend
income
|
(2,021)
|
(2,154)
|
(2,037)
|
|
(7,888)
|
(3,842)
|
Income tax expense
(benefit)
|
397
|
(3,534)
|
(935)
|
|
(2,515)
|
133,019
|
Adjusted
EBITDA
|
$
15,463
|
$
21,834
|
$
16,711
|
|
$
78,490
|
$
84,458
|
Adjusted EBITDA %
of revenue
|
12 %
|
14 %
|
8 %
|
|
12 %
|
9 %
|
|
|
|
|
|
|
|
LENDINGTREE'S RECONCILIATION OF NON-GAAP
MEASURES TO GAAP
Adjusted Net Income
Below is a reconciliation of net income (loss), the most
directly comparable GAAP measure, to adjusted net income and net
income (loss) per diluted share 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
|
|
Twelve Months
Ended
|
|
December 31,
2023
|
September
30,
2023
|
December 31,
2022
|
|
December 31,
2023
|
December 31,
2022
|
|
(in thousands,
except per share amounts)
|
Net income
(loss)
|
$
12,719
|
$
(148,465)
|
$ (10,404)
|
|
$
(122,404)
|
$
(187,952)
|
Adjustments to
reconcile to adjusted net income:
|
|
|
|
|
|
|
Restructuring and
severance
|
151
|
1,955
|
668
|
|
10,118
|
4,428
|
Goodwill
impairment
|
—
|
38,600
|
—
|
|
38,600
|
—
|
Loss on impairments
and disposal of assets
|
182
|
88
|
2,329
|
|
5,437
|
6,590
|
Loss on impairment of
investments
|
—
|
113,064
|
—
|
|
114,504
|
—
|
Non-cash
compensation
|
8,177
|
8,592
|
11,634
|
|
37,176
|
58,541
|
Franchise tax caused
by equity investment gain
|
—
|
—
|
—
|
|
—
|
1,500
|
Contribution to
LendingTree Foundation
|
—
|
—
|
500
|
|
—
|
500
|
Acquisition
expense
|
—
|
—
|
106
|
|
(5)
|
277
|
Litigation settlements
and contingencies
|
38
|
(150)
|
23
|
|
388
|
(18)
|
Gain on extinguishment
of debt
|
(17,665)
|
—
|
—
|
|
(48,562)
|
—
|
Income tax benefit
from adjusted items
|
—
|
(5,764)
|
—
|
|
(5,764)
|
(14,312)
|
Excess tax expense
from stock-based compensation
|
—
|
—
|
—
|
|
—
|
4,658
|
Income tax expense
from valuation allowance
|
—
|
—
|
—
|
|
—
|
139,670
|
Adjusted net
income
|
$
3,602
|
$
7,920
|
$
4,856
|
|
$
29,488
|
$
13,882
|
|
|
|
|
|
|
|
Net income (loss)
per diluted share
|
$
0.98
|
$
(11.43)
|
$
(0.81)
|
|
$
(9.46)
|
$
(14.69)
|
Adjustments to
reconcile net income (loss) to adjusted net income
|
(0.70)
|
12.04
|
1.19
|
|
11.74
|
15.78
|
Adjustments to
reconcile effect of dilutive securities
|
—
|
—
|
—
|
|
—
|
(0.02)
|
Adjusted net income
per share
|
$
0.28
|
$
0.61
|
$
0.38
|
|
$
2.28
|
$
1.07
|
|
|
|
|
|
|
|
Adjusted weighted
average diluted shares outstanding
|
13,020
|
12,999
|
12,793
|
|
12,957
|
12,991
|
Effect of dilutive
securities
|
—
|
6
|
2
|
|
16
|
198
|
Weighted average
diluted shares outstanding
|
13,020
|
12,993
|
12,791
|
|
12,941
|
12,793
|
Effect of dilutive
securities
|
12
|
—
|
—
|
|
—
|
—
|
Weighted average
basic shares outstanding
|
13,008
|
12,993
|
12,791
|
|
12,941
|
12,793
|
|
|
|
|
|
|
|
LENDINGTREE'S PRINCIPLES OF FINANCIAL REPORTING
LendingTree reports the following non-GAAP measures as
supplemental to GAAP:
- Variable marketing expense
- Variable marketing margin
- 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 expense, variable marketing margin and
variable marketing margin % of revenue are related measures of the
effectiveness of the Comapny's marketing efforts. Variable
marketing expense represents the portion of selling and marketing
expense attributable to variable costs paid for advertising, direct
marketing, and related expenses, and excludes overhead, fixed
costs, and personnel-related expenses. Variable marketing
margin is a measure of the efficiency of the Company's operating
model, measuring revenue after subtracting variable marketing
expense. 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.
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 net income and GAAP net income per diluted share by enabling
investors to make period to period comparisons of those components
of the most directly 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,
contributions to the LendingTree Foundation, 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, any excess tax benefit or expense
associated with stock-based compensation recorded in net income in
conjunction with FASB pronouncement ASU 2016-09, and income tax
(benefit) expense from a full valuation allowance. 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
and GAAP net income per diluted share.
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 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) contributions to the LendingTree
Foundation,(9) dividend income, and (10) one-time items.
Adjusted net income is defined as net income (loss) 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) contributions to the LendingTree Foundation, (10)
one-time items, (11) the effects to income taxes of the
aforementioned adjustments, (12) any excess tax benefit or expense
associated with stock-based compensation recorded in net income in
conjunction with FASB pronouncement ASU 2016-09, and (13) income
tax (benefit) from a full valuation allowance.
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, the
effects of potentially dilutive securities are excluded from the
calculation of net loss per diluted share because their inclusion
would have been anti-dilutive. In periods where the Company reports
GAAP loss 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 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: adverse
conditions in the primary and secondary mortgage markets and in the
economy, particularly interest rates and inflation; 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 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; effects of
changing laws, rules or regulations on our business model;
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, 2022, in our Quarterly Report on
Form 10-Q for the period ended September 30,
2023, 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 is one of the nation's largest, most experienced
online financial platforms, created to give consumers the power to
win financially. LendingTree provides customers with access
to the best offers on loans, credit cards, insurance and more
through its network of approximately 500 financial partners.
Since its founding, LendingTree has helped millions of customers
obtain financing, save money, and improve their financial and
credit health in their personal journeys. With a portfolio of
innovative products and tools and personalized financial
recommendations, LendingTree helps customers achieve everyday
financial wins.
LendingTree, Inc. is headquartered in Charlotte, NC. For more information, please
visit www.lendingtree.com.
Investor Relations:
investors@lendingtree.com
Media Relations:
press@lendingtree.com
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SOURCE LendingTree, Inc.