What changed in this filing

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Item 1. Financial Statements

2021-05-05 compared with 2020-11-05 · 287 added, 411 removed, 609 unchanged (53% of the section changed)

4 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except per share amounts)

Revenue $ 272,750 $ 283,084

Costs and expenses:

Cost of revenue (exclusive of depreciation and amortization shown separately below)

13,895 14,252

Selling and marketing expense 197,462 195,538

1 unchanged sentence

Product development 12,468 10,963

Depreciation 3,718 3,378

Amortization of intangibles 11,312 13,757

Change in fair value of contingent consideration 797 ( 8,122 )

Severance — 158

Litigation settlements and contingencies 16 329

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Interest expense, net ( 10,215 ) ( 4,834 )

(Loss) income before income taxes

Income tax benefit (expense)

Net (loss) income from continuing operations

Income (loss) from discontinued operations, net of tax

Net (loss) income and comprehensive (loss) income

Other income 40,072 —

Income before income taxes 27,950 15,915

Income tax (expense) benefit ( 8,638 ) 3,061

Net income from continuing operations 19,312 18,976

Loss from discontinued operations, net of tax ( 263 ) ( 4,575 )

Net income and comprehensive income $ 19,049 $ 14,401

Weighted average shares outstanding:

(Loss) income per share from continuing operations:

Income (loss) per share from discontinued operations:

Net (loss) income per share:

Basic 13,070 12,957

Diluted 14,119 14,158

Income per share from continuing operations:

Basic $ 1.48 $ 1.46

Diluted $ 1.37 $ 1.34

Loss per share from discontinued operations:

Basic $ ( 0.02 ) $ ( 0.35 )

Diluted $ ( 0.02 ) $ ( 0.32 )

Net income per share:

Basic $ 1.46 $ 1.11

Diluted $ 1.35 $ 1.02

The accompanying notes to consolidated financial statements are an integral part of these statements.

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CONSOLIDATED BALANCE SHEETS

September 30,

2021 December 31, 2020

(in thousands, except par value and share amounts)

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Accounts receivable (net of allowance of $ 1,429 and $ 1,402 , respectively)

123,067 89,841

Prepaid and other current assets 28,638 27,949

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Property and equipment (net of accumulated depreciation of $ 22,368 and $ 20,238 , respectively)

71,572 62,381

Operating lease right-of-use assets 81,622 84,109

Goodwill 420,139 420,139

Intangible assets, net 117,189 128,502

Deferred income tax assets 87,586 96,224

Equity investment (Note 7)

Equity investment 121,253 80,000

Other non-current assets 5,403 5,334

Non-current assets of discontinued operations 15,982 15,892

Revolving credit facility

Total assets $ 1,243,177 $ 1,188,990

Accounts payable, trade $ 7,230 $ 10,111

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2,641,318 shares

( 183,161 ) ( 183,161 )

Total shareholders' equity 395,443 364,761

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Treasury Stock

Common Stock Treasury Stock

of Shares Amount Additional

Capital Accumulated

Deficit Number

of Shares Amount

(in thousands)

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Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 4,801 ) 31 — ( 4,801 ) — — —

Other ( 2 ) — — ( 2 ) — — —

Balance as of March 31, 2021 $ 395,443 15,797 $ 158 $ 1,200,306 $ ( 621,860 ) 2,641 $ ( 183,161 )

Net loss and comprehensive loss

Non-cash compensation

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes

Balance as of June 30, 2020

Net loss and comprehensive loss

Non-cash compensation

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes

Issuance of 0.50% Convertible Senior Notes, net

Repurchase of 0.625% Convertible Senior Notes, net

Convertible note hedge transactions

Warrant transactions

Balance as of September 30, 2020

Treasury Stock

Common Stock Treasury Stock

of Shares Amount Additional

Capital Accumulated

Deficit Number

of Shares Amount

(in thousands)

Balance as of December 31, 2019 $ 402,326 15,677 $ 157 $ 1,177,984 $ ( 592,654 ) 2,641 $ ( 183,161 )

Net loss and comprehensive loss

Non-cash compensation

Purchase of treasury stock

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes

Balance as of March 31, 2019

Net income and comprehensive income 14,401 — — — 14,401 — —

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Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 5,087 ) 27 — ( 5,087 ) — — —

Balance as of June 30, 2019

Net income and comprehensive income

Non-cash compensation

Purchase of treasury stock

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes

Balance as of September 30, 2019

Other — — — ( 1 ) 1 — —

Balance as of March 31, 2020 $ 423,557 15,704 $ 157 $ 1,184,813 $ ( 578,252 ) 2,641 $ ( 183,161 )

The accompanying notes to consolidated financial statements are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Cash flows from operating activities attributable to continuing operations:

Net (loss) income and comprehensive (loss) income

Net income and comprehensive income $ 19,049 $ 14,401

Loss from discontinued operations, net of tax 263 4,575

(Loss) income from continuing operations

Income from continuing operations 19,312 18,976

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

Loss on disposal of assets 348 530

Amortization of intangibles 11,312 13,757

Depreciation 3,718 3,378

Non-cash compensation expense 16,436 11,917

1 unchanged sentence

Change in fair value of contingent consideration 797 ( 8,122 )

Unrealized gain on investments ( 40,072 ) —

Bad debt expense 516 880

1 unchanged sentence

Amortization of convertible debt discount 7,346 3,111

Loss on extinguishment of debt

Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities 7,132 ( 196 )

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Accounts payable, accrued expenses and other current liabilities 7,154 ( 3,271 )

Current contingent consideration

Income taxes receivable ( 89 ) 65

Other, net ( 240 ) ( 862 )

Net cash provided by operating activities attributable to continuing operations 8,925 29,302

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Capital expenditures ( 10,553 ) ( 4,189 )

Proceeds from sale of fixed assets

Equity investment ( 1,180 ) ( 80,000 )

Acquisition of ValuePenguin, net of cash acquired

Acquisition of QuoteWizard, net of cash acquired

Net cash used in investing activities attributable to continuing operations ( 11,733 ) ( 84,189 )

1 unchanged sentence

Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options ( 4,801 ) ( 5,087 )

Proceeds from the issuance of 0.50% Convertible Senior Notes

Repurchase of 0.625% Convertible Senior Notes

Payment for convertible note hedge on the 0.50% Convertible Senior Notes

Termination of convertible note hedge on the 0.625% Convertible Senior Notes

Proceeds from the sale of warrants related to the 0.50% Convertible Senior Notes

Termination of warrants related to the 0.625% Convertible Senior Notes

Net repayment of revolving credit facility

Net proceeds from revolving credit facility — 55,000

Payment of debt issuance costs ( 168 ) ( 306 )

Contingent consideration payments — ( 3,000 )

Purchase of treasury stock

Other financing activities ( 31 ) ( 6 )

Net cash provided by (used in) financing activities attributable to continuing operations

Total cash provided by (used in) continuing operations

Net cash (used in) provided by financing activities attributable to continuing operations ( 5,000 ) 46,601

Total cash used in continuing operations ( 7,808 ) ( 8,286 )

Discontinued operations:

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Total cash used in discontinued operations ( 71 ) ( 752 )

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents

Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents ( 7,879 ) ( 9,038 )

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 170,049 60,339

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ 162,170 $ 51,301

Non-cash investing activities:

Capital additions from tenant improvement allowance

The accompanying notes to consolidated financial statements are an integral part of these statements.

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LendingTree, Inc.

is currently the parent of LendingTree, LLC and several companies owned by LendingTree, LLC (collectively, "LendingTree" or the "Company").

is the parent of LT Intermediate Company, LLC, which holds all of the outstanding ownership interests of LendingTree, LLC, and LendingTree, LLC owns several companies (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.

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Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of September 30, 2020 and for the three and nine months ended September 30, 2020 and 2019 , respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S.

The accompanying unaudited interim consolidated financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission ("SEC").

In the opinion of management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company's financial position for the periods presented.

The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 , or any other period.

The results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021, or any other period.

The accompanying consolidated balance sheet as of December 31, 2020 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2020 (the "2020 Annual Report").

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Actual results could differ from those estimates.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Significant estimates underlying the accompanying consolidated financial statements, including discontinued operations, include:

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contract assets;

various other

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

allowances, reserves and accruals;

various other allowances, reserves and accruals;

assumptions related to the determination of stock-based compensation;

and the determination of right-of-use assets and lease liabilities.

The Company considered the impact of COVID-19 on the assumptions and estimates used when preparing its quarterly financial statements including, but not limited to, our allowance for doubtful accounts, valuation allowances, contract asset and contingent consideration.

The Company considered the impact of the COVID-19 pandemic on the assumptions and estimates used when preparing its financial statements including, but not limited to, the allowance for doubtful accounts, valuation allowances, contract asset and contingent consideration.

These assumptions and estimates may change as new events occur and additional information is obtained.

If economic conditions caused by COVID-19 do not recover as currently estimated by management, such future changes may have an adverse impact on the Company's results of operations, financial position and liquidity.

If economic conditions caused by the COVID-19 pandemic do not recover as currently estimated by management, such future changes may have an adverse impact on the Company's results of operations, financial position and liquidity.

Certain Risks and Concentrations

LendingTree's business is subject to certain risks and concentrations including dependence on third-party technology providers, exposure to risks associated with online commerce security and credit card fraud.

Financial instruments, which potentially subject the Company to concentration of credit risk at September 30, 2020 , consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet.

Financial instruments, which potentially subject the Company to concentration of credit risk at March 31, 2021, consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet.

Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation insurance limits, but are maintained with quality financial institutions of high credit.

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If a significant number of potential consumers are able to obtain loans and other products from Network Partners without utilizing the Company's services, the Company's ability to generate revenue may be limited.

Because the Company does not have exclusive relationships with the Network Partners whose loans and other financial products are offered on its online marketplace, consumers may obtain offers from these Network Partners without using its services.

Other than a support services office in India, the Company's operations are geographically limited to and dependent upon the economic condition of the United States.

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Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

This ASU is effective for annual and interim reporting periods beginning after December 15, 2019.

The amendments should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

The Company adopted ASU 2018-15 in the first quarter of 2020 using the prospective approach.

Subsequent to the adoption of this ASU, capitalizable implementation costs incurred in a hosting arrangement that is a service contract are recorded within prepaid and other current assets and other non-current assets on the consolidated balance sheet.

The expense related to these capitalized implementation costs are included within general and administrative expense on the consolidated statement of operations and comprehensive income.

The adoption of ASU 2018-15 did not have a material impact on the consolidated financial statements as of September 30, 2020 and for the three and nine months ended September 30, 2020 .

In August 2018, the FASB issued ASU 2018-13, which removes, modifies and adds certain disclosure requirements in Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement.

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes, and clarifies certain aspects of the current guidance to improve consistency among reporting entities.

This ASU is effective for annual and interim reporting periods beginning after December 15, 2020.

Certain amendments must be applied prospectively while others are to be applied on a retrospective basis to all periods presented.

Early adoption was permitted, including adoption in interim periods.

Entities electing early adoption were required to adopt all amendments in the same period.

Most amendments require prospective application while others are to be applied on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The Company adopted ASU 2019-12 in the first quarter of 2021.

See Note 16 —Fair Value Measurements.

The amendments applicable to the Company required prospective application, and do not have material impacts to its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible instruments, amends the derivatives scope exception guidance for contracts in an entity’s own equity, and amends the related earnings-per-share

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In January 2017, the FASB issued ASU 2017-04, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (Step 2 of the goodwill impairment test).

Instead, an impairment charge will be based on the excess of the carrying amount over the fair value.

This ASU is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019.

The Company adopted ASU 2017-04 in the first quarter of 2020.

In June 2016, the FASB issued ASU 2016-13, which requires entities to measure expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

This ASU introduces ASC Topic 326, Financial Instruments—Credit Losses, which replaces the existing incurred loss model and is applicable to financial assets measured at amortized cost, including trade receivables and certain other financial assets that have the contractual right to receive cash.

ASC Topic 326 is effective for annual and interim reporting periods beginning after December 15, 2019.

The guidance must be adopted using a modified retrospective transition.

The Company adopted ASC Topic 326 as of January 1, 2020, which did not result in any cumulative effect adjustment to the opening balance of accumulated deficit in the period of adoption.

Recently Issued Accounting Pronouncements

This ASU is effective for annual and interim reporting periods beginning after December 15, 2021.

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The Company expects the amendments to impact its convertible senior notes and warrants issued and is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.

In December 2019, the FASB issued ASU 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes, and clarifies certain aspects of the current guidance to improve consistency among reporting entities.

This ASU is effective for annual and interim reporting periods beginning after December 15, 2020.

Early adoption is permitted, including adoption in interim periods.

Entities electing early adoption must adopt all amendments in the same period.

Most amendments must be applied prospectively while others are to be applied on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The Company is evaluating the impact this ASU will have on its consolidated financial statements and will adopt ASU 2019-12 in the first quarter of 2021.

NOTE 3— REVENUE

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Home $ 128,125 $ 79,174

Credit cards 17,637 51,586

Personal loans 14,868 31,509

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Total Consumer 57,907 119,924

Insurance 86,614 82,737

Other 104 1,249

Total revenue $ 272,750 $ 283,084

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Revenue from Home products is primarily generated from upfront match fees paid by mortgage Network Partners that receive a loan request, and in some cases upfront fees for clicks or call transfers.

Match fees and upfront fees for clicks and call transfers

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

are earned through the delivery of loan requests that originated through the Company's websites or affiliates.

Match fees and upfront fees for clicks and call transfers are earned through the delivery of loan requests that originated through the Company's websites or affiliates.

The Company recognizes revenue at the time a loan request is delivered to the customer, provided that no significant obligations remain.

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The Company recognizes revenue at the time a consumer request is delivered to the customer, provided that no significant obligations remain.

The Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the performance obligation to deliver a consumer request to the customer.

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 6.1 million and $ 6.5 million at September 30, 2020 and December 31, 2019 , respectively.

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers in the Company's Consumer business was $ 0.9 million and $ 0.6 million at September 30, 2020 and December 31, 2019 , respectively.

During the first nine months of 2020 , the Company recognized revenue of $ 0.6 million that was included in the contract liability balance at December 31, 2019 .

During the first nine months of 2019 , the Company recognized revenue of $ 0.4 million that was included in the contract liability balance at December 31, 2018 .

The Company's contractual right

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

to the match fee consideration is contemporaneous with the satisfaction of the performance obligation to deliver a consumer request to the customer.

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration in the Company's Consumer business was $ 7.1 million and $ 6.4 million at March 31, 2021 and December 31, 2020, respectively.

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers in the Company's Consumer business was $ 1.0 million and $ 0.7 million at March 31, 2021 and December 31, 2020, respectively.

During the first quarter of 2021, the Company recognized revenue of $ 0.6 million that was included in the contract liability balance at December 31, 2020.

During the first quarter of 2020, the Company recognized revenue of $ 0.5 million that was included in the contract liability balance at December 31, 2019.

Revenue recognized in any reporting period includes estimated variable consideration for which the Company has satisfied the related performance obligations but are still pending the occurrence or non-occurrence of a future event outside the Company's control (such as lenders providing loans to consumers or credit card approvals of consumers) before the Company has a contractual right to payment.

The Company recognized increases to such revenue from prior periods of $ 0.6 million and $ 0.9 million in the third quarters of 2020 and 2019 , respectively.

The Company recognized increases to such revenue from prior periods of $ 0.3 million and $ 0.1 million in the first quarters of 2021 and 2020, respectively.

NOTE 4— CASH AND RESTRICTED CASH

Total cash, cash equivalents, restricted cash and restricted cash equivalents consist of the following (in thousands) :

September 30,

2021 December 31, 2020

Cash and cash equivalents $ 162,091 $ 169,932

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Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time accounts receivable are past due, previous loss history, current and expected economic conditions and the specific customer's current and expected ability to pay its obligation.

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A reconciliation of the beginning and ending balances of the allowance for doubtful accounts is as follows (in thousands) :

Three Months Ended September 30,

Nine Months Ended

September 30,

Three Months Ended

Balance, beginning of the period $ 1,402 $ 1,466

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Balance, end of the period $ 1,429 $ 2,021

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6— GOODWILL AND INTANGIBLE ASSETS

The balance of goodwill and intangible assets, net is as follows (in thousands) :

September 30,

The balance of goodwill, net and intangible assets, net is as follows (in thousands) :

2021 December 31, 2020

Goodwill $ 903,227 $ 903,227

Accumulated impairment losses ( 483,088 ) ( 483,088 )

Net goodwill $ 420,139 $ 420,139

Intangible assets with indefinite lives $ 10,142 $ 10,142

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Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill at each of September 30, 2020 and December 31, 2019 consists of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 194.7 million associated with the Insurance segment.

The Company's goodwill at each of March 31, 2021 and December 31, 2020 consists of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 194.7 million associated with the Insurance segment.

Intangible assets with indefinite lives relate to the Company's trademarks.

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Intangible assets with definite lives relate to the following (in thousands) :

Cost Accumulated

Amortization Net

Technology $ 87,700 $ ( 53,467 ) $ 34,233

Customer lists 77,300 ( 20,087 ) 57,213

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Website content 43,200 ( 33,967 ) 9,233

Balance at September 30, 2020

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Balance at March 31, 2021 $ 225,400 $ ( 118,353 ) $ 107,047

Cost Accumulated

Amortization Net

Technology $ 87,700 $ ( 48,166 ) $ 39,534

Customer lists 77,300 ( 18,560 ) 58,740

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Balance at December 31, 2020 $ 225,400 $ ( 107,040 ) $ 118,360

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of September 30, 2020 , future amortization is estimated to be as follows (in thousands) :

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of March 31, 2021, future amortization is estimated to be as follows (in thousands) :

Amortization Expense

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Year ending December 31, 2025 6,259

Thereafter 28,758

Total intangible assets with definite lives, net $ 107,047

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 7— EQUITY INVESTMENT

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(“Stash”) for $ 80.0 million.

On January 6, 2021, the Company acquired additional equity interest for $ 1.2 million.

Stash is a consumer investing and banking platform.

Stash brings together banking, investing, and education into one seamless experience offering a full-suite of personal investment accounts, Traditional and Roth IRAs, custodial investment accounts, and banking services, including checking accounts and debit cards with a Stock-Back ® rewards program.

Stash brings together banking, investing, and financial services education into one seamless experience offering a full suite of personal investment accounts, traditional and Roth IRAs, custodial investment accounts, and banking services, including checking accounts and debit cards with a Stock-Back® rewards program.

The Stash equity securities do not have a readily determinable fair value and, upon acquisition, the Company elected the measurement alternative to value its securities.

The Stash equity securities will be carried at cost and subsequently marked to market upon observable market events with any gains or losses recorded in operating income in the consolidated statement of operations.

As of September 30, 2020 , there have been no observable market events that would result in upward or downward adjustments in the fair value and there have been no impairments to the original cost of $ 80.0 million .

The Stash equity securities will be carried at cost and subsequently marked to market upon observable market events with any gains or losses recorded to the consolidated statement of operations and comprehensive income.

During the first quarter of 2021, the Company recorded a gain on the investment in Stash of $ 40.1 million as a result of an adjustment to the fair value of the Stash equity securities based on observable market events, which is included within other income on the consolidated statement of operations and comprehensive income.

As of March 31, 2021, there have been no impairments to the acquisition cost of the Stash equity securities.

NOTE 8— BUSINESS ACQUISITIONS

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In 2018, the Company acquired all of the outstanding equity interests of QuoteWizard.com, LLC (“QuoteWizard”) and Ovation Credit Services, Inc.

In 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”) and all of the assets of Deposits Online, LLC, which does business under the name DepositAccounts.com (“DepositAccounts”).

The Company will make earnout payments ranging from zero to $ 46.8 million based on the achievement of certain defined performance targets for QuoteWizard.

During 2020, the Company made the final earnout payment related to the achievement of certain defined operating metrics for Ovation.

In 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”).

During 2020, the Company made the final earnout payments related to the achievement of certain defined earnings targets for SnapCap.

The Company made no earnout payments related to the DepositAccounts acquisition during 2020, and the earnout is complete.

In October 2020, the Company made the final earnout payment related to the achievement of certain defined operating metrics for Ovation.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company will make an earnout payment ranging from zero to $ 23.4 million based on the achievement of certain defined performance targets for QuoteWizard.

Changes in the fair value of contingent consideration is summarized as follows ( in thousands) :

Three Months Ended

September 30,

Nine Months Ended

September 30,

DepositAccounts

QuoteWizard $ 797 $ ( 8,262 )

Ovation — 141

SnapCap — ( 1 )

Total changes in fair value of contingent consideration $ 797 $ ( 8,122 )

As of September 30, 2020 , the estimated fair value of the contingent consideration for the QuoteWizard acquisition totaled $ 30.8 million , of which $ 20.7 million is included in current contingent consideration and $ 10.1 million is included in non-current contingent consideration in the accompanying consolidated balance sheet.

As of March 31, 2021, the estimated fair value of the contingent consideration for the QuoteWizard acquisition totaled $ 9.0 million, which is included in current contingent consideration in the accompanying consolidated balance sheet.

The estimated fair value of the contingent consideration payments is determined using an option pricing model.

The estimated value of the contingent consideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable.

As of September 30, 2020 , the estimated fair value of the contingent consideration for the Ovation acquisition totaled $ 4.4 million , which is included in current contingent consideration in the accompanying consolidated balance sheet.

The estimated fair value of the contingent consideration payment is based on the $ 4.4 million achieved target discounted from the payment due date to September 30, 2020.

Any differences in the actual contingent consideration payments will be recorded in operating income in the consolidated statements of operations and comprehensive income.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands) :

September 30,

2021 December 31, 2020

Accrued advertising expense $ 66,893 $ 54,045

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Current lease liabilities 5,031 5,375

Other 17,009 14,340

Total accrued expenses and other current liabilities $ 113,442 $ 101,196

NOTE 10— LEASES

The Company is a lessee to leases of corporate offices and certain office equipment.

The majority of leases for corporate offices include one or more options to renew, with renewal terms ranging from two to five years .

These renewal options have not been included in the calculation of right-of-use assets and lease liabilities, as the Company is not reasonably certain of the exercise of these renewal options.

The Company used its incremental borrowing rate to calculate the right-of-use asset and lease liability for each lease.

As of September 30, 2020 , right-of-use assets totaled $ 86.2 million and lease liabilities, the current portion of which is included in accrued expenses and other current liabilities in the accompanying balance sheet, totaled $ 93.4 million .

At December 31, 2019 , right-of-use assets totaled $ 25.5 million and lease liabilities totaled $ 28.2 million .

During the second quarter of 2020 the right-of-use assets and lease liabilities increased $ 65.7 million due to commencement of the lease, as defined under ASC Topic 842, Leases, for the Company’s new principal executive offices currently under construction in Charlotte, North Carolina.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Lease expense, which is included in general and administrative expense on the accompanying consolidated statements of operations and comprehensive income, consists of the following (in thousands) :

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating lease cost

Short-term lease cost

Total lease cost

Weighted average remaining lease term and discount rate for operating leases are as follows:

September 30, 2020

December 31, 2019

Weighted average remaining lease term

Weighted average discount rate

Supplemental cash flow information related to leases is as follows (in thousands) :

Nine Months Ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

Maturities of lease liabilities as of September 30, 2020 are as follows (in thousands) :

Operating Leases

Remainder of current year

Year ending December 31, 2021

Year ending December 31, 2022

Year ending December 31, 2023

Year ending December 31, 2024

Total lease payments

Tenant improvement allowances

Present value of lease liabilities

Rental income of $ 0.3 million in the first nine months of 2019 is included in other income on the accompanying consolidated statements of operations and comprehensive income.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10— SHAREHOLDERS' EQUITY

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

Weighted average basic common shares 13,070 12,957

3 unchanged sentences

Weighted average diluted common shares 14,119 14,158

For the three and nine months ended September 30, 2020 , the Company had losses from continuing operations and, as a result, no potentially dilutive securities were included in the denominator for computing diluted loss per share, because the impact would have been anti-dilutive.

Accordingly, the weighted average basic shares outstanding was used to compute loss per share.

Approximately 1.3 million and 1.1 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the three and nine months ended September 30, 2020 , respectively, because their inclusion would have been anti-dilutive.

For the three and nine months ended September 30, 2020 , the weighted average shares that were anti-dilutive included options to purchase 0.1 million and 0.2 million shares of common stock, respectively.

For each of the three and nine months ended September 30, 2019 , the weighted average shares that were anti-dilutive included options to purchase 0.1 million shares of common stock.

For the first quarters of 2021 and 2020, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 0.3 million and 0.1 million shares of common stock, respectively.

The convertible notes and the warrants issued by the Company could be converted into the Company’s common stock, subject to certain contingencies.

See Note 13—Debt for additional information.

Shares of the Company's common stock associated with the 0.50% Convertible Senior Notes due July 15, 2025 and the warrants issued by the Company in 2020 were excluded from the calculation of diluted loss per share for the three and nine months ended September 30, 2020 , as they were anti-dilutive since the conversion price of the notes and the strike price of the warrants were greater than the average market price of the Company's common stock during these periods.

Shares of the Company's common stock associated with the 0.50 % Convertible Senior Notes due July 15, 2025 and the warrants issued by the Company in the third quarter of 2020 were excluded from the calculation of diluted income per share for the first quarter of 2021 as they were anti-dilutive since the conversion price of the notes and the strike price of the warrants were greater than the average market price of the Company’s common stock during the relevant period.

Common Stock Repurchases

In each of February 2018 and February 2019, the board of directors authorized and the Company announced the repurchase of up to $ 100.0 million and $ 150.0 million, respectively, of LendingTree's common stock.

During the first nine months of 2019 , the Company purchased 18,580 shares of its common stock for aggregate consideration of $ 4.3 million .

At September 30, 2020 , approximately $ 179.7 million of the previous authorizations to repurchase common stock remain available.

There were no repurchases of the Company's common stock during the first quarters of 2021 and 2020.

At March 31, 2021, approximately $ 179.7 million of the previous authorizations to repurchase common stock remain available.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11— STOCK-BASED COMPENSATION

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue $ 397 $ 242

3 unchanged sentences

Total non-cash compensation $ 16,436 $ 11,917

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock Options

A summary of changes in outstanding stock options is as follows:

Number of Options

(in thousands)

Number of Options Weighted

Price Weighted

Term Aggregate

(per option) (in years) (in thousands)

Options outstanding at January 1, 2021 924,710 $ 111.82

Options outstanding at September 30, 2020

Options exercisable at September 30, 2020

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 306.89 on the last trading day of the quarter ended September 30, 2020 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on September 30, 2020 .

53,173 253.75

Exercised ( 635 ) 271.96

Forfeited ( 2,280 ) 267.17

Expired ( 35 ) 371.25

Options outstanding at March 31, 2021 974,933 119.09 4.52 $ 114,706

Options exercisable at March 31, 2021 694,184 $ 55.13 2.65 $ 114,701

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 213.00 on the last trading day of the quarter ended March 31, 2021 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on March 31, 2021.

The intrinsic value changes based on the market value of the Company's common stock.

During the nine months ended September 30, 2020 , the Company granted stock options to certain employees and members of the board of directors with a weighted average grant date fair value per share of $ 138.75 , calculated using the Black-Scholes option pricing model, which vesting periods include (a) immediate vesting on grant date (b) one year from grant date (c) three years from grant date and (d) four years from grant date .

(b) During the three months ended March 31, 2021, the Company granted stock options to certain employees with a weighted average grant date fair value per share of $ 136.23 , calculated using the Black-Scholes option pricing model, with a vesting period of three years from grant date.

For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions.

1 unchanged sentence

Expected term (1)

5.00 - 6.25 years

Expected dividend (2)

1 unchanged sentence

Risk-free interest rate (4)

0.59 - 0.94 %

(1) The expected term of stock options granted was calculated using the "Simplified Method," which utilizes the midpoint between the weighted average time of vesting and the end of the contractual term.

This method was utilized for the stock options due to a lack of historical exercise behavior by the Company's employees.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) For all stock options granted in 2021, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.

3 unchanged sentences

Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock Options with Market Conditions

A summary of changes in outstanding stock options with market conditions at target is as follows:

Number of Options with Market Conditions

(in thousands)

Number of Options with Market Conditions Weighted

Price Weighted

Term Aggregate

(per option) (in years) (in thousands)

Options outstanding at January 1, 2021 700,209 $ 236.01

Options outstanding at September 30, 2020

Options exercisable at September 30, 2020

Exercised — —

Forfeited — —

Options outstanding at March 31, 2021 700,209 236.01 7.50 $ 11,759

Options exercisable at March 31, 2021 — $ — 0.00 $ —

The intrinsic value changes based on the market value of the Company's common stock.

During the nine months ended September 30, 2020 , the Company granted stock options with a grant date fair value per share of $ 196.07 , calculated using the Monte Carlo simulation model, which has a vesting date of March 31, 2024 .

For purposes of determining stock-based compensation expense, the grant date fair value per share of the stock options was estimated using the Monte Carlo simulation model, which requires the use of various key assumptions.

The assumptions used are as follows:

Expected term (1)

Expected dividend (2)

Expected volatility (3)

Risk-free interest rate (4)

The expected term of stock options with a market condition granted was calculated using the midpoint between the time of vesting and the end of the contractual term.

For all stock options with a market condition granted in 2020 , no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.

The expected volatility rate is based on the historical volatility of the Company's common stock.

The risk-free interest rate is specific to the date of grant.

The risk-free interest rate is based on U.S.

Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date.

A maximum of 1,169,349 shares may be earned for achieving superior performance up to 167 % of the target number of shares.

As of September 30, 2020 , performance-based nonqualified stock options with a market condition of 481,669 had been earned, which have a vest date of September 30, 2022 .

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of March 31, 2021, performance-based nonqualified stock options with a market condition of 481,669 had been earned, which have a vest date of September 30, 2022.

Restricted Stock Units

A summary of changes in outstanding nonvested restricted stock units ("RSUs") is as follows:

Number of Units

Weighted Average Grant Date Fair Value

Number of Units Weighted Average Grant Date Fair Value

Nonvested at January 1, 2021 194,686 $ 289.82

Nonvested at September 30, 2020

Granted 120,994 253.98

Vested ( 47,330 ) 291.07

Forfeited ( 7,927 ) 276.18

Nonvested at March 31, 2021 260,423 $ 273.36

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Units with Performance Conditions

1 unchanged sentence

RSUs with Performance Conditions

Number of Units

Weighted Average Grant Date Fair Value

Number of Units Weighted Average Grant Date Fair Value

Nonvested at January 1, 2021 6,328 $ 223.90

Nonvested at September 30, 2020

Forfeited — —

Nonvested at March 31, 2021 6,328 $ 223.90

Restricted Stock Awards with Performance Conditions

1 unchanged sentence

RSAs with Performance Conditions

Number of Awards

Weighted Average Grant Date Fair Value

Number of Awards Weighted Average Grant Date Fair Value

Nonvested at January 1, 2021 23,804 $ 340.25

Nonvested at September 30, 2020

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Vested ( 5,951 ) 340.25

Forfeited — —

Nonvested at March 31, 2021 17,853 $ 340.25

Restricted Stock Awards with Market Conditions

1 unchanged sentence

RSAs with Market Conditions

Number of Awards

Weighted Average Grant Date Fair Value

Number of Awards Weighted Average Grant Date Fair Value

Nonvested at January 1, 2021 26,674 $ 340.25

Nonvested at September 30, 2020

Forfeited — —

Nonvested at March 31, 2021 26,674 $ 340.25

A maximum of 44,545 shares may be earned for achieving superior performance up to 167 % of the target number of shares.

As of September 30, 2020 , performance-based restricted stock awards with a market condition of 29,601 had been earned, which have a vest date of September 30, 2022 .

As of March 31, 2021, performance-based restricted stock awards with a market condition of 29,601 had been earned, which have a vest date of September 30, 2022.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12— INCOME TAXES

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except percentages)

Income tax benefit (expense)

Income tax (expense) benefit $ ( 8,638 ) $ 3,061

Effective tax rate 30.9 % ( 19.2 ) %

For the third quarter and first nine months of 2020 , the effective tax rate varied from the federal statutory rate of 21 % in part due to a tax benefit of $ 0.2 million and $ 2.0 million , respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

The effective tax rate for the first nine months of 2020 was also impacted by a tax benefit of $ 6.1 million for the impact of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, as described below.

For the first quarter of 2021, the effective tax rate varied from the federal statutory rate of 21% primarily due to the effect of state taxes.

For the first quarter of 2020, the effective tax rate varied from the federal statutory rate of 21 % in part due to a tax benefit of $ 1.1 million recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

The effective tax rate for the first quarter of 2020 was also impacted by a tax benefit of $ 6.1 million for the impact of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, as described below.

On March 27, 2020, President Trump signed into law the CARES Act.

This legislation is an economic relief package in response to the public health and economic impacts of COVID-19 and includes various provisions that impact the Company, including, but not limited to, modifications for net operating losses, accelerated timeframe for refunds associated with prior minimum taxes and modifications of the limitation on business interest.

The Company revalued deferred tax assets related to net operating losses in light of the changes in the CARES Act, and recorded a net tax benefit of $ 6.1 million during the first nine months of 2020 .

These deferred tax assets are being revalued, as they will be carried back to 2016 and 2017, which are tax periods prior to the Tax Cuts and Jobs Act ("TCJA") when the federal statutory tax rate was 35% versus the 21% federal statutory tax rate in effect after the enactment of the TCJA.

For the third quarter and first nine months of 2019 , the effective tax rate varied from the federal statutory rate of 21 % primarily due to a tax benefit of $ 2.8 million and $ 16.5 million , respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09, a tax benefit of $ 1.9 million recognized from an adjustment to the federal research tax credit and the effect of state taxes.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company revalued deferred tax assets related to net operating losses in light of the changes in the CARES Act and recorded a net tax benefit of $ 6.1 million during the first quarter of 2020.

These deferred tax assets are being revalued, as they have been carried back to 2016 and 2017, which are tax periods prior to the Tax Cuts and Jobs Act ("TCJA") when the federal statutory tax rate was 35% versus the 21% federal statutory tax rate in effect after the enactment of the TCJA.

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

Income tax benefit (expense) - excluding excess tax benefit on stock compensation and CARES Act

Income tax expense - excluding excess tax benefit on stock compensation and CARES Act $ ( 8,670 ) $ ( 4,097 )

Excess tax benefit on stock compensation 32 1,054

Income tax benefit from CARES Act — 6,104

Income tax benefit (expense)

Income tax (expense) benefit $ ( 8,638 ) $ 3,061

NOTE 13— DEBT

7 unchanged sentences

In addition, upon the occurrence of a make-whole fundamental change prior to the maturity of the 2025 Notes or if the Company issues a notice of redemption for the 2025 Notes, the Company will, in certain circumstances, increase the conversion rate by a specified number of additional shares for a holder that elects to convert the 2025 Notes in connection with such make-whole fundamental change or to convert its 2025 Notes called for redemption, as the case may be.

Upon conversion, the 2025 Notes will settle for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option.

Upon conversion, the 2025

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Notes will settle for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option.

It is the intent of the Company to settle the principal amount of the 2025 Notes in cash and any conversion premium in shares of its common stock.

8 unchanged sentences

• upon the occurrence of specified corporate events including but not limited to a fundamental change.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Holders of the 2025 Notes are not entitled to convert the 2025 Notes during the calendar quarter ended December 31, 2020 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on September 30, 2020, was not greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day.

Holders of the 2025 Notes were not entitled to convert the 2025 Notes during the calendar quarter ended March 31, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on December 31, 2020, was not greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day.

Holders of the 2025 Notes are not entitled to convert the 2025 Notes during the calendar quarter ended June 30, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on March 31, 2021, was not greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day.

On or after March 13, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2025 Notes, holders of the 2025 Notes may convert all or a portion of their 2025 Notes regardless of the foregoing conditions.

4 unchanged sentences

Upon the occurrence of a fundamental change prior to the maturity date of the 2025 Notes, holders of the 2025 Notes may require the Company to repurchase all or a portion of the 2025 Notes for cash at a price equal to 100 % of the principal amount of the 2025 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

If the market price per share of the common stock, as measured under the terms of the 2025 Notes, exceeds the conversion price of the 2025 Notes, the 2025 Notes could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the principal amount of the 2025 Notes and any conversion premium in cash.

3 unchanged sentences

Financing costs related to the issuance of the 2025 Notes were approximately $ 15.1 million, of which $ 12.0 million were allocated to the liability component and are being amortized to interest expense over the term of the debt and $ 3.1 million were allocated to the equity component.

In the third quarter of 2020, the Company recorded interest expense on the 2025 Notes of $ 4.9 million which consisted of $ 0.5 million associated with the 0.50 % coupon rate, $ 4.0 million associated with the accretion of the debt discount, and $ 0.4 million associated with the amortization of the debt issuance costs.

In the first quarter of 2021, the Company recorded interest expense on the 2025 Notes of $ 6.8 million which consisted of $ 0.7 million associated with the 0.50 % coupon rate, $ 5.5 million associated with the accretion of the debt discount, and $ 0.6 million associated with the amortization of the debt issuance costs.

The debt discount is being amortized over the term of the debt.

As of September 30, 2020, the fair value of the 2025 Notes is estimated to be approximately $ 562.1 million using the Level 1 observable input of the last quoted market price for the quarter ended September 30, 2020.

As of March 31, 2021, the fair value of the 2025 Notes is estimated to be approximately $ 523.5 million using the Level 1 observable input of the last quoted market price on March 31, 2021.

A summary of the gross carrying amount, unamortized debt cost, debt issuance costs and net carrying value of the liability component of the 2025 Notes are as follows (in thousands) :

September 30,

2021 December 31, 2020

Gross carrying amount $ 575,000 $ 575,000

5 unchanged sentences

The 2022 Notes will mature on June 1, 2022, unless earlier repurchased or converted.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The initial conversion rate of the 2022 Notes is 4.8163 shares of the Company's common stock per $1,000 principal amount of 2022 Notes (which is equivalent to an initial conversion price of approximately $ 207.63 per share).

8 unchanged sentences

Prior to the close of business on the business day immediately preceding February 1, 2022, the 2022 Notes will be convertible at the option of the holders thereof only under the following circumstances:

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

• during any calendar quarter commencing after the calendar quarter ending on September 30, 2017 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

1 unchanged sentence

• upon the occurrence of specified corporate events including but not limited to a fundamental change.

Holders of the 2022 Notes were not entitled to convert the 2022 Notes during the calendar quarter ended September 30, 2020 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on June 30, 2020, was not greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day.

Holders of the 2022 Notes are entitled to convert the 2022 Notes during the calendar quarter ended December 31, 2020 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on September 30, 2020, was greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day.

Holders of the 2022 Notes were not entitled to convert the 2022 Notes during the calendar quarter ended March 31, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on December 31, 2020, was not greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day.

Holders of the 2022 Notes are not entitled to convert the 2022 Notes during the calendar quarter ended June 30, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on March 31, 2021, was not greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day.

On or after February 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2022 Notes, holders of the 2022 Notes may convert all or a portion of their 2022 Notes regardless of the foregoing conditions.

5 unchanged sentences

Financing costs related to the issuance of the 2022 Notes were approximately $ 9.3 million, of which $ 7.4 million were allocated to the liability component and are being amortized to interest expense over the term of the debt and $ 1.9 million were allocated to the equity component.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On July 24, 2020, the Company used approximately $ 234.0 million of the net proceeds from the issuance of the 2025 Notes to repurchase approximately $ 130.3 million principal amount of the 2022 Notes, including the payment of accrued and unpaid interest of approximately $ 0.1 million, through separate transactions with certain holders of the 2022 Notes.

Of the consideration paid, $ 126.0 million was allocated to the extinguishment of the liability component of the notes, while the remaining $ 107.9 million was allocated to the reacquisition of the equity component and recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity.

The Company recognized a loss on debt extinguishment of $ 7.8 million in the third quarter of 2020, which is included in interest expense, net in the consolidated statements of operations and comprehensive income.

In the first nine months of 2020 , the Company recorded interest expense on the 2022 Notes of $ 10.7 million which consisted of $ 1.3 million associated with the 0.625 % coupon rate, $ 8.4 million associated with the accretion of the debt discount, and $ 1.0 million associated with the amortization of the debt issuance costs.

In the first nine months of 2019 , the Company recorded interest expense on the 2022 Notes of $ 11.5 million which consisted of $ 1.4 million associated with the 0.625 % coupon rate, $ 9.0 million associated with the accretion of the debt discount, and $ 1.1 million associated with the amortization of the debt issuance costs.

The Company recognized a loss on debt extinguishment of $ 7.8 million in the third quarter of 2020.

In the first quarter of 2021, the Company recorded interest expense on the 2022 Notes of $ 2.3 million which consisted of $ 0.3 million associated with the 0.625 % coupon rate, $ 1.8 million associated with the accretion of the debt discount, and $ 0.2 million associated with the amortization of the debt issuance costs.

In the first quarter of 2020, the Company recorded interest expense on the 2022 Notes of $ 4.0 million which consisted of $ 0.5 million associated with the 0.625 % coupon rate, $ 3.1 million associated with the accretion of the debt discount, and $ 0.4 million associated with the amortization of the debt issuance costs.

The debt discount is being amortized over the term of the debt.

As of September 30, 2020 , the fair value of the 2022 Notes is estimated to be approximately $ 265.6 million using the Level 1 observable input of the last quoted market price for the quarter ended September 30, 2020 .

As of March 31, 2021, the fair value of the 2022 Notes is estimated to be approximately $ 205.7 million using the Level 1 observable input of the last quoted market price on March 31, 2021.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the gross carrying amount, unamortized debt cost, debt issuance costs and net carrying value of the liability component of the 2022 Notes are as follows (in thousands) :

September 30,

2021 December 31, 2020

Gross carrying amount $ 169,659 $ 169,690

14 unchanged sentences

The 2020 Hedge and 2020 Warrants transactions are indexed to, and potentially settled in, the Company's common stock and the net cost of $ 63.0 million has been recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2017 Hedge and Warrants

5 unchanged sentences

The 2017 Hedge transactions will expire upon the maturity of the Notes.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On May 31, 2017, the Company sold to the counterparties, warrants (the “2017 Warrants”) to acquire 1.4 million shares of the Company's common stock at an initial strike price of $ 266.39 per share, which represents a premium of 70 % over the last reported sale price of the common stock of $ 156.70 on May 24, 2017.

10 unchanged sentences

Borrowings under the Amended Revolving Credit Facility can be used to finance working capital needs, capital expenditures and general corporate purposes, including to finance permitted acquisitions.

As of September 30, 2020 , the Company had no borrowings outstanding under the Amended Revolving Credit Facility.

As of December 31, 2019 , the Company had $ 75.0 million in borrowings outstanding under the Amended Revolving Credit Facility at the LIBO rate option with a weighted average interest rate of 3.01 % , consisting of a $ 50.0 million 31 -day borrowing and a $ 25.0 million 31 -day borrowing.

As of March 31, 2021 and December 31, 2020, the Company had no borrowings outstanding under the Amended Revolving Credit Facility.

Up to $ 10.0 million of the Amended Revolving Credit Facility will be available for short-term loans, referred to as swingline loans.

1 unchanged sentence

Additionally, up to $ 10.0 million of the Amended Revolving Credit Facility will be available for the issuance of letters of credit.

At each of September 30, 2020 and December 31, 2019 , the Company had outstanding one letter of credit issued in the amount of $ 0.2 million .

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At each of March 31, 2021 and December 31, 2020, the Company had outstanding one letter of credit issued in the amount of $ 0.2 million.

The Company’s borrowings under the Amended Revolving Credit Facility bear interest at annual rates that, at the Company’s option, will be either:

4 unchanged sentences

The Amended Revolving Credit Facility contains a restrictive financial covenant, which initially limits the total consolidated debt to EBITDA ratio to 4.5 , with step downs to 4.0 over time, except that this may increase by 0.5 for the four fiscal quarters following a material acquisition.

In addition, the Amended Revolving Credit Facility contains customary affirmative and negative covenants in addition to events of default for a transaction of this type that, among other things, restrict additional indebtedness, liens, mergers or certain fundamental changes, asset dispositions, dividends, stock repurchases and other restricted payments, transactions with affiliates, sale-leaseback transactions, hedging transactions, loans and investments and other matters customarily restricted in such agreements.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

additional indebtedness, liens, mergers or certain fundamental changes, asset dispositions, dividends, stock repurchases and other restricted payments, transactions with affiliates, sale-leaseback transactions, hedging transactions, loans and investments and other matters customarily restricted in such agreements.

On July 21, 2020, the Company executed a temporary amendment to its Amended Revolving Credit Facility to provide for certain covenant relief, primarily to facilitate the issuance of the 2025 Notes, the repurchase of a portion of the 2022 Notes, and to pay down existing borrowings under the credit facility.

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These amendments shall apply from the effective date through the fiscal quarter ending June 30, 2021, unless terminated in advance by the Company.

The Company was in compliance with all covenants at September 30, 2020 .

The Company was in compliance with all covenants at March 31, 2021.

The Amended Revolving Credit Facility requires LendingTree, LLC to pledge as collateral, subject to certain customary exclusions, substantially all of its assets, including 100 % of its equity in all of its domestic subsidiaries and 66 % of the voting equity, and 100 % of the non-voting equity, in all of its material foreign subsidiaries (of which there are currently none).

6 unchanged sentences

In addition to the remaining unamortized debt issuance costs associated with the original revolving credit facility and the Revolving Credit Facility, debt issuance costs of $ 2.8 million related to the Amended Revolving Credit Facility entered into on December 10, 2019 are being amortized to interest expense over the life of the Amended Revolving Credit Facility.

Debt issuance costs of $ 1.1 million related to the July 21, 2020 temporary amendment are being amortized to interest expense through June 30,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2021, unless the temporary amendment is terminated in advance by the Company.

Debt issuance costs of $ 1.1 million related to the July 21, 2020 temporary amendment are being amortized to interest expense through June 30, 2021, unless the temporary amendment is terminated in advance by the Company.

Unamortized debt issuance costs are included in prepaid and other current assets and other non-current assets in the Company's consolidated balance sheet.

In the first nine months of 2020 , the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 3.2 million which consisted of $ 1.3 million associated with borrowings bearing interest at the LIBO rate, $ 1.1 million in unused commitment fees, and $ 0.8 million associated with the amortization of the debt issuance costs.

In the first nine months of 2019 , the Company recorded interest expense related to the revolving credit facility of $ 5.1 million which consisted of $ 4.2 million associated with borrowings bearing interest at the LIBO rate, $ 0.5 million in unused commitment fees, and $ 0.4 million associated with the amortization of the debt issuance costs.

In the first quarter of 2021, the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 1.1 million which consisted of $ 0.6 million in unused commitment fees, and $ 0.5 million associated with the amortization of the debt issuance costs.

In the first quarter of 2020, the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 1.1 million which consisted of $ 0.6 million associated with borrowings bearing interest at the LIBO rate, $ 0.3 million in unused commitment fees, and $ 0.2 million associated with the amortization of the debt issuance costs.

NOTE 14— CONTINGENCIES

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In assessing the materiality of a legal proceeding, the Company evaluates, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require it to change its business practices in a manner that could have a material and adverse impact on the Company's business.

With respect to the matters disclosed in this Note 15 , unless otherwise indicated, the Company is unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies.

As of September 30, 2020 , the Company had litigation settlement accruals of $ 0.1 million and $ 0.5 million in continuing operations and discontinued operations, respectively.

With respect to the matters disclosed in this Note 14,

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

unless otherwise indicated, the Company is unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies.

As of March 31, 2021, the Company had litigation settlement accruals of $ 0.1 million and $ 0.8 million in continuing operations and discontinued operations, respectively.

As of December 31, 2020, the Company had litigation settlement accruals of $ 0.1 million and $ 0.5 million in continuing operations and discontinued operations, respectively.

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NOTE 15— FAIR VALUE MEASUREMENTS

Other than the convertible notes and warrants, as well as the equity interest in Stash, the carrying amounts of the Company's financial instruments are equal to fair value at September 30, 2020 .

Other than the convertible notes and warrants, as well as the equity interest in Stash, the carrying amounts of the Company's financial instruments are equal to fair value at March 31, 2021.

See Note 13—Debt for additional information on the convertible notes and warrants, and see Note 7—Equity Investment for additional information on the equity interest in Stash.

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Contingent consideration, beginning of period $ 8,249 $ 33,464

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Purchases, sales and settlements:

Additions — —

Payments — ( 3,000 )

Contingent consideration, end of period $ 9,046 $ 22,342

The contingent consideration liability at September 30, 2020 is the estimated fair value of the earnout payments of the Ovation and QuoteWizard acquisitions.

In October 2020, the Company made an earnout payment of $ 4.4 million based on the achievement of certain defined operating metrics for Ovation.

The Company will make earnout payments ranging from zero to $ 46.8 million based on the achievement of certain defined performance targets for QuoteWizard.

See Note 8 —Business Acquisitions for additional information on the contingent consideration for each of these respective acquisitions.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The significant unobservable inputs used to calculate the fair value of the contingent consideration are estimated future cash flows for the acquisitions and the discount rate.

Actual results will differ from the projected results and could have a significant impact on the estimated fair value of the contingent considerations.

The contingent consideration liability at March 31, 2021 is the estimated fair value of the remaining earnout payment for the QuoteWizard acquisition.

The Company will make an earnout payment ranging from zero to $ 23.4 million based on the achievement of certain defined performance targets for QuoteWizard.

See Note 8—Business Acquisitions for additional information.

The significant unobservable inputs used to calculate the fair value of the contingent consideration for QuoteWizard are the operating results growth rate and the discount rate.

Actual results will differ from the projected results and could have a significant impact on the estimated fair value of the contingent consideration.

Additionally, as the liability is stated at present value, the passage of time alone will increase the estimated fair value of the liability each reporting period.

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Fair Value at

September 30, 2020

Valuation Technique

Unobservable Input

Range (Weighted Average) (a)

March 31, 2021 Valuation Technique Unobservable Input Range (Weighted Average) (a)

(in thousands)

Contingent consideration

Option pricing model

Operating results growth rate

24.4% - 25.7% (25.1%)

Contingent consideration $ 9,046 Option pricing model Operating results growth rate 3.2 %

Discount rate 5.7 %

(a) Discount rates were weighted by the relative undiscounted value of expected earnout payments.

Other unobservable inputs were weighted by the relative maximum potential earnout payments.

(a) Discount rates are weighted by the relative undiscounted value of expected earnout payments.

Other unobservable inputs are weighted by the relative maximum potential earnout payments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 16— SEGMENT INFORMATION

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Characteristics which were relied upon in making the determination of the reportable segments include the nature of the products, the organization's internal structure, and the information that is regularly reviewed by the chief operating decision maker for the purpose of assessing performance and allocating resources.

The Company changed its reportable segments in the fourth quarter of 2019 and previously reported segment results have been revised to conform to the Company's reportable segments at September 30, 2020 .

The Home segment includes the following products:

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The Insurance segment consists of insurance quote products.

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, are included within the Other category.

Revenue from the resale of online advertising space to third parties in the first quarter of 2020 is included within the Other category.

The Company ceased reselling online advertising space during the first quarter of 2020.

The following tables are a reconciliation of segment profit, which is the Company's primary segment profitability measure, to income before income taxes and discontinued operations.

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This measure excludes overhead, fixed costs and personnel-related expenses.

For the Other category, segment cost of revenue and marketing expense also includes the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties.

The Company ceased reselling online advertising space during the first quarter of 2020.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended September 30, 2020

For the Other category, segment cost of revenue and marketing expense in the first quarter of 2020 also includes the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties.

Three Months Ended March 31, 2021

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 128,125 $ 57,907 $ 86,614 $ 104 $ 272,750

Segment marketing expense 89,135 33,300 53,772 196 176,403

Segment profit

Segment profit (loss) 38,990 24,607 32,842 ( 92 ) 96,347

Cost of revenue 13,895

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Product development 12,468

Depreciation 3,718

Amortization of intangibles 11,312

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Interest expense, net ( 10,215 )

Loss before income taxes and discontinued operations

Three Months Ended September 30, 2019

(in thousands)

Segment cost of revenue and marketing expense

Segment profit

Cost of revenue (exclusive of cost of advertising re-sold to third parties included above)

Brand and other marketing expense

General and administrative expense

Product development

Amortization of intangibles

Change in fair value of contingent consideration

Litigation settlements and contingencies

Operating income

Interest expense, net

Other income 40,072

Income before income taxes and discontinued operations $ 27,950

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Nine Months Ended September 30, 2020

(in thousands)

Segment cost of revenue and marketing expense

Segment profit (loss)

Cost of revenue (exclusive of cost of advertising re-sold to third parties included above)

Brand and other marketing expense

General and administrative expense

Product development

Amortization of intangibles

Change in fair value of contingent consideration

Litigation settlements and contingencies

Operating loss

Interest expense, net

Loss before income taxes and discontinued operations

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 79,174 $ 119,924 $ 82,737 $ 1,249 $ 283,084

Segment cost of revenue and marketing expense 43,263 76,825 52,204 1,577 173,869

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Product development 10,963

Depreciation 3,378

Amortization of intangibles 13,757

Change in fair value of contingent consideration ( 8,122 )

Severance 158

Litigation settlements and contingencies 329

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Discover generally did not assume liabilities of HLC that arose before the closing date, except for certain liabilities directly related to assets Discover acquired.

A portion of the purchase price

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

received was deposited in escrow in accordance with the purchase agreement with Discover for certain loan loss obligations that remained with HLC following the sale.

A portion of the purchase price received was deposited in escrow in accordance with the purchase agreement with Discover for certain loan loss obligations that remained with HLC following the sale.

During 2018, the remaining funds in escrow were released to HLC in accordance with the terms of the purchase agreement with Discover.

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On September 16, 2019, the Bankruptcy Court converted the bankruptcy to Chapter 7 of the Bankruptcy Code and appointed a Trustee to liquidate HLC's assets.

HLC’s filing under the Bankruptcy Code creates an automatic stay of enforcement of the judgment entered against HLC by the Minnesota court in ResCap Liquidating Trust v.

Home Loan Center, Inc.

described above and in Litigation Related to Discontinued Operations below.

As a result of the voluntary petition, LendingTree, LLC was, as of the initial July 21, 2019 bankruptcy petition filing date, no longer deemed to have a controlling interest in HLC under applicable accounting standards.

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The effect of such deconsolidation was the elimination of the consolidated assets and liabilities of HLC (and its consolidated subsidiary) from the Company’s consolidated balance sheets.

Upon deconsolidation, in the third quarter of 2019 the Company recognized a loss of $ 5.5 million which includes a net gain of $ 4.5 million related to the removal of HLC's (and its consolidated subsidiary's) assets and liabilities and the recognition of a liability of $ 10.0 million related to LendingTree LLC's ownership in HLC.

Upon deconsolidation, in 2019 the Company recognized a loss of $ 5.5 million which includes a net gain of $ 4.5 million related to the removal of HLC's (and its consolidated subsidiary's) assets

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and liabilities and the recognition of a liability of $ 10.0 million related to LendingTree, LLC's ownership in HLC.

No consideration was received by the Company as a result of the deconsolidation.

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RFC asserted that, beginning in 2008, RFC faced massive repurchase demands and lawsuits from purchasers or insurers of the loans and RMBS that RFC had sold.

RFC filed for bankruptcy

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

protection in May 2012.

RFC filed for bankruptcy protection in May 2012.

Plaintiff alleged that, after RFC filed for Chapter 11 protection, hundreds of proofs of claim were filed, many of which mirrored the litigation filed against RFC prior to its bankruptcy.

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On March 20, 2020, the court denied the Company's motion to dismiss, or in the alternative, to compel arbitration, and on April 3, 2020, the Company appealed the court's findings with respect to the Company's request to compel arbitration of the first count of the lawsuit.

On June 17, 2020, the Company entered into a settlement agreement with ResCap, pursuant to which, the Company agreed to, among other things, pay ResCap $ 58.5 million , less any amounts ResCap receives in the HLC bankruptcy, in exchange for, among other things, ResCap releasing any and all claims against the Company, and the Company’s directors and officers, including any claims asserted in ResCap v.

On June 17, 2020, the Company entered into a settlement agreement with ResCap, pursuant to which, the Company

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

agreed to, among other things, pay ResCap $ 58.5 million, less any amounts ResCap receives in the HLC bankruptcy, in exchange for, among other things, ResCap releasing any and all claims against the Company, and the Company’s directors and officers, including any claims asserted in ResCap v.

Pursuant to the settlement agreement, the Company will be responsible for the difference of $ 58.5 million minus the amount that ResCap receives through the HLC Bankruptcy.

In the third quarter of 2020, the Company made a $ 26.5 million payment to the ResCap Liquidating Trust.

The Company expects to be refunded $ 1.1 million of this amount, subsequent to the final distributions in the HLC Bankruptcy.

This $ 1.1 million is recorded within current assets of discontinued operations on the accompanying consolidated balance sheet as of September 30, 2020 .

In October 2020, due to the timing of distributions from the HLC bankruptcy estate, the Company was required per the terms of the ResCap settlement agreement to make a further payment of $ 6.4 million to ResCap.

In turn, ResCap assigned its claims related to this amount to the Company, and the Company anticipates receiving reimbursement of a total $ 7.5 million from the HLC bankruptcy estate by the first quarter of 2021.

In the third and fourth quarters of 2020, the Company made payments of $ 26.5 million and $ 6.4 million, respectively, to the ResCap Liquidating Trust.

The Company expects to be refunded $ 8.6 million of these amounts, subsequent to the final distributions in the HLC Bankruptcy.

This $ 8.6 million is recorded within current assets of discontinued operations on the accompanying consolidated balance sheet as of March 31, 2021.

Lehman Brothers Holdings, Inc.

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20-cv-01351 (U.S.

Ct., Minn.) , seeking to hold the Company liable for their allowed bankruptcy claim of

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

$ 13.3 million , under assumption of liability, agency and alter ego theories.

Ct., Minn.), transferred to Case No.

08-13555 (SCC), Adversary Proceeding No.

21-01107 (SCC) (Bankr.

S.D.N.Y.) , seeking to hold the Company liable for their allowed bankruptcy claim of $ 13.3 million, under assumption of liability, agency and alter ego theories.

The Company believes that these claims lack merit and intends to defend this action vigorously.

In the third quarter of 2020, the Company made a settlement offer to LBHI for $ 0.5 million , which is included as a liability on the accompanying consolidated balance sheet as of September 30, 2020 .

In April 2021, the Company made a settlement offer to LBHI for $ 0.8 million, which is included as a liability on the accompanying consolidated balance sheet as of March 31, 2021.

Financial Information of Discontinued Operations

The components of net income (loss) reported as discontinued operations in the accompanying consolidated statements of operations and comprehensive income are as follows (in thousands) :

The components of net loss reported as discontinued operations in the accompanying consolidated statements of operations and comprehensive income are as follows (in thousands) :

Three Months Ended

September 30,

Nine Months Ended

September 30,

Gain from removal of HLC's assets and liabilities

Other operating gains (expenses)

Income (loss) before income taxes

Income tax (expense) benefit

Net income (loss)

Revenue $ — $ —

Loss before income taxes ( 353 ) ( 6,102 )

Income tax benefit 90 1,527

Net loss $ ( 263 ) $ ( 4,575 )

Losses from discontinued operations included all activity of HLC prior to bankruptcy, including litigation settlements, contingencies and legal fees associated with legal proceedings.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements