What changed in this filing

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Item 1. Financial Statements

2021-07-30 compared with 2021-05-05 · 252 added, 186 removed, 710 unchanged (38% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

(in thousands, except per share amounts)

12 unchanged sentences

Total costs and expenses 259,466 191,874 534,123 454,209

Operating (loss) income ( 1,907 ) 20,749

Operating income (loss) 10,548 ( 7,548 ) 8,641 13,201

Other (expense) income, net:

1 unchanged sentence

Other income — 7 40,072 7

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

Income (loss) before income taxes 708 ( 12,496 ) 28,658 3,419

Income tax benefit 9,092 3,880 454 6,941

Net income (loss) from continuing operations 9,800 ( 8,616 ) 29,112 10,360

Loss from discontinued operations, net of tax ( 3,199 ) ( 21,141 ) ( 3,462 ) ( 25,716 )

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

Net income (loss) and comprehensive income (loss) $ 6,601 $ ( 29,757 ) $ 25,650 $ ( 15,356 )

Weighted average shares outstanding:

1 unchanged sentence

Diluted 13,719 12,984 13,913 13,954

Income per share from continuing operations:

Income (loss) per share from continuing operations:

Basic $ 0.74 $ ( 0.66 ) $ 2.21 $ 0.80

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Diluted $ ( 0.23 ) $ ( 1.63 ) $ ( 0.25 ) $ ( 1.84 )

Net income per share:

Net income (loss) per share:

Basic $ 0.50 $ ( 2.29 ) $ 1.95 $ ( 1.18 )

23 unchanged sentences

Total assets $ 1,266,637 $ 1,188,990

Current portion of long-term debt $ 161,723 $ —

Accounts payable, trade 6,623 10,111

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

Net income and comprehensive income 6,601 — — — 6,601 — —

Non-cash compensation 18,294 — — 18,294 — — —

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes 30 159 2 28 — — —

Balance as of June 30, 2021 $ 420,368 15,956 $ 160 $ 1,218,628 $ ( 615,259 ) 2,641 $ ( 183,161 )

Common Stock Treasury Stock

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

Net loss and comprehensive loss ( 29,757 ) — — — ( 29,757 ) — —

Non-cash compensation 13,158 — — 13,158 — — —

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 981 ) 27 — ( 981 ) — — —

Balance as of June 30, 2020 $ 405,977 15,731 $ 157 $ 1,196,990 $ ( 608,009 ) 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

Three Months Ended

Six Months Ended

(in thousands)

Cash flows from operating activities attributable to continuing operations:

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

Net income (loss) and comprehensive income (loss) $ 25,650 $ ( 15,356 )

Loss from discontinued operations, net of tax 3,462 25,716

1 unchanged sentence

Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable to continuing operations:

Loss on disposal of assets 348 530

Loss on impairments and disposal of assets 1,400 552

Amortization of intangibles 22,622 27,513

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Accounts payable, accrued expenses and other current liabilities 3,845 ( 19,134 )

Current contingent consideration — ( 2,670 )

Income taxes receivable 10,322 63

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Net cash (used in) provided by financing activities attributable to continuing operations ( 4,970 ) 45,282

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

Total cash provided by continuing operations 24,845 44,090

Discontinued operations:

Net cash used in operating activities attributable to discontinued operations ( 71 ) ( 752 )

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

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

Net cash provided by (used in) operating activities attributable to discontinued operations 8,353 ( 2,571 )

Total cash provided by (used in) discontinued operations 8,353 ( 2,571 )

Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents 33,198 41,519

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

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("HLC") subsequent to its bankruptcy filing on July 21, 2019 which resulted in the Company's loss of a controlling interest in HLC under applicable accounting standards.

The HLC Bankruptcy case was closed on July 14, 2021.

See Note 17—Discontinued Operations for additional information.

Intercompany transactions and accounts have been eliminated.

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Basis of Presentation

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.

The accompanying unaudited interim consolidated financial statements as of June 30, 2021 and for the three and six months ended June 30, 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 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 results for the three and six months ended June 30, 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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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 March 31, 2021, 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 June 30, 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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Recently Adopted Accounting Pronouncements

In May 2021, the FASB issued ASU 2021-04 to clarify and reduce diversity in accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange.

The amendments clarify that a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be accounted for as an exchange of the original instrument for a new instrument.

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

Early adoption is permitted, including adoption in interim periods.

An entity should adopt the guidance as of the beginning of its annual fiscal year.

The amendments should be applied prospectively to modifications or exchanges occurring on or after the date of adoption.

The Company adopted ASU 2021-04 in the second quarter of 2021.

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.

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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.

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

Most amendments require prospective application while others are to be applied on a retrospective basis for all

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

Recently Issued Accounting Pronouncements

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

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Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Home $ 104,861 $ 74,123 $ 232,986 $ 153,297

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The Company's contractual right to closing fees and approval fees is not contemporaneous with the satisfaction of the performance obligation to deliver a loan request or a credit card consumer to the customer.

As such, the Company records a contract asset at each reporting period-end related to the estimated variable consideration on closing fees and approval fees for which the Company has satisfied the related performance obligation but are still pending the loan closing or credit card approval before the Company has a contractual right to payment.

As such, the Company records a contract asset at each reporting period-end related to the estimated variable

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

consideration on closing fees and approval fees for which the Company has satisfied the related performance obligation but are still pending the loan closing or credit card approval before the Company has a contractual right to payment.

This estimate is based on the Company's historical closing rates and historical time between when a consumer request for a loan or credit card is delivered to the lender or card issuer and when the loan is closed by the lender or approved by the card issuer.

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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

LENDINGTREE, INC.

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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.

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 in the Company's Consumer business was $ 7.3 million and $ 6.4 million at June 30, 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 $ 1.1 million and $ 0.7 million at June 30, 2021 and December 31, 2020, respectively.

During the second quarter and first six months of 2021, the Company recognized revenue of $ 0.1 million and $ 0.7 million, respectively, that was included in the contract liability balance at December 31, 2020.

During the second quarter and first six months of 2020, the Company recognized revenue of $ 0.1 million and $ 0.6 million, respectively, 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 $ 0.3 million and $ 0.1 million in the first quarters of 2021 and 2020, respectively.

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

NOTE 4— CASH AND RESTRICTED CASH

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Accounts receivable are written off when management deems them uncollectible.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Balance, beginning of the period $ 1,429 $ 2,021 $ 1,402 $ 1,466

3 unchanged sentences

Balance, end of the period $ 1,473 $ 1,756 $ 1,473 $ 1,756

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6— GOODWILL AND INTANGIBLE ASSETS

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Goodwill and Indefinite-Lived Intangible Assets

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.

The Company's goodwill at each of June 30, 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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Website content 43,200 ( 37,567 ) 5,633

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

Balance at June 30, 2021 $ 225,200 $ ( 129,462 ) $ 95,738

Cost Accumulated

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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 March 31, 2021, future amortization is estimated to be as follows (in thousands) :

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of June 30, 2021, future amortization is estimated to be as follows (in thousands) :

Amortization Expense

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Total intangible assets with definite lives, net $ 95,738

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 7— EQUITY INVESTMENT

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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.

During the first six months 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 June 30, 2021, there have been no impairments to the acquisition cost of the Stash equity securities.

NOTE 8— BUSINESS ACQUISITIONS

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Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

QuoteWizard $ ( 8,850 ) $ 8,058 $ ( 8,053 ) $ ( 204 )

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Total changes in fair value of contingent consideration $ ( 8,850 ) $ 9,175 $ ( 8,053 ) $ 1,053

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.

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

As of June 30, 2021, the estimated fair value of the contingent consideration for the QuoteWizard acquisition totaled $ 0.2 million, which is included in current contingent consideration in the accompanying consolidated balance sheet.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

NOTE 9— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Weighted average basic common shares 13,243 12,984 13,157 12,971

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Weighted average diluted common shares 13,719 12,984 13,913 13,954

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.

For the second quarter of 2021, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 0.9 million shares of common stock and 0.2 million restricted stock units.

For the first six months of 2021, the weighted average shares that were anti-dilutive included options to purchase 0.4 million shares of common stock.

For the second quarter of 2020, the Company had a loss 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 0.8 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the second quarter of 2020, because their inclusion would have been anti-dilutive.

For the second quarter of 2020, the weighted average shares that were anti-dilutive included options to purchase 0.7 million shares of common stock and 0.1 million restricted stock units.

For the first six months of 2020, the weighted average shares that were anti-dilutive included options to purchase 0.2 million shares of common stock.

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 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.

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.

Shares of the Company's common stock associated with the 0.50 % Convertible Senior Notes due July 15, 2025 were excluded from the calculation of diluted income per share for the second quarter and first six months of 2021 as they were anti-dilutive since the conversion price of the notes was greater than the average market price of the Company’s common stock during the relevant periods.

Shares of the Company's common stock associated with the warrants were excluded from the calculation of diluted income per share for the

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

second quarter and first six months of 2021 and the first six months of 2020 as they were anti-dilutive since the strike price of the warrants was greater than the average market price of the Company's common stock during the relevant periods.

Common Stock Repurchases

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

At June 30, 2021, approximately $ 179.7 million of the previous authorizations to repurchase common stock remain available.

NOTE 11— STOCK-BASED COMPENSATION

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Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Cost of revenue $ 463 $ 333 $ 860 $ 575

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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.

Options outstanding at June 30, 2021 833,093 141.52 5.20 $ 82,110

Options exercisable at June 30, 2021 543,666 $ 71.06 3.20 $ 82,039

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 211.88 on the last trading day of the quarter ended June 30, 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 June 30, 2021.

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

(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.

(b) During the six months ended June 30, 2021, 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 $ 130.25 , calculated using the Black-Scholes option pricing model, which vesting periods include (a) immediate vesting on grant date (b) earlier of one year from grant date and the Company's annual meeting of stockholders for 2022 and (c) three years from grant date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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Expected term (1)

5.00 - 6.00 years

Expected dividend (2)

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

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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.

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Forfeited — —

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

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

Options outstanding at June 30, 2021 700,209 236.01 7.25 $ 11,308

Options exercisable at June 30, 2021 — $ — 0.00 $ —

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

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 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.

As of June 30, 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Units

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Forfeited ( 20,735 ) 269.88

Nonvested at March 31, 2021 260,423 $ 273.36

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Nonvested at June 30, 2021 268,566 $ 266.34

Restricted Stock Units with Performance Conditions

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Forfeited — —

Nonvested at March 31, 2021 6,328 $ 223.90

Nonvested at June 30, 2021 6,328 $ 223.90

Restricted Stock Awards with Performance Conditions

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Forfeited — —

Nonvested at March 31, 2021 17,853 $ 340.25

Nonvested at June 30, 2021 11,902 $ 340.25

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Awards with Market Conditions

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Forfeited — —

Nonvested at March 31, 2021 26,674 $ 340.25

Nonvested at June 30, 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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 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.

NOTE 12— INCOME TAXES

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

(in thousands, except percentages)

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

Income tax benefit $ 9,092 $ 3,880 $ 454 $ 6,941

Effective tax rate ( 1,284.2 ) % 31.0 % ( 1.6 ) % ( 203.0 ) %

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.

For the second quarter and first six months of 2021, the effective tax rate varied from the federal statutory rate of 21 % in part due to a tax benefit of $ 8.3 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.

For the second quarter and first six months of 2020, the effective tax rate varied from the federal statutory rate of 21 % in part due to a tax benefit of $ 0.8 million and $ 1.8 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 six 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.

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 quarter of 2020.

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 six months 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

(in thousands)

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

Income tax benefit (expense) - excluding excess tax benefit on stock compensation and CARES Act $ 831 $ 3,127 $ ( 7,839 ) $ ( 970 )

Excess tax benefit on stock compensation 8,261 753 8,293 1,807

Income tax benefit from CARES Act — — — 6,104

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

Income tax benefit $ 9,092 $ 3,880 $ 454 $ 6,941

NOTE 13— DEBT

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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

LENDINGTREE, INC.

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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.

Upon conversion, the 2025 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.

7 unchanged sentences

• if the Company calls such 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called for redemption;

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.

Holders of the 2025 Notes were 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.

Holders of the 2025 Notes are not entitled to convert the 2025 Notes during the calendar quarter ended September 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 June 30, 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.

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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 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.

In the first six months of 2021, the Company recorded interest expense on the 2025 Notes of $ 13.5 million which consisted of $ 1.4 million associated with the 0.50 % coupon rate, $ 11.0 million associated with the accretion of the debt discount, and $ 1.1 million associated with the amortization of the debt issuance costs.

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

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) :

As of June 30, 2021, the fair value of the 2025 Notes is estimated to be approximately $ 520.4 million using the Level 1 observable input of the last quoted market price on June 30, 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 2025 Notes, all of which is recorded as a non-current liability in the June 30, 2021 consolidated balance sheet, are as follows (in thousands) :

2021 December 31, 2020

16 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 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.

Holders of the 2022 Notes were 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.

Holders of the 2022 Notes are not entitled to convert the 2022 Notes during the calendar quarter ended September 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 June 30, 2021, was not greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

8 unchanged sentences

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.

In the first six months of 2021, the Company recorded interest expense on the 2022 Notes of $ 4.7 million which consisted of $ 0.5 million associated with the 0.625 % coupon rate, $ 3.8 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 six months of 2020, the Company recorded interest expense on the 2022 Notes of $ 7.9 million which consisted of $ 0.9 million associated with the 0.625 % coupon rate, $ 6.3 million associated with the accretion of the debt discount, and $ 0.7 million associated with the amortization of the debt issuance costs.

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

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.

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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) :

As of June 30, 2021, the fair value of the 2022 Notes is estimated to be approximately $ 208.7 million using the Level 1 observable input of the last quoted market price on June 30, 2021.

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, all of which is recorded as a current liability in the June 30, 2021 consolidated balance sheet, are as follows (in thousands) :

2021 December 31, 2020

7 unchanged sentences

The Company used approximately $ 63.0 million of the net proceeds from the 2025 Notes to pay for the cost of the 2020 Hedge, after such cost was partially offset by the proceeds from the warrant transactions.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On July 24, 2020, the Company paid $ 124.2 million to the counterparties for the 2020 Hedge transactions.

13 unchanged sentences

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

LENDINGTREE, INC.

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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.

6 unchanged sentences

The net $ 15.6 million has been recorded as an increase to additional paid-in capital in the consolidated statement of shareholders’ equity.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Senior Secured Revolving Credit Facility

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

As of June 30, 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 March 31, 2021 and December 31, 2020, the Company had outstanding one letter of credit issued in the amount of $ 0.2 million.

At each of June 30, 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.

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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.

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.

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.

3 unchanged sentences

and (iii) increase the applicable margins to (x) 2.25 % for loans based on the LIBO rate and (y) 1.25 % for loans based on the base rate, subject to a 0.75 % floor, and unused commitment fees to 0.50 % under the Amended Revolving Credit Facility during the temporary period.

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 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).

These amendments were applicable from the effective date through the fiscal quarter ending June 30, 2021.

The Company was in compliance with all covenants at June 30, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

equity, and 100 % of the non-voting equity, in all of its material foreign subsidiaries (of which there are currently none).

The obligations under this facility are unconditionally guaranteed on a senior basis by LendingTree, Inc.

5 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, 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 were amortized to interest expense through June 30, 2021.

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 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.

In the first six months of 2021, the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 2.3 million which consisted of $ 1.3 million in unused commitment fees and $ 1.0 million associated with the amortization of the debt issuance costs.

In the first six months of 2020, the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 2.1 million which consisted of $ 1.1 million associated with borrowings bearing interest at the LIBO rate, $ 0.5 million in unused commitment fees, and $ 0.5 million associated with the amortization of the debt issuance costs.

NOTE 14— CONTINGENCIES

1 unchanged sentence

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 14,

LENDINGTREE, INC.

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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.

With respect to the matters disclosed in this Note 14, 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 June 30, 2021, the Company had litigation settlement accruals of $ 1.0 million and $ 4.9 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.

2 unchanged sentences

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 March 31, 2021.

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 June 30, 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.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contingent consideration payments related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Contingent consideration, beginning of period $ 9,046 $ 22,342 $ 8,249 $ 33,464

6 unchanged sentences

Contingent consideration, end of period $ 196 $ 28,517 $ 196 $ 28,517

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

The contingent consideration liability at June 30, 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.

6 unchanged sentences

Fair Value at

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

June 30, 2021 Valuation Technique Unobservable Input Range (Weighted Average) (a)

(in thousands)

3 unchanged sentences

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

7 unchanged sentences

The Insurance segment consists of insurance quote products.

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

Revenue from the resale of online advertising space to third parties in the first six months 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.

Segment cost of revenue and marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related expenses, that are directly attributable to the segments' products.

Segment cost of revenue and marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

expenses, that are directly attributable to the segments' products.

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

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

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

Three Months Ended June 30, 2021

Home Consumer Insurance Other Total

11 unchanged sentences

Litigation settlements and contingencies 322

Operating income 10,548

Interest expense, net ( 9,840 )

Income before income taxes and discontinued operations $ 708

Three Months Ended June 30, 2020

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 74,123 $ 37,118 $ 72,919 $ 166 $ 184,326

Segment marketing expense 35,397 17,716 42,797 85 95,995

Segment profit (loss) 38,726 19,402 30,122 81 88,331

Cost of revenue 13,464

Brand and other marketing expense 17,926

General and administrative expense 28,489

Product development 10,812

Depreciation 3,550

Amortization of intangibles 13,756

Change in fair value of contingent consideration 9,175

Litigation settlements and contingencies ( 1,325 )

Operating loss ( 7,548 )

1 unchanged sentence

Other income 7

Income before income taxes and discontinued operations $ 27,950

Loss before income taxes and discontinued operations $ ( 12,496 )

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended March 31, 2020

Six Months Ended June 30, 2021

Home Consumer Insurance Other Total

1 unchanged sentence

Revenue $ 232,986 $ 133,583 $ 175,877 $ 318 $ 542,764

Segment marketing expense 154,979 75,582 109,797 459 340,817

Segment profit (loss) 78,007 58,001 66,080 ( 141 ) 201,947

Cost of revenue 27,829

Brand and other marketing expense 41,851

General and administrative expense 74,800

Product development 25,758

Depreciation 8,161

Amortization of intangibles 22,622

Change in fair value of contingent consideration ( 8,053 )

Litigation settlements and contingencies 338

Operating income 8,641

Interest expense, net ( 20,055 )

Other income 40,072

Income before income taxes and discontinued operations $ 28,658

Six Months Ended June 30, 2020

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 153,297 $ 157,042 $ 155,656 $ 1,415 $ 467,410

Segment cost of revenue and marketing expense 78,660 94,541 95,001 1,662 269,864

Segment profit 35,911 43,099 30,533 ( 328 ) 109,215

Segment profit (loss) 74,637 62,501 60,655 ( 247 ) 197,546

Cost of revenue (exclusive of cost of advertising re-sold to third parties included above) 26,630

9 unchanged sentences

Interest expense, net ( 9,789 )

Other income 7

Income before income taxes and discontinued operations $ 3,419

7 unchanged sentences

Upon closing of the sale of substantially all of the operating assets of HLC on June 6, 2012, HLC ceased to originate consumer loans.

Certain liability for losses on previously sold loans remains with HLC.

Litigation settlements and contingencies and legal fees associated with ongoing related bankruptcy and legal proceedings against the Company are included in discontinued operations in the accompanying financial statements.

HLC agreed to retain certain liability for losses on previously sold loans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Litigation settlements and contingencies and legal fees associated with related bankruptcy and ongoing legal proceedings against the Company are included in discontinued operations in the accompanying financial statements.

Home Loan Center, Inc.

9 unchanged sentences

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 voluntary petition under the Bankruptcy Code does not represent an event of default under LendingTree, LLC’s Second Amended and Restated Credit Agreement dated as of December 10, 2019, the Company’s indenture dated May 31, 2017 with respect to the Company’s 0.625 % Convertible Senior Notes due 2022, or the Company’s indenture dated July 24, 2020 with respect to the Company’s 0.50 % Convertible Senior Notes due 2025.

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.

1 unchanged sentence

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 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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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.

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 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.

HLC has indicated that it believes that it has claims against HLC’s sole shareholder, LendingTree, LLC, and certain of its officers and directors, relating to the declaration of a dividend by HLC in January 2016 of $ 40.0 million.

During its bankruptcy, HLC indicated that it believed that it had claims against HLC’s sole shareholder, LendingTree, LLC, and certain of its officers and directors, relating to the declaration of a dividend by HLC in January 2016 of $ 40.0 million.

LendingTree, LLC believes the declaration of the dividend was proper, that the amounts paid to LendingTree, LLC following such declaration are not subject to recovery by HLC and that any claims by HLC relating to such dividend declaration are without merit.

2 unchanged sentences

The $ 36.0 million settlement payment was made in the third quarter of 2020.

During the HLC bankruptcy, a bar date for claims against HLC was set, establishing a deadline for all HLC’s creditors to assert any claim they may have had against HLC.

Distributions were made to holders of allowed claims deemed timely filed.

After all distributions to creditors were made and HLC’s Chapter 7 bankruptcy estate was fully administered, the HLC bankruptcy case was closed on July 14, 2021.

Litigation Related to Discontinued Operations

10 unchanged sentences

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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2013, the United States Bankruptcy Court for the Southern District of New York entered an Order confirming the Second Amended Joint Chapter 11 Plan Proposed by Residential Capital, LLC et al.

2 unchanged sentences

In each case, plaintiff claimed that the defendant is liable for a portion of the global settlement in RFC’s bankruptcy.

Plaintiff asserted two claims against HLC:

(1) breach of contract based on HLC’s alleged breach of representations and warranties concerning the quality and characteristics of the mortgage loans it sold to RFC;

and (2) contractual indemnification for alleged liabilities, losses, and damages incurred by RFC arising out of purported defects in loans that RFC purchased from HLC and sold to third parties.

Plaintiff alleged that the “types of defects” contained in the loans it purchased from HLC included “income misrepresentation, employment misrepresentation, appraisal misrepresentations or inaccuracies, undisclosed debt, and missing or inaccurate documents.” Plaintiff sought damages of up to $ 61.0 million plus attorney's fees and prejudgment interest.

HLC denied the material allegations of the complaint and asserted numerous defenses thereto.

The matter went to trial in the fourth quarter of 2018 and the jury returned a verdict of $ 28.7 million in favor of plaintiff.

On June 21, 2019, the U.S.

District Court in Minnesota entered judgment against HLC for $ 68.5 million.

The judgment is comprised of:

(i) $ 28.7 million in damages awarded by the jury;

(ii) $ 14.1 million in pre-verdict interest;

(iii) $ 23.1 million in attorneys' fees and costs, and (iv) $ 2.6 million in post-verdict, prejudgment interest.

HLC’s filing under the Bankruptcy Code discussed above in Home Loan Center, Inc.

Bankruptcy Filing creates an automatic stay of enforcement of the judgment entered against HLC by the U.S.

Bankruptcy Filing created an automatic stay of enforcement of the judgment entered against HLC by the U.S.

District Court in Minnesota.

3 unchanged sentences

Ct., Minn.) , seeking to hold the Company liable for the judgment against HLC, under assumption of liability, agency and alter ego theories.

The Company believes that these claims lack merit.

On October 17, 2019, the Company filed a motion to dismiss the liability and agency claims, and oral arguments with respect to such motion were held on January 10, 2020.

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

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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 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.

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.

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

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, and the ResCap Liquidating Trust, in turn, assigned its allowed claims against HLC to the Company.

In the second quarter of 2021, the Company received a refund of $ 8.6 million related to these amounts, from the final distributions in the HLC Bankruptcy on account of the allowed claims that the ResCap Liquidating Trust had assigned to the Company.

Lehman Brothers Holdings, Inc.

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(“LBHI”) filed an Adversary Complaint against HLC and approximately 149 other defendants (the "Complaint").

In December 2018, LBHI amended its complaint against HLC.

The amended complaint references approximately 370 allegedly defective mortgage loans sold by HLC with purported "Claim Amounts" totaling $ 40.2 million.

LBHI alleges it settled all such claims and is seeking indemnification from HLC for LBHI’s purported losses and liabilities associated with such settlements, plus prejudgment interest, attorneys’ fees, litigation costs and other expenses.

The amended complaint does not specify the amount of LBHI’s purported damages.

On December 4, 2019, LBHI filed a $ 44.7 million proof of claim in HLC’s bankruptcy seeking recovery for the claims asserted in the lawsuit.

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

HLC’s filing under the Bankruptcy Code discussed above in Home Loan Center, Inc.

Bankruptcy Filing creates an automatic stay of this proceeding.

Bankruptcy Filing created an automatic stay of this proceeding.

On June 11, 2020, LBHI filed a lawsuit captioned Lehman Brothers Holdings Inc.

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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 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.

S.D.N.Y.) , seeking to hold the Company liable for its allowed bankruptcy claim of $ 13.3 million.

In July 2021, the Company reached a settlement with LBHI, which is included as a liability on the accompanying consolidated balance sheet as of June 30, 2021.

Financial Information of Discontinued Operations

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Revenue $ — $ — $ — $ —

6 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