What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-07-30 compared with 2021-05-05 · 102 added, 85 removed, 222 unchanged (46% of the section changed)

75 unchanged sentences

We dynamically adjust selling and marketing expenditures in all interest rate environments to optimize our results against these variables.

According to Freddie Mac, 30-year mortgage interest rates increased from a monthly average of 2.68% in December 2020 to a monthly average of 3.08% in March 2021.

On a quarterly basis, 30-year mortgage interest rates in the first quarter of 2021 averaged 2.88%, compared to 3.51% in the first quarter of 2020 and 2.76% in the fourth quarter of 2020.

According to Freddie Mac, 30-year mortgage interest rates generally increased from a monthly average of 2.68% in December 2020 to a monthly average of 2.98% in June 2021.

On a quarterly basis, 30-year mortgage interest rates in the second quarter of 2021 averaged 3.00%, compared to 3.23% in the second quarter of 2020 and 2.88% in the first quarter of 2021.

Typically, as mortgage interest rates rise, there are fewer consumers in the marketplace seeking refinancings and, accordingly, the mix of mortgage origination dollars will move toward purchase mortgages.

However, limited inventory of homes for sale have impacted this trend in recent months.

According to Mortgage Bankers Association ("MBA") data, total refinance origination dollars increased to 71% of total mortgage origination dollars in the first quarter of 2021 compared to 67% in the fourth quarter of 2020.

In the first quarter of 2021, total refinance origination dollars decreased 9% from the fourth quarter of 2020 and increased 153% from the first quarter of 2020.

Industry-wide mortgage origination dollars in the first quarter of 2021 decreased 13% from the fourth quarter of 2020 and increased 94% from first quarter of 2020.

In April 2021, the MBA projected 30-year mortgage interest rates to increase during 2021, to an average 3.7% for the year.

According to Mortgage Bankers Association ("MBA") data, total refinance origination dollars decreased to 56% of total mortgage origination dollars in the second quarter of 2021 compared to 71% in the first quarter of 2021.

In the second quarter of 2021, total refinance origination dollars decreased 24% from the first quarter of 2021 and increased 2% from the second quarter of 2020.

Industry-wide mortgage origination dollars in the second quarter of 2021 decreased 4% from the first quarter of 2021 and increased 13% from the second quarter of 2020.

In July 2021, the MBA projected 30-year mortgage interest rates to increase during 2021, to an average 3.4% for the year.

According to MBA projections, the mix of mortgage origination dollars is expected to move back towards purchase mortgages with the refinance share representing approximately 54% for 2021.

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Conversely, a weaker real estate market will typically lead to an increase in lender demand, as there are fewer consumers in the marketplace seeking mortgages.

According to Fannie Mae data, existing-home sales decreased 6% in the first quarter of 2021 compared to the fourth quarter of 2020, and increased 13% compared to the first quarter of 2020.

According to Fannie Mae data, existing-home sales decreased 8% in the second quarter of 2021 compared to the first quarter of 2021, and increased 32% compared to the second quarter of 2020.

Fannie Mae predicts an overall increase in existing-home sales of approximately 3% in 2021 compared to 2020.

Results of Operations for the Three Months ended March 31, 2021 and 2020

Three Months Ended March 31,

Results of Operations for the Three and Six Months ended June 30, 2021 and 2020

Three Months Ended June 30, Six Months Ended June 30,

Change 2021 2020 $

(Dollars in thousands)

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Cost of revenue (exclusive of depreciation and amortization shown separately below) 13,934 13,464 470 3 % 27,829 27,716 113 — %

13,895 14,252 (357) (3) %

Selling and marketing expense 185,206 113,921 71,285 63 % 382,668 309,459 73,209 24 %

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Total costs and expenses 259,466 191,874 67,592 35 % 534,123 454,209 79,914 18 %

Operating (loss) income (1,907) 20,749 (22,656) (109) %

Operating income (loss) 10,548 (7,548) 18,096 240 % 8,641 13,201 (4,560) (35) %

Other (expense) income, net:

Interest expense, net (9,840) (4,955) 4,885 99 % (20,055) (9,789) 10,266 105 %

Other income 40,072 — 40,072 100 %

Income before income taxes 27,950 15,915 12,035 76 %

Income tax (expense) benefit (8,638) 3,061 11,699 382 %

Net income from continuing operations 19,312 18,976 336 2 %

Other income — 7 (7) (100) % 40,072 7 40,065 n/a

Income (loss) before income taxes 708 (12,496) 13,204 106 % 28,658 3,419 25,239 738 %

Income tax benefit 9,092 3,880 5,212 134 % 454 6,941 (6,487) (93) %

Net income (loss) from continuing operations 9,800 (8,616) 18,416 214 % 29,112 10,360 18,752 181 %

Loss from discontinued operations, net of tax (3,199) (21,141) (17,942) (85) % (3,462) (25,716) (22,254) (87) %

Net income and comprehensive income $ 19,049 $ 14,401 $ 4,648 32 %

Revenue decreased in the first quarter of 2021 compared to the first quarter of 2020 due to decreases in our Consumer segment and Other category, partially offset by increases in our Home and Insurance segments.

Net income (loss) and comprehensive income (loss) $ 6,601 $ (29,757) $ 36,358 122 % $ 25,650 $ (15,356) $ 41,006 267 %

Revenue increased in the second quarter of 2021 compared to the second quarter of 2020 due to increases in all our segments.

Revenue increased in the first six months of 2021 compared to the first six months of 2020 due to increases in our Home and Insurance segments, partially offset by decreases in our Consumer segment and Other category.

Our Consumer segment includes the following products:

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Many of our Consumer segment products are not individually significant to revenue.

Revenue from our Consumer segment decreased $62.0 million in the first quarter of 2021 from the first quarter of 2020, or 52%, primarily due to decreases in our credit cards, personal loans, small business loans and deposits products.

Revenue from our credit cards product decreased $34.0 million to $17.6 million in the first quarter of 2021 from $51.6 million in the first quarter of 2020, or 66%, primarily due to the impact of economic conditions related to the COVID-19 pandemic that caused lower issuer demand, resulting in a decrease in the number of approvals and a decrease in revenue earned per approval.

Revenue from our personal loans product decreased $16.6 million to $14.9 million in the first quarter of 2021 from $31.5 million in the first quarter of 2020, or 53%, primarily due to the impact of economic conditions related to the COVID-19 pandemic that caused a decrease in consumers' risk tolerance and subsequent demand for this product.

Revenue from our Consumer segment increased $38.6 million in the second quarter of 2021 from the second quarter of 2020, or 104%, primarily due to increases in our personal loans, credit cards, and small business loans products.

Revenue from our Consumer segment decreased $23.5 million in the first six months of 2021 from the first six months of 2020, or 15%, primarily due to decreases in our credit cards and deposits products.

Revenue from our credit cards product increased $15.2 million to $22.4 million in the second quarter of 2021 from $7.2 million in the second quarter of 2020, or 212%, primarily due to an increase in the number of approvals and an increase in revenue earned per approval.

Revenue from our credit cards product decreased $18.7 million to $40.1 million in the first six months of 2021 from $58.8 million in the first six months of 2020, or 32%, primarily due to a decrease in the number of approvals and a decrease in revenue earned per approval.

For the periods presented, no other products in our Consumer segment represented more than 10% of revenue;

however, certain other Consumer products experienced notable changes primarily due to the impact of economic conditions related to the COVID-19 pandemic.

Revenue from our small business loans product decreased $6.6 million in the first quarter of 2021 compared to the first quarter of 2020, due to government stimulus loans creating less consumer demand for traditional loans, and a decrease in revenue earned per consumer.

Revenue from our deposits product decreased $5.5 million in the first quarter of 2021 compared to the first quarter of 2020, due to lower demand in a reduced interest rate environment and a decrease in revenue earned per consumer.

however, certain other Consumer products experienced notable changes.

Revenue from our personal loans product increased $16.4 million in the second quarter of 2021 compared to the second quarter of 2020, due to an increase in the number of consumers completing request forms as well as an increase in revenue earned per consumer.

Revenue from our small business loans product increased $7.7 million in the second quarter of 2021 compared to the second quarter of 2020, due to loosening underwriting standards and improved flow of capital, as well as an increase in revenue earned per consumer.

Revenue from our deposits product decreased $7.9 million in the first six months of 2021 compared to the first six months of 2020, due to a decrease in the number of consumers completing request forms as well as a decrease in revenue earned per consumer.

The ongoing COVID-19 pandemic is anticipated to continue to impact our Consumer product revenues in the near-term.

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purchase mortgage, refinance mortgage, home equity loans and lines of credit, reverse mortgage loans, and real estate.

Revenue from our Home segment increased $49.0 million in the first quarter of 2021 from the first quarter of 2020, or 62%, primarily due to an increase in revenue from our refinance mortgage product, partially offset by a decrease in our purchase mortgage product.

Revenue from our refinance mortgage product increased $52.0 million in the first quarter of 2021 compared to the first quarter of 2020, due to an increase in the number of consumers completing request forms resulting from increased refinancing activity in a declining interest rate environment, as well as an increase in revenue earned per consumer.

Revenue from our purchase mortgage product decreased $2.6 million in the first quarter of 2021 compared to the first quarter of 2020, primarily due to a shift in lender focus toward refinance products as well as a decrease in revenue earned per consumer.

Revenue from our Insurance segment increased $3.9 million to $86.6 million in the first quarter of 2021 from $82.7 million in the first quarter of 2020, or 5%, due to an increase in the number of consumers seeking insurance coverage, partially offset by a decrease in revenue earned per consumer.

Revenue in the Other category decreased $1.1 million in the first quarter of 2021 compared to the first quarter of 2020, primarily as we ceased reselling online advertising space during the first quarter of 2020.

Revenue from our Home segment increased $30.7 million in the second quarter of 2021 from the second quarter of 2020, or 41%, primarily due to increases in revenue from our refinance mortgage, purchase mortgage, and home equity loans and lines of credit products.

Revenue from our Home segment increased $79.7 million in the first six months of 2021 from the first six months of 2020, or 52%, primarily due to increases in revenue from those same products.

Revenue from our refinance mortgage product increased $12.7 million in the second quarter of 2021 compared to the second quarter of 2020, and increased $64.7 million in the first six months of 2021 compared to the first six months of 2020, due to an increase in revenue earned per consumer, partially offset by a decrease in the number of consumers completing request forms.

Revenue from our home equity loans and lines of credit product increased $10.0 million in the second quarter of 2021 compared to the second quarter of 2020, and increased $9.9 million in the first six months of 2021 compared to the first six months of 2020.

Revenue from our purchase mortgage product increased $8.2 million in the second quarter of 2021 compared to the second quarter of 2020, and increased $5.5 million in the first six months of 2021 compared to the first six months of 2020.

Revenue from our home equity loans and lines of credit product and our purchase mortgage product increased due to a shift in both lender and consumer focus away from refinance products as well as an increase in revenue earned per consumer.

Revenue from our Insurance segment increased $16.3 million to $89.3 million in the second quarter of 2021 from $72.9 million in the second quarter of 2020, or 22%, and increased $20.2 million to $175.9 million in the first six months of 2021 from $155.7 million in the first six months of 2020, or 13%, due to an increase in the number of consumers seeking insurance coverage, partially offset by a decrease in revenue earned per consumer.

Revenue in the Other category decreased $1.1 million in the first six months of 2021 compared to the first six months of 2020, primarily as we ceased reselling online advertising space during the first quarter of 2020.

Cost of revenue

Cost of revenue consists primarily of costs associated with compensation and other employee-related costs (including stock-based compensation) relating to internally-operated customer call centers, third-party customer call center fees, costs for online advertising resold to third parties, credit scoring fees, credit card fees, website network hosting and server fees.

Cost of revenue decreased in the first quarter of 2021 from the first quarter of 2020, primarily due to a $1.1 million decrease for the cost of resold advertising space, as well as a $0.7 million decrease in credit card fees.

This was partially offset by an increase in compensation and benefits of $0.9 million.

Cost of revenue as a percentage of revenue remained consistent at 5% for each of the first quarters of 2021 and 2020.

Cost of revenue increased in the second quarter of 2021 from the second quarter of 2020, primarily due to an increase in compensation and benefits of $0.8 million, partially offset by a $0.6 million decrease in credit card fees.

Cost of revenue increased slightly in the first six months of 2021 from the first six months of 2020, primarily due to an increase in compensation and benefits of $1.7 million, partially offset by a $1.3 million decrease in credit card fees, as well as a $1.1 million decrease for the cost of resold advertising space.

Cost of revenue as a percentage of revenue decreased to 5% in the second quarter of 2021 compared to 7% in the second quarter of 2020, and decreased to 5% in the first six months of 2021 compared to 6% in the first six months of 2020.

Selling and marketing expense

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Advertising production costs are expensed in the period the related ad is first run.

Selling and marketing expense increased in the first quarter of 2021 compared to the first quarter of 2020 primarily due to an increase in compensation and benefits of $2.0 million as a result of an increase in headcount.

Selling and marketing expense increased in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 primarily due to the increases in advertising and promotional expense discussed below.

Advertising and promotional expense is the largest component of selling and marketing expense, and is comprised of the following:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Change 2021 2020 $

(Dollars in thousands)

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This relationship exists for our Home, Consumer and Insurance segments.

We adjusted our advertising expenditures in the first quarter of 2021 compared to the first quarter of 2020 in response to changes in Network Partner demand on our marketplace as a result of the ongoing COVID-19 pandemic discussed above.

We adjusted our advertising expenditures in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 in response to changes in Network Partner demand on our marketplace as a result of the ongoing COVID-19 pandemic discussed above.

We will continue to adjust selling and marketing expenditures dynamically in relation to this and in response to anticipated revenue opportunities.

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General and administrative expense consists primarily of compensation and other employee-related costs (including stock-based compensation) for personnel engaged in finance, legal, tax, corporate information technology, human resources and executive management functions, as well as facilities and infrastructure costs and fees for professional services.

General and administrative expense increased in the first quarter of 2021 compared to the first quarter of 2020, primarily due to increases in compensation and benefits, facilities expense, and technology expense of $4.7 million, $1.5 million, and $0.6 million, respectively.

This was partially offset by decreases in professional fees and travel and entertainment expense of $1.5 million and $0.7 million, respectively.

General and administrative expense as a percentage of revenue increased to 13% in the first quarter of 2021 compared to 11% in the first quarter of 2020.

General and administrative expense increased in the second quarter of 2021 compared to the second quarter of 2020, primarily due to increases in compensation and benefits, technology expense, and facilities expense of $5.5 million, $1.7 million, and $1.4 million, respectively, as well as a $1.0 million increase in losses on asset impairments and disposals.

General and administrative expense increased in the first six months of 2021 compared to the first six months of 2020, primarily due to increases in compensation and benefits, facilities expense, and technology expense of $10.2 million, $2.9 million, and $2.3 million, respectively.

This was partially offset by a decrease in professional fees of $1.3 million.

General and administrative expense as a percentage of revenue decreased to 15% in the second quarter of 2021 compared to 16% in the second quarter of 2020, and increased to 14% in the first six months of 2021 compared to 13% in the first six months of 2020.

Product development

Product development expense consists primarily of compensation and other employee-related costs (including stock-based compensation) and third-party labor costs that are not capitalized, for employees and consultants engaged in the design, development, testing and enhancement of technology.

Product development expense increased in the first quarter of 2021 compared to the first quarter of 2020 as we continued to invest in internal development of new and enhanced features, functionality and business opportunities that we believe will enable us to better and more fully serve consumers and Network Partners.

Product development expense increased in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 as we continued to invest in internal development of new and enhanced features, functionality and business opportunities that we believe will enable us to better and more fully serve consumers and Network Partners.

The increase in depreciation expense in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 was primarily the result of depreciation on assets related to our new corporate office, which lease contractually commenced in the second quarter of 2021.

Amortization of intangibles

The decrease in amortization of intangibles in the first quarter of 2021 compared to the first quarter of 2020 was due to intangible assets associated with our recent business acquisitions becoming fully amortized.

The decrease in amortization of intangibles in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 was due to certain intangible assets associated with our recent business acquisitions becoming fully amortized.

Contingent consideration

During the first quarter of 2021, we recorded contingent consideration expense of $0.8 million due to the adjustment in the estimated fair value of the remaining earnout payment related to the QuoteWizard acquisition.

During the first quarter of 2020, we recorded an aggregate gain of $8.1 million due to adjustments in the estimated fair value of the earnout payments related to our recent acquisitions.

For the first quarter of 2020, the gain related to the

QuoteWizard acquisition was $8.3 million, partially offset by contingent consideration expense for the Ovation acquisition of $0.1 million.

During the second quarter and first six months of 2021, we recorded contingent consideration gains of $8.9 million and $8.1 million, respectively, due to adjustments in the estimated fair value of the remaining earnout payment related to the QuoteWizard acquisition.

During the second quarter and first six months of 2020, we recorded aggregate contingent consideration expense of $9.2 million and $1.1 million, respectively, due to adjustments in the estimated fair value of the earnout payments related to our recent acquisitions.

For the second quarter of 2020, the contingent consideration expense for the QuoteWizard, Ovation and SnapCap acquisitions was $8.1 million, $1.0 million and $0.1 million, respectively.

For the first six months of 2020, the contingent consideration expense for the Ovation and SnapCap acquisitions was $1.2 million and $0.1 million, respectively, partially offset by a contingent consideration gain for the QuoteWizard acquisition of $0.2 million.

Interest expense

Interest expense increased in the first quarter of 2021 compared to the first quarter of 2020 due to the issuance of $575.0 million of our 0.50% Convertible Senior Notes due July 15, 2025 (the “2025 Notes”) as well as the repurchase of a portion of our existing 0.625% Convertible Senior Notes due June 1, 2022 (the “2022 Notes”) in July 2020.

In the first quarter of 2021, interest expense of $6.8 million was recognized on the 2025 Notes.

This increase to interest expense was partially offset by lower interest expense on the 2022 Notes in the first quarter of 2021 compared to the first quarter of 2020 as a result of the July 2020 repurchase of $130.3 million principal amount of the 2022 Notes.

Interest expense increased in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 due to the issuance of $575.0 million of our 0.50% Convertible Senior Notes due July 15, 2025 (the “2025 Notes”) as well as the repurchase of a portion of our existing 0.625% Convertible Senior Notes due June 1, 2022 (the “2022 Notes”) in July 2020.

In the second quarter and first six months of 2021, interest expense of $6.7 million and $13.5 million, respectively, was recognized on the 2025 Notes.

This increase to interest expense was partially offset by lower interest expense on the 2022 Notes in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 as a result of the July 2020 repurchase of $130.3 million principal amount of the 2022 Notes.

See Note 13—Debt for additional information on the issuance of the 2025 Notes and the partial repurchase of the 2022 Notes.

For the first quarter of 2021, other income primarily consists of a $40.1 million gain on our investment in Stash as a result of an adjustment to the fair value based on observable market events.

For the first six months of 2021, other income primarily consists of a $40.1 million gain on our investment in Stash as a result of an adjustment to the fair value based on observable market events.

See Note 7—Equity Investment for additional information on the equity interest in Stash.

Income tax expense

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, as well as a tax benefit of $6.1 million for the impact of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.

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.

See Note 12—Income Taxes for additional information.

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The sale of substantially all of the assets of HLC, including the LendingTree Loans business, was completed on June 6, 2012.

HLC filed a petition under Chapter 11 of the United States Bankruptcy Code on July 21, 2019, which was converted to Chapter 7 of the United States Bankruptcy Code on September 16, 2019.

HLC filed a petition under Chapter 11 of the United States

Bankruptcy Code on July 21, 2019, which was converted to Chapter 7 of the United States Bankruptcy Code on September 16, 2019.

As a result of the voluntary bankruptcy petition, as of the initial July 21, 2019 bankruptcy petition filing date, HLC and its consolidated subsidiary were deconsolidated from LendingTree’s consolidated financial statements.

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

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.

Prior to the bankruptcy filing, losses from the LendingTree Loans business were primarily due to litigation settlements and contingencies and legal fees associated with ongoing legal proceedings.

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Segment Profit

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Change 2021 2020 $

(Dollars in thousands)

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See Note 16—Segment Information in the notes to the consolidated financial statements for additional information on segments and a reconciliation of segment profit to pre-tax income from continuing operations.

Consumer segment profit decreased $18.5 million in the first quarter of 2021 from the first quarter of 2020, primarily due to a decrease in revenue, partially offset by a corresponding decrease in selling and marketing expense.

We continue to be encouraged by the progress made in the Consumer segment since the onset of the COVID-19 pandemic.

Credit card issuer budgets continue to increase, and there are sustained signs of increasing consumer health and spending.

The profitability of our credit card product remains constrained in part due to lower approval rates and decreased competition on our network, as well as increased traffic acquisition costs in an environment where government stimulus has temporarily reduced consumers' demand for additional debt.

Lender demand in our personal loans product continues to recover;

however, consumers' lowered risk tolerance and subsequently lower demand continues to constrain this product.

While the timeline of full recovery for the Consumer segment remains uncertain, we continue to view the segment with optimism over the medium to long term.

Home segment profit increased $3.1 million in the first quarter of 2021 from the first quarter of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense.

Refinance activity increased at the beginning of the first quarter of 2021, then decelerated in the latter part of the quarter as mortgage interest rates increased from the historical lows experienced in the fourth quarter of 2020.

The Home segment performed well throughout as we are an integral part of our Network Partners' marketing model.

Demand for our services, and competition on our network, continued to increase with mortgage revenue per lead improving 53% over the first quarter of 2020.

In line with an acceleration of revenue, the Home segment margin contracted to 30% of revenue as we extended into lower-margin channels to fulfill increased lender demand.

While there is uncertainty over near-term changes in interest rates, we are confident in our market-leading position and flexible business model.

Insurance segment profit increased $2.3 million in the first quarter of 2021 from the first quarter of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense.

We continue to expand our presence in the Insurance industry by broadening traffic acquisition sources, growing existing insurance carrier relationships, and increasing efforts to scale non-automobile categories.

Our publisher platform and inbound channel each delivered record performance in the first quarter of 2021.

These additional traffic sources enable incremental growth while reducing our reliance on paid search marketing.

Consumer segment profit increased $14.0 million in the second quarter of 2021 from the second quarter of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense.

Consumer segment profit decreased $4.5 million in the first six months of 2021 from the first six months of 2020, primarily due to a decrease in revenue, partially offset by a corresponding decrease in selling and marketing expense.

We continue to build momentum in the Consumer segment as demand from both consumers and our Network Partners returns.

Consumer demand for personal loans began to return as the economy begins to reopen.

Lender demand in our personal loans product continues to improve, with more lenders currently on our marketplace than prior to the onset of the COVID-19 pandemic.

Credit card issuer budgets continue to increase, with an increasing number of issuers returning to our marketplace and increasing approval rates.

The profitability of our credit card product remains constrained as we continue to re-invest incremental revenue into the product to capture wallet share.

Our small business loans product continues steady recovery from the impact of the COVID-19 pandemic.

Insurance segment profit increased $3.1 million in the second quarter of 2021 from the second quarter of 2020, and increased $5.4 million in the first six months of 2021 from the first six months of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense.

We continue to diversify and increase the durability of the Insurance segment by broadening traffic acquisition sources, expanding our insurance carrier network, and growing into non-automobile categories.

During the second quarter of 2021, our publisher platform again delivered record performance, and our inbound channel continued positive momentum.

These additional traffic sources enable incremental

growth while reducing our reliance on paid search marketing, in which we have observed increasing competition in recent months.

Additionally, our efforts to scale non-automobile categories continue to deliver returns.

We observed record revenue from the home category in the first quarter of 2021, as we increasingly leverage our presence in the mortgage industry.

We continue to make significant investments in our Medicare category.

We again observed record revenue from the home category in the second quarter of 2021, as we increasingly leverage our presence in the mortgage industry.

We continue to make significant investments in our Medicare category, ahead of the annual fourth quarter enrollment season.

Home segment profit remained relatively consistent in the second quarter of 2021 from the second quarter of 2020.

Home segment profit increased $3.4 million in the first six months of 2021 from the first six months of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense.

Although refinance activity is decelerating from the peak experienced earlier this year, the Home segment continues to perform well as we are an integral part of our Network Partners' marketing model.

Demand for our services, and competition on our network, drove a 71% increase in mortgage revenue per lead in the second quarter of 2021 compared to the second quarter of 2020.

The Home segment margin increased to 37% of revenue in the second quarter of 2021, compared to 30% in the first quarter of 2021.

While there is uncertainty over the current low interest rate environment and corresponding impact to refinance activity, we are confident in our market-leading position and flexible business model.

Adjusted EBITDA

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Three Months Ended

Net income from continuing operations $ 19,312 $ 18,976

June 30, Six Months Ended

2021 2020 2021 2020

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

Adjustments to reconcile to Adjusted EBITDA:

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Severance — 32 — 190

Loss on disposal of assets 348 530

Loss on impairments and disposal of assets 1,052 22 1,400 552

Unrealized gain on investments — — (40,072) —

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Interest expense, net 9,840 4,955 20,055 9,789

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

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

Adjusted EBITDA $ 38,229 $ 30,847 $ 68,978 $ 75,723

Financial Position, Liquidity and Capital Resources

As of March 31, 2021, we had $162.1 million of cash and cash equivalents, compared to $169.9 million of cash and cash equivalents as of December 31, 2020.

As of June 30, 2021, we had $203.2 million of cash and cash equivalents, compared to $169.9 million of cash and cash equivalents as of December 31, 2020.

In the first quarter of 2021, we acquired additional equity interest in Stash for $1.2 million.

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We expect our cash and cash equivalents and cash flows from operations to be sufficient to fund our operating needs for the next twelve months and beyond.

Our revolving credit facility described below is an additional potential source of liquidity.

We will continue to monitor the impact of the ongoing COVID-19 pandemic on our liquidity and capital resources.

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In July 2020, we executed a temporary amendment to the 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.

The amendment applies from the effective date through the fiscal quarter ending June 30, 2021, unless terminated in advance by us.

The amendment was applicable from the effective date through the fiscal quarter ending June 30, 2021.

As a result of the expiration of the temporary amendment, we are currently unable to draw on the Amended Revolving Credit Facility and we are in the process of establishing a new facility during the third quarter of 2021.

See Note 13—Debt for additional information.

As of May 5, 2021, we have outstanding a $0.2 million letter of credit under the Amended Revolving Credit Facility.

The remaining borrowing capacity at May 5, 2021 is $499.8 million.

As of July 29, 2021, we have outstanding a $0.2 million letter of credit under the Amended Revolving Credit Facility.

Cash Flows from Continuing Operations

Our cash flows attributable to continuing operations are as follows:

Three Months Ended

Six Months Ended

(in thousands)

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In addition, our uses of cash from operating activities include compensation and other employee-related costs, other general corporate expenditures, litigation settlements and contingencies, certain contingent consideration payments, and income taxes.

Net cash provided by operating activities attributable to continuing operations decreased in the first three months of 2021 from the first three months of 2020 primarily due to unfavorable changes in accounts receivable, partially offset by favorable changes in accounts payable, accrued expenses and other current liabilities.

Net cash provided by operating activities attributable to continuing operations decreased in the first six months of 2021 from the first six months of 2020 primarily due to unfavorable changes in accounts receivable, partially offset by favorable changes in accounts payable, accrued expenses and other current liabilities, and income taxes receivable.

Cash Flows from Investing Activities

Net cash used in investing activities attributable to continuing operations in the first three months of 2021 of $11.7 million consisted of capital expenditures of $10.6 million primarily related to internally developed software and leasehold improvements for our new principal corporate offices, as well as the purchase of an additional $1.2 million equity interest in Stash, described above.

Net cash used in investing activities attributable to continuing operations in the first three months of 2020 of $84.2 million consisted of the initial purchase of an $80.0 million equity interest in Stash and capital expenditures of $4.2 million primarily related to internally developed software.

Net cash used in investing activities attributable to continuing operations in the first six months of 2021 of $24.8 million consisted of capital expenditures of $23.6 million primarily related to internally developed software and leasehold improvements for our new principal corporate offices, as well as the purchase of an additional $1.2 million equity interest in Stash, described above.

Net cash used in investing activities attributable to continuing operations in the first six months of 2020 of $89.1 million consisted of the initial purchase of an $80.0 million equity interest in Stash and capital expenditures of $9.1 million primarily related to internally developed software.

Cash Flows from Financing Activities

Net cash used in financing activities attributable to continuing operations in the first three months of 2021 of $5.0 million consisted primarily of $4.8 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options.

Net cash provided by financing activities attributable to continuing operations in the first three months of 2020 of $46.6 million consisted primarily of $55.0 million of net proceeds from our Amended Revolving Credit Facility, partially offset by $5.1 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options, and a $3.0 million contingent consideration payment for SnapCap.

Net cash used in financing activities attributable to continuing operations in the first six months of 2021 of $5.0 million consisted primarily of $4.8 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options.

Net cash provided by financing activities attributable to continuing operations in the first six months of 2020 of $45.3 million consisted primarily of $55.0 million of net proceeds from our Amended Revolving Credit Facility, partially offset by $6.1 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options, and a $3.3 million contingent consideration payment for SnapCap.

Off-Balance Sheet Arrangements

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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 2. Management’s Discussion and Analysis