What changed in this filing

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Item 1. Financial Statements

2021-10-28 compared with 2021-07-30 · 259 added, 198 removed, 764 unchanged (37% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

17 unchanged sentences

Other income — — 40,072 7

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

(Loss) income before income taxes ( 4,407 ) ( 32,734 ) 24,251 ( 29,315 )

Income tax benefit 1 7,925 455 14,866

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

Net (loss) income from continuing operations ( 4,406 ) ( 24,809 ) 24,706 ( 14,449 )

(Loss) income from discontinued operations, net of tax ( 54 ) 166 ( 3,516 ) ( 25,550 )

Net (loss) income and comprehensive (loss) income $ ( 4,460 ) $ ( 24,643 ) $ 21,190 $ ( 39,999 )

Weighted average shares outstanding:

1 unchanged sentence

Diluted 13,268 13,033 13,797 12,992

Income (loss) per share from continuing operations:

(Loss) income per share from continuing operations:

Basic $ ( 0.33 ) $ ( 1.90 ) $ 1.87 $ ( 1.11 )

Diluted $ ( 0.33 ) $ ( 1.90 ) $ 1.79 $ ( 1.11 )

Loss per share from discontinued operations:

(Loss) income per share from discontinued operations:

Basic $ — $ 0.01 $ ( 0.27 ) $ ( 1.97 )

Diluted $ — $ 0.01 $ ( 0.25 ) $ ( 1.97 )

Net income (loss) per share:

Net (loss) income per share:

Basic $ ( 0.34 ) $ ( 1.89 ) $ 1.61 $ ( 3.08 )

4 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2021 December 31, 2020

20 unchanged sentences

Accrued expenses and other current liabilities 114,664 101,196

Current contingent consideration 196 —

Current liabilities of discontinued operations 13 536

40 unchanged sentences

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

Net loss and comprehensive loss ( 4,460 ) — — — ( 4,460 ) — —

Non-cash compensation 17,074 — — 17,074 — — —

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 1,894 ) 13 — ( 1,894 ) — — —

Other ( 6 ) — — ( 6 ) — — —

Balance as of September 30, 2021 $ 431,082 15,969 $ 160 $ 1,233,802 $ ( 619,719 ) 2,641 $ ( 183,161 )

Common Stock Treasury Stock

14 unchanged sentences

Balance as of June 30, 2020 $ 405,977 15,731 $ 157 $ 1,196,990 $ ( 608,009 ) 2,641 $ ( 183,161 )

Net loss and comprehensive loss ( 24,643 ) — — — ( 24,643 ) — —

Non-cash compensation 14,161 — — 14,161 — — —

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes 4,646 28 1 4,645 — — —

Issuance of 0.50 % Convertible Senior Notes, net

116,300 — — 116,300 — — —

Repurchase of 0.625 % Convertible Senior Notes, net

( 107,882 ) — — ( 107,882 ) — — —

Convertible note hedge transactions ( 14,379 ) — — ( 14,379 ) — — —

Warrant transactions ( 33,171 ) — — ( 33,171 ) — — —

Balance as of September 30, 2020 $ 361,009 15,759 $ 158 $ 1,176,664 $ ( 632,652 ) 2,641 $ ( 183,161 )

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

2 unchanged sentences

Loss from discontinued operations, net of tax 3,516 25,550

Income from continuing operations 29,112 10,360

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

Income (loss) from continuing operations 24,706 ( 14,449 )

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

Loss on impairments and disposal of assets 2,651 686

7 unchanged sentences

Amortization of debt issuance costs 3,756 2,241

Amortization of convertible debt discount 14,670 6,250

Write-off of previously-capitalized debt issuance costs 1,066 —

Amortization of debt discount 22,297 12,429

Loss on extinguishment of debt — 7,768

Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities 13,015 2,490

13 unchanged sentences

Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options ( 6,666 ) ( 1,421 )

Net proceeds from revolving credit facility — 55,000

Proceeds from the issuance of 0.50 % Convertible Senior Notes

Repurchase of 0.625 % Convertible Senior Notes

— ( 233,862 )

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

— ( 124,200 )

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

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

Termination of warrants related to the 0.625 % Convertible Senior Notes

Net repayment of revolving credit facility — ( 75,000 )

Payment of debt issuance costs ( 5,995 ) ( 16,398 )

Payment of original issue discount on undrawn term loan ( 2,500 ) —

Contingent consideration payments — ( 3,330 )

17 unchanged sentences

LendingTree operates what it believes to be the leading online consumer platform that connects consumers with the choices they need to be confident in their financial decisions.

The Company offers consumers tools and resources, including free credit scores, that facilitate comparison-shopping for mortgage loans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, deposit accounts, personal loans, student loans, small business loans, insurance quotes and other related offerings.

The Company offers consumers tools and resources, including free credit scores, that facilitate comparison-shopping for mortgage loans, home equity loans, reverse mortgage loans, auto loans, credit cards, deposit accounts, personal loans, student loans, small business loans, insurance quotes and other related offerings.

The Company primarily seeks to match in-market consumers with multiple providers on its marketplace who can provide them with competing quotes for loans, deposit products, insurance or other related offerings they are seeking.

10 unchanged sentences

Basis of Presentation

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.

The accompanying unaudited interim consolidated financial statements as of September 30, 2021 and for the three and nine months ended September 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 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 results for the three and nine months ended September 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").

26 unchanged sentences

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 June 30, 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 September 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.

13 unchanged sentences

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.

17 unchanged sentences

An entity may adopt the amendments through either a modified retrospective method of transition or a fully retrospective method of transition.

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

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

NOTE 3— REVENUE

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

32 unchanged sentences

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.

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 $ 7.9 million and $ 6.4 million at September 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 $ 1.0 million and $ 0.7 million at September 30, 2021 and December 31, 2020, respectively.

During the first nine months of 2021, the Company recognized revenue of $ 0.7 million that was included in the contract liability balance at December 31, 2020.

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

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 $ 0.1 million and $ 0.3 million in the second quarters of 2021 and 2020, respectively.

The Company recognized increases to such revenue from prior periods of $ 0.4 million and $ 0.6 million in the third quarters of 2021 and 2020, respectively.

NOTE 4— CASH AND RESTRICTED CASH

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

September 30,

2021 December 31, 2020

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

6 unchanged sentences

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

September 30,

2021 December 31, 2020

6 unchanged sentences

Goodwill and Indefinite-Lived Intangible Assets

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.

The Company's goodwill at each of September 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.

7 unchanged sentences

Website content 27,100 ( 24,172 ) 2,928

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

Balance at September 30, 2021 $ 208,100 $ ( 122,708 ) $ 85,392

Cost Accumulated

8 unchanged sentences

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

Amortization Expense

14 unchanged sentences

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 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.

During the first nine 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 September 30, 2021, there have been no impairments to the acquisition cost of the Stash equity securities.

See Note 18—Subsequent Event for additional information.

NOTE 8— BUSINESS ACQUISITIONS

4 unchanged sentences

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

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.

The Company could make an earnout payment ranging from zero to $ 23.4 million based on the achievement of certain defined performance targets for QuoteWizard during the final earnout period ending October 31, 2021.

As of September 30, 2021, this remaining earnout payment is not expected to be made and no liability has been recorded in the accompanying consolidated balance sheet.

See Note 15—Fair Value Measurements for additional information.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

3 unchanged sentences

Total changes in fair value of contingent consideration $ ( 196 ) $ 6,658 $ ( 8,249 ) $ 7,711

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.

AND SUBSIDIARIES

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.

1 unchanged sentence

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

September 30,

2021 December 31, 2020

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

4 unchanged sentences

Weighted average diluted common shares 13,268 13,033 13,797 12,992

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.

For the third quarter of 2021, as well as the third quarter and first nine months of 2020, the Company had losses from continuing operations and, as a result, no potentially dilutive securities were included in the denominator for computing diluted loss per share, because the impact would have been anti-dilutive.

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

Approximately 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 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

Approximately 0.4 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the third quarter of 2021 because their inclusion would have been anti-dilutive.

Approximately 1.3 million and 1.1 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the third quarter and first nine months of 2020, respectively.

For the third 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 nine months of 2021, the weighted average shares that were anti-dilutive included options to purchase 0.4 million shares of common stock and 0.1 million restricted stock units.

LENDINGTREE, INC.

1 unchanged sentence

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.

For the third quarter and first nine months of 2020, the weighted average shares that were anti-dilutive included options to purchase 0.1 million and 0.2 million shares of common stock, respectively.

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 0.625 % Convertible Senior Notes due June 1, 2022 were excluded from the calculation of diluted shares for the third quarter 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 period.

Shares of the Company's common stock associated with the warrants issued by the Company in 2017 were excluded from the calculation of diluted shares for the third quarter and first nine months of 2021 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 these periods.

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

During the third quarter of 2021, the Company implemented an employee stock purchase plan, which did not have a material impact to the calculation of diluted shares.

See Note 11—Stock-Based Compensation for additional information.

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 six months of 2021 and 2020.

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

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

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

NOTE 11— STOCK-BASED COMPENSATION

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

15 unchanged sentences

Expired ( 35 ) 371.25

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 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.

Options outstanding at September 30, 2021 826,467 140.38 4.87 $ 50,380

Options exercisable at September 30, 2021 547,177 $ 72.09 2.91 $ 50,380

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 139.83 on the last trading day of the quarter ended September 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 September 30, 2021.

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

(b) During the nine months ended September 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 $ 129.21 , 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.

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.

22 unchanged sentences

Forfeited — —

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

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

Options outstanding at September 30, 2021 700,209 236.01 7.00 $ —

Options exercisable at September 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 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.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

Restricted Stock Units

5 unchanged sentences

Forfeited ( 45,848 ) 266.99

Nonvested at June 30, 2021 268,566 $ 266.34

Nonvested at September 30, 2021 300,298 $ 238.28

Restricted Stock Units with Performance Conditions

4 unchanged sentences

Forfeited — —

Nonvested at June 30, 2021 6,328 $ 223.90

Nonvested at September 30, 2021 6,328 $ 223.90

Restricted Stock Awards with Performance Conditions

5 unchanged sentences

Forfeited — —

Nonvested at June 30, 2021 11,902 $ 340.25

Nonvested at September 30, 2021 5,951 $ 340.25

LENDINGTREE, INC.

7 unchanged sentences

Forfeited — —

Nonvested at June 30, 2021 26,674 $ 340.25

Nonvested at September 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 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.

As of September 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.

Employee Stock Purchase Plan

During the third quarter of 2021, the Company implemented an employee stock purchase plan ("ESPP"), under which a total of 262,731 shares of the Company's common stock have been reserved for issuance.

The ESPP is a tax-qualified plan under Section 423 of the Internal Revenue Code.

Under the terms of the ESPP, eligible employees are granted options to purchase shares of the Company's common stock at 85 % of the lesser of (1) the fair market value at time of grant or (2) the fair market value at time of exercise.

The offering periods and purchase periods are typically six-month periods ending on June 30 and December 31 of each year.

No shares were issued under the ESPP during the third quarter of 2021.

During the nine months ended September 30, 2021, the Company granted employee stock purchase rights to certain employees with a grant date fair value per share of $ 42.39 , calculated using the Black-Scholes option pricing model.

For purposes of determining stock-based compensation expense, the grant date fair value per share estimated using the Black-Scholes option pricing model required the use of the following key assumptions:

Expected term (1)

Expected dividend (2)

Expected volatility (3)

Risk-free interest rate (4)

(1) The expected term was calculated using the time period between the grant date and the purchase date.

(2) No dividends are expected to be paid, resulting in a zero expected dividend rate.

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

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

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

Treasury yields for notes with comparable expected terms as the employee stock purchase rights, in effect at the grant date.

NOTE 12— INCOME TAXES

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

2 unchanged sentences

Effective tax rate — % 24.2 % ( 1.9 ) % 50.7 %

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 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.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the third quarter and first nine months of 2021, the effective tax rate varied from the federal statutory rate of 21 % in part due to an excess tax expense of $ 0.9 million and an excess tax benefit of $ 7.4 million, respectively, 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 third quarter and first nine months of 2020, the effective tax rate varied from the federal statutory rate of 21 % in part due to a tax benefit of $ 0.2 million and $ 2.0 million, respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

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

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in thousands)

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 (expense) - excluding excess tax (expense) benefit on stock compensation and CARES Act $ 939 $ 7,750 $ ( 6,900 ) $ 6,780

Excess tax (expense) benefit on stock compensation ( 938 ) 175 7,355 1,982

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

12 unchanged sentences

The 2025 Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2025 Notes;

equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated;

effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the senior secured revolving credit facility, described below, to the extent of the value of the assets securing such indebtedness;

equal in right of payment to any

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

of the Company’s unsecured indebtedness that is not so subordinated;

effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the senior secured credit facility, described below, to the extent of the value of the assets securing such indebtedness;

and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

3 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.

AND SUBSIDIARIES

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 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.

Holders of the 2025 Notes were 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.

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

6 unchanged sentences

The initial measurement of convertible debt instruments that may be settled in cash is separated into a debt and an equity component whereby the debt component is based on the fair value of a similar instrument that does not contain an equity conversion option.

The separate components of debt and equity of the Company’s 2025 Notes were determined using an interest rate of 5.30 %, which reflects the nonconvertible debt borrowing rate of the Company at the date of issuance.

As a result, the initial components of debt and equity were $ 455.6 million and $ 119.4 million, respectively.

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 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 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.

The separate components of debt and equity of the Company’s 2025 Notes were determined using an

LENDINGTREE, INC.

1 unchanged sentence

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) :

interest rate of 5.30 %, which reflects the nonconvertible debt borrowing rate of the Company at the date of issuance.

As a result, the initial components of debt and equity were $ 455.6 million and $ 119.4 million, respectively.

In the first nine months of 2021, the Company recorded interest expense on the 2025 Notes of $ 20.3 million which consisted of $ 2.2 million associated with the 0.50 % coupon rate, $ 16.4 million associated with the accretion of the debt discount, and $ 1.7 million associated with the amortization of the debt issuance costs.

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

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

As of September 30, 2021, the fair value of the 2025 Notes is estimated to be approximately $ 500.5 million using the Level 1 observable input of the last quoted market price for the quarter ended September 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 2025 Notes, all of which is recorded as a non-current liability in the September 30, 2021 consolidated balance sheet, are as follows (in thousands) :

September 30,

2021 December 31, 2020

13 unchanged sentences

equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated;

and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

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:

• 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;

• during the five business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price (as defined in the 2022 Notes) per $1,000 principal amount of 2022 Notes for such trading day was less than 98 % of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;

• 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 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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

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

Holders of the 2022 Notes were not entitled to convert the 2022 Notes during the calendar quarter ended September 30, 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.

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

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

7 unchanged sentences

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

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

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

In the first nine months of 2021, the Company recorded interest expense on the 2022 Notes of $ 7.1 million which consisted of $ 0.8 million associated with the 0.625 % coupon rate, $ 5.6 million associated with the accretion of the debt discount, and $ 0.7 million associated with the amortization of the debt issuance costs.

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

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

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) :

As of September 30, 2021, the fair value of the 2022 Notes is estimated to be approximately $ 167.3 million using the Level 1 observable input of the last quoted market price for the quarter ended September 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 2022 Notes, all of which is recorded as a current liability in the September 30, 2021 consolidated balance sheet, are as follows (in thousands) :

September 30,

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.

AND SUBSIDIARIES

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.

Credit Facility

On September 15, 2021, the Company entered into a credit agreement (the “Credit Agreement”), consisting of a $ 200.0 million revolving credit facility (the “Revolving Facility”), which matures on September 15, 2026, and a $ 250.0 million delayed draw term loan facility (the “Term Loan Facility” and together with the Revolving Facility, the “Credit Facility”), which matures on September 15, 2028 to the extent the loans thereunder will be drawn.

The delayed draw commitments under the Term Loan Facility will be available until June 1, 2022.

The proceeds of the Revolving Facility can be used to finance working capital, for general corporate purposes and any other purpose not prohibited by the Credit Agreement.

The proceeds of the Term Loan Facility can be used to settle the Company’s 2022 Notes, including related fees, costs and expenses, and up to $ 80.0 million may be used for general corporate purposes and any other purposes not prohibited by the Credit Agreement.

The Credit Facility replaces the Company's $ 500.0 million five-year senior secured revolving credit facility (the "Amended Revolving Credit Facility") which was entered into on December 10, 2019.

As of September 30, 2021, the Company had no borrowings outstanding under the Credit Facility and at December 31, 2020, the Company had no borrowings outstanding under the Amended Revolving Credit Facility.

The full amount of the Revolving Facility will be available on a same-day basis, with respect to base rate loans and upon advance notice with respect to LIBO rate loans, subject to customary terms and conditions.

Under certain conditions, the Company will be permitted to add one or more term loans and/or increase revolving or term loan commitments under the Credit Facility by an amount set at the greater of $ 116.0 million and 100% of consolidated EBITDA (subject to adjustments for certain prepayments), plus an unlimited amount provided that the first lien net leverage ratio does not exceed 3.00 to 1.00.

Additionally, up to $ 20.0 million of the Revolving Facility will be available for the issuance of letters of credit.

At each of September 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 Credit Facility bear interest at annual rates that, at the Company’s option, will be either:

• a base rate generally defined as the sum of (i) the greater of (a) the prime rate of Truist Bank, (b) the federal funds effective rate plus 0.5 % and (c) the LIBO rate (defined below) on a daily basis applicable for an interest period of one month plus 1.0 % and (ii) an applicable percentage of 1.25 % to 1.75 % for loans under the Revolving Facility and 2.75 % to 3.00 % for loans under the Term Loan Facility, in each case, based on a first lien net leverage ratio;

• a LIBO rate generally defined as the sum of (i) the rate for Eurodollar dollar deposits for the applicable interest period and (ii) an applicable percentage of 2.25 % to 2.75 % for loans under the Revolving Facility and 3.75 % to 4.00 % for loans under the Term Loan Facility, in each case, based on a first lien net leverage ratio.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Senior Secured Revolving Credit Facility

On December 10, 2019, the Company's wholly-owned subsidiary, LendingTree, LLC, entered into an amended and restated $ 500.0 million five-year senior secured revolving credit facility (the "Amended Revolving Credit Facility") which amended and restated the Company's previous $ 350.0 million five-year senior secured revolving credit facility (the “2017 Revolving Credit Facility”).

The Amended Revolving Credit Facility matures on December 10, 2024.

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 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.

Under certain conditions, the Company will be permitted to add one or more term loans and/or increase revolving commitments under the Amended Revolving Credit Facility by an additional amount equal to the greater of $ 185.0 million or 100% of Consolidated EBITDA as defined, or a greater amount provided that a total consolidated senior secured debt to EBITDA ratio does not exceed 2.50 to 1.00.

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 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:

• a base rate generally defined as the sum of (i) the greater of (a) the prime rate of Truist Bank, (b) the federal funds effective rate plus 0.5 % and (c) the LIBO rate (defined below) on a daily basis applicable for an interest period of one month plus 1.0 % and (ii) an applicable percentage of 0.25 % to 1.0 % based on a total consolidated debt to EBITDA ratio;

• a LIBO rate generally defined as the sum of (i) the rate for Eurodollar deposits in the applicable currency and (ii) an applicable percentage of 1.25 % to 2.0 % based on a total consolidated debt to EBITDA ratio.

All swingline loans bear interest at the base rate defined above.

Interest on the Company’s borrowings are payable quarterly in arrears for base rate loans and on the last day of each interest rate period (but not less often than three months) for LIBO rate loans.

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

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

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.

The amendment amends the existing credit agreement to, among other things:

(i) temporarily replace the total consolidated debt to EBITDA ratio covenant with a consolidated liquidity covenant requiring the Company to maintain unrestricted cash and cash equivalents in the United States plus amounts available and permitted to be drawn under the Amended Revolving Credit Facility to be no less than $ 200.0 million;

(ii) impose additional limitations on certain restricted payments during such temporary period;

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 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.

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

Interest on the Company’s borrowings is payable quarterly in arrears for base rate loans and on the last day of each interest rate period (but not less often than three months) for LIBO rate loans.

The Credit Facility contains a restrictive financial covenant, which is set at a first lien net leverage ratio of 2.50 to 1.00, except that this may increase by 0.50 :1.00 for the four fiscal quarters following a material acquisition.

The financial covenant will be tested only if the loans and certain other obligations under the Revolving Facility exceed $ 20.0 million as of the last date of any fiscal quarter (starting with the fiscal quarter ending on December 31, 2021).

In addition, the Credit Facility contains mandatory prepayment events, affirmative and negative covenants and events of default customary for a transaction of this type.

The covenants, among other things, restrict additional indebtedness, liens, mergers or certain fundamental changes, asset dispositions, dividends and other restricted payments, transactions with affiliates, loans and investments and other matters customarily restricted in credit agreements of this type.

The Company is required to make mandatory prepayments of the outstanding principal amount of loans under the Term Loan Facility with the net cash proceeds from certain disposition of assets and the receipt of insurance proceeds upon certain casualty and condemnation events, in each case, to the extent not reinvested within a specified time period, from excess cash flow beyond stated threshold amounts, and from the incurrence of certain indebtedness.

The Company has the right to prepay its term loans under the Credit Agreement, in whole or in part, at any time without premium or penalty, subject to certain limitations and a 1.0 % soft call premium applicable during the first six months following the closing date.

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

The Credit Facility requires the Company and certain of its subsidiaries to pledge as collateral, subject to certain customary exclusions, substantially all of their assets, including 100 % of the equity in certain domestic subsidiaries and 65 % of the voting equity, and 100 % of the non-voting equity, in certain foreign subsidiaries.

The obligations under the Credit Facility are unconditionally guaranteed on a senior basis by the Company’s material domestic subsidiaries, which guaranties are secured by the collateral.

With respect to the Revolving Facility, the Company is required to pay an unused commitment fee quarterly in arrears on the difference between committed amounts and amounts actually borrowed under the Revolving Facility equal to an applicable percentage of 0.25 % to 0.50 % per annum based on a first lien net leverage ratio.

The Company is required to pay a letter of credit participation fee and a letter of credit fronting fee quarterly in arrears.

The letter of credit participation fee is based upon the aggregate face amount of outstanding letters of credit at an applicable percentage of 2.25 % to 2.75 % based on a first lien net leverage ratio.

The letter of credit fronting fee is 0.125 % per annum on the face amount of each letter of credit.

With respect to the Term Loan Facility, the Company is required to pay an unused commitment fee quarterly in arrears on the difference between committed amounts and amounts actually borrowed under the Term Loan Facility equal to an applicable LIBO rate plus an applicable percentage of 3.75 % to 4.00 % per annum based on a first lien net leverage ratio.

The Company recognized $ 1.1 million in additional interest expense in the third quarter of 2021 due to the write-off of certain unamortized debt issuance costs associated with the Amended Revolving Credit Facility.

In addition to the remaining unamortized debt issuance costs associated with the Amended Revolving Credit Facility, debt issuance costs of $ 2.8 million related to the Revolving Facility are being amortized to interest expense over the life of the Revolving Facility.

Debt issuance costs of $ 3.5 million related to the Term Loan Facility and the original issue discount of $ 2.5 million paid on the undrawn term loan facility are being amortized to interest expense over the delayed draw access period, until such time that the loans thereunder are drawn.

These deferred costs are included in prepaid and other current assets and other non-current assets in the Company's consolidated balance sheet.

In the first nine months of 2021, the Company recorded interest expense related to its revolving credit facilities of $ 3.0 million which consisted of $ 1.8 million in unused commitment fees and $ 1.2 million associated with the amortization of the debt issuance costs.

In the first nine months of 2021, the Company recorded interest expense related to the Term Loan Facility of $ 0.7 million which consisted of $ 0.4 million in unused commitment fees, $ 0.2 million associated with the amortization of the debt issuance costs, and $ 0.1 million associated with the amortization of the original issue discount.

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

LENDINGTREE, INC.

1 unchanged sentence

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.

and material domestic subsidiaries of LendingTree, LLC, which guaranties are secured by a pledge as collateral, subject to certain customary exclusions, of 100 % of each such guarantor's assets, including 100 % of each such guarantor’s 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).

Except as noted in the covenant relief discussion above, the Company is required to pay an unused commitment fee quarterly in arrears on the difference between committed amounts and amounts actually borrowed under the Amended Revolving Credit Facility equal to an applicable percentage of 0.25 % to 0.45 % per annum based on a total consolidated debt to EBITDA ratio.

The Company is required to pay a letter of credit participation fee and a letter of credit fronting fee quarterly in arrears.

The letter of credit participation fee is based upon the aggregate face amount of outstanding letters of credit at an applicable percentage of 1.25 % to 2.0 % based on a total consolidated debt to EBITDA ratio.

The letter of credit fronting fee is 0.125 % per annum on the face amount of each letter of credit.

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 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 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

2 unchanged sentences

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 September 30, 2021, the Company had litigation settlement accruals of $ 0.1 million in continuing operations.

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 June 30, 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 September 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

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

7 unchanged sentences

Contingent consideration, end of period $ — $ 35,175 $ — $ 35,175

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.

See Note 8—Business Acquisitions for additional information.

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

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

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

Any changes in fair value will be recorded in operating income in the consolidated statements of operations and comprehensive income.

The following table provides quantitative information about Level 3 fair value measurements.

Fair Value at

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

(in thousands)

Contingent consideration $ 196 Option pricing model Operating results growth rate ( 21.4 ) %

Discount rate 3.1 %

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

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

As of September 30, 2021, these performance targets are not expected to be achieved.

As such, this remaining earnout payment is not expected to be made and no liability has been recorded in the accompanying consolidated balance sheet.

The significant unobservable input used to estimate achievement of performance targets for the QuoteWizard contingent consideration is a 29.8 % decrease in operating results.

NOTE 16— SEGMENT INFORMATION

3 unchanged sentences

The Home segment includes the following products:

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

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

The Consumer segment includes the following products:

credit cards, personal loans, small business loans, student loans, auto loans, deposit accounts, and other credit products such as credit repair and debt settlement.

The Insurance segment consists of insurance quote products.

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

credit cards, personal loans, small

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

business loans, student loans, auto loans, deposit accounts, and other credit products such as credit repair and debt settlement.

The Insurance segment consists of insurance quote products.

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

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

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

For the Other category, segment cost of revenue and marketing expense in the first nine 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 September 30, 2021

Home Consumer Insurance Other Total

2 unchanged sentences

Segment marketing expense 70,905 55,295 58,227 83 184,510

Segment profit (loss) 39,017 33,394 33,238 ( 49 ) 105,600

Segment profit 41,517 44,716 26,610 97 112,940

Cost of revenue 15,020

8 unchanged sentences

Interest expense, net ( 11,826 )

Income before income taxes and discontinued operations $ 708

Three Months Ended June 30, 2020

Loss before income taxes and discontinued operations $ ( 4,407 )

Three Months Ended September 30, 2020

Home Consumer Insurance Other Total

2 unchanged sentences

Segment marketing expense 53,693 26,730 55,457 513 136,393

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

Segment profit 25,166 21,647 37,043 2 83,858

Cost of revenue 13,220

8 unchanged sentences

Interest expense, net ( 16,617 )

Other income 7

Loss before income taxes and discontinued operations $ ( 32,734 )

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Home Consumer Insurance Other Total

15 unchanged sentences

Income before income taxes and discontinued operations $ 24,251

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Home Consumer Insurance Other Total

12 unchanged sentences

Litigation settlements and contingencies ( 983 )

Operating income 13,201

Operating loss ( 2,916 )

Interest expense, net ( 26,406 )

Other income 7

Income before income taxes and discontinued operations $ 3,419

Loss before income taxes and discontinued operations $ ( 29,315 )

NOTE 17— DISCONTINUED OPERATIONS

5 unchanged sentences

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

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

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

LENDINGTREE, INC.

1 unchanged sentence

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.

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

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

Litigation settlements and contingencies and legal fees associated with related bankruptcy and 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.

HLC’s voluntary petition under the Bankruptcy Code does not represent an event of default under the Company’s Credit Agreement dated as of September 15, 2021, 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.

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

RFC filed for bankruptcy protection in May 2012.

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

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

filed for bankruptcy protection in May 2012.

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

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.

30 unchanged sentences

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.

In July 2021, the Company reached a settlement with LBHI, which payment was made in the third quarter of 2021.

Financial Information of Discontinued Operations

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Revenue $ — $ — $ — $ —

Loss before income taxes ( 4,261 ) ( 28,424 ) ( 4,614 ) ( 34,526 )

Income tax benefit 1,062 7,283 1,152 8,810

Net loss $ ( 3,199 ) $ ( 21,141 ) $ ( 3,462 ) $ ( 25,716 )

(Loss) income before income taxes ( 103 ) 193 ( 4,717 ) ( 34,333 )

Income tax benefit (expense) 49 ( 27 ) 1,201 8,783

Net (loss) income $ ( 54 ) $ 166 $ ( 3,516 ) $ ( 25,550 )

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

The results of discontinued operations also include litigation settlements and contingencies and legal fees associated with ongoing legal proceedings against LendingTree, Inc.

The results of discontinued operations also include litigation settlements and contingencies and legal fees associated with legal proceedings against LendingTree, Inc.

or LendingTree, LLC that arose due to the LendingTree Loans Business or the HLC bankruptcy filing.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 18— SUBSEQUENT EVENT

In October 2021, the Company entered into a stock transfer agreement with third parties to sell a portion of its Stash equity securities for $ 46.3 million.

The Company sold $ 35.3 million in October and will close on an additional $ 11.0 million in December 2021.

During the fourth quarter of 2021, the Company will record a realized gain of $ 27.9 million based on the sale of Stash equity securities under the stock transfer agreement.

Additionally, we anticipate net unrealized gains of $ 55.3 million as a result of an adjustment to the fair value of the Stash equity securities still held by the Company based on observable market events.

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