What changed in this filing

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Item 1A. Risk Factors

2022-03-01 compared with 2021-03-01 · 171 added, 239 removed, 454 unchanged (47% of the section changed)

Summary of Risk Factors

Below is a summary of the principal factors that make an investment in our common stock speculative or risky.

This summary does not address all of the risks that we face.

Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.

• The COVID-19 pandemic has impacted our business, and the ultimate impact on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

• Adverse conditions in the primary and secondary mortgage markets, as well as the general economy, could have a material adverse effect on our business, financial condition and results of operations.

• We depend on relationships with our Network Partners and any adverse changes in these relationships could adversely affect our business, financial condition and results of operations.

• Failure to maintain our reputation and brand recognition and attract and retain consumers in a cost-effective manner could materially and adversely affect our business, financial condition and results of operations.

As such, adverse publicity from litigation or governmental investigations could impact our business and financial condition and results of operations.

• We depend on search engines, online advertising and other online sources to attract visitors to our websites, and if we are unable to attract these visitors and convert them into consumer requests for our Network Partners in a cost-effective manner, our business and financial results may be harmed.

• A significant portion of our revenue growth in 2019 and 2018 was driven by our credit card product.

• A significant portion of our revenue growth in 2020, 2019 and 2018 has been driven by our insurance leads business through our acquisition of QuoteWizard, which was completed in October 2018.

• A portion of our revenue growth in recent years has been driven by personal loan offerings.

If lenders participating on our marketplace decide to reduce their offerings of personal loans or if such loans become unattractive to consumers because of higher interest rates demanded by lenders or other reasons, then our results of operations and future growth prospects could be materially and adversely affected.

• The intended benefits of acquisitions may not be realized and acquisitions or strategic investments that we pursue may not be successful and could disrupt our business and harm our financial condition.

• If we fail to manage our growth effectively, our business and results of operations could be harmed.

• We rely on the performance of highly skilled personnel and if we are unable to attract, retain, develop and motivate well-qualified employees, our business and results of operations could be harmed.

• A significant portion of our total revenue is derived from one Network Partner, and our results from operations could be adversely affected and stockholder value harmed if we lose significant business from this Network Partner.

• We participate in a highly competitive market, and pressure from existing and new competitors may materially and adversely affect our business, results of operations and financial condition.

If any of our competitors are more successful than we are at attracting and retaining customers or Network Partners, our business, financial condition and results of operations could be materially and adversely affected.

• Difficult market conditions have adversely affected the mortgage industry.

• Our current lack of geographic diversity exposes us to risk.

• Our success depends, in part, on the integrity of our systems and infrastructures.

System interruption and the lack of integration and redundancy in these systems and infrastructures may have a material and adverse impact on our business, financial condition and results of operations.

• We are subject to risks relating to the bankruptcy of our Home Loan Center, Inc.

subsidiary, including risks of claims against us and our operating subsidiaries.

• We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.

• Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition.

• We may fail to adequately obtain, maintain, enforce and protect our intellectual property and similar proprietary rights or may be accused of infringing, misappropriating or otherwise violating intellectual property or similar proprietary rights of third parties.

• In the ordinary course of business, we are party to litigation involving contract, intellectual property and a variety of other claims, which could adversely affect our business and financial condition.

• Failure to comply with past, existing or new laws, rules and regulations, or to obtain and maintain required licenses, could materially and adversely affect our business, financial condition and results of operations.

• If our Network Partners fail to produce required documents for examination by, or other affiliated parties fail to make certain filings with, state regulators, we may be subject to fines, forfeitures and the revocation of required licenses.

• Our collection, use, storage, disclosure, transfer and other processing of personal information could give rise to significant costs and liabilities, including as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights, which may have a material and adverse impact on our business, financial condition and results of operations.

• The possibility of additional future regulations, changing rule interpretations and examinations by regulatory agencies may result in more stringent compliance standards and could adversely affect the results of our operations.

• Fluctuations in our operating results, quarter to quarter earnings and other factors may result in significant decreases in the price of our common stock.

• One holder of our common stock owns a substantial portion of our outstanding common stock, which concentrates voting control and limits your ability to influence corporate matters.

• Our financial results fluctuate as a result of seasonality, which may make it difficult to predict our future performance and may adversely affect our common stock price.

• The conditional conversion feature of our outstanding convertible senior notes, if triggered, may adversely affect our financial condition and operating results.

• We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.

• Our hedge and warrant transactions may affect the value of the Notes and our common stock.

Investing in our common stock involves a high degree of risk.

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Risks Related to our Business

The COVID-19 pandemic has impacted our business, and the ultimate impact on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, created significant volatility and disruption in financial markets, and increased unemployment levels.

In addition, the pandemic has resulted in temporary closures of many businesses and the institution of various lockdown orders and sheltering in place requirements in many states and communities.

As a result, the demand for our products, in particular in our Consumer segment, has been and may continue to be significantly impacted.

Within our Consumer segment we have seen reductions in near-term lender demand for our services, reflecting those lenders' uncertainty over the length and depth of the economic recession as well as the effect of governmental actions such as the temporary suspension of interest accrual and payments on student debt owned by the federal government.

Our business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic.

The extent to which the COVID-19 pandemic impacts our business, financial condition and results of operations, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

Adverse conditions in the primary and secondary mortgage markets, as well as the general economy, could have a material adverse effect on our business, financial condition and results of operations.

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Situations like this could have a material adverse effect on our business, financial condition and results of operations.

We depend on relationships with our Network Partners and any adverse changes in these relationships could adversely affect our business, financial condition and results of operations.

We depend on the financial strength of our Network Partners and our relationships with them, and any adverse changes in these relationships could adversely affect our business, financial condition and results of operations.

Our success depends in significant part on the financial strength of lenders, insurers and lead purchasers participating on our marketplaces and continuing relationships with such lenders, insurers and lead purchases.

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As such, adverse publicity from litigation or governmental investigations could impact our business and financial condition and results of operations.

In order to attract visitors to our websites, convert these visitors into loan or other financial product requests for our Network Partners and lead purchasers and generate repeat visits from consumers, our businesses must promote and maintain their reputations and various brands.

their reputations and various brands.

Brand promotion and maintenance requires the expenditure of considerable money and resources for online and offline advertising, marketing and related efforts, as well as the continued provision and introduction of high-quality products and services that meet the needs of consumers at competitive prices, the ability to maintain consumers' trust, and the ability to successfully differentiate our brand, products and services from those of our competitors.

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Furthermore, if any free search engine traffic on which we rely begins charging fees for listing or placement, or if one or more of the search engines or other online sources on which we rely for purchased listings, modifies or terminates its relationship with us, our expenses could rise, we could lose customers, and traffic to our websites could decrease, all of which could have a material adverse effect on our business, financial condition and results of operations.

A significant portion of our revenue growth in 2019 and 2018 was driven by our credit card product.

Our credit card product offering is subject to particular risks.

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If our credit card product is impacted by the risks described above, then our results of operations and future growth prospects could be materially and adversely affected.

A significant portion of our revenue growth in 2020, 2019 and 2018 has been driven by our insurance leads business through our acquisition of QuoteWizard, which was completed in October 2018.

The QuoteWizard acquisition poses risks for our ongoing operations, including, among others:

Our insurance business, QuoteWizard, is significant to our revenue, and operational issues in this business could have a material impact on our results of operations.

The QuoteWizard business poses risks for our ongoing operations, including, among others:

• adverse conditions in the economy may affect insurance carriers and their willingness to issue policies;

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• that the business acquired in the acquisition may not continue to perform as well as anticipated;

• assumed liabilities associated with QuoteWizard’s historical operations, including liabilities arising from privacy and security regulations or security breaches.

• assumed liabilities associated with QuoteWizard’s historical operations, including liabilities arising from data privacy and security laws and regulations or security breaches.

If the QuoteWizard business is impacted by the risks described above, then our results of operations and future growth prospects could be materially and adversely affected.

A portion of our revenue growth in recent years has been driven by personal loan offerings.

Our insurance agency businesses pose unique risks.

Our Medicare and Property and Casualty insurance agency businesses employ a different business model than the rest of our businesses and are subject to unique risks because of our role in selling insurance policies direct to consumers.

In that role, we act as agents of insurance carriers or of other insurance agents, known as uplines, that we contract with.

We must secure and maintain contracts with those carriers and agents, and our individual agents must be state-licensed.

Our revenues are generated from sales commissions which are based upon the insurance premiums of policies sold and our models to determine the appropriate policies for consumers.

Our models could be incorrect, and we could generate less revenue than expected.

We could also lose appointments with carriers or uplines that affect our ability to sell policies and generate revenue.

Carrier losses, which could result from increased repair time and costs due to inflation and supply chain issues in the automotive and housing

industries, among other issues, could cause carriers to reduce commissions or increase premiums, both of which would have a negative effect on us.

Insurance carriers could increase premiums to the point where we cannot profitably sell policies or consumers make the decision to forego the purchase of insurance.

Our licensed insurance agents are critical to our agency business, and our inability to attract and retain effective agents or for them to obtain or retain their licenses to sell policies could have a negative impact on our results of operation.

Our personal loan product is a key product within our Consumer segment.

Prior to the emergence of the COVID-19 pandemic, revenue from personal loan offerings was responsible for a significant portion of the growth in the Consumer segment revenue over the last few years.

Personal loans are unsecured obligations and generally carry shorter terms and smaller loan amounts than mortgages.

Because they are unsecured, they are generally riskier assets for lenders than mortgages or other secured loans.

Consumer demand for unsecured loans offered on our marketplace is often for refinancing of higher interest credit card debt or for a lower interest alternative to credit card debt for a contemplated larger purchase that would otherwise be purchased with a credit card.

Lenders participating on our marketplace may reduce their willingness to make personal loans at more attractive interest rates than credit card debt and may for that reason, or for any other reason, reduce their demand for personal consumer requests generated from our personal loan marketplace.

Consumer demand for unsecured loans offered on our marketplace is often for refinancing of higher interest credit card debt or for a lower interest alternative to credit card debt for a contemplated large purchase that would otherwise be purchased with a credit card.

Lenders participating on our marketplace may reduce their willingness to make personal loans at more attractive interest rates than credit card debt and may for that reason, or for any other reason, reduce their demand for requests generated from our personal loan marketplace.

Reasons that lenders might reduce their willingness to make personal loans at attractive interest rates may include regulatory changes, stricter institutional lending criteria, a lack of adequate funding sources or capital for loan originations, or increased borrower default levels, which may occur upon adverse changes in regional, national or global economic conditions.

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If a significant number of consumers seek loans, insurance and other financial products and services directly from Network Partners or through our competitors as opposed to through our marketplaces, our business, financial condition and results of operations could be materially and adversely affected.

The COVID-19 pandemic impacted our business, and the ultimate impact on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, created significant volatility and disruption in financial markets, and, at times, increased unemployment levels.

In addition, the pandemic resulted in temporary closures of many businesses and the institution of various lockdown orders and sheltering in place requirements in many states and communities.

As a result, the demand for our products, in particular in our Consumer segment, was significantly impacted.

Our business operations may be disrupted if closures or lockdowns are reinstated or if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic.

Some of our products are new to the market and may fail to achieve or maintain customer acceptance and profitability.

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• our ability to develop new products and services and enhance existing ones;

• assumed liabilities associated with the historical operations of the acquired businesses, including as a result of privacy regulations or data breaches.

• assumed liabilities associated with the historical operations of the acquired businesses, including as a result of data privacy and security laws and regulations or security breaches.

As a result of the foregoing, our acquisitions may not be accretive to us in the near term or at all.

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We may consider or undertake strategic acquisitions of, or material investments in, businesses, products or technologies, such as our February 2020 acquisition of an equity interest in Stash.

We may not be able to identify suitable acquisition or

investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there is no guarantee that we can obtain any necessary regulatory approvals or complete such transactions on terms that are favorable to us.

To the extent we pay the purchase price of any acquisition or investment in cash or through borrowings under our Amended Revolving Credit Facility (as defined herein), it would reduce our cash balances and/or result in indebtedness we must service, which may have a material and adverse effect on our business and financial condition.

We may not be able to identify suitable acquisition or investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there is no guarantee that we can obtain any necessary regulatory approvals or complete such transactions on terms that are favorable to us.

To the extent we pay the purchase price of any acquisition or investment in cash or through borrowings under our Credit Facility (as defined herein), it would reduce our cash balances and/or result in indebtedness we must service, which may have a material and adverse effect on our business and financial condition.

If the purchase price is paid with our stock, it would be dilutive to our stockholders.

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Network Partners on our marketplaces may not provide competitive levels of service to consumers, which could materially and adversely affect our brands and businesses and their ability to attract consumers.

The ability of our businesses to provide consumers with a high-quality experience depends, in part, on consumers receiving competitive levels of convenience, customer service, price and responsiveness from Network Partners participating on our other marketplaces with whom they are matched.

If these providers do not provide consumers with competitive levels of convenience, customer service, price and responsiveness, the value of our various brands may be harmed, the ability of our businesses to attract consumers to our websites may be limited and the number of consumers matched through our marketplaces may decline, which could have a material and adverse effect on our business, financial condition and results of operations.

A significant portion of our total revenue is derived from one Network Partner, and our results from operations could be adversely affected and stockholder value harmed if we lose significant business from this Network Partner.

For the years ended December 31, 2020 and 2019, one Network Partner accounted for 15% and 12%, respectively, of total consolidated revenue.

If these providers do not provide consumers with competitive levels of

convenience, customer service, price and responsiveness, the value of our various brands may be harmed, the ability of our businesses to attract consumers to our websites may be limited and the number of consumers matched through our marketplaces may decline, which could have a material and adverse effect on our business, financial condition and results of operations.

A significant portion of our total revenue has, in the past, derived from one Network Partner, and our results of operations could be adversely affected and stockholder value harmed if we lose significant business from this Network Partner.

For the years ended December 31, 2020 and 2019, one Network Partner accounted for 15% and 12%, respectively, of total consolidated revenue, and this Network Partner remains a significant contributor to our total revenue.

If this significant Network Partner were to cease purchasing consumer requests and we were unable to replace the associated demand, the loss could have a material adverse effect on our results of operations in the short term and potentially also the longer term.

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We have incurred significant operating losses in the past and we may not be able to generate sufficient revenue to be profitable over the long term.

We have incurred operating losses from continuing operations at times in our history, and although we were profitable in 2019 and 2018, we have an accumulated deficit of $640.9 million at December 31, 2020.

We have incurred operating losses from continuing operations at times in our history, and although we were profitable in 2021, we have an accumulated deficit of $571.8 million at December 31, 2021.

If we fail to maintain or grow our revenue and manage our expenses, we may incur significant losses in the future and not be able to maintain profitability.

Our Amended Revolving Credit Facility contains financial covenants and other restrictions on our actions, and it could therefore limit our operational flexibility or otherwise adversely affect our financial condition.

Our Credit Facility contains financial covenants and other restrictions on our actions, and it could therefore limit our operational flexibility or otherwise adversely affect our financial condition.

Failure to comply with the terms of any such facility could impair our rights to the assets that have been pledged as collateral under the facility.

On December 10, 2019, our 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 our previous $350.0 million five-year senior secured revolving credit facility (the “2017 Revolving Credit Facility”).

This 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 February 26, 2021, there were no borrowings under the Amended Revolving Credit Facility.

The Amended Revolving Credit Facility contains a restrictive financial covenant, which limits the total consolidated debt to an EBITDA ratio.

In addition, the Amended Revolving Credit Facility contains customary affirmative and negative covenants, including, subject to certain exceptions, restrictions on our ability to, among other things:

On September 15, 2021, we entered into a $200.0 million five-year senior secured revolving credit facility (the “Revolving Facility”) and a $250.0 million seven-year senior secured delayed draw term loan facility (the “Term Loan Facility” and together with the Revolving Facility, the “Credit Facility”).

The Revolving Facility matures on September 15, 2026, and the Term Loan Facility matures on September 15, 2028.

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

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

As of February 28, 2022, we have outstanding a $0.2 million letter of credit under the Revolving Facility.

No term loans have been drawn under the Term Loan Facility as of February 28, 2022.

The Credit Facility contains a restrictive financial covenant, which limits the amount of first lien consolidated debt to an EBITDA ratio subject to a step up following a material acquisition.

In addition, the Credit Facility contains customary affirmative and negative covenants, including, subject to certain exceptions, restrictions on our ability to, among other things:

• incur additional indebtedness;

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• enter into restrictive transactions.

• enter into sale and leaseback transactions;

• enter into hedging transactions;

• engage in certain other transactions without the prior consent of the lenders.

On July 21, 2020, we entered into a temporary amendment to the Amended Revolving Credit Facility to provide for certain covenant relief, primarily to facilitate the issuance of new convertible notes, the repurchase of a portion of existing convertible notes, and to pay down existing borrowings under the credit facility.

Among other things, the amendment amends the existing credit agreement to temporarily replace the total consolidated debt to EBITDA ratio covenant with a consolidated liquidity covenant requiring us 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, as well as impose additional limitations on certain restricted payments during such temporary period.

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

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

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).

If an event of default occurs or if we otherwise fail to comply with any of the negative or affirmative covenants of the Amended Revolving Credit Facility, the lenders may declare all of the obligations and indebtedness under such facility due and payable.

The Credit Facility requires us to pledge as collateral, subject to certain customary exclusions, substantially all of our assets.

The obligations under this facility are unconditionally guaranteed, subject to certain customary exclusions, on a senior basis by our material domestic subsidiaries, which guaranties are secured, subject to certain customary exclusions, by substantially all of each such guarantor's assets.

If an event of default occurs or if we otherwise fail to comply with any of the negative or affirmative covenants of the Credit Facility, the lenders may declare all of the obligations and indebtedness under such facility due and payable.

In such a scenario, the lenders could exercise their lien on the pledged collateral, which would have a material adverse effect on our business, operations, financial condition and liquidity.

For additional information on the Amended Revolving

Credit Facility, see Note 15—Debt, in the notes to the consolidated financial statements included elsewhere in this annual report.

For additional information on the Credit Facility, see Note 15—Debt, in the notes to the consolidated financial statements included elsewhere in this annual report.

Risks Related to our Industry

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Difficult market conditions have adversely affected the mortgage industry.

Declines in the housing market from 2006 through early 2012, as measured by the S&P/Case-Schiller 20-city composite home price index, with home price declines and increased foreclosures, unemployment and under-employment, negatively impacted the credit performance of mortgage loans and resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities as well as major commercial and investment banks.

These write-downs, initially of mortgage-backed securities but subsequently of other asset-backed securities, credit default swaps and other derivative and cash securities, in turn, caused many financial institutions to seek additional capital, merge with larger and stronger institutions and, in some cases, to fail.

Reflecting concern about the stability of the housing markets generally and the strength of counterparties, many lenders and institutional investors reduced or ceased providing funding to borrowers, including to other financial institutions.

This market disruption and tightening of credit led to an increased level of commercial and consumer delinquencies, lack of consumer confidence and increased market volatility.

The resulting economic pressure on consumers and lack of confidence in the financial markets has had in the past and may have in the future, an adverse effect on our business, financial condition and results of operations.

While conditions in the housing markets have improved since 2013, the failure to sustain such improvements could have adverse effects on us and our mortgage Network Partners.

Further, our business could be adversely affected by the actions and commercial soundness of other businesses in the financial services sector, including our non-lender lead purchasers.

As a result, defaults by, or even rumors or questions about, one or more of these entities, or the financial services industry generally, have in the past, and may in the future, lead to market-wide liquidity problems and could lead to disruptions in the financial technology industry.

Any such disruption could have a material and adverse effect on our business, financial condition and results of operations.

Our current lack of geographic diversity exposes us to risk.

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

As a result of this geographical concentration, we are more vulnerable to downturns or other conditions that affect the U.S.

We may choose to expand our operations in order to increase our geographic diversity, and if we do, such expansion would place increased responsibilities on our management, divert resources from other operations and expose us to new risks of foreign operations.

Risks Related to our Operations

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Our success depends, in part, on our ability to maintain the integrity of our systems and infrastructures, including websites, information and related systems, call centers and distribution and fulfillment facilities.

System interruption and the lack of

integration and redundancy in our information systems and infrastructures may materially and adversely affect our ability to operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations.

System interruption and the lack of integration and redundancy in our information systems and infrastructures may materially and adversely affect our ability to operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations.

We may experience occasional system interruptions that make some or all systems or data unavailable or prevent our businesses from efficiently providing services or fulfilling orders.

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Any of these events could cause system interruption, delays and loss of critical data, and could prevent our businesses from providing services, fulfilling orders and/or processing transactions.

While our businesses have backup systems for certain aspects of their operations, these systems are not fully redundant and disaster recovery planning is not sufficient for all eventualities.

While our businesses have backup systems and other resiliency measures in place for certain aspects of their operations, these systems are not fully redundant and disaster recovery planning is not sufficient for all eventualities.

In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption.

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In the processing of consumer transactions, our businesses collect, use, store, disclose, transfer, and otherwise process a large volume of personal information and other confidential, proprietary and sensitive data.

Breaches or failures of security involving our systems or website or those of any of our affiliates, Network Partners or external service providers may occur, and could result in the theft, unauthorized access, acquisition, use, disclosure, modification or misappropriation of personal information of our consumers, employees or third parties with whom we conduct business, or other confidential, proprietary and sensitive data, fraudulent activity, or system disruptions or shutdowns.

The occurrence of any actual or attempted breach, failure of security or fraudulent activity, the reporting of such an incident, whether accurate or not, or our failure to make adequate or timely disclosures to the public or law enforcement agencies following any such event, whether due to delayed discovery or a failure to follow existing protocols, could result in claims made against us or our affiliates, Network Partners or external service providers, which could result in state and/or federal litigation and related financial liabilities, as well as criminal penalties or civil liabilities, regulatory actions from state and/or federal governmental authorities, and significant fines, orders, sanctions, litigation and claims against us by consumers or third parties and related indemnification obligations.

Actual or perceived security breaches or failures could also cause financial losses, increased costs, interruptions in the operations of our business, misappropriation of assets, significant damage to our brand and reputation with consumers and third parties with whom we do business, and result in adverse publicity, loss of consumer confidence, distraction to our management, and reduced sales and profits, any or all of which could have a material and adverse impact on our business, financial condition and results of operations.

Breaches or failures of security involving our systems or website or those of any of our affiliates, Network Partners or external service providers have occurred in the past and may occur in the future, and have in the past resulted in, and could in the future result in, the theft, unauthorized access, acquisition, use, disclosure, modification or misappropriation of personal information of our consumers, employees or third parties with whom we conduct business, or other confidential, proprietary and sensitive data, fraudulent activity, or system disruptions or shutdowns.

could result in claims made against us or our affiliates, Network Partners or external service providers, which could result in state and/or federal litigation and related financial liabilities, as well as criminal penalties or civil liabilities, regulatory actions from state and/or federal governmental authorities, and significant fines, orders, sanctions, litigation and claims against us by consumers or third parties and related indemnification obligations.

Actual or perceived security breaches or failures also have in the past caused, and may in the future cause, financial losses, increased costs, interruptions in the operations of our business, misappropriation of assets, significant damage to our brand and reputation with consumers and third parties with whom we do business, and result in adverse publicity, loss of consumer confidence, distraction to our management, and reduced sales and profits, any or all of which could have a material and adverse impact on our business, financial condition and results of operations.

Such breaches, failures and fraudulent activity may take many forms, including check fraud, fraudulent inducement, electronic fraud, wire fraud, computer viruses, phishing, social engineering, denial or degradation of service attacks, malware, ransomware or other cyber-attacks, and other dishonest acts, any of which could be the result of a circumvention or failure of our data security processes, procedures, tools, and controls.

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Risks Related to Legal, Compliance and Regulation

We are subject to risks relating to the bankruptcy of our Home Loan Center, Inc.

subsidiary, including risks of claims against us and our operating subsidiaries.

Our subsidiary Home Loan Center, Inc.

("HLC") filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in order to preserve assets for the benefit of all creditors of HLC.

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

We refer to HLC’s filing and the subsequent process under the Bankruptcy Code as the HLC bankruptcy.

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

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

During 2020, LendingTree, LLC and HLC entered into a settlement agreement in the amount of $36.0 million for the release of any and all claims against company defendants by HLC, including the dividend claim.

As a result of its filings with the Bankruptcy Court, certain creditors have, and it is possible that certain other creditors will, assert claims directly against our company or one or more of our wholly-owned subsidiaries not included as debtors in the HLC bankruptcy, which we refer to as non-debtor parties, on various legal theories.

While we are not aware of a basis for any material claims of this nature, any such assertions of claims by HLC creditors may require significant effort, resources and money to defend and could result in losses to us.

Moreover, our management may be required to spend a significant amount of time and effort dealing with the HLC bankruptcy, which could have an adverse impact on our ability to execute our business plan and operations.

See Note 21—Discontinued Operations to the consolidated financial statements included elsewhere in this annual report for a discussion of the accounting for HLC’s bankruptcy filing.

Failure to comply with past, existing or new laws, rules and regulations, or to obtain and maintain required licenses, could materially and adversely affect our business, financial condition and results of operations.

We market and provide services in heavily regulated industries through a number of different channels across the United States.

As a result, our businesses have been and remain subject to a variety of laws, rules, regulations, statutes, standards, policies and procedures in various jurisdictions in the United States and abroad, which are subject to change at any time.

The failure of our businesses to comply with past, existing or new laws, rules and regulations, or to obtain and maintain required

licenses, could result in administrative fines or proceedings against us or our businesses by governmental agencies and/or litigation by consumers, which could materially and adversely affect our business, financial condition and results of operations and our brand.

Our businesses conduct marketing activities via telephone, mail and/or through online marketing channels, and these general marketing activities are governed by numerous federal regulations, such as the TSR, the CAN-SPAM Act, the TCPA, the Federal Trade Commission Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and various state telemarketing laws, federal and state data privacy and security laws and their accompanying regulations and guidelines, among others.

Additionally, increased regulation by the Bureau of Consumer Financial Protection (“CFPB”), the U.S.

Federal Trade Commission ("FTC") and Federal Communications Commission ("FCC") has resulted in restrictions on our marketing activities.

Additional federal, state and in some instances, local laws regulate secured and unsecured lending, and insurance brokerage activities, and certain solicitation activities related to registered investment advisors, which impacts our marketplace, partners and consumers.

These laws generally regulate the manner in which lending and lending-related activities, and insurance brokerage activities, and solicitation activities related to registered investment advisors are marketed or made available, including advertising and other consumer disclosures, payments for services and record keeping requirements;

these laws include RESPA, the Fair Credit Reporting Act, the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act and various state laws.

State laws often restrict the amount (and nature) of interest and fees that may be charged by a lender or mortgage broker, or otherwise regulate the manner in which lenders or mortgage brokers operate or advertise.

State and federal lending laws and regulations generally require accurate disclosure of the critical components of credit costs so that consumers can readily compare credit terms from various lenders.

These laws and regulations also impose certain restrictions on the marketing and advertisement of these credit terms.

Because we are an aggregator of rate and other information regarding many financial products, including mortgages, loans, deposits and credit cards, we may be subject to some of these laws and regulations and we may be held liable under these laws and regulations for information provided through our online services.

Our businesses are also subject to various state, federal and/or local laws, rules and regulations that regulate the amount and nature of fees that may be charged for transactions and incentives, such as rebates, that may be offered to consumers by our businesses, as well as the manner in which these businesses may offer, advertise or promote transactions.

For example, RESPA generally prohibits the payment or receipt of referral fees and fee shares or splits in connection with residential mortgage loan transactions, subject to certain exceptions.

The applicability of referral fee and fee sharing prohibitions to lenders and real estate providers, including online networks, may have the effect of reducing the types and amounts of fees that may be charged or paid in connection with real estate-secured loan offerings or activities, including mortgage brokerage, lending and real estate brokerage services, or otherwise limiting our and our Network Partners' ability to conduct marketing and referral activities.

Various federal, state and, in some instances, local, laws also prohibit unfair, deceptive and abusive marketing and sales practices.

We have adopted appropriate policies and procedures to address these requirements (such as appropriate consumer disclosures and call scripting, call monitoring and other quality assurance and compliance measures), but it is not possible to ensure that all employees comply with our policies and procedures at all times.

Regulatory authorities and private plaintiffs may allege that we failed to comply with applicable laws, rules and regulations where we believe we have complied.

These allegations may relate to past conduct and/or past business operations, such as our discontinued mortgage origination operation (which was subject to various state and local laws, rules and regulations).

Even allegations that our activities have not complied or do not comply with all applicable laws and regulations may have a material and adverse effect on our business, financial condition and results of operations.

The alleged violation of such laws, rules or regulations may entitle an individual plaintiff to seek monetary damages, or may entitle an enforcing government agency to seek significant civil or criminal penalties, costs and attorneys' fees.

Regardless of its merit, an allegation typically requires legal fee expenditures to defend against.

We have in the past and may in the future decide to settle allegations of non-compliance with laws, rules and regulations when we determine that the cost of settlement is less than the cost and risk of continuing to defend against an allegation.

Settlements may require us to pay monetary fines and may require us to adopt new procedures and practices, which may render it more difficult to operate or may raise our internal costs.

The future occurrence of one or more of these events could have a material and adverse effect on our business, financial condition and results of operations.

Compliance with these laws, rules and regulations is a significant component of our internal costs, and new laws, rules and regulations are frequently proposed and adopted, requiring us to adopt new procedures and practices.

Changes to existing laws, rules and regulations or changes to interpretation of existing laws, rules and regulations could result in further restriction of activities incidental to our business and could have a material and adverse effect on our business, results of operation and financial condition.

compensation, administrative enforcement actions and fines, private lawsuits, including those styled as class actions, cease and desist orders and civil and criminal liability.

Our collection, use, storage, disclosure, transfer and other processing of personal information could give rise to significant costs and liabilities, including as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights, which may have a material and adverse impact on our business, financial condition and results of operations.

In the course of our operations and the processing of consumer transactions, our businesses collect, use, store, disclose, transfer and otherwise process a large volume of personal information, including from our consumers, employees and third parties with whom we conduct business, and other user data.

The collection, use, storage, disclosure, transfer and other processing of personal information is increasingly subject to a wide array of federal and state laws and regulations regarding data privacy and security, including the GLBA, that are intended to protect the privacy of personal information that is collected, used, stored, disclosed, transferred and otherwise processed in or from the governing jurisdiction.

Some countries, including India, also are considering or have passed legislation requiring local storage and processing of data, or similar requirements, which could increase the cost and complexity of delivering our products and services.

As we seek to expand our business, we are, and may increasingly become, subject to various laws, regulations and standards, as well as contractual obligations, relating to data use, privacy and security in the jurisdictions in which we operate.

In many cases, these laws and regulations apply not only to third-party transactions, but also to transfers of information between or among us, our affiliates and other parties with whom we conduct business.

These laws, regulations and standards may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may have a material and adverse impact on our business, financial condition and results of operations.

The regulatory framework for data privacy and security worldwide is continuously evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.

In the United States, various federal and state regulators, including governmental agencies, like the CFPB and FTC, have adopted, or are considering adopting, laws and regulations concerning personal information and data privacy and security.

This patchwork of legislation and regulation may give rise to conflicts or differing views of personal privacy rights.

For example, certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts.

At the federal level, we are subject to the GLBA, which restricts certain collection, storage, use, disclosure and other processing by covered companies of certain personal information, requires notice to individuals of privacy practices and provides individuals with certain rights to prevent the use and disclosure of certain non-public or otherwise legally protected personal information.

The GLBA also imposes requirements regarding the safeguarding and proper destruction of personal information through the issuance of data security standards or guidelines.

In addition, many states in which we operate have laws that protect the privacy and security of personal information.

For example, the California Consumer Privacy Act (the "CCPA") requires covered companies to, among other things, provide certain disclosures to California residents and provide such residents with certain data protection and privacy rights, including the ability to opt-out of certain sales of personal information.

The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of certain personal information.

This private right of action may increase the likelihood of, and risks associated with, data breach litigation.

The passage of the California Privacy Rights Act (“CPRA”), which expands upon the CCPA, will bring additional compliance obligations with respect to certain processing of personal information of California residents once it comes into effect in most material respects on January 1, 2023.

The CCPA and the CPRA contain several exemptions, including a provision to the effect that the CCPA and CPRA do not apply where the personal information is collected, processed, sold or disclosed pursuant to the GLBA.

It is possible that further amendments to the CCPA and the CPRA will be enacted, but even in their current forms it remains unclear how various provisions of the CCPA and CPRA will be interpreted and enforced.

Numerous other states also have enacted or are in the process of enacting state-level data privacy and security laws and regulations and there is discussion in Congress of a new federal data protection and privacy law to which we may become subject if it is enacted.

All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time, may require us to modify our data processing practices and policies, divert resources from other initiatives and projects, and could restrict the way products and services involving data are offered, all of which may have a material and adverse impact on our business, financial condition and results of operations.

Many statutory requirements, both in the United States and abroad, include obligations for companies to notify individuals of data breaches involving certain personal information, which have in the past resulted from and may in the future result from, breaches experienced by us or our external service providers.

For example, laws in all 50 U.S.

states require businesses to provide notice to consumers whose personal information has been disclosed as a result of a data breach.

These laws are not consistent, and compliance in the event of a widespread data breach is difficult and may be costly.

Moreover, states have been frequently amending existing laws, requiring attention to changing regulatory requirements.

We also may be contractually required to notify consumers or other third parties of a security breach.

Although we may have contractual protections with our

external service providers, actual or perceived security breaches have in the past resulted in, and may in the future result in, harm to our reputation and brand, exposure to potential liability or a need to expend significant resources on data security and in responding to any such actual or perceived breach.

Any contractual protections we may have from our external service providers may not be sufficient to adequately protect us from any such liabilities and losses, and we may be unable to enforce any such contractual protections.

In addition to government regulation, privacy advocates and industry groups have and may in the future propose self-regulatory standards from time to time.

These and other industry standards may legally or contractually apply to us, or we may elect to comply with such standards.

We expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact such future laws, regulations and standards may have on our business.

New laws, amendments to or re-interpretations of existing laws, regulations, standards and other obligations may require us to incur additional costs and restrict our business operations.

Because the interpretation and application of laws, regulations, standards and other obligations relating to data privacy and security are still uncertain, it is possible that these laws, regulations, standards and other obligations may be interpreted and applied in a manner that is inconsistent with our data processing practices and policies or the features of our products and services.

If so, in addition to the possibility of fines, lawsuits, regulatory investigations, public censure, other claims and penalties, and significant costs for remediation and damage to our reputation, we could be materially and adversely affected if legislation or regulations are expanded to require changes in our data processing practices and policies or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively impact our business, financial condition and results of operations.

We may be unable to make such changes and modifications in a commercially reasonable manner, or at all.

Any inability to adequately address data privacy or security-related concerns, even if unfounded, or to comply with applicable laws, regulations, standards and other obligations relating to data privacy and security, could result in additional cost and liability to us, harm our reputation and brand, damage our relationships with consumers and have a material and adverse impact on our business, financial condition and results of operations.

We make public statements about our use and disclosure of personal information through our privacy policies, information provided on our website and press statements.

Although we endeavor to comply with our public statements and documentation, we may at times fail to do so or be alleged to have failed to do so.

The publication of our privacy policies and other statements that provide promises and assurances about data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices.

Moreover, from time to time, concerns may be expressed about whether our products and services compromise the privacy of consumers and others.

Any concerns about our data privacy and security practices, even if unfounded, could damage the reputation of our businesses, discourage potential users from our products and services and have a material and adverse impact on our business, financial condition and results of operations.

Any failure or perceived failure by us or our Network Partners or external service providers to comply with our posted privacy policies or with any applicable federal, state or foreign laws, regulations, standards, certifications or orders relating to data privacy or security or consumer protection, or any compromise of security that results in the theft, unauthorized access, acquisition, use, disclosure, or misappropriation of personal information or other user data, could result in fines or proceedings or litigation by governmental agencies or consumers, including class action privacy litigation in certain jurisdictions, which would subject us to significant awards, penalties or judgments, one or all of which could materially and adversely affect our business, financial condition and results of operations.

In addition, if our practices are not consistent, or viewed as not consistent, with legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may also become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, or severe criminal or civil sanctions, all of which may affect our financial condition, operating results and our reputation.

We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.

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Our success depends, in part, on our ability to develop and commercialize our products and services without infringing, misappropriating or otherwise violating the intellectual property rights of third parties.

However, we may not be aware that our products or services are infringing, misappropriating or otherwise violating third-party intellectual property rights and such third parties may bring claims alleging such infringement, misappropriation or violation.

Lawsuits are often time-consuming and expensive to resolve and they may

divert management’s time and attention.

However, we may not be aware or we may disagree that our products or services are infringing, misappropriating or otherwise violating third-party intellectual property rights and such third parties may bring claims alleging such infringement, misappropriation or violation.

Lawsuits are often time-consuming and expensive to resolve and they may divert management’s time and attention.

Patent litigation tends to be particularly protracted and expensive.

Our technologies may not be able to withstand any third-party claims against their use.

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Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could materially and adversely impact our business, financial condition and results of operations.

Patent litigation tends to be particularly protracted and expensive.

In addition, during the course of litigation there could be public announcements of the results of hearings, motions or other interim proceedings or developments.

If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock or other adverse consequences.

Failure to obtain proper business licenses or other documentation or to otherwise comply with local laws and requirements regarding marketing, sales or services, may result in civil or criminal penalties and restrictions on our ability to conduct business in that jurisdiction.

Most states require licenses to solicit, broker or make loans secured by residential mortgages and other consumer loans to residents of those states, as well as to operate real estate referral and brokerage services, and in many cases require the licensure or registration of individual employees engaged in aspects of these businesses.

Further, as mandated by the federal Secure and Fair Enforcement of Mortgage Licensing Act of 2008 (the "SAFE Act"), states adopted certain minimum standards for the licensing of individuals involved in mortgage lending or loan brokering.

States also require licenses to undertake certain insurance brokerage activities, and state or federal licensure or registration is required to undertake solicitation activities involving registered investment advisors.

Compliance with these requirements may render it more difficult for us and our Network Partners to operate or may raise our internal costs or the costs of our Network Partners, which may be passed on to us through less favorable commercial arrangements.

While our businesses have endeavored to comply with applicable requirements, the application of these requirements to persons operating online is not always clear.

Moreover, any of the licenses or rights currently held by our businesses or our employees may be revoked prior to, or may not be renewed upon, their expiration.

In addition, our businesses or our employees may not be granted new licenses or rights for which they may be required to apply from time to time in the future.

Regulations promulgated by some states may also impose compliance obligations on directors, executive officers, and any person who acquires a certain percentage (for example, 10% or more) of the equity in a licensed entity, including requiring such persons to periodically file financial and other personal and business information with state regulators.

If any such person refuses or fails to comply with these requirements, we may be unable to obtain certain licenses and existing licensing arrangements may be jeopardized.

The inability to obtain, or the loss of, required licenses could have a material and adverse effect on our business, financial condition and results of operations.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition.

On December 22, 2017, former President Trump signed into law the Tax Cuts and Jobs Act (“TCJA”), comprehensive tax legislation which significantly reformed the Internal Revenue Code of 1986, as amended.

This tax legislation significantly reduced the U.S.

statutory corporate tax rate and made broad and complex changes to the U.S.

tax code in the period of enactment and will continue to impact the income tax adjustments of prospective reporting periods.

The Company recorded a provisional net tax expense of $9.1 million in the fourth quarter of 2017, which was subject to adjustment in the remeasurement period of up to one year following the December 2017 enactment, as provided by Staff Accounting Bulletin No.

118 (“SAB 118”).

During the fourth quarter of the year ended December 31, 2018, the Company finalized the computations of the income tax effects of the Act.

As such, in accordance with SAB 118, the Company's accounting for the effects of the Act was deemed complete.

The Company did not significantly adjust provisional amounts recorded in the prior year and the SAB 118 measurement period subsequently ended on December 22, 2018.

The impact of the changes in tax legislation on future years may be material to our consolidated financial statements.

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In addition, tax laws and regulations are complex and subject to varying interpretations, and any significant failure to comply with applicable tax laws and regulations in all relevant jurisdictions could give rise to substantial penalties and liabilities.

Any changes in enacted tax laws (such as the recent U.S.

tax legislation), rules or regulatory or judicial interpretations;

Any changes in enacted tax laws, rules or regulatory or judicial interpretations (including any attempt to tax online services such as those offered by us);

any adverse outcome in connection with tax audits in any jurisdiction;

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As of December 31, 2021, we had pre-tax consolidated federal net operating losses (“NOLs”) of $220.1 million.

The federal NOLs no longer expire under the TCJA.

The federal NOLs no longer expire under the Tax Cuts and Jobs Act ("TCJA").

Our NOLs will be available to offset taxable income subject to the limitations found in Internal Revenue Code Sections 382 and 383.

In addition, we have state NOLs of approximately $542.7 million at December 31, 2021, that will expire at various times between 2022 and 2041.

The state NOLs could expire before we are able to utilize them.

If we experience one or more ownership changes in the future as a result of future transactions in our stock, our ability to utilize NOLs could be limited.

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Likewise, the issuance of a patent to us does not mean that our processes or inventions will be found not to infringe upon patents or other intellectual property rights of third parties.

There may be issued patents of which we are not aware, held by third parties that, if found to be valid and enforceable, could be alleged to be infringed by our current or future processes or inventions.

There may be issued patents of which we are not aware, held by third parties that, if found to be valid and enforceable,

could be alleged to be infringed by our current or future processes or inventions.

There also may be pending patent applications of which we are not aware that may result in issued patents, which could be alleged to be infringed by our current or future processes or inventions.

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Patent, trademark, copyright, and trade secret protection may not be available to us.

In addition, the laws of some foreign countries may not be as protective of intellectual property rights as those in the United

States, and mechanisms for enforcement of intellectual property rights may be inadequate.

In addition, the laws of some foreign countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate.

As we expand our activities, our exposure to unauthorized copying and use of our intellectual property and similar proprietary rights will likely increase.

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It is possible that unfavorable outcomes in one or more such proceedings could result in substantial payments that could adversely affect our business, consolidated financial position, results of operations, or cash flows in a particular period.

We market and provide services in heavily regulated industries through a number of different channels across the United States.

The failure of our businesses to comply with past, existing or new laws, rules and regulations, or to obtain and maintain required licenses, could result in administrative fines or proceedings against us or our businesses by governmental agencies and/or litigation by consumers, which could materially and adversely affect our business, financial condition and results of operations and our brand.