What changed in this filing

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Item 1. Financial Statements

2022-08-01 compared with 2022-05-05 · 215 added, 152 removed, 656 unchanged (36% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in thousands, except per share amounts)

12 unchanged sentences

Total costs and expenses 265,817 259,466 551,929 534,123

Operating loss ( 2,934 ) ( 1,907 )

Operating (loss) income ( 3,894 ) 10,548 ( 6,828 ) 8,641

Other (expense) income, net:

Interest expense, net ( 6,765 ) ( 9,840 ) ( 14,270 ) ( 20,055 )

Other (expense) income ( 1 ) 40,072

Other income 284 — 283 40,072

(Loss) income before income taxes ( 10,375 ) 708 ( 20,815 ) 28,658

Income tax expense ( 383 ) ( 8,638 )

Income tax benefit 2,337 9,092 1,954 454

Net (loss) income from continuing operations ( 8,038 ) 9,800 ( 18,861 ) 29,112

77 unchanged sentences

Balance as of March 31, 2022 $ 340,848 16,120 $ 161 $ 1,145,038 $ ( 538,173 ) 3,355 $ ( 266,178 )

Net loss and comprehensive loss ( 8,038 ) — — — ( 8,038 ) — —

Non-cash compensation 17,335 — — 17,335 — — —

Issuance of common stock for stock options, employee stock purchase plan, restricted stock awards and restricted stock units, net of withholding taxes 341 21 — 341 — — —

Other — — — — — — —

Balance as of June 30, 2022 $ 350,486 16,141 $ 161 $ 1,162,714 $ ( 546,211 ) 3,355 $ ( 266,178 )

Common Stock Treasury Stock

10 unchanged sentences

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

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

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

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

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

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands)

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Cash flows from financing activities attributable to continuing operations:

Proceeds from term loan 250,000 —

Repayment of 0.625 % Convertible Senior Notes

( 169,659 ) —

Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options ( 2,745 ) ( 4,771 )

2 unchanged sentences

Other financing activities — ( 31 )

Net cash used in financing activities attributable to continuing operations ( 46,098 ) ( 5,000 )

Total cash used in continuing operations ( 54,563 ) ( 7,808 )

Net cash provided by (used in) financing activities attributable to continuing operations 34,584 ( 4,970 )

Total cash provided by continuing operations 27,897 24,845

Discontinued operations:

Net cash used in operating activities attributable to discontinued operations ( 1 ) ( 71 )

Total cash used in discontinued operations ( 1 ) ( 71 )

Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents ( 54,564 ) ( 7,879 )

Net cash (used in) provided by operating activities attributable to discontinued operations ( 6 ) 8,353

Total cash (used in) provided by discontinued operations ( 6 ) 8,353

Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents 27,891 33,198

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 251,342 170,049

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Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S.

The accompanying unaudited interim consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”).

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

The results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or any other period.

The results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or any other period.

The accompanying consolidated balance sheet as of December 31, 2021 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”).

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litigation accruals;

HLC ownership related claims;

contract assets;

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

Financial instruments, which potentially subject the Company to concentration of credit risk at March 31, 2022, consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet.

Financial instruments, which potentially subject the Company to concentration of credit risk at June 30, 2022, consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet.

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

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Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Home $ 73,938 $ 104,861 $ 175,882 $ 232,986

30 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 $ 9.7 million and $ 9.1 million at March 31, 2022 and December 31, 2021, 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 $ 0.8 million at March 31, 2022 and December 31, 2021, respectively.

During the first quarter of 2022, the Company recognized revenue of $ 0.7 million that was included in the contract liability balance at December 31, 2021.

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

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 11.7 million and $ 9.1 million at June 30, 2022 and December 31, 2021, respectively.

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers was $ 0.9 million and $ 0.8 million at June 30, 2022 and December 31, 2021, respectively.

During the second quarter and first six months of 2022, the Company recognized revenue of $ 0.1 million and $ 0.8 million, respectively, that was included in the contract liability balance at December 31, 2021.

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.

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 $ 0.2 million and $ 0.3 million in the first quarters of 2022 and 2021, respectively.

The Company recognized increases to such revenue from prior periods.

This increase was no t material in the second quarter of 2022, and was $ 0.1 million in the second quarter of 2021.

NOTE 4— CASH AND RESTRICTED CASH

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Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Balance, beginning of the period $ 1,803 $ 1,429 $ 1,456 $ 1,402

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Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill at each of March 31, 2022 and December 31, 2021 consists of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 194.7 million associated with the Insurance segment.

The Company's goodwill at each of June 30, 2022 and December 31, 2021 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.

At June 30, 2022, the Company assessed the qualitative factors in its impairment testing of goodwill and determined that the effects of the challenging interest rate environment, consumer price inflation, and the decline in the Company's market capitalization required a quantitative impairment test be performed.

The quantitative goodwill impairment test found that the fair value of each reporting unit exceeded its carrying amount, indicating no goodwill impairment.

The Company will monitor the recovery of the Insurance reporting unit.

The property and casualty auto industry is experiencing challenges caused by inflation, supply chain challenges, and rising severity and frequency of claims.

Changes in the timing of the recovery compared to current expectations could cause an impairment to the Insurance reporting unit.

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible Assets with Definite Lives

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Trademarks and tradenames 11,700 ( 8,962 ) 2,738

Balance at March 31, 2022 $ 172,500 $ ( 104,795 ) $ 67,705

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Balance at June 30, 2022 $ 172,500 $ ( 111,870 ) $ 60,630

Cost Accumulated

5 unchanged sentences

Balance at December 31, 2021 $ 202,800 $ ( 127,179 ) $ 75,621

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of March 31, 2022, 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 June 30, 2022, future amortization is estimated to be as follows (in thousands) :

Amortization Expense

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

The 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.

In 2021, the Company recorded a net unrealized gain on the investment in Stash of $ 95.4 million as a result of an adjustment to the fair value of the Stash equity securities based on observable market events, which is included within other income on the consolidated statement of operations and comprehensive income.

As of March 31, 2022, there have been no impairments to the acquisition cost of the equity securities.

The equity securities will be carried at cost less impairment, if any, and subsequently measured to fair value upon observable price changes in an orderly transaction for the identical or similar investments with any gains or losses recorded to the consolidated statement of operations and comprehensive income.

In 2021, the Company recorded a net unrealized gain on the investment in Stash of $ 95.4 million as a result of an adjustment to the fair value of the Stash equity securities based on observable price changes, which is included within other income on the consolidated statement of operations and comprehensive income.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 2022, there have been no impairments to the acquisition cost of the equity securities.

NOTE 8— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Weighted average basic common shares 12,723 13,243 12,812 13,157

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Weighted average diluted common shares 12,723 13,719 12,812 13,913

For the first quarter of 2022, 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.

For the second quarter and first six months of 2022, 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 0.3 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the first quarter of 2022 because their inclusion would have been anti-dilutive.

For the first quarter of 2022, 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 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 0.3 million shares of common stock.

Approximately 0.2 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the second quarter and first six months of 2022 because their inclusion would have been anti-dilutive.

For the second quarter of 2022, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 1.0 million shares of common stock and 0.5 million restricted stock units.

For the first six months of 2022, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 1.0 million shares of common stock and 0.4 million restricted stock units.

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.

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

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See Note 2—Significant Accounting Policies for additional information.

Approximately 2.1 million shares related to the potentially dilutive shares of the Company's common stock associated with the 0.50 % Convertible Senior Notes due July 15, 2025 and the 0.625 % Convertible Senior Notes due June 1, 2022 were excluded from the calculation of diluted loss per share for the first quarter of 2022 because their inclusion would have been anti-dilutive.

Shares of the Company's stock associated with the warrants issued by the Company in 2017 and 2020 were excluded from the calculation of diluted loss per share for the first quarter of 2022 as they were anti-dilutive since the the strike price of the warrants was greater than the average market price of the Company's common stock during the period.

The employee stock purchase plan did not have a material impact to the calculation of diluted shares.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

excluded from the calculation of diluted loss per share for the second quarter and first six months of 2022 because their inclusion would have been anti-dilutive.

Shares of the Company's stock associated with the warrants issued by the Company in 2017 and 2020 were excluded from the calculation of diluted loss per share for the second quarter and first six months of 2022 and 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 the relevant periods.

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.

The employee stock purchase plan did not have a material impact to the calculation of diluted shares.

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.

In the first quarter of 2022, the Company purchased 379,895 shares of its common stock pursuant to this stock repurchase program.

There were no repurchases of the Company's common stock during the first quarter 2021.

At March 31, 2022, approximately $ 96.7 million of the previous authorizations to repurchase common stock remain available.

During the six months ended June 30, 2022, the Company purchased 379,895 shares of its common stock pursuant to this stock repurchase program.

At June 30, 2022, approximately $ 96.7 million of the previous authorizations to repurchase common stock remain available.

NOTE 10— STOCK-BASED COMPENSATION

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Cost of revenue $ 442 $ 463 $ 835 $ 860

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Expired ( 1,327 ) 281.86

Options outstanding at March 31, 2022 795,900 159.41 5.85 $ 25,773

Options exercisable at March 31, 2022 485,638 $ 126.88 3.77 $ 24,985

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 119.67 on the last trading day of the quarter ended March 31, 2022 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on March 31, 2022.

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

(b) During the three months ended March 31, 2022, the Company granted stock options to certain employees with a weighted average grant date fair value per share of $ 58.60 , calculated using the Black-Scholes option pricing model, with a vesting period of three years from grant date.

Options outstanding at June 30, 2022 819,397 156.14 5.73 $ 4,612

Options exercisable at June 30, 2022 494,026 $ 127.28 3.62 $ 4,612

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 43.82 on the last trading day of the quarter ended June 30, 2022 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

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

option holder exercised these options on June 30, 2022.

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

(b) During the six months ended June 30, 2022, the Company granted stock options to certain employees with a weighted average grant date fair value per share of $ 53.75 , calculated using the Black-Scholes option pricing model, which vesting periods include (1) immediate vesting on grant date (b) earlier of one year from grant date and the Company's annual meeting of stockholders for 2023 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.

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Expected term (1)

5.00 - 6.00 years

Expected dividend (2)

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Expired ( 13,163 ) 378.95

Options outstanding at March 31, 2022 687,046 233.27 6.51 $ —

Options exercisable at March 31, 2022 — $ — 0.00 $ —

Options outstanding at June 30, 2022 687,046 233.27 6.26 $ —

Options exercisable at June 30, 2022 — $ — 0.00 $ —

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

A maximum of 1,147,367 shares may be earned for achieving superior performance up to 167 % of the target number of shares.

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

As of June 30, 2022, 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.

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Forfeited ( 47,464 ) 186.22

Nonvested at March 31, 2022 527,593 $ 150.41

Nonvested at June 30, 2022 536,536 $ 143.02

Restricted Stock Units with Performance Conditions

A summary of changes in outstanding nonvested RSUs with performance conditions is as follows:

RSUs with Performance Conditions

Number of Units Weighted Average Grant Date Fair Value

Nonvested at January 1, 2022 — $ —

Granted 16,000 83.25

Forfeited — —

Nonvested at June 30, 2022 16,000 $ 83.25

A maximum of 24,000 shares may be earned for achieving superior performance up to 150 % of the target number of shares.

Restricted Stock Awards with Market Conditions

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Forfeited — —

Nonvested at March 31, 2022 26,674 $ 340.25

Nonvested at June 30, 2022 26,674 $ 340.25

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

As of March 31, 2022, 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 June 30, 2022, 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

In 2021, the Company implemented an employee stock purchase plan (“ESPP”), under which a total of 262,731 shares of the Company's common stock were reserved for issuance.

As of March 31, 2022, 257,188 shares of common stock were available for issuance under the ESPP.

As of June 30, 2022, 243,929 shares of common stock were available for issuance under the ESPP.

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.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 first quarter of 2022.

During the three months ended March 31, 2022, the Company granted employee stock purchase rights to certain employees with a grant date fair value per share of $ 35.43 , calculated using the Black-Scholes option pricing model.

During the six months ended June 30, 2022, 13,259 shares were issued under the ESPP.

During the six months ended June 30, 2022, the Company granted employee stock purchase rights to certain employees with a grant date fair value per share of $ 35.43 , 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:

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in thousands, except percentages)

Income tax expense $ ( 383 ) $ ( 8,638 )

Income tax benefit $ 2,337 $ 9,092 $ 1,954 $ 454

Effective tax rate 22.5 % ( 1,284.2 ) % 9.4 % ( 1.6 ) %

For the first quarter of 2022, the effective tax rate varied from the federal statutory rate of 21 % primarily due to excess tax expense of $ 2.5 million, resulting from vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

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

The Company determines its estimated annual effective tax rate at the end of each interim period based on estimated pre-tax income (loss) and facts known at that time.

The estimated annual effective tax rate is applied to the year-to-date pre-tax income (loss) at the end of each interim period with certain adjustments.

The tax effects of significant unusual or extraordinary items are reflected as discrete adjustments in the periods in which they occur.

However, if the Company is unable to make a reliable estimate of its annual effective tax rate, then the actual effective tax rate for the year-to-date period may be the best estimate.

For the three months ended March 31, 2021, the Company determined that its annual effective tax rate approach would provide a reliable estimate and therefore used its historical method to calculate its tax provision.

However, for the three months ended March 31, 2022, the Company used a discrete effective tax rate method as it was determined that the effective tax rate determined using the forecast of ordinary income or loss does not reasonably estimate the effective tax rate to be applied to year-to-date pre-tax income (loss), and any small changes would result in significant changes in the estimated annual effective tax rate.

For the second quarter and first six months of 2022, the effective tax rate varied from the federal statutory rate of 21 % primarily due to excess tax expense of $ 0.4 million and $ 2.9 million, respectively, resulting from 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 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.

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in thousands)

Income tax expense - excluding excess tax benefit on stock compensation $ 2,085 $ ( 8,670 )

Income tax benefit (expense) - excluding excess tax benefit on stock compensation $ 2,775 $ 831 $ 4,860 $ ( 7,839 )

Excess tax (expense) benefit on stock compensation ( 438 ) 8,261 ( 2,906 ) 8,293

Income tax expense $ ( 383 ) $ ( 8,638 )

Income tax benefit $ 2,337 $ 9,092 $ 1,954 $ 454

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12— DEBT

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The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

rate by a specified number of additional shares for a holder that elects to convert the 2025 Notes in connection with such make-whole fundamental change or to convert its 2025 Notes called for redemption, as the case may be.

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

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

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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;

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.

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

Holders of the 2025 Notes were not entitled to convert the 2025 Notes during the calendar quarter ended March 31, 2022 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on December 31, 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 June 30, 2022 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, 2022, was not greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day.

Holders of the 2025 Notes were not entitled to convert the 2025 Notes during the calendar quarter ended June 30, 2022 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, 2022, 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, 2022 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, 2022, was not greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

In the first quarter of 2022, the Company recorded interest expense on the 2025 Notes of $ 1.5 million which consisted of $ 0.7 million associated with the 0.50 % coupon rate and $ 0.8 million associated with the amortization of the debt issuance costs.

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

As of March 31, 2022, the fair value of the 2025 Notes is estimated to be approximately $ 471.5 million using the Level 1 observable input of the last quoted market price on March 31, 2022.

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 March 31, 2022 consolidated balance sheet, are as follows (in thousands) :

In the first six months of 2022, the Company recorded interest expense on the 2025 Notes of $ 3.0 million which consisted of $ 1.5 million associated with the 0.50 % coupon rate and $ 1.5 million associated with the amortization of the debt issuance costs.

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

As of June 30, 2022, the fair value of the 2025 Notes is estimated to be approximately $ 391.0 million using the Level 1 observable input of the last quoted market price on June 30, 2022.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the gross carrying amount, unamortized debt cost, debt issuance costs, and net carrying value of the liability component of the 2025 Notes, all of which is recorded as a non-current liability in the June 30, 2022 consolidated balance sheet, are as follows (in thousands) :

2022 December 31,

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On May 31, 2017, the Company issued $ 300.0 million aggregate principal amount of its 0.625 % Convertible Senior Notes due June 1, 2022 (the “2022 Notes”) in a private placement.

The 2022 Notes bear interest at a rate of 0.625 % per year, payable semi-annually on June 1 and December 1 of each year, beginning on December 1, 2017.

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

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

The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest.

In addition, upon the occurrence of a make-whole fundamental change prior to the maturity of the 2022 Notes, the Company will, in certain circumstances, increase the conversion rate by a specified number of additional shares for a holder that elects to

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

convert the 2022 Notes in connection with such make-whole fundamental change.

Upon conversion, the 2022 Notes will settle for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option.

It is the intent of the Company to settle the principal amount of the 2022 Notes in cash and any conversion premium in shares of its common stock.

The 2022 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 2022 Notes;

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.

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.

The Company may not redeem the 2022 Notes prior to the maturity date and no sinking fund is provided for the 2022 Notes.

Upon the occurrence of a fundamental change prior to the maturity date of the 2022 Notes, holders of the 2022 Notes may require the Company to repurchase all or a portion of the 2022 Notes for cash at a price equal to 100 % of the principal amount of the 2022 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

If the market price per share of the common stock, as measured under the terms of the 2022 Notes, exceeds the conversion price of the 2022 Notes, the 2022 Notes could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the principal amount of the 2022 Notes and any conversion premium in cash.

The Company settled the outstanding balance of the 2022 Notes of $ 169.7 million in cash on June 1, 2022.

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

Accounting for the Notes After Adoption of ASU 2020-06

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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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 quarter of 2022, the Company recorded interest expense on the 2022 Notes of $ 0.5 million which consisted of $ 0.3 million associated with the 0.625 % coupon rate and $ 0.2 million associated with the amortization of the debt issuance costs.

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

As of March 31, 2022, the fair value of the 2022 Notes is estimated to be approximately $ 168.4 million using the Level 1 observable input of the last quoted market price on March 31, 2022.

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 March 31, 2022 consolidated balance sheet, are as follows (in thousands) :

In the first six months of 2022, the Company recorded interest expense on the 2022 Notes of $ 0.8 million which consisted of $ 0.4 million associated with the 0.625 % coupon rate and $ 0.4 million associated with the amortization of the debt issuance costs.

In the first six months of 2021, the Company recorded interest expense on the 2022 Notes of $ 4.7 million which consisted of $ 0.5 million associated with the 0.625 % coupon rate, $ 3.8 million associated with the accretion of the debt discount, and $ 0.4 million associated with the amortization of the debt issuance costs.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

2022 December 31,

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If the market price per share of the common stock, as measured under the terms of the 2020 Warrants, exceeds the strike price of the 2020 Warrants, the 2020 Warrants could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the 2020 Warrants in cash.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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On May 31, 2017, the Company paid $ 61.5 million to the counterparties for the 2017 Hedge transactions.

The 2017 Hedge transactions initially covered 1.4 million shares of the Company’s common stock, the same number of shares initially underlying the 2022 Notes, and are exercisable upon any conversion of the 2022 Notes.

The 2017 Hedge transactions are expected generally to reduce the potential dilution to the Company's common stock upon conversion of the 2022 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2022 Notes, as the case may be, in the event that the market price per share of common stock, as measured under the terms of the 2017 Hedge transactions, is greater than the strike price of the 2017 Hedge transactions, which initially corresponds to the initial conversion price of the 2022 Notes, or approximately $ 207.63 per share of common stock.

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

The 2017 Hedge transactions initially covered 1.4 million shares of the Company’s common stock, the same number of shares initially underlying the 2022 Notes, and were exercisable upon any conversion of the 2022 Notes.

The 2017 Hedge transactions were expected generally to reduce the potential dilution to the Company's common stock upon conversion of the 2022 Notes and/or offset any cash payments the Company was required to make in excess of the principal amount of the converted 2022 Notes, as the case may be, in the event that the market price per share of common stock, as measured under the terms of the 2017 Hedge transactions, was greater than the strike price of the 2017 Hedge transactions, which initially corresponded to the initial conversion price of the 2022 Notes, or approximately $ 207.63 per share of common stock.

The 2017 Hedge transactions expired on June 1, 2022 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.

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If the market price per share of the common stock, as measured under the terms of the 2017 Warrants, exceeds the strike price of the 2017 Warrants, the 2017 Warrants could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the 2017 Warrants in cash.

As of June 30, 2022, there were 0.8 million warrants outstanding.

The warrants expire ratably from October 14, 2022 through December 12, 2022.

The 2017 Hedge and 2017 Warrants transactions are indexed to, and potentially settled in, the Company's common stock and the net cost of $ 18.1 million was recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity.

To the extent of the repurchases of the 2022 Notes noted above, the Company entered into agreements with the counterparties for the 2017 Hedge and 2017 Warrants transactions to terminate a portion of these call spread transactions effective July 24, 2020 in notional amounts corresponding to the principal amount of the 2022 Notes repurchased.

Subsequent to such termination, the outstanding portion of the 2017 Hedge covers 0.8 million shares of the Company's common stock and 2017 Warrants to acquire 0.8 million shares of the Company's common stock remain outstanding.

The Company received $ 109.9 million and paid $ 94.3 million as a result of terminating such portions of the 2017 Hedge and 2017 Warrants, respectively.

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

The net $ 15.6 million was 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.

On May 31, 2022, the Company received proceeds of $ 250.0 million from the Term Loan Facility and on June 1, 2022, used $ 170.2 million of the proceeds to settle the Company’s 2022 Notes, including interest.

The remaining proceeds of $ 79.8 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 March 31, 2022 and December 31, 2021, the Company had no borrowings outstanding under the Credit Facility.

As of June 30, 2022, the Company had $ 250.0 million of borrowings outstanding under the Term Loan Facility bearing interest at the LIBO option rate of 5.42 % and had no borrowings under the Revolving Facility.

As of December 31, 2021, the Company had no borrowings outstanding under the Credit Facility.

As of June 30, 2022, borrowings of $ 2.5 million under the Term Loan Facility are recorded as current portion of long-term debt on the consolidated balance sheet.

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

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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 March 31, 2022 and December 31, 2021, the Company had outstanding one letter of credit issued in the amount of $ 0.2 million.

At each of June 30, 2022 and December 31, 2021, 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:

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• a LIBO rate generally defined as the sum of (i) the rate for Eurodollar 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.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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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).

The Credit Facility also includes a restricted payment covenant which is set at a total net leverage ratio of 4.0 to 1.

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

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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 March 31, 2022.

The Company was in compliance with all covenants at June 30, 2022.

The Credit Facility requires the Company and certain of its subsidiaries to pledge as collateral, subject to certain customary exclusions, substantially all of its 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.

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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.

With respect to the Term Loan Facility, the Company was 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 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

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 were 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 six months of 2022, the Company recorded interest expense related to its Revolving Facility of $ 0.7 million which consisted of $ 0.2 million in unused commitment fees, and $ 0.5 million associated with the amortization of the debt issuance costs.

In the first six months of 2022, the Company recorded interest expense related to the Term Loan Facility of $ 9.6 million which consisted of $ 1.0 million associated with borrowings bearing interest at the LIBO rate, $ 5.1 million in unused commitment fees, $ 2.0 million associated with the amortization of the debt issuance costs, and $ 1.5 million associated with the amortization of the original issue discount.

In the first six months of 2021, the Company recorded interest expense related to its revolving credit facilities 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.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 quarter of 2022, the Company recorded interest expense related to its Revolving Facility of $ 0.4 million which consisted of $ 0.2 million in unused commitment fees, and $ 0.2 million associated with the amortization of the debt issuance costs.

In the first quarter of 2022, the Company recorded interest expense related to the Term Loan Facility of $ 5.1 million which consisted of $ 3.0 million in unused commitment fees, $ 1.2 million associated with the amortization of the debt issuance costs, and $ 0.9 million associated with the amortization of the original issue discount.

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

NOTE 13— CONTINGENCIES

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With respect to the matters disclosed in this Note 13, unless otherwise indicated, the Company is unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies.

As of March 31, 2022 and December 31, 2021, the Company had litigation settlement accruals of $ 0.1 million in continuing operations.

As of June 30, 2022 and December 31, 2021, the Company had litigation settlement accruals of $ 0.1 million in continuing operations.

The litigation settlement accruals relate to litigation matters that were either settled or a firm offer for settlement was extended, thereby establishing an accrual amount that is both probable and reasonably estimable.

NOTE 14— FAIR VALUE MEASUREMENTS

Other than the convertible notes and warrants, as well as the equity interests, the carrying amounts of the Company's financial instruments are equal to fair value at March 31, 2022.

Other than the convertible notes and warrants, as well as the equity interests, the carrying amounts of the Company's financial instruments are equal to fair value at June 30, 2022.

See Note 12—Debt for additional information on the convertible notes and warrants, and see Note 7—Equity Investment for additional information on the equity interests in Stash and EarnUp.

In 2018, the Company acquired all of the outstanding equity interests of QuoteWizard.com, LLC (“QuoteWizard”).

In the first quarter of 2021 the company recorded $ 0.8 million of expense for the change in fair value of the contingent consideration related to the QuoteWizard acquisition.

In the second quarter and first six months of 2021, the company recorded $ 0.9 million and $ 0.8 million, respectively, of income for the change in fair value of the contingent consideration related to the QuoteWizard acquisition.

The earnout was completed in 2021 and there were no earnout payments related to the acquisition in 2021.

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.

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Three Months Ended

June 30, Six Months Ended

Contingent consideration, beginning of period $ 9,046 $ 8,249

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Purchases, sales and settlements:

Additions — —

Contingent consideration, end of period $ 196 $ 196

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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 and insurance policies in the agency businesses.

The Insurance segment consists of insurance quote products and sales of insurance policies in the agency businesses.

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

Segment marketing expense represents the portion of selling and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Home Consumer Insurance Other Total

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Loss before income taxes and discontinued operations $ ( 10,375 )

Three Months Ended June 30, 2021

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 104,861 $ 75,676 $ 89,263 $ 214 $ 270,014

Segment marketing expense 65,844 42,282 56,025 263 164,414

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

Cost of revenue 13,934

Brand and other marketing expense 20,792

General and administrative expense 39,811

Product development 13,290

Depreciation 4,443

Amortization of intangibles 11,310

Change in fair value of contingent consideration ( 8,850 )

Litigation settlements and contingencies 322

Operating loss 10,548

Interest expense, net ( 9,840 )

Income before income taxes and discontinued operations $ 708

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended March 31, 2021

Six Months Ended June 30, 2022

Home Consumer Insurance Other Total

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Amortization of intangibles 14,992

Severance 3,760

Litigation settlements and contingencies ( 34 )

Operating loss ( 6,828 )

Interest expense, net ( 14,270 )

Other income 283

Loss before income taxes and discontinued operations $ ( 20,815 )

Six Months Ended June 30, 2021

Home Consumer Insurance Other Total

(in thousands)

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

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

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

Cost of revenue 27,829

Brand and other marketing expense 41,851

General and administrative expense 74,800

Product development 25,758

Depreciation 8,161

Amortization of intangibles 22,622

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

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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)

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

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Revenue $ — $ — $ — $ —

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NOTE 17— RESTRUCTURING ACTIVITIES

In the first quarter of 2022, the Company completed a workforce reduction of approximately 75 employees.

In the first quarter of 2022, the Company completed a workforce reduction of approximately 75 employees, and in the second quarter of 2022 completed a workforce reduction of approximately 25 employees.

The Company incurred total expense of $ 3.8 million consisting of employee separation costs of $ 2.7 million and non-cash compensation expense of $ 1.1 million due to the accelerated vesting of certain equity awards.

All employee separation costs are expected to be paid by the first quarter of 2023.

Accrued Balance at December 31, 2021 Income Statement Impact Payments Non-Cash Accrued Balance at March 31, 2022

First quarter of 2022 action

Accrued Balance at December 31, 2021 Income Statement Impact Payments Non-Cash Accrued Balance at June 30, 2022

Employee separation payments $ — $ 2,677 $ ( 2,304 ) $ — $ 373

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

What changed 10-Q

Item 1. Financial Statements