What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-03-01 · 373 added, 375 removed, 1174 unchanged (39% of the section changed)

18 unchanged sentences

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible debt in 2022.

Basis for Opinions

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of equity securities - Stash

As described in Note 8 to the consolidated financial statements, on February 28, 2020, the Company acquired an equity interest in Stash Financial, Inc.

(“Stash”) for $80.0 million.

On January 6, 2021, the Company acquired an additional equity interest for $1.2 million.

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

The Stash equity securities are carried at cost and subsequently marked to market upon observable market events with any gains or losses recorded in operating income in the consolidated statement of operations.

On October 18, 2021, the Company entered into a stock transfer agreement with third parties to sell a portion of its Stash equity securities for $46.3 million.

The Company sold $35.3 million in October and closed on an additional $11.0 million in November 2021.

The Company recorded a realized gain of $27.9 million based on the sale of Stash equity securities under the stock transfer agreement.

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.

The principal considerations for our determination that performing procedures relating to the valuation of the Stash equity securities is a critical audit matter are (i) the significant judgment by management to determine the fair value of the Stash equity securities, which included identifying the observable market events utilized in the fair value estimate, and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's fair value estimate.

Interim Goodwill Impairment Assessment – Insurance Reporting Unit

As described in Notes 2 and 7 to the consolidated financial statements, the Company’s consolidated goodwill balance was $420.1 million as of December 31, 2022, and total goodwill associated with the Insurance reporting unit was $194.7 million.

Goodwill is tested annually for impairment as of October 1, or more frequently upon the occurrence of certain events or substantive changes in circumstances.

Management may elect to assess qualitative factors as a basis for determining whether it is necessary to perform the traditional quantitative impairment testing.

At June 30, 2022, management determined that the effects of the challenging interest rate environment, consumer price inflation, and the decline in the Company's market capitalization required an interim quantitative impairment test be performed.

The quantitative impairment test for goodwill involves a comparison of the fair value of a reporting unit with its carrying amount, including goodwill.

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

Management determines the fair value of the Company’s reporting units by using a market approach and a discounted cash flow analysis.

Determining the fair value using a discounted cash flow analysis and market analysis requires the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates, including revenue, the amount and timing of expected future cash flows, and market multiples.

The principal considerations for our determination that performing procedures relating to the interim goodwill impairment assessment of the Insurance reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Insurance reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, discount rate, and market multiples;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s valuation of the Stash equity securities, including controls over the identification of the observable market events.

These procedures also included, among others, (i) testing management’s process for determining the fair value of the Stash equity securities, (ii) evaluating the appropriateness of the model and management’s identification of observable market events, and (iii) evaluating the appropriateness of the observable market events used to estimate the fair value of the Stash equity securities.

Evaluating the observable market events involved assessing whether the inputs were reasonable considering consistency with recent company and third party executed transactions.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s Insurance reporting unit.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Insurance reporting unit;

(ii) evaluating the appropriateness of the discounted cash flow model and market approach;

(iii) testing the completeness and accuracy of the underlying data used in the discounted cash flow model and market approach;

and (iv) evaluating the reasonableness of significant assumptions used by management related to revenue growth rates, discount rate, and market multiples.

Evaluating management’s assumptions related to revenue growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Insurance reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s discounted cash flow model and market approach and (ii) the reasonableness of the significant assumptions related to the discount rate and market multiples.

/s/ PricewaterhouseCoopers LLP

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Change in fair value of contingent consideration — ( 8,249 ) 5,327

Severance 53 295 1,026

Restructuring and severance 4,428 53 295

Litigation settlements and contingencies ( 18 ) 392 ( 943 )

Total costs and expenses 1,017,748 1,090,468 916,593

Operating income (loss) 8,031 ( 6,603 ) 50,728

Operating (loss) income ( 32,756 ) 8,031 ( 6,603 )

Other (expense) income, net:

1 unchanged sentence

Other income 3,843 123,272 376

Income (loss) before income taxes 84,436 ( 42,527 ) 30,981

(Loss) income before income taxes ( 54,927 ) 84,436 ( 42,527 )

Income tax (expense) benefit ( 133,019 ) ( 11,298 ) 19,961

Net income (loss) from continuing operations 73,138 ( 22,566 ) 39,460

Net (loss) income from continuing operations ( 187,946 ) 73,138 ( 22,566 )

Loss from discontinued operations, net of tax ( 6 ) ( 4,023 ) ( 25,689 )

Net income (loss) and comprehensive income (loss) $ 69,115 $ ( 48,255 ) $ 17,828

Net (loss) income and comprehensive (loss) income $ ( 187,952 ) $ 69,115 $ ( 48,255 )

Weighted average shares outstanding:

1 unchanged sentence

Diluted 12,793 13,695 13,007

Income (loss) per share from continuing operations:

(Loss) income per share from continuing operations:

Basic $ ( 14.69 ) $ 5.54 $ ( 1.73 )

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Diluted $ — $ ( 0.29 ) $ ( 1.98 )

Net income (loss) per share:

Net (loss) income per share:

Basic $ ( 14.69 ) $ 5.24 $ ( 3.71 )

12 unchanged sentences

Prepaid and other current assets 26,250 25,379

Current assets of discontinued operations — 8,570

Assets held for sale (Note 9)

Total current assets 413,968 374,379

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Current liabilities of discontinued operations — 1

Liabilities held for sale (Note 9)

Total current liabilities 82,534 274,432

1 unchanged sentence

Operating lease liabilities 88,232 96,165

Non-current contingent consideration — 8,249

Deferred income tax liabilities 6,783 2,265

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Balance as of December 31, 2019 $ 402,326 15,677 $ 157 $ 1,177,984 $ ( 592,654 ) 2,641 $ ( 183,161 )

Net income and comprehensive income 17,828 — — — 17,828 — —

Non-cash compensation 52,167 — — 52,167 — — —

Purchase of treasury stock ( 5,470 ) — — — — 23 ( 5,470 )

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 8,406 ) 249 3 ( 8,409 ) — — —

Other ( 1 ) — — ( 1 ) — — —

Balance as of December 31, 2019 $ 402,326 15,677 $ 157 $ 1,177,984 $ ( 592,654 ) 2,641 $ ( 183,161 )

Net loss and comprehensive loss ( 48,255 ) — — — ( 48,255 ) — —

12 unchanged sentences

Purchase of treasury stock ( 40,008 ) — — — — 335 ( 40,008 )

Issuance of common stock for stock options, employee stock purchase plan, restricted stock awards and restricted stock units, net of withholding taxes ( 14,423 ) 305 3 ( 14,426 ) — — —

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 14,423 ) 305 3 ( 14,426 ) — — —

Other ( 8 ) — — ( 8 ) — — —

Balance as of December 31, 2021 $ 447,992 16,071 $ 161 $ 1,242,794 $ ( 571,794 ) 2,976 $ ( 223,169 )

Net loss and comprehensive loss ( 187,952 ) — — — ( 187,952 ) — —

Non-cash compensation 59,624 — — 59,624 — — —

Purchase of treasury stock ( 43,009 ) — — — — 379 ( 43,009 )

Issuance of common stock for stock options, employee stock purchase plan, restricted stock awards and restricted stock units, net of withholding taxes ( 3,412 ) 96 1 ( 3,413 ) — — —

Cumulative effect adjustment due to ASU 2020-06 ( 65,303 ) — — ( 109,750 ) 44,447 — —

Balance as of December 31, 2022 $ 207,940 16,167 $ 162 $ 1,189,255 $ ( 715,299 ) 3,355 $ ( 266,178 )

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

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Cash flows from operating activities attributable to continuing operations:

Net income (loss) and comprehensive income (loss) $ 69,115 $ ( 48,255 ) $ 17,828

Net (loss) income and comprehensive (loss) income $ ( 187,952 ) $ 69,115 $ ( 48,255 )

Loss from discontinued operations, net of tax 6 4,023 25,689

Income (loss) from continuing operations 73,138 ( 22,566 ) 39,460

(Loss) income from continuing operations ( 187,946 ) 73,138 ( 22,566 )

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

Loss (gain) on impairments and disposal of assets 3,465 1,160 ( 695 )

Loss on impairments and disposal of assets 6,590 3,465 1,160

Amortization of intangibles 25,306 42,738 53,078

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Capital expenditures ( 11,443 ) ( 35,065 ) ( 42,149 )

Proceeds from the sale of fixed assets — — 24,077

Purchase of equity investment ( 16,440 ) ( 1,180 ) ( 80,000 )

Proceeds from the sale of equity investment — 46,312 —

Acquisition of ValuePenguin, net of cash acquired — — ( 105,578 )

Acquisition of QuoteWizard, net of cash acquired — — 482

Net cash provided by (used in) investing activities attributable to continuing operations 10,067 ( 122,149 ) ( 101,060 )

Other investing activities 7 — —

Net cash (used in) provided by investing activities attributable to continuing operations ( 27,876 ) 10,067 ( 122,149 )

Cash flows from financing activities attributable to continuing operations:

1 unchanged sentence

Purchase of treasury stock ( 43,009 ) ( 40,008 ) —

Proceeds from term loan 250,000 — —

Repayment of term loan ( 1,250 ) — —

Proceeds from the issuance of 0.50 % Convertible Senior Notes

Repurchase of 0.625 % Convertible Senior Notes

Repayment of 0.625 % Convertible Senior Notes

( 169,659 ) — ( 233,862 )

7 unchanged sentences

Payment of debt issuance costs ( 135 ) ( 6,385 ) ( 16,568 )

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

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

Contingent consideration payments — — ( 4,755 )

Other financing activities — ( 31 ) ( 184 )

Net cash (used in) provided by financing activities attributable to continuing operations ( 63,347 ) 193,290 ( 87,678 )

Total cash provided by (used in) continuing operations 77,976 182,440 ( 31,564 )

Net cash provided by (used in) financing activities attributable to continuing operations 32,536 ( 63,347 ) 193,290

Total cash provided by continuing operations 47,634 77,976 182,440

Discontinued operations:

Net cash provided by (used in) operating activities attributable to discontinued operations 3,317 ( 72,730 ) ( 13,255 )

Total cash provided by (used in) discontinued operations 3,317 ( 72,730 ) ( 13,255 )

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents 81,293 109,710 ( 44,819 )

Net cash (used in) provided by operating activities attributable to discontinued operations ( 7 ) 3,317 ( 72,730 )

Total cash (used in) provided by discontinued operations ( 7 ) 3,317 ( 72,730 )

Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents 47,627 81,293 109,710

Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period 251,342 170,049 60,339

2 unchanged sentences

(Decrease) increase in capital expenditures included in accounts payable and accrued expenses $ ( 294 ) $ ( 4,793 ) $ 4,196

Capital additions from tenant improvement allowance — — 1,111

Supplemental cash flow information:

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

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

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

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

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Intercompany transactions and accounts have been eliminated.

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

The HLC entity was legally dissolved in the first quarter of 2022.

See Note 22—Discontinued Operations for additional information.

Discontinued Operations

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The time between satisfaction of the Company's performance obligation and when the Company's right to consideration becomes unconditional varies across products but is generally less than 90 days for auto loans, personal loans, student loans and credit card approvals.

The time between satisfaction of the Company's performance obligation and when the Company's right to consideration becomes unconditional for small business loans is generally less than 51 months.

The time between satisfaction of the Company's performance obligation and when the Company's right to consideration becomes unconditional for small business loans is generally less than 5 years.

Revenue from the Company's Insurance products is primarily generated from upfront match fees and upfront fees for website clicks or fees for calls.

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Recoveries collected — 6 10

Assets held for sale (Note 9)

Balance, end of the period $ 2,317 $ 1,456 $ 1,402

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Hosting Arrangement that is a Service Contract

Subsequent to the adoption of Accounting Standards Update ("ASU") 2018-15 in the first quarter of 2020, as described below, qualifying implementation costs incurred in a hosting arrangement that is a service contract are capitalized and deferred on a straight-line basis over the term of the hosting arrangement, which is typically one to five years .

Subsequent to the adoption of ASU 2018-15 in the first quarter of 2020, as described below, qualifying implementation costs incurred in a hosting arrangement that is a service contract are capitalized and deferred on a straight-line basis over the term of the hosting arrangement, which is typically one to five years .

These costs are capitalized to prepaid and other current assets and other non-current assets on the balance sheet, and the associated amortization expense is included within general and administrative expense on the statement of operations and comprehensive income (loss).

17 unchanged sentences

The Company determines the fair value of its reporting units by using a market approach and a discounted cash flow (“DCF”) analysis.

Determining fair value using a DCF analysis requires the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows.

Determining fair value using a DCF analysis and market analysis requires the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates, including revenue, the amount and timing of expected future cash flows, and market multiples.

If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired.

4 unchanged sentences

Significant judgments inherent in this analysis include the determination of royalty rates, discount rates, perpetual growth rates and the amount and timing of future revenues.

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.

Results of the October 1, 2022, 2021 and 2020 qualitative annual impairment tests indicated that it is not more likely than not that the fair value of the goodwill and the indefinite-lived intangible assets were each less than their respective carrying values.

Accordingly, no further testing was required.

At October 1, 2019, the Company performed the first step of the quantitative goodwill impairment test and found that the fair value of each reporting unit exceeded its carrying amount, indicating no goodwill impairment.

The Company changed its operating segments in the fourth quarter of 2019 and accordingly changed its reporting units.

At December 31, 2019, the Company performed the first step of the quantitative goodwill impairment test and found that the fair value of each reporting unit exceeded its carrying amount, indicating no goodwill impairment.

Results of the October 1, 2019 qualitative annual impairment tests for the indefinite-lived intangible assets indicated that it is not more likely than not that the fair value of the assets were each less than their respective carrying values.

Accordingly, no further testing was required.

Long-Lived Assets and Intangible Assets with Definite Lives

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Amortization of definite-lived intangible assets is recorded on a straight-line basis over their estimated lives.

Subsequent to the adoption of ASU 2018-15, described below, capitalized implementation costs incurred in a hosting arrangement that is a service contract are also allocated to and included within long-lived asset groups tested for recoverability.

Capitalized implementation costs incurred in a hosting arrangement that is a service contract are also allocated to and included within long-lived asset groups tested for recoverability.

Long-lived asset groups are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

2 unchanged sentences

At December 31, 2022 and 2021, the Company performed its review of impairment triggering events for long-lived asset groups and determined that a triggering event had not occurred.

Fair Value Measurements

The Company categorizes its assets and liabilities measured at fair value into a fair value hierarchy that prioritizes the assumptions used in pricing the asset or liability into the following three levels:

Observable inputs, such as quoted prices for identical assets and liabilities in active markets obtained from independent sources.

Assets and Liabilities Held for Sale

The Company classifies assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met:

• Management, having the authority to approve the action, commits to a plan to sell the asset or disposal group;

• The asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups;

• An active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated;

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• The sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the Company's control extend the period of time required to sell the asset or disposal group beyond one year;

• The asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value;

• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

A long-lived asset or disposal group that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell.

Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met.

Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale.

The fair value of a long-lived asset or disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the asset or disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale.

Equity Investments

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

Accordingly, 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.

Fair Value Measurements

Observable inputs, such as quoted prices for identical assets and liabilities in active markets obtained from independent sources.

Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data.

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

Advertising costs are expensed in the period incurred (except for production costs which are initially capitalized and then recognized as expense when the advertisement first runs) and principally represent offline costs, including television, print and radio advertising, and online advertising costs, including fees paid to search engines and distribution partners.

Advertising expense was $ 716.6 million, $ 567.7 million and $ 688.2 million for the years ended December 31, 2021, 2020 and 2019, respectively, and is included in selling and marketing expense on the consolidated statements of operations and comprehensive income (loss).

Income taxes are accounted for under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Advertising and Promotional Expense

Advertising and promotional costs are expensed in the period incurred (except for production costs which are initially capitalized and then recognized as expense when the advertisement first runs) and principally represent offline costs, including television, print and radio advertising, and online advertising costs, including fees paid to search engines and distribution partners.

Advertising and promotional expense was $ 647.3 million, $ 716.6 million and $ 567.7 million for the years ended December 31, 2022, 2021 and 2020, respectively, and is included in selling and marketing expense on the consolidated statements of operations and comprehensive income (loss).

Income taxes are accounted for under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

In estimating future tax consequences, all expected future events are considered.

6 unchanged sentences

The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

15 unchanged sentences

Excess tax benefits and deficiencies that arise due to the difference in the measure of stock compensation and the amount deductible for tax purposes are recorded in income tax expense within the consolidated statement of operations and comprehensive income (loss), and are classified as a component of operating cash flows within the consolidated statements of cash flows.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Litigation Settlements and Contingencies

17 unchanged sentences

litigation accruals;

HLC ownership related claims;

contract assets;

2 unchanged sentences

and the determination of right-of-use assets and lease liabilities.

The Company considered the impact of the COVID-19 pandemic on the assumptions and estimates used when preparing its financial statements including, but not limited to, the allowance for doubtful accounts, valuation allowances, contract asset and

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

contingent consideration.

The Company considered the impact of the COVID-19 pandemic on the assumptions and estimates used when preparing its consolidated financial statements including, but not limited to, the allowance for doubtful accounts, valuation allowances, contract asset and contingent consideration.

These assumptions and estimates may change as new events occur and additional information is obtained.

6 unchanged sentences

Due to the nature of the mortgage lending industry, interest rate fluctuations may negatively impact future revenue from the Company's marketplace.

For the year ended December 31, 2021, there were no network partners accounting for more than 10% of total revenue.

For the years ended December 31, 2020 and 2019, one network partner accounted for 15 % and 12 %, respectively, of total consolidated revenue, all of which was recorded within the Insurance segment.

For the years ended December 31, 2022 and December 31, 2021, there were no network partners accounting for more than 10% of total revenue.

For the year ended December 31, 2020, one network partner accounted for 15 % of total consolidated revenue, all of which was recorded within the Insurance segment.

Lenders and lead purchasers participating on the Company's marketplace can offer their products directly to consumers through brokers, mass marketing campaigns or through other traditional methods of credit distribution.

3 unchanged sentences

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, which simplifies the accounting for convertible instruments, amends the derivatives scope exception guidance for contracts in an entity’s own equity, and amends the related earnings-per-share guidance.

Under the new guidance, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital.

As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives.

Additionally, the new guidance requires the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share.

This ASU is effective for annual and interim reporting periods beginning after December 15, 2021, with early adoption permitted for periods beginning after December 15, 2020.

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

The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition approach and recognized the cumulative effect of initially applying ASU 2020-06 as a $ 44.4 million adjustment to the opening balance of accumulated deficit, comprised of $ 60.8 million for the interest adjustment, net of $ 16.4 million for the related tax impacts.

The recombination of the equity conversion component of our convertible debt remaining outstanding caused a reduction in additional paid-in capital and an increase in deferred income tax assets.

The removal of the remaining debt discounts recorded for this previous separation had the effect of increasing our net debt balance.

ASU 2020-06 also requires the dilutive impact of convertible debt instruments to utilize the if-converted method when calculating diluted earnings per share and the result is more dilutive.

The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.

See Note 16—Debt for further information.

The cumulative effect of the changes made to the consolidated January 1, 2022 balance sheet for the adoption of ASU 2020-06 were as follows (in thousands):

December 31, 2021 Adjustments due to

ASU 2020-06 January 1, 2022

Deferred income tax assets $ 87,581 $ 23,979 $ 111,560

Current portion of long-term debt $ 166,008 $ 3,213 $ 169,221

Long-term debt 478,151 86,069 564,220

Shareholders' equity:

Additional paid-in capital $ 1,242,794 $ ( 109,750 ) $ 1,133,044

Accumulated deficit ( 571,794 ) 44,447 ( 527,347 )

The adoption of ASU 2020-06 did not impact our cash flows or compliance with debt covenants.

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

9 unchanged sentences

Entities electing early adoption must adopt all amendments in the same period.

Most amendments must be applied prospectively while others are to be applied on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

Most amendments must be applied prospectively while others are to be applied on a

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The Company adopted ASU 2019-12 in the first quarter of 2021.

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

In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

In August 2018, the FASB issued ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

This ASU is effective for annual and interim reporting periods beginning after December 15, 2019.

1 unchanged sentence

The Company adopted ASU 2018-15 in the first quarter of 2020 using the prospective approach.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to the adoption of this ASU, capitalizable implementation costs incurred in a hosting arrangement that is a service contract are recorded within prepaid and other current assets and other non-current assets on the consolidated balance sheet.

Subsequent to the adoption of this ASU, capitalizable implementation costs incurred in a hosting arrangement that is a service contract are recorded within prepaid and other current assets and other non-current assets on the consolidated balance sheet.

The amortization expense associated with these capitalized implementation costs is included within general and administrative expense on the consolidated statement of operations and comprehensive income (loss).

15 unchanged sentences

The Company adopted ASC Topic 326 as of January 1, 2020, which did not result in any cumulative effect adjustment to the opening balance of accumulated deficit in the period of adoption.

In February 2016, the FASB issued ASU 2016-02 related to lease accounting guidance.

This ASU introduces ASC Topic 842, Leases, which supersedes ASC Topic 840, Leases.

In 2018 and 2019, the FASB issued final amendments clarifying certain narrow aspects of implementing ASU 2016-02, including clarifications related to the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate, transition disclosures and certain other transition matters.

The clarification ASUs also provided an optional transition method that allows entities to initially apply the lease accounting transition requirements at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption without restating comparative prior periods presented.

The clarification ASUs must be adopted concurrently with the adoption of ASU 2016-02 (collectively, "ASC Topic 842").

The Company adopted ASC Topic 842 as of January 1, 2019, using the optional transition method to apply the new requirements at the adoption date without restating comparative prior periods presented.

The adoption resulted in the increase in total assets and total liabilities of $ 8.8 million as of January 1, 2019, related to operating leases greater than one year in duration for which the Company is the lessee, with no cumulative effect adjustment to the opening balance of accumulated deficit.

As part of the transition, the Company elected the package of practical expedients, which allows the Company to not reassess whether expired or existing contracts contain leases, lease classification for expired or existing leases, and initial direct costs for existing leases.

Additionally, the Company elected an accounting policy to not record short-term leases, which are leases with an initial term of twelve months or fewer, on the balance sheet.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible instruments, amends the derivatives scope exception guidance for contracts in an entity’s own equity, and amends the related earnings-per-share guidance.

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

Early adoption is permitted for fiscal years beginning after December 15, 2020, including adoption in interim periods.

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

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

The Company plans to adopt the amendments through the modified retrospective method of transition in the first quarter of 2022.

As a result, the Company's convertible senior notes will be stated on its consolidated balance sheet at their principal amounts, net of debt issuance costs.

The Company will record a cumulative-effect adjustment to retained earnings related to prior interest costs associated with the debt discount initially recorded upon issuance of the notes and will record a decrease to additional paid in capital.

The cumulative-effect adjustment is expected to increase retained earnings by approximately $ 61 million.

Additionally, ASU 2020-06 will result in

The Company has considered the applicability of recently issued accounting pronouncements by the Financial Accounting Standards Board and have determined that they are not applicable or are not expected to have a material impact on our consolidated financial statements.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the reporting of diluted earnings per share, if the effect is dilutive, in our consolidated financial statements, regardless of our settlement intent.

NOTE 3— REVENUE

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Total revenue $ 984,992 $ 1,098,499 $ 909,990

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 $ 9.1 million and $ 6.4 million on December 31, 2021 and 2020, respectively.

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 12.2 million and $ 9.1 million on December 31, 2022 and 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 $ 0.9 million and $ 0.8 million at December 31, 2022 and 2021, respectively.

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Capitalized software development depreciation expense was $ 14.1 million, $ 13.3 million and $ 11.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Long-lived assets located outside the United States, the Company's country of domicile, were $ 0.1 million at each of December 31, 2021 and 2020.

Long-lived assets located outside the United States, the Company's country of domicile, were immaterial at December 31, 2022 and $ 0.1 million at December 31, 2021.

See Note 9—Assets and Liabilities Held for Sale for property and equipment classified as held for sale during 2022.

NOTE 6— HOSTING ARRANGEMENTS

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Total net $ 2,229 $ 2,803 $ 2,047 $ 2,714

Amortization expense included within general and administrative expense on the consolidated statement of operations and comprehensive income (loss) associated with these capitalized implementation costs was $ 1.1 million and $ 0.2 million for the year ended December 31, 2021 and 2020, respectively.

Amortization expense included within general and administrative expense on the consolidated statement of operations and comprehensive income (loss) associated with these capitalized implementation costs was $ 2.5 million and $ 1.1 million for the years ended December 31, 2022 and 2021, respectively.

LENDINGTREE, INC.

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Balance at December 31, 2020

$ 903,227 $ ( 483,088 ) $ 420,139

Changes in goodwill — — —

Balance at December 31, 2021

$ 903,227 $ ( 483,088 ) $ 420,139

Changes in goodwill — — —

Balance at December 31, 2022

$ 903,227 $ ( 483,088 ) $ 420,139

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

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Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill at each of December 31, 2021 and 2020 consists of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 194.7 million associated with the Insurance segment.

Prior to the fourth quarter of 2019, the Company's goodwill was associated with its then one reportable segment.

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

Results of the annual impairment test as of October 1, 2022 indicated that no impairment had occurred.

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 our 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 and the Mortgage reporting unit.

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

Additionally, the significant increase in mortgage interest rates have had a negative impact on the Mortgage reporting unit.

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

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

Results of the annual impairment test as of October 1, 2022 indicated that no impairment had occurred.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets with Definite Lives

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Amortization Net

Technology 4.3 years $ 87,700 $ ( 69,369 ) $ 18,331

Customer lists 13.2 years 77,300 ( 30,775 ) 46,525

Trademarks and tradenames 5.0 years 10,100 ( 8,452 ) 1,648

Website content 3.0 years 26,100 ( 25,375 ) 725

Balance at December 31, 2022 $ 87,400 $ ( 39,227 ) $ 48,173

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The decrease in cost and accumulated amortization in 2022 compared to 2021 is primarily due to certain technology and website content intangible assets becoming fully amortized and written off in 2022.

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

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Total intangible assets with definite lives, net $ 48,173

See Note 9—Assets and Liabilities Held for Sale for intangible assets with definite lives classified as held for sale during 2022.

NOTE 8— EQUITY INVESTMENT

In January 2022, the Company acquired an equity interest in EarnUp Inc.

(“EarnUp”) for $ 15.0 million.

The company is a consumer-first mortgage payment platform that intelligently automates loan payment scheduling and helps consumers better manage their money and improve their financial well-being.

On February 28, 2020, the Company acquired an equity interest in Stash Financial, Inc.

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Stash brings together banking, investing, and financial services education into one seamless experience offering a full suite of personal investment accounts, traditional and Roth IRAs, custodial investment accounts, and banking services, including checking accounts and debit cards with a Stock-Back® rewards program.

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

The Stash equity securities will be carried at cost and subsequently marked to market upon observable market events with any gains or losses recorded in operating income in the consolidated statement of operations.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 market events, which is included within other income on the consolidated statement of operations and comprehensive income.

As of December 31, 2021, there have been no impairments to the acquisition cost of the Stash equity securities.

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

NOTE 9— ASSETS AND LIABILITIES HELD FOR SALE

In the fourth quarter of 2022, the Company approved a plan to sell an asset group associated with the Company's Consumer segment.

The asset group is expected to be sold in 2023 to an unrelated third party and is classified, at its carrying value, as current assets held for sale and current liabilities held for sale in the consolidated balance sheet as of December 31, 2022.

The following table presents information related to the major classes of assets and liabilities that were classified as held for sale (in thousands) :

December 31, 2022

Accounts receivable, net of allowance $ 1,353

Prepaid and other current assets 79

Property and equipment, net of accumulated depreciation of $ 1,102

Operating lease right-of-use assets 436

Intangible assets, net of accumulated amortization of $ 3,857

Other non-current assets 13

Total assets held for sale $ 5,689

Accounts payable, trade $ 253

Accrued expenses and other current liabilities 2,551

Operating lease liabilities 105

Total liabilities held for sale $ 2,909

NOTE 10— BUSINESS ACQUISITIONS

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In 2018, the Company acquired all of the outstanding equity interests of QuoteWizard.com, LLC, which does business under the name QuoteWizard (“QuoteWizard”).

The Company made no earnout payments related to the QuoteWizard acquisition during 2021, and this earnout is complete.

The Company made no earnout payments related to the QuoteWizard acquisition during 2022 or 2021, and this earnout period ended October 31, 2021.

In 2020, the Company paid $ 20.2 million related to the earnout payment for the period of November 1, 2019 through October 31, 2020, which is included within cash flows from operating activities on the consolidated statement of cash flows.

In 2019, the Company paid $ 23.4 million related to the earnout payment for the period of November 1, 2018 through October 31, 2019, of which $ 13.9 million is included within cash flows from financing activities and $ 9.5 million is included within cash flows from operating activities on the consolidated statement of cash flows.

In 2018, the Company acquired all of the outstanding equity interests of Ovation Credit Services, Inc., which does business under the name Ovation (“Ovation”).

The Company made no earnout payments related to the Ovation acquisition during 2021, as this earnout was completed in 2020.

The Company made no earnout payments related to the Ovation acquisition during 2022 or 2021, as this earnout was completed in 2020.

In 2020, the Company paid $ 4.4 million related to the earnout payment for the period of July 1, 2019 through June 30, 2020, of which $ 1.4 million is included within cash flows from financing activities and $ 3.0 million is included within cash flows from operating activities on the consolidated statement of cash flows.

In 2019, the Company paid $ 4.4 million related to the earnout payment for the period of July 1, 2018 through June 30, 2019, which is included within cash flows from financing activities on the consolidated statement of cash flows.

In 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”).

During 2020, the Company made the final earnout payments related to the achievement of certain defined

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

Of the total earnout payments of $ 6.0 million in 2020, $ 3.3 million is included within cash flows from financing activities and $ 2.7 million is included within cash flows from operating activities on the consolidated statement of cash flows.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

earnings targets for SnapCap.

The earnout payment of $ 3.0 million in 2019 is included within cash flows from financing activities on the consolidated statement of cash flows.

In 2017, the Company acquired all of the assets of Deposits Online, LLC, which does business under the name DepositAccounts.com (“DepositAccounts”).

The Company made no earnout payments related to the DepositAccounts acquisition during 2020 and 2021, and this earnout is complete.

Total earnout payments of $ 3.0 million in 2019 are included within cash flows from operating activities on the consolidated statement of cash flows.

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

Year Ended December 31,

2021 2020 2019

QuoteWizard $ ( 8,249 ) $ 3,980

Ovation — 1,270

SnapCap — 77 2,220

DepositAccounts — — ( 947 )

Total changes in fair value of contingent consideration $ ( 8,249 ) $ 5,327

2019 Acquisition

On January 10, 2019, the Company acquired Value Holding, Inc., the parent company of ValuePenguin Inc.

("ValuePenguin"), a personal finance website that offers consumers objective analysis on a variety of financial topics from insurance to credit cards.

The Company made an upfront cash payment of $ 106.1 million at the closing of the transaction, funded through $ 90.0 million drawn on the Company's revolving credit facility and the balance using cash on hand.

The purchase price of $ 106.2 million is comprised of the upfront cash payment of $ 106.1 million and a $ 0.1 million post-closing payment for working capital settlement.

The acquisition has been accounted for as a business combination.

In 2019, the Company completed the determination of the final allocation of purchase price to the assets acquired and liabilities assumed as follows (in thousands) :

Net working capital $ 2,502

Fixed assets 68

Intangible assets 31,600

Goodwill 71,739

Net noncurrent assets 323

Total purchase price $ 106,232

The Company primarily used the income approach for the valuation as appropriate and used valuation inputs in these models and analyses that were based on market participant assumptions.

Market participants are buyers and sellers unrelated to the Company, and fair value is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The acquired intangible assets are definite-lived assets consisting of developed technology, content and trademarks and tradenames.

The estimated fair values of the developed technology were determined using the cost replacement method, the content was determined using the excess earnings method, and the trademarks and tradenames were determined using the relief from royalty method.

The estimated fair value of the intangible assets are based on estimates for content lifecycles, estimates for revenue growth rates, estimates for future cash flows, the probability weighting of scenarios and discount rates, known at the acquisition date, which management believes are reasonable.

The fair value of the intangible assets with definite lives is as follows (dollars in thousands) :

Fair Value Weighted Average

Amortization Life

Technology $ 4,200 3 years

Content 26,100 3 years

Trademarks and tradenames 1,300 5 years

Total intangible assets $ 31,600 3.1 years

The Company recorded goodwill of $ 71.7 million, which represents the excess of the purchase price over the estimated fair value of tangible and intangible assets acquired, net of the liabilities assumed.

The goodwill is primarily attributable to ValuePenguin as a going concern, which represents the ability of the Company to earn a higher return on the collection of assets and business of ValuePenguin than if those assets and business were to be acquired and managed separately.

The benefit of access to the workforce is an additional element of goodwill.

The goodwill was recorded in the Company’s then one reportable segment.

For income tax purposes, the Company accounted for the acquisition as an asset purchase which would indicate the goodwill will be tax deductible.

Subsequent to the acquisition date, the Company’s consolidated results of operations include the results of the acquired ValuePenguin business.

In 2019, the Company’s consolidated results of operations include revenue of $ 19.8 million attributable to the ValuePenguin business.

In the first six months of 2019, net income from continuing operations attributable to the ValuePenguin business was $ 3.1 million.

Due to the integration of the ValuePenguin business subsequent to the acquisition, earnings of the acquired ValuePenguin business beginning in the third quarter of 2019 is impracticable to determine with sufficient accuracy.

Acquisition-related costs were $ 0.1 million in 2019 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income (loss).

Pro forma Financial Results

The unaudited pro forma financial results for the year ended December 31, 2019 combine the consolidated results of the Company and ValuePenguin, giving effect to the acquisition as if the acquisition had been completed on January 1, 2018.

This unaudited pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the acquisition been completed as of January 1, 2018, or any other date.

The unaudited pro forma financial results include adjustments for additional amortization expense based on the fair value of the intangible assets with definite lives and their estimated useful lives.

Interest expense was also adjusted to reflect incremental interest associated with debt issued to finance the ValuePenguin acquisition.

(in thousands)

Pro forma revenue $ 1,107,118

Pro forma net income from continuing operations $ 39,173

The unaudited pro forma net income from continuing operations in 2019 includes the aggregate after-tax contingent consideration expense associated with the DepositAccounts, SnapCap, Ovation and QuoteWizard earnouts of $ 21.5 million.

Acquisition-related costs of $ 0.1 million incurred by the Company that are directly attributable to the ValuePenguin acquisition, and which will not have an ongoing impact, have been eliminated from the unaudited pro forma net income from continuing operations for 2019.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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Total accrued expenses and other current liabilities $ 75,095 $ 106,731

See Note 9—Assets and Liabilities Held for Sale for accrued expenses and other current liabilities classified as held for sale during 2022.

NOTE 12— LEASES

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Weighted average discount rate 5.0 % 5.0 % 5.0 %

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information related to leases is as follows (in thousands) :

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Right-of-use assets obtained in exchange for new operating lease liabilities $ 975 $ 1,250 $ 66,881

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Maturities of lease liabilities as of December 31, 2022 are as follows (in thousands) :

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Interest 35,811

Tenant improvement allowances 253

Present value of lease liabilities $ 96,745

The Company operated as a lessor in connection with office buildings in Charlotte, North Carolina acquired in December 2016.

The properties were sold in 2019 to an unrelated third party.

Rental income of $ 0.3 million in 2019 is included in other income on the accompanying consolidated statements of operations and comprehensive income (loss).

See Note 9—Assets and Liabilities Held for Sale for leases classified as held for sale during 2022.

NOTE 13— SHAREHOLDERS' EQUITY

Basic and diluted income (loss) per share was determined based on the following share data (in thousands) :

Basic and diluted (loss) income per share was determined based on the following share data (in thousands) :

Year Ended December 31,

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Effect of dilutive share awards — 89 —

Effect of Convertible Senior Notes and warrants — — 871

Weighted average diluted common shares 12,793 13,695 13,007

For the year ended December 31, 2022, the Company had a loss from continuing operations and, as a result, no potentially dilutive securities were included in the denominator for computing diluted loss per share, because the impact would have been anti-dilutive.

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

Approximately 0.2 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the year ended December 31, 2022 because their inclusion would have been anti-dilutive.

For the year ended December 31, 2022 the weighted average shares that were anti-dilutive included options to purchase 1.0 million shares of common stock and 0.4 million restricted stock units.

For the year ended December 31, 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 0.1 million restricted stock units.

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For the year ended December 31, 2020 the weighted average shares that were anti-dilutive included options to purchase 0.2 million shares of common stock.

For the year ended December 31, 2019, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 0.1 million shares of common stock.

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

See Note 15—Debt for additional information.

Shares of the Company's common stock associated with the 0.50 % Convertible Senior Notes due July 15, 2025 and the warrants issued by the Company in 2020 were excluded from the calculation of diluted loss per share for the years ended December 31, 2021 and 2020 as they were anti-dilutive since the conversion price of the notes and the strike price of the warrants were greater than the average market price of the Company’s common stock during the relevant period.

Shares of the Company's common stock associated with the 0.625 % Convertible Senior Notes due June 1, 2022 and the warrants issued by the Company in 2017 were excluded from the calculation of diluted loss per share for the year ended December 31, 2021 as they were anti-dilutive since the conversion price of the notes and the strike price of the warrants were greater than the average market price of the Company’s common stock during the relevant period.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

See Note 16—Debt for additional information.

On January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method.

Following the adoption, the if-converted method is used for diluted net income per share calculation of our convertible notes.

Prior to the adoption of ASU 2020-06 the dilutive impact of the convertible notes was calculated using the treasury stock method.

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 years ended December 31, 2022 and 2020 because their inclusion would have been anti-dilutive and were excluded from diluted income per share for the year ended December 31, 2021 since the conversion price of the Notes was greater than the average market price of the Company's common stock during the period.

Shares of the Company's stock associated with warrants issued by the Company in 2017 and 2020 were excluded from the calculation of diluted (loss) income per share for the years ended December 31, 2022 and 2020 because their inclusion would have been anti-dilutive and were excluded for the year ended December 31, 2021 since the strike price of the warrants was greater than the average market price of the Company's common stock during the relevant periods.

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

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During the years ended December 31, 2022 and 2021, the Company purchased 379,895 and 334,253 shares, respectively, of its common stock for aggregate consideration of $ 43.0 million and $ 40.0 million, respectively.

The Company did no t purchase shares of its common stock during the year ended December 31, 2020.

At December 31, 2022, $ 96.7 million remains authorized for share repurchase.

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The Compensation Committee has the authority to modify the vesting provisions of an award.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-cash compensation related to equity awards is included in the following line items in the accompanying consolidated statements of operations and comprehensive income (loss) (in thousands) :

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Product development 8,418 8,447 6,524

Restructuring and severance 1,083 — —

Total non-cash compensation $ 59,624 $ 68,555 $ 53,733

For the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 14.1 million, $ 11.4 million and $ 12.2 million of income tax benefit, including state taxes, related to non-cash compensation.

Additionally, for the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 11.7 million, $ 2.5 million and $ 17.1 million, respectively, of excess tax benefit, including state taxes, in income tax expense.

For the years ended December 31, 2022, 2021, and 2020, the Company recognized $ 12.0 million, $ 14.1 million, and $ 11.4 million, respectively, of income tax benefit, including state taxes, related to non-cash compensation.

Additionally, for the year ended December 31, 2022, the Company recognized excess tax expense of $ 5.1 million, and for the years ended December 31, 2021, and 2020, the Company recognized excess tax benefit of $ 11.7 million, and $ 2.5 million, respectively, including state taxes, in income tax expense.

See Note 2—Significant Accounting Policies, for additional information regarding excess tax benefits and deficiencies.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

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Upon exercise, the intrinsic value represents the pre-tax difference between the Company's closing stock price on the exercise date and the exercise price, multiplied by the number of stock options exercised.

During the years ended December 31, 2021, 2020 and 2019, the total intrinsic value of stock options that were exercised was $ 51.4 million, $ 6.8 million and $ 50.2 million, respectively.

Cash received from stock option exercises and the related actual tax benefit realized were $ 2.2 million and $ 13.1 million, respectively, for the year ended December 31, 2021.

During the year ended December 31, 2022, there were no stock options exercised.

During the years ended December 31, 2021 and 2020, the total intrinsic value of stock options that were exercised was $ 51.4 million and $ 6.8 million, respectively.

As there were no options exercised for the year ended December 31, 2022, no cash was received from stock option exercises.

During the years ended December 31, 2022, 2021, and 2020, the Company granted stock options with a weighted average grant date fair value per share of $ 53.21 , $ 128.86 , and $ 116.08 , respectively, of which the vesting periods include (a) immediately upon grant, (b) earlier of one year from grant date and the Company's annual meeting of stockholders for 2023, (c) 33 % over a period of three years from the grant date, (d) 25 % over a period of four years from the grant date, and (e) certain grants to executive officers that vest over periods of up to six years .

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options, except the December 2020 grant to the Chairman and Chief Executive Officer described below, was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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(5) An 8.8 % discount for the post-exercise holding requirement, calculated using the cost-of-carry method, the Chaffe protective put method, and the Finnerty model.

During the years ended December 31, 2021, 2020 and 2019, the total fair value of options vested was $ 10.8 million, $ 5.8 million and $ 6.9 million, respectively.

During the years ended December 31, 2022, 2021 and 2020, the total grant date fair value of options vested was $ 9.2 million, $ 10.8 million and $ 5.8 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Options with Market Conditions

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Outstanding at December 31, 2021 700,209 $ 236.01

47,639 195.10

Exercised — —

Forfeited — —

Expired ( 13,163 ) 378.95

Outstanding at December 31, 2022 734,685 $ 230.79 5.68 $ —

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No stock options with market conditions were granted in 2021.

During the years ended December 31, 2020 and 2019, the Company granted stock options with a weighted-average grant date fair value per share of $ 142.54 and $ 230.81 , respectively.

The single cliff-vesting stock options granted during the years ended December 31, 2020 and 2019 have vest dates of March 31,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2024 and March 31, 2023, respectively.

During the year ended December 31, 2020, the Company granted stock options with a weighted-average grant date fair value per share of $ 142.54 .

The single cliff-vesting stock options granted during the year ended December 31, 2020 have a vest date of March 31, 2024.

The graded-vesting stock options granted during the year ended December 31, 2020 have a vesting schedule with vesting dates of December 31, 2024, December 31, 2025 and December 31, 2026.

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The weighted-average assumptions used for single cliff-vesting stock options with a market condition are as follows:

Year Ended December 31,

December 31, 2020

Expected term (1)

7.00 years 7.00 years

Expected dividend (2)

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Risk-free interest rate (4)

1.03 % 2.54 %

(1) The expected term of stock options with a market condition granted was calculated using the midpoint between the weighted average time of vesting and the end of the contractual term.

(2) For all stock options with a market condition granted during the years ended December 31, 2020 and 2019, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.

(2) For all stock options with a market condition granted during the years ended December 31, 2020, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.

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

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Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2020, the Company granted graded-vesting stock options with a market condition to its Chairman and Chief Executive Officer at a premium exercise price of $ 300 , representing an approximate 25 % premium over the closing market price of LendingTree's common stock on the date of grant.

16 unchanged sentences

The performance measurement period ends on March 31, 2023.

The performance measurement period for the stock options with market conditions granted in conjunction with the 2017 Chairman and Chief Executive Officer grants ended on September 30, 2022.

The grants had a target number of shares of 434,030 that would vest upon achieving a targeted total shareholder return performance of 110 % stock price appreciation and a maximum of 724,831 shares for achieving superior performance.

No shares would vest unless 70 % of the targeted performance is achieved.

At September 30, 2022, an additional 47,639 shares were granted to reflect the actual total shareholder return performance above the target, as reflected in the table above.

The performance measurement period for stock options with a market condition granted in 2018 ended on March 31, 2022.

The grant had a target number of shares of 13,163 that would vest upon achieving a targeted total shareholder return performance of 81 % stock price appreciation and a maximum of 21,982 shares for achieving superior performance.

No shares would vest unless 41 % of the targeted performance was achieved.

At March 31, 2022, the target number of shares expired due to the actual total shareholder return performance not meeting the 41 % of the targeted performance measure, as reflected in the table above.

For all stock options with market conditions, time-based service vesting conditions would also have to be satisfied in order for shares to become fully vested and no longer subject to forfeiture.

As of December 31, 2022, a maximum of 422,537 may be earned for achieving superior performance up to 167 % of the remaining unvested target number of shares.

As of December 31, 2022, no additional performance-based nonqualified stock options with a market condition had been earned.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain of the stock options with a market condition granted in 2018 have a target number of shares that vest upon achieving a targeted total shareholder return performance of 110 % stock price appreciation and a maximum of 52,332 shares for achieving superior performance.

No shares will vest unless 70 % of the targeted performance is achieved.

The performance measurement period ends on September 30, 2022.

The remaining stock options with a market condition granted in 2018 have a target number of shares that vest upon achieving a targeted total shareholder return performance of 81 % stock price appreciation and a maximum of 21,982 shares for achieving superior performance.

No shares will vest unless 41 % of the targeted performance is achieved.

The performance measurement period ends on March 31, 2022.

For all stock options with market conditions, time-based service vesting conditions would also have to be satisfied in order for shares to become fully vested and no longer subject to forfeiture.

As of December 31, 2021, stock options with a market condition of 481,669 had been earned, which have a vest date of September 30, 2022.

Restricted Stock Units

15 unchanged sentences

Nonvested at December 31, 2021 — $ —

Vested ( 6,328 ) 223.90

Granted 16,000 83.25

Forfeited — —

2 unchanged sentences

As of December 31, 2022, there was no unrecognized compensation cost related to RSUs with performance conditions.

The total fair value of RSUs with performance conditions that vested during the years ended December 31, 2021, 2020, and 2019 was $ 0.9 million, $ 2.6 million, and $ 18.8 million, respectively.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The total fair value of RSUs with performance conditions that vested during the years ended December 31, 2021, and 2020 was $ 0.9 million and $ 2.6 million, respectively.

Restricted Stock Awards with Performance Conditions

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

RSAs with Performance Conditions

Number of Awards Weighted Average Grant Date Fair Value

Nonvested at December 31, 2020 23,804 $ 340.25

Vested ( 23,804 ) 340.25

Forfeited — —

Nonvested at December 31, 2021 — $ —

No RSAs with performance conditions were granted in 2022, 2021, or 2020.

2 unchanged sentences

The performance condition was tied to the Company's operating results during the first six months of 2018, and has been met.

As of December 31, 2021, there was no unrecognized compensation cost related to RSAs with performance conditions.

The total fair value of RSAs with performance conditions that vested during the years ended December 31, 2021, 2020 and 2019 was $ 4.1 million, $ 6.2 million and $ 8.2 million, respectively.

The total fair value of RSAs with performance conditions that vested during the years ended December 31, 2021 and 2020 was $ 4.1 million and $ 6.2 million, respectively.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Awards with Market Conditions

3 unchanged sentences

Nonvested at December 31, 2021 26,674 $ 340.25

Granted 2,927 340.25

Vested ( 29,601 ) 340.25

Forfeited — —

2 unchanged sentences

During 2018, the Company granted RSAs with market conditions to its Chairman and Chief Executive Officer with a total grant date fair value of $ 1.9 million.

These RSAs with a market condition have a target number of shares that vest upon achieving a targeted total shareholder return performance of 110 % stock price appreciation and a maximum of 44,545 shares for achieving superior performance.

No shares will vest unless 70 % of the targeted performance is achieved.

The performance measurement period ends on September 30, 2022.

Time-based service vesting conditions would also have to be satisfied in order for shares to become fully vested and no longer subject to forfeiture.

As of December 31, 2021, there was approximately $ 0.3 million of unrecognized compensation cost related to RSAs with market conditions.

These costs are expected to be recognized over a weighted-average period of approximately 0.8 years.

As of December 31, 2021, RSAs with a market condition of 29,601 had been earned, which have a vest date of September 30, 2022.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The performance measurement period ended on September 30, 2022, and 29,601 shares were earned.

The performance measurement period for restricted stock awards with market conditions granted in 2018 ended on September 30, 2022.

The grant had a target number of shares of 26,674 that would vest upon achieving a targeted total shareholder return performance of 110 % stock price appreciation and a maximum of 44,545 shares for achieving superior performance.

No shares would vest unless 70 % of the targeted performance was achieved.

At September 30, 2022, an additional 2,927 were granted to reflect the actual total shareholder return performance above the target, as reflected in the table above.

As of December 31, 2022, there was no unrecognized compensation cost related to RSAs with market conditions.

The total fair value of RSAs with market conditions that vested during the year ended December 31, 2022 was $ 0.7 million.

Employee Stock Purchase Plan

4 unchanged sentences

During the year ended December 31, 2022, 30,375 shares were purchased under the ESPP at a weighted average purchase price of $ 27.19 per share, resulting in cash proceeds of $ 0.8 million.

As of December 31, 2021, 257,188 shares were available for issuance under the ESPP.

For the year ended December 31, 2021, the Company granted Employee Stock Purchase Rights to certain employees with a grant date fair value per share of $ 42.39 , calculated using the Black-Scholes option pricing model.

During the year ended December 31, 2021, 5,543 shares were purchased under the ESPP at a weighted average purchase price of $ 103.62 per share, resulting in cash proceeds of $ 0.6 million.

As of December 31, 2022 and 2021, 226,813 and 257,188 shares, respectively, were available for issuance under the ESPP.

For the years ended December 31, 2022 and 2021, the Company granted Employee Stock Purchase Rights to certain employees with a weighted average grant date fair value per share of $ 20.96 and $ 42.39 respectively, 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:

Year Ended December 31,

Expected term (1)

0.50 years 0.33 years

Expected dividend (2)

1 unchanged sentence

Risk-free interest rate (4)

0.19 % - 2.51 %

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

3 unchanged sentences

Treasury yields for notes with comparable expected terms as the Employee Stock Purchase Rights, in effect at the grant date.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15— INCOME TAXES

Income Tax Provision

The components of the income tax benefit are as follows (in thousands) :

The components of the income tax expense (benefit) are as follows (in thousands) :

Year Ended December 31,

9 unchanged sentences

Income tax expense (benefit) $ 133,019 $ 11,298 $ ( 19,961 )

A reconciliation of the income tax benefit to the amounts computed by applying the statutory federal income tax rate to income (loss) from continuing operations before income taxes is shown as follows (in thousands) :

A reconciliation of the income tax expense (benefit) to the amounts computed by applying the statutory federal income tax rate to income (loss) from continuing operations before income taxes is shown as follows (in thousands) :

Year Ended December 31,

5 unchanged sentences

Research and experimentation tax credit ( 2,906 ) ( 3,207 ) ( 3,800 )

Impact of certain state legislation, net — — 3,932

Nondeductible executive compensation 2,692 3,058 1,778

14 unchanged sentences

59,302 66,977

Capitalized research and experimentation 17,843 —

Non-cash compensation expense 30,451 26,756

Intangible assets 10,240 15,222

Interest limitation 8,036 4,059

Contingent liabilities — 4,507

Interest 30,054 8,036

Tax credits 16,174 15,848

14 unchanged sentences

The Company's NOLs will be available to offset taxable income subject to the Internal Revenue Code Section 382 annual limitation.

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

In addition, the Company has state NOLs of approximately $ 517.0 million at December 31, 2022 a portion of which will expire at various times between 2023 and 2042.

(b) The valuation allowance is related to items for which it is “more likely than not” that the tax benefit will not be realized.

10 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2021, 2020 and 2019, the Company recorded a partial valuation allowance of $ 6.0 million, $ 5.8 million and $ 4.1 million, respectively, primarily related to state net operating losses, which the Company does not expect to be able to utilize prior to expiration.

During 2022, the Company recorded tax expense of $ 139.4 million to establish a full valuation allowance against its net deferred tax assets due to historical cumulative pre-tax losses and continued pre-tax losses.

Management regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing taxable temporary differences, and tax planning strategies.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.

In determining the amount of the valuation allowance, the Company considered the scheduled reversal of deferred tax liabilities.

The Company will maintain a full valuation allowance on net deferred tax assets until there is sufficient evidence to support the reversal of some or all of the allowance.

Should there be a change in the valuation allowance in the future, the income tax provision would increase or decrease in the period in which the allowance is changed.

At December 31, 2021 and 2020, the Company recorded a partial valuation allowance of $ 6.0 million and $ 5.8 million, respectively, primarily related to state net operating losses, which the Company does not expect to be able to utilize prior to expiration.

A reconciliation of the beginning and ending balances of the deferred tax valuation allowance is as follows (in thousands) :

12 unchanged sentences

Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense.

Interest and penalties on unrecognized tax benefits included in income tax expense for each of the years ended December 31, 2021, 2020 and 2019 is immaterial.

Interest and penalties on unrecognized tax benefits included in income tax expense for each of the years ended December 31, 2022, 2021 and 2020 is not required to be recorded, as there have been no tax attributes included in income tax returns filed to date to require consideration of interest expense.

As of December 31, 2022 and 2021, the accrual for unrecognized tax benefits, including interest, was $ 3.3 million and $ 2.9 million, respectively, which would benefit the effective tax rate if recognized.

6 unchanged sentences

In addition, the Company is subject to state and local tax examinations for the tax years 2017 through 2022.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16— DEBT

6 unchanged sentences

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

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.

12 unchanged sentences

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.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company may not redeem the 2025 Notes prior to July 20, 2023.

4 unchanged sentences

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.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Accounting for the Notes After Adoption of ASU 2020-06

The Company adopted ASU 2020-06 on January 1, 2022 as further described in Note 2—Significant Accounting Policies in the notes to the consolidated financial statements included elsewhere in this report.

Following the adoption of ASU 2020-06, the 2025 Notes are recorded as a single unit within liabilities on the consolidated balance sheets as the conversion features within the 2025 Notes are not derivatives that require bifurcation and the 2025 Notes do not involve a substantial premium.

Debt issuance costs to issue the 2025 Notes were recorded as a direct deduction from the related liability and amortized to interest expense over the term of Notes.

The new guidance also requires the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share.

See Note 2—Significant Accounting Policies in the notes to the consolidated financial statements included elsewhere in this report for additional information.

Accounting for the Notes Before Adoption of ASU 2020-06

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

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

1 unchanged sentence

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.

During 2022, the Company recorded interest expense on the 2025 Notes of $ 5.9 million which consisted of $ 2.9 million associated with the 0.50 % coupon rate and $ 3.0 million associated with the amortization of the debt issuance costs.

During 2021, the Company recorded interest expense on the 2025 Notes of $ 27.2 million which consisted of $ 2.9 million associated with the 0.50 % coupon rate, $ 22.1 million associated with the accretion of the debt discount, and $ 2.2 million associated with the amortization of the debt issuance costs.

During 2020, the Company recorded interest expense on the 2025 Notes of $ 11.5 million which consisted of $ 1.3 million associated with the 0.50 % coupon rate, $ 9.3 million associated with the accretion of the debt discount, and $ 0.9 million associated with the amortization of the debt issuance costs.

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

The debt discount was being amortized over the term of the debt prior to the adoption of ASU 2020-06.

As of December 31, 2022, the fair value of the 2025 Notes is estimated to be approximately $ 419.0 million using the Level 1 observable input of the last quoted market price on December 31, 2022.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

5 unchanged sentences

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 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;

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.

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

Holders of the 2022 Notes were not entitled to convert the 2022 Notes during the calendar quarter ended December 31, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on September 30, 2021, was not greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day.

Holders of the 2022 Notes are not entitled to convert the 2022 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 2022 Notes on each applicable trading day.

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

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

Following the adoption of ASU 2020-06, the 2022 Notes are recorded as a single unit within liabilities on the consolidated balance sheets as the conversion features within the 2022 Notes are not derivatives that require bifurcation and the 2022 Notes do not involve a substantial premium.

Debt issuance costs to issue the 2022 Notes were recorded as a direct deduction from the related liability and amortized to interest expense over the term of Notes.

The new guidance also requires the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share.

See Note 2—Significant Accounting Policies in the notes to the consolidated financial statements included elsewhere in this report for additional information.

Accounting for the Notes Before Adoption of ASU 2020-06

The separate components of debt and equity of the Company’s 2022 Notes were determined using an interest rate of 5.36 %, which reflects the nonconvertible debt borrowing rate of the Company at the date of issuance.

As a result, the initial components of debt and equity were $ 238.4 million and $ 61.6 million, respectively.

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.

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 were being amortized to interest expense over the term of the debt and $ 1.9 million were allocated to the equity component.

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.

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

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

During 2021, the Company recorded interest expense on the 2022 Notes of $ 9.5 million which consisted of $ 1.1 million associated with the 0.625 % coupon rate, $ 7.5 million associated with the accretion of the debt discount, and $ 0.9 million associated with the amortization of the debt issuance costs.

During 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.

During 2020, the Company recorded interest expense on the 2022 Notes of $ 13.0 million which consisted of $ 1.5 million associated with the 0.625 % coupon rate, $ 10.3 million associated with the accretion of the debt discount, and $ 1.2 million associated with the amortization of the debt issuance costs.

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

As of December 31, 2021, the fair value of the 2022 Notes is estimated to be approximately $ 167.3 million using the Level 1 observable input of the last quoted market price on December 31, 2021.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 December 31, 2021 consolidated balance sheet, are as follows (in thousands) :

2021 December 31,

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 was recorded as a current liability in the December 31, 2021 consolidated balance sheet, are as follows (in thousands) :

Gross carrying amount $ 169,659

18 unchanged sentences

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 expired on June 1, 2022 upon the maturity of the Notes.

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 represented a premium of 70 % over the last reported sale price of the common stock of $ 156.70 on May 24, 2017 receiving proceeds of approximately $ 43.4 million.

The warrants expired on December 12, 2022.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

reported sale price of the common stock of $ 156.70 on May 24, 2017.

On May 31, 2017, the Company received aggregate proceeds of approximately $ 43.4 million from the sale of the 2017 Warrants.

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.

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.

effective July 24, 2020 in notional amounts corresponding to the principal amount of the 2022 Notes repurchased.

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.

1 unchanged sentence

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.

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.

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

As of December 31, 2022, the Company had $ 248.8 million borrowings outstanding under the Term Loan Facility bearing interest at the LIBO option rate of 8.14 % 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 December 31, 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.

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

The financial covenant will be tested only if the loans and certain other obligations under the Revolving Facility exceed $ 20.0 million as of the last date

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of any fiscal quarter (starting with the fiscal quarter ending on December 31, 2021).

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

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

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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.

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The Company was in compliance with all covenants at December 31, 2022.

8 unchanged sentences

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 $ 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.

Debt issuance costs of $ 3.5 million related to the Term Loan Facility and the original issue discount $ 2.5 million paid on the undrawn term loan facility were amortized to interest expense over the delayed draw access period.

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

During 2022, the Company recorded interest expense related to its Revolving Facility of $ 1.5 million which consisted of $ 0.6 million in unused commitment fees and $ 0.9 million associated with the amortization of the debt issuance costs.

During 2022, the Company recorded interest expense related to the Term Loan Facility of $ 18.2 million which consisted of $ 9.6 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.

During 2021, the Company recorded interest expense related to its revolving credit facilities of $ 3.4 million which consisted of $ 2.0 million in unused commitment fees and $ 1.4 million associated with the amortization of the debt issuance costs.

During 2021, the Company recorded interest expense related to the Term Loan Facility of $ 5.9 million which consisted of $ 3.5 million in unused commitment fees, $ 1.4 million associated with the amortization of the debt issuance costs, and $ 1.0 million associated with the amortization of the original issue discount.

During 2020, the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 4.3 million which consisted of $ 1.3 million associated with borrowings bearing interest at the LIBO rate, $ 1.7 million in unused commitment fees, and $ 1.3 million associated with the amortization of the debt issuance costs.

During 2020, the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 4.3 million which consisted of $ 1.3 million associated with borrowings bearing interest at the base rate and the LIBO rate, $ 1.7 million in unused commitment fees, and $ 1.3 million associated with the amortization of the debt issuance costs.

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NOTE 17— COMMITMENTS

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All states require that the Company maintain surety bonds for potential claims.

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Other Commitments

The Company has certain other commitments through 2025, where the aggregate commitments for these contracts range from $ 0.2 million to $ 5.2 million each year throughout the remaining life of the contract.

The Company has certain other commitments through 2023, where the aggregate commitments for these contracts range from $ 0.2 million to $ 2.4 million throughout the remaining life of the contract.

NOTE 18— CONTINGENCIES

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With respect to the matters disclosed in this Note 18, 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 December 31, 2021, the Company had litigation settlement accruals of $ 0.1 million in continuing operations.

As of December 31, 2020, the Company had litigation settlement accruals of $ 0.1 million and $ 0.5 million in continuing operations and discontinued operations, respectively.

As of December 31, 2022 and 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.

See Note 21—Discontinued Operations for additional information.

See Note 22—Discontinued Operations in the notes to the consolidated financial statements included elsewhere in this report for additional information.

NOTE 19— FAIR VALUE MEASUREMENTS

Other than the convertible notes and warrants, as well as the equity interest in Stash, the carrying amounts of the Company's financial instruments are equal to fair value at December 31, 2021.

See Note 15—Debt for additional information on the convertible notes and warrants, and see Note 8—Equity Investment for additional information on the equity interest in Stash.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

See Note 16—Debt for additional information on the convertible notes and warrants, and see Note 8—Equity Investment in the notes to the consolidated financial statements included elsewhere in this report for additional information on the equity interest in Stash and EarnUp.

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

The changes in the fair value of the Company's Level 3 liabilities during the years ended December 31, 2021, 2020 and 2019 are as follows (in thousands) :

There were no changes in the fair value of the Company's Level 3 liabilities during the year ended December 31, 2022 and the changes for the years ended December 31, 2021 and 2020 are as follows (in thousands) :

Year Ended December 31,

2021 2020 2019

Contingent consideration, beginning of period $ 8,249 $ 33,464

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Contingent consideration, end of period $ — $ 8,249

There was no contingent consideration liability at December 31, 2021 because the final earnout period for the QuoteWizard acquisition ended on October 31, 2021.

There was no contingent consideration liability at December 31, 2022 or 2021 because the final earnout period for the QuoteWizard acquisition ended on October 31, 2021.

The contingent consideration liability at December 31, 2020 consisted of the estimated fair value of the remaining earnout payment for the QuoteWizard acquisition.

The contingent consideration liability at December 31, 2019 consisted of the estimated fair value of the earnout payments of the DepositAccounts, SnapCap, Ovation, and QuoteWizard acquisitions.

NOTE 20— RELATED PARTY TRANSACTIONS

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In each of 2020 and 2019, the Company paid $ 3.3 million of the $ 10.0 million contribution, and paid the final installment in 2022.

In the fourth quarter of 2022, the Company's Board of Directors approved an additional $ 0.5 million contribution to the LendingTree Foundation that the Company paid in 2023.

Officers of the Company serve as officers of the LendingTree Foundation.

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NOTE 21— BENEFIT PLANS

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NOTE 22— DISCONTINUED OPERATIONS

The LendingTree Loans Business is presented as discontinued operations in the accompanying financial statements.

The LendingTree Loans Business is presented as discontinued operations in the accompanying consolidated financial statements.

The LendingTree Loans Business originated various consumer mortgage loans through HLC.

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

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

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Home Loan Center, Inc.

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

Upon deconsolidation, in 2019 the Company recognized a loss of $ 5.5 million which includes a net gain of $ 4.5 million related to the removal of HLC's (and its consolidated subsidiary's) assets and liabilities and the recognition of a liability of $ 10.0 million related to LendingTree, LLC's ownership in HLC.

No consideration was received by the Company as a result of the deconsolidation.

The derecognition of HLC’s cash of $ 5.9 million removed from the consolidated balance sheet on the deconsolidation date of July 21, 2019 is included within cash flows from operating activities attributable to discontinued operations in the accompanying consolidated statement of cash flows.

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

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

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Litigation Related to Discontinued Operations

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

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Lehman Brothers Holdings, Inc.

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Revenue $ — $ — $ —

Gain from removal of HLC's assets and liabilities — — 4,515

Other operating expenses ( 6 ) ( 4,719 ) ( 33,308 )

2 unchanged sentences

Net loss $ ( 6 ) $ ( 4,023 ) $ ( 25,689 )

Losses from discontinued operations included all activity of HLC prior to bankruptcy, including litigation settlements, contingencies and legal fees associated with legal proceedings, as well as a gain upon deconsolidation due to the accounting effect of HLC’s bankruptcy filing on the consolidated financial statements.

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

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

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

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Home, Consumer, and Insurance.

Characteristics which were relied upon in making the determination of the reportable segments include the nature of the products, the organization's internal structure, and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.

Characteristics which were relied upon in making the determination of the

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reportable segments include the nature of the products, the organization's internal structure, and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.

The Home segment includes the following products:

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

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

We ceased offering reverse mortgage loans in the fourth quarter of 2022.

The Consumer segment includes the following products:

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

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

Revenue from the resale of online advertising space to third parties and revenue from home improvement referrals, and the related variable marketing and advertising expenses, are included within the Other category.

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

Revenue from the resale of online advertising space to third parties, and the related variable marketing and advertising expenses, are included within the Other category.

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.

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The Company ceased reselling online advertising space during the first quarter of 2020.

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Year Ended December 31, 2022

3 unchanged sentences

Segment cost of revenue and marketing expense 186,299 221,531 207,239 982 616,051

Segment profit 153,352 143,497 113,464 53 410,366

Segment profit (loss) 103,084 174,578 91,834 ( 555 ) 368,941

Cost of revenue 57,769

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Amortization of intangibles 25,306

Change in fair value of contingent consideration ( 8,249 )

Restructuring and severance 4,428

Litigation settlements and contingencies ( 18 )

Operating income 8,031

Operating loss ( 32,756 )

Interest expense, net ( 26,014 )

Other income 3,843

Income before income taxes and discontinued operations $ 84,436

Loss before income taxes and discontinued operations $ ( 54,927 )

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Year Ended December 31, 2021

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Segment cost of revenue and marketing expense 288,386 186,448 212,689 610 688,133

Segment profit (loss) 132,123 106,890 131,142 ( 682 ) 369,473

Cost of revenue (exclusive of cost of advertising re-sold to third parties included above) 53,408

Segment profit 153,352 143,497 113,464 53 410,366

Cost of revenue 57,297

Brand and other marketing expense 85,857

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Change in fair value of contingent consideration ( 8,249 )

Severance 295

Restructuring and severance 53

Litigation settlements and contingencies 392

Operating (loss) ( 6,603 )

Operating income 8,031

Interest expense, net ( 46,867 )

Other income 123,272

Loss before income taxes and discontinued operations $ ( 42,527 )

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Income before income taxes and discontinued operations $ 84,436

Year Ended December 31, 2020

3 unchanged sentences

Segment cost of revenue and marketing expense 188,869 146,308 202,623 2,717 540,517

Segment profit 103,121 213,185 114,639 1,373 432,318

Segment profit (loss) 132,123 106,890 131,142 ( 682 ) 369,473

Cost of revenue (exclusive of cost of advertising re-sold to third parties included above) 53,408

5 unchanged sentences

Change in fair value of contingent consideration 5,327

Severance 1,026

Restructuring and severance 295

Litigation settlements and contingencies ( 943 )

Operating income 50,728

Operating loss ( 6,603 )

Interest expense, net ( 36,300 )

Other expense 376

Income before income taxes and discontinued operations $ 30,981

Loss before income taxes and discontinued operations $ ( 42,527 )

The CODM does not review information on segment assets and as such, no segment asset information is reported herein.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 23— SUBSEQUENT EVENT

In January 2022, the Company acquired an equity interest in another company for $ 15.0 million.

This company is a consumer-first payment platform that intelligently automates loan payment scheduling and helps consumers better manage their money and improve their financial well-being.

NOTE 24— RESTRUCTURING ACTIVITIES

During 2022, the Company completed workforce reductions in each of the first, second, and fourth quarters of approximately 75 employees, 25 employees, and 50 employees, respectively.

The Company incurred total expense of $ 4.4 million consisting of employee separation costs of $ 3.3 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 third quarter of 2023.

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

Employee separation payments $ — $ 3,345 $ ( 3,041 ) $ — $ 304

Non-cash compensation — 1,083 — ( 1,083 ) —

$ — $ 4,428 $ ( 3,041 ) $ ( 1,083 ) $ 304

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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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-K

Item 8. Financial Statements and Supplementary Data