What changed in this filing

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Item 1. Financial Statements

2023-05-03 compared with 2022-11-04 · 176 added, 485 removed, 439 unchanged (60% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in thousands, except per share amounts)

8 unchanged sentences

Amortization of intangibles 2,049 7,917

Change in fair value of contingent consideration — ( 196 ) — ( 8,249 )

Restructuring and severance 4,454 3,625

1 unchanged sentence

Total costs and expenses 213,519 286,116

Operating (loss) income ( 18,576 ) 7,419 ( 25,404 ) 16,060

Other (expense) income, net:

Interest expense, net ( 5,720 ) ( 11,826 ) ( 19,990 ) ( 31,881 )

Other income 1,523 — 1,806 40,072

(Loss) income before income taxes ( 22,773 ) ( 4,407 ) ( 43,588 ) 24,251

Income tax (expense) benefit ( 135,910 ) 1 ( 133,956 ) 455

Net (loss) income from continuing operations ( 158,683 ) ( 4,406 ) ( 177,544 ) 24,706

Loss from discontinued operations, net of tax ( 1 ) ( 54 ) ( 4 ) ( 3,516 )

Net (loss) income and comprehensive (loss) income $ ( 158,684 ) $ ( 4,460 ) $ ( 177,548 ) $ 21,190

Operating loss ( 13,011 ) ( 2,938 )

Other income (expense), net:

Interest income (expense), net 25,029 ( 7,505 )

Other income (expense) 1,834 ( 1 )

Income (loss) before income taxes 13,852 ( 10,444 )

Income tax expense ( 395 ) ( 382 )

Net income (loss) and comprehensive income (loss) $ 13,457 $ ( 10,826 )

Weighted average shares outstanding:

1 unchanged sentence

Diluted 12,935 12,901

(Loss) income per share from continuing operations:

Basic $ ( 12.44 ) $ ( 0.33 ) $ ( 13.88 ) $ 1.87

Diluted $ ( 12.44 ) $ ( 0.33 ) $ ( 13.88 ) $ 1.79

Loss per share from discontinued operations:

Basic $ — $ — $ — $ ( 0.27 )

Diluted $ — $ — $ — $ ( 0.25 )

Net (loss) income per share:

Net income (loss) per share:

Basic $ 1.05 $ ( 0.84 )

4 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2023 December 31,

5 unchanged sentences

Prepaid and other current assets 28,231 26,250

Assets held for sale (Note 7)

Total current assets 262,001 413,968

4 unchanged sentences

Intangible assets, net 56,266 58,315

Deferred income tax assets — 87,581

Equity investments 174,580 174,580

Other non-current assets 6,319 6,101

Non-current assets of discontinued operations — 16,589

Total assets $ 1,042,294 $ 1,199,313

2 unchanged sentences

Accrued expenses and other current liabilities 84,829 75,095

Current liabilities of discontinued operations — 1

Liabilities held for sale (Note 7)

Total current liabilities 91,802 82,534

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

For the Nine Months Ended September 30, 2022

Common Stock Treasury Stock

5 unchanged sentences

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

Net loss and comprehensive loss ( 10,826 ) — — — ( 10,826 ) — —

Net income and comprehensive income 13,457 — — — 13,457 — —

Non-cash compensation 11,274 — — 11,274 — — —

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

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 1,693 ) 98 1 ( 1,694 ) — — —

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

Other 1 — — 1 — — —

Balance as of March 31, 2023 $ 230,979 16,265 $ 163 $ 1,198,836 $ ( 701,842 ) 3,355 $ ( 266,178 )

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

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

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

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

Net loss and comprehensive loss ( 158,684 ) — — — ( 158,684 ) — —

Non-cash compensation 15,575 — — 15,575 — — —

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes and cancellations ( 880 ) ( 1 ) — ( 880 ) — — —

Balance as of September 30, 2022 $ 206,497 16,140 $ 161 $ 1,177,409 $ ( 704,895 ) 3,355 $ ( 266,178 )

LENDINGTREE, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

For the Nine Months Ended September 30, 2021

Common Stock Treasury Stock

5 unchanged sentences

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

Net income and comprehensive income 19,049 — — — 19,049 — —

Non-cash compensation 16,436 — — 16,436 — — —

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 4,801 ) 31 ( 4,801 ) — — —

Other ( 2 ) — — ( 2 ) — — —

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

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

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

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

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

Net loss and comprehensive loss ( 10,826 ) — — — ( 10,826 ) — —

Non-cash compensation 15,080 — — 15,080 — — —

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

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 3,086 ) 49 — ( 3,086 ) — — —

Other ( 6 ) — — ( 6 ) — — —

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

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

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

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Cash flows from operating activities attributable to continuing operations:

Net (loss) income and comprehensive (loss) income $ ( 177,548 ) $ 21,190

Loss from discontinued operations, net of tax 4 3,516

Net (loss) income from continuing operations ( 177,544 ) 24,706

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

Cash flows from operating activities:

Net income (loss) and comprehensive income (loss) $ 13,457 $ ( 10,826 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Loss on impairments and disposal of assets 5,027 431

3 unchanged sentences

Deferred income taxes 360 326

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

Gain on investments — ( 40,072 )

Bad debt expense 963 850

3 unchanged sentences

Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities ( 877 ) ( 49 )

Gain on settlement of convertible debt ( 34,308 ) —

Changes in current assets and liabilities:

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Other, net ( 424 ) ( 146 )

Net cash provided by operating activities attributable to continuing operations 26,329 88,893

Cash flows from investing activities attributable to continuing operations:

Net cash provided by operating activities 13,156 9,999

Cash flows from investing activities:

Capital expenditures ( 2,452 ) ( 3,465 )

Equity investments — ( 15,000 )

Net cash used in investing activities attributable to continuing operations ( 25,410 ) ( 31,695 )

Cash flows from financing activities attributable to continuing operations:

Proceeds from term loan 250,000 —

Net cash used in investing activities ( 2,452 ) ( 18,465 )

Cash flows from financing activities:

Repayment of term loan ( 625 ) —

Repayment of 0.625 % Convertible Senior Notes

( 169,659 ) —

Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options ( 1,693 ) ( 3,085 )

Purchase of treasury stock — ( 43,009 )

Repurchase of 0.50 % Convertible Senior Notes

( 156,294 ) —

Payment of debt issuance costs ( 953 ) ( 4 )

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

Other financing activities — ( 31 )

Net cash provided by (used in) financing activities attributable to continuing operations 33,411 ( 15,192 )

Total cash provided by continuing operations 34,330 42,006

Discontinued operations:

Net cash (used in) provided by operating activities attributable to discontinued operations ( 7 ) 3,330

Total cash (used in) provided by discontinued operations ( 7 ) 3,330

Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents 34,323 45,336

Net cash used in financing activities ( 159,565 ) ( 46,098 )

Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents ( 148,861 ) ( 54,564 )

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 298,969 251,342

9 unchanged sentences

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

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

The Company also serves as a valued partner to lenders and other providers seeking an efficient, scalable, and flexible source of customer acquisition with directly measurable benefits, by matching the consumer inquiries it generates with these providers.

The consolidated financial statements include the accounts of LendingTree and all its wholly-owned entities, except Home Loan Center, Inc.

(“HLC”) subsequent to its bankruptcy filing on July 21, 2019, which resulted in the Company's loss of a controlling interest in HLC under applicable accounting standards.

The consolidated financial statements include the accounts of LendingTree and all its wholly-owned entities.

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 16—Discontinued Operations for additional information.

Discontinued Operations

The LendingTree Loans business, which consisted of originating various consumer mortgage loans through HLC (the “LendingTree Loans Business”), is presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements of operations and comprehensive income and consolidated statements of cash flows for all periods presented.

The notes accompanying these consolidated financial statements reflect the Company's continuing operations and, unless otherwise noted, exclude information related to the discontinued operations.

See Note 16 — Discontinued Operations for additional information.

Basis of Presentation

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

The accompanying unaudited interim consolidated financial statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”).

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

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

The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or any other period.

The accompanying consolidated balance sheet as of December 31, 2022 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”).

1 unchanged sentence

Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in the 2022 Annual Report.

The Company reclassified certain amounts in the prior year consolidated statement of operations and comprehensive income and consolidated statement of cash flows to be consistent with the current year presentation.

NOTE 2— SIGNIFICANT ACCOUNTING POLICIES

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Management is required to make certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with GAAP.

These estimates and assumptions impact the reported amount of assets and liabilities and

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

disclosures of contingent assets and liabilities as of the date of the consolidated financial statements.

These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements.

They also impact the reported amount of net earnings during any period.

Actual results could differ from those estimates.

Significant estimates underlying the accompanying consolidated financial statements, including discontinued operations, include:

Significant estimates underlying the accompanying consolidated financial statements include:

the recoverability of long-lived assets, goodwill and intangible assets;

1 unchanged sentence

fair value of assets acquired in a business combination;

contingent consideration related to business combinations;

litigation accruals;

3 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 contingent consideration.

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

If economic conditions caused by the COVID-19 pandemic do not recover as currently estimated by management, such future changes may have an adverse impact on the Company's results of operations, financial position and liquidity.

The Company considered the impact of the current economic conditions, including interest rates, inflation, and 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 the recoverability of long-lived assets, goodwill and intangible assets.

These assumptions and estimates may change as new events occur and additional

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

information is obtained.

If economic conditions worsen, such future changes may have an adverse impact on the Company's results of operations, financial position and liquidity.

Certain Risks and Concentrations

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

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

Financial instruments, which potentially subject the Company to concentration of credit risk at March 31, 2023, consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet.

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

13 unchanged sentences

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.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

2 unchanged sentences

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 12—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.

Recently Issued Accounting Pronouncements

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.

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3— REVENUE

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Home $ 43,675 $ 101,944

4 unchanged sentences

Insurance 77,082 80,038

Other 17 180 230 498

Total revenue $ 200,508 $ 283,178

2 unchanged sentences

The Company's services are generally transferred to the customer at a point in time.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue from Home products is primarily generated from upfront match fees paid by mortgage Network Partners that receive a loan request, and in some cases upfront fees for clicks or call transfers.

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The Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the performance obligation to deliver a consumer request to the customer.

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 12.2 million and $ 9.1 million at September 30, 2022 and December 31, 2021, respectively.

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

During the first nine months of 2022, the Company recognized revenue of $ 0.8 million that was included in the contract liability balance at December 31, 2021.

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

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 13.4 million and $ 12.2 million at March 31, 2023 and December 31, 2022, respectively.

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers was $ 1.0 million and $ 0.9 million at March 31, 2023 and December 31, 2022,

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

respectively.

During the first three months of 2023, the Company recognized revenue of $ 0.8 million that was included in the contract liability balance at December 31, 2022.

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

Revenue recognized in any reporting period includes estimated variable consideration for which the Company has satisfied the related performance obligations but are still pending the occurrence or non-occurrence of a future event outside the Company's control (such as lenders providing loans to consumers or credit card approvals of consumers) before the Company has a contractual right to payment.

The Company recognized increases to such revenue from prior periods.

This increase was $ 0.1 million in the third quarter of 2022, and was $ 0.4 million in the third quarter of 2021.

This increase was $ 0.2 million in the first quarter of 2023, and $ 0.2 million in the first quarter of 2022.

NOTE 4— CASH AND RESTRICTED CASH

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

September 30,

2023 December 31,

2 unchanged sentences

Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 150,108 $ 298,969

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5— ALLOWANCE FOR DOUBTFUL ACCOUNTS

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Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Balance, beginning of the period $ 2,317 $ 1,456

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Recoveries collected — —

Assets held for sale (Note 7)

Balance, end of the period $ 2,688 $ 1,803

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6— GOODWILL AND INTANGIBLE ASSETS

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

September 30,

2023 December 31,

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Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill at each of September 30, 2022 and December 31, 2021 consists of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 194.7 million associated with the Insurance segment.

The Company's goodwill at each of March 31, 2023 and December 31, 2022 consists of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 194.7 million associated with the Insurance segment.

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

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

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

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

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

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

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 unit.

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible Assets with Definite Lives

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Amortization Net

Technology $ 74,900 $ ( 71,108 ) $ 3,792

Customer lists 77,300 ( 32,303 ) 44,997

Trademarks and tradenames 9,100 ( 7,973 ) 1,127

Balance at September 30, 2022 $ 162,900 $ ( 108,853 ) $ 54,047

Balance at March 31, 2023 $ 86,400 $ ( 40,276 ) $ 46,124

Cost Accumulated

Amortization Net

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

Customer lists $ 77,300 $ ( 30,775 ) $ 46,525

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

Website content 26,100 ( 25,375 ) 725

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

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of March 31, 2023, future amortization is estimated to be as follows (in thousands) :

Amortization Expense

6 unchanged sentences

Total intangible assets with definite lives, net $ 46,124

NOTE 7— EQUITY INVESTMENTS

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.

(“Stash”) for $ 80.0 million.

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

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

Stash is a consumer investing and banking platform.

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 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

See Note 7—Assets and Liabilities Held for Sale for intangible assets with definite lives classified as held for sale.

NOTE 7— ASSETS AND LIABILITIES HELD FOR SALE

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

The asset group was 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.

In the first quarter of 2023, the third party withdrew the letter of intent to purchase the asset group held for sale.

The Company made the decision to close the Ovation credit services business.

As a result, the Company recorded asset impairment charges of $ 4.2 million, of which $ 2.1 million related to intangible assets, $ 1.7 million related to property and equipment, and $ 0.4 million related to an operating lease right-of-use asset.

The carrying value of the accounts receivable, prepaid and other assets, and other non-current assets previously held for sale, and the liabilities previously held for sale approximate their fair value and are no longer classified as assets and liabilities held for sale in the consolidated balance sheet as of March 31, 2023.

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

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

value of the Stash equity securities based on observable price changes, which is included within other income on the consolidated statement of operations and comprehensive income.

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

NOTE 8— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

September 30,

2023 December 31,

5 unchanged sentences

Current lease liabilities 8,901 8,513

Accrued restructuring and severance 4,446 304

Other 9,070 7,965

Total accrued expenses and other current liabilities $ 84,829 $ 75,095

See Note 7—Assets and Liabilities Held for Sale for accrued expenses and other current liabilities classified as held for sale.

NOTE 9— SHAREHOLDERS' EQUITY

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Weighted average basic common shares 12,846 12,901

1 unchanged sentence

Effect of dilutive share awards 35 —

Effect of Convertible Senior Notes and warrants — — — 55

Weighted average diluted common shares 12,935 12,901

For the third quarter and first nine months of 2022, the Company had losses from continuing operations and, as a result, no potentially dilutive securities were included in the denominator for computing diluted loss per share, because the impact would have been anti-dilutive.

For the first quarter of 2023, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 1.0 million shares of common stock and 0.4 million restricted stock units.

For the first quarter of 2022, the Company was in a net loss position 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 0.1 million and 0.2 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the third quarter and first nine months of 2022 respectively, because their inclusion would have been anti-dilutive.

Approximately 0.4 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the third quarter of 2021.

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

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

For the third quarter of 2021, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 0.9 million shares of common stock and 0.2 million restricted stock units.

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

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

For the first quarter of 2022, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 0.9 million shares of common stock and 0.2 million restricted stock units.

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

2 unchanged sentences

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

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 1.2 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 were excluded from the calculation of diluted loss per share for the first quarter of 2023 because their inclusion would have been anti-dilutive.

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

Shares of the Company's stock associated

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

convertible notes was calculated using the treasury stock method.

See Note 2—Significant Accounting Policies for additional information.

Approximately 1.2 million shares and 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 third quarter and first nine months of 2022, respectively, because their inclusion would have been anti-dilutive.

Shares of the Company's stock associated with the warrants issued by the Company in 2017 and 2020 were excluded from the calculation of diluted loss per share for the third quarter and first nine months of 2022 and 2021 as they were anti-dilutive since the strike price of the warrants was greater than the average market price of the Company's common stock during the relevant periods.

Shares of the Company's common stock associated with the 0.50 % Convertible Senior Notes due July 15, 2025 were excluded from the calculation of diluted income per share for the third quarter and first nine months of 2021 and shares of the Company's common stock associated with the 0.625 % Convertible Senior Notes due June 1, 2022 were excluded in the third quarter of 2021 as they were anti-dilutive since the conversion price of the notes was greater than the average market price of the Company's common stock during the relevant periods.

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

with the warrants issued by the Company in 2020 were excluded from the calculation of diluted loss per share for the first quarter of 2023, and shares of the Company's stock associated with the warrants issued by the Company in 2017 and 2020 were excluded from the calculation of diluted loss per share for the first quarter of 2022 as they were anti-dilutive since the strike price of the warrants was greater than the average market price of the Company's common stock during the relevant periods.

Common Stock Repurchases

In each of February 2018 and February 2019, the board of directors authorized and the Company announced the repurchase of up to $ 100.0 million and $ 150.0 million, respectively, of LendingTree's common stock.

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

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

During the first quarter of 2023, the Company did no t purchase shares of its common stock.

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

At March 31, 2023, approximately $ 96.7 million of the previous authorizations to repurchase common stock remain available.

NOTE 10— STOCK-BASED COMPENSATION

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Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Cost of revenue $ 214 $ 393

4 unchanged sentences

Total non-cash compensation $ 11,274 $ 15,080

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock Options

5 unchanged sentences

Options outstanding at January 1, 2023 805,079 $ 155.10

157,632 103.54

Exercised — —

1 unchanged sentence

Expired ( 34,313 ) 239.93

Options outstanding at September 30, 2022 807,361 155.20 5.47 $ 3

Options exercisable at September 30, 2022 489,581 $ 126.08 3.39 $ 3

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 23.86 on the last trading day of the quarter ended September 30, 2022 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on September 30, 2022.

Options outstanding at March 31, 2023 770,766 151.32 5.14 $ 171

Options exercisable at March 31, 2023 553,965 $ 134.08 3.92 $ 171

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 26.66 on the last trading day of the quarter ended March 31, 2023 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on March 31, 2023.

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

(b) During the nine months ended September 30, 2022, the Company granted stock options to certain employees with a weighted average grant date fair value per share of $ 53.21 , calculated using the Black-Scholes option pricing model, which vesting periods include (1) immediate vesting on grant date (b) earlier of one year from grant date and the Company's annual meeting of stockholders for 2023 and (c) three years from grant date.

For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions.

The weighted average assumptions used are as follows:

Expected term (1)

5.00 - 6.00 years

Expected dividend (2)

Expected volatility (3)

Risk-free interest rate (4)

1.62 - 3.23 %

(1) The expected term of stock options granted was calculated using the “Simplified Method,” which utilizes the midpoint between the weighted average time of vesting and the end of the contractual term.

This method was utilized for the stock options due to a lack of historical exercise behavior by the Company's employees.

(2) For all stock options granted in 2022, 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.

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

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

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

LENDINGTREE, INC.

8 unchanged sentences

Options outstanding at January 1, 2023 734,685 $ 230.79

Granted 47,639 195.10

Exercised — —

1 unchanged sentence

Expired ( 16,247 ) 308.96

Options outstanding at September 30, 2022 734,685 230.79 5.94 $ —

Options exercisable at September 30, 2022 481,669 $ 195.10 4.85 $ —

Options outstanding at March 31, 2023 718,438 229.02 5.43 $ —

Options exercisable at March 31, 2023 481,669 $ 195.10 4.35 $ —

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

As of September 30, 2022, a maximum of 422,537 shares may be earned for achieving superior performance up to 167 % of the remaining unvested target number of shares.

As of September 30, 2022, no additional performance-based nonqualified stock options with a market condition had been earned.

As of March 31, 2023, a maximum of 395,404 shares may be earned for achieving superior performance up to 167 % of the remaining unvested target number of shares.

As of March 31, 2023, no additional performance-based nonqualified stock options with a market condition had been earned.

Restricted Stock Units

5 unchanged sentences

Forfeited ( 11,427 ) 95.25

Nonvested at September 30, 2022 505,955 $ 131.60

Nonvested at March 31, 2023 672,928 $ 72.68

Restricted Stock Units with Performance Conditions

3 unchanged sentences

Nonvested at January 1, 2023 16,000 $ 83.25

Granted 16,000 83.25

Forfeited ( 16,000 ) 83.25

Nonvested at September 30, 2022 16,000 $ 83.25

Nonvested at March 31, 2023 — $ —

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Restricted Stock Awards with Market Conditions

A summary of changes in outstanding nonvested RSAs with market conditions at target is as follows:

RSAs with Market Conditions

Number of Awards Weighted Average Grant Date Fair Value

Nonvested at January 1, 2022 26,674 $ 340.25

Granted 2,927 340.25

Vested ( 29,601 ) 340.25

Forfeited — —

Nonvested at September 30, 2022 — $ —

Employee Stock Purchase Plan

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

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

As of March 31, 2023, 226,813 shares of common stock were available for issuance under the ESPP.

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

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

During the nine months ended September 30, 2022, 13,259 shares were issued under the ESPP.

During the nine months ended September 30, 2022, the Company granted employee stock purchase rights to certain employees with a grant date fair value per share of $ 20.96 , calculated using the Black-Scholes option pricing model.

No shares were issued under the ESPP during the three months ended March 31, 2023.

During the three months ended March 31, 2023 and 2022, the Company granted employee stock purchase rights to certain employees with a grant date fair value per share of $ 8.19 and $ 35.43 , 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:

Three Months Ended

Expected term (1)

0.50 years 0.50 years

Expected dividend (2)

8 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 (Continued)

NOTE 11— INCOME TAXES

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in thousands, except percentages)

Income tax (expense) benefit $ ( 135,910 ) $ 1 $ ( 133,956 ) $ 455

Income tax expense $ ( 395 ) $ ( 382 )

Effective tax rate 2.9 % ( 3.7 ) %

For the third quarter and first nine months of 2022, the effective tax rate varied from the federal statutory rate of 21 % primarily due to expense of $ 139.7 million to record a full valuation allowance against our net deferred tax assets, excess tax expense of $ 1.8 million and $ 4.7 million, respectively, resulting from vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

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

During the third quarter of 2022, the Company recorded tax expense of $ 139.7 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 in the quarter.

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.

The indefinite carryforward period for certain deferred tax assets means that indefinite-lived deferred tax liabilities can be considered as support for realization of such deferred tax assets including post December 31, 2017 net operating loss carryovers, which can affect the need to record or maintain a valuation allowance for deferred tax assets.

At September 30, 2022 the Company maintains a valuation allowance of $ 146 million against its net deferred tax assets.

For the first quarter of 2023, the effective tax rate varied from the federal statutory rate of 21 % primarily due to the change in the valuation allowance, net of the current period change in tax effected net indefinite-lived intangibles.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in thousands)

Income tax benefit (expense) - excluding excess tax expense from valuation allowance and excess tax (expense) benefit on stock compensation $ 5,512 $ 939 $ 10,372 $ ( 6,900 )

Income tax expense from valuation allowance ( 139,670 ) — ( 139,670 ) —

Excess tax (expense) benefit on stock compensation ( 1,752 ) ( 938 ) ( 4,658 ) 7,355

Income tax (expense) benefit $ ( 135,910 ) $ 1 $ ( 133,956 ) $ 455

Income tax benefit - excluding excess tax expense on stock compensation $ ( 395 ) $ 2,086

Excess tax expense on stock compensation — ( 2,468 )

Income tax expense $ ( 395 ) $ ( 382 )

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12— DEBT

1 unchanged sentence

On July 24, 2020, the Company issued $ 575.0 million aggregate principal amount of its 0.50 % Convertible Senior Notes due July 15, 2025 (the “2025 Notes”) in a private placement.

The issuance included $ 75.0 million aggregate principal amount of 2025 Notes under a 13-day purchase option which was exercised in full.

The 2025 Notes bear interest at a rate of 0.50 % per year, payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2021.

The 2025 Notes will mature on July 15, 2025, unless earlier repurchased, redeemed or converted.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The initial conversion rate of the 2025 Notes is 2.1683 shares of the Company's common stock per $1,000 principal amount of 2025 Notes (which is equivalent to an initial conversion price of approximately $ 461.19 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 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.

It is the intent of the Company to settle the principal amount of the 2025 Notes in cash and any conversion premium in shares of its common stock.

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

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

effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the senior secured 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 March 13, 2025, the 2025 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, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

• during the five business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price (as defined in the 2025 Notes) per $1,000 principal amount of 2025 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;

• if the Company calls such 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called for redemption;

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

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

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

On or after March 13, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2025 Notes, holders of the 2025 Notes may convert all or a portion of their 2025 Notes regardless of the foregoing conditions.

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

On or after July 20, 2023 and before the 41 st scheduled trading day immediately before the maturity date, the Company may redeem for cash all or a portion of the 2025 Notes, at its option, 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 (and including the last trading day of such period) ending on, and including the last trading day immediately preceding the date of notice of redemption is greater than or equal to 130 % of the conversion price on each applicable trading day.

The redemption price will be equal to 100 % of the principal amount of the 2025 Notes to be

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date.

No sinking fund is provided for the 2025 Notes.

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

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.

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.

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 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 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.

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

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

In the first nine months of 2022, the Company recorded interest expense on the 2025 Notes of $ 4.4 million which consisted of $ 2.1 million associated with the 0.50 % coupon rate and $ 2.3 million associated with the amortization of the debt issuance costs.

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

As of September 30, 2022, the fair value of the 2025 Notes is estimated to be approximately $ 411.8 million using the Level 1 observable input of the last quoted market price on September 30, 2022.

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

September 30,

2022 December 31,

Gross carrying amount $ 575,000 $ 575,000

Unamortized debt discount — 87,994

Debt issuance costs 8,496 8,855

Net carrying amount $ 566,504 $ 478,151

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 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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The Company adopted ASU 2020-06 on January 1, 2022 as further described in Note 2—Significant Accounting Policies.

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 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 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.

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.

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

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

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

September 30,

On March 8, 2023, the Company repurchased approximately $ 190.6 million in principal amount of its 2025 Notes, through individual privately-negotiated transactions with certain holders of the 2025 Notes, for $ 156.3 million in cash plus accrued and unpaid interest of approximately $ 0.1 million.

In the first quarter of 2023, the Company recognized a gain on the extinguishment of debt of $ 34.3 million, a loss on the write-off of unamortized debt issuance costs of $ 2.4 million and incurred debt repayment costs of $ 1.0 million, all of which are included in interest income/expense, net in the consolidated statement of operations and comprehensive income.

Holders of the 2025 Notes were not entitled to convert the 2025 Notes during the calendar quarter ended March 31, 2023 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, 2022, was not greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day.

In the first three months of 2023, the Company recorded interest expense on the 2025 Notes of $ 1.4 million which consisted of $ 0.7 million associated with the 0.50 % coupon rate and $ 0.7 million associated with the amortization of the debt issuance costs.

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

As of March 31, 2023, the fair value of the 2025 Notes is estimated to be approximately $ 286.7 million using the Level 1 observable input of the last quoted market price on March 31, 2023.

A summary of the gross carrying amount, debt issuance costs, and net carrying value of the 2025 Notes, all of which is recorded as a non-current liability in the March 31, 2023 consolidated balance sheet, are as follows (in thousands) :

2023 December 31,

Gross carrying amount $ 384,398 $ 575,000

Unamortized debt discount — 3,260

Debt issuance costs 4,667 7,734

Net carrying amount $ 379,731 $ 567,266

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

The 2022 Notes were fully settled in June 2022.

Convertible Note Hedge and Warrant Transactions

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On July 24, 2020, in connection with the issuance of the 2025 Notes, the Company entered into Convertible Note Hedge (the “2020 Hedge”) and warrant transactions with respect to the Company’s common stock.

The Company used approximately $ 63.0 million of the net proceeds from the 2025 Notes to pay for the cost of the 2020 Hedge, after such cost was partially offset by the proceeds from the warrant transactions.

On July 24, 2020, the Company paid $ 124.2 million to the counterparties for the 2020 Hedge transactions.

The 2020 Hedge transactions cover 1.2 million shares of the Company’s common stock, the same number of shares initially underlying the 2025 Notes, and are exercisable upon any conversion of the 2025 Notes.

The 2020 Hedge transactions are expected generally to

The 2020 Hedge transactions

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

reduce the potential dilution to the Company's common stock upon conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2025 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 2020 Hedge transactions, is greater than the strike price of the 2020 Hedge transactions, which initially corresponds to the initial conversion price of the 2025 Notes, or approximately $ 461.19 per share of common stock.

are expected generally to reduce the potential dilution to the Company's common stock upon conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2025 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 2020 Hedge transactions, is greater than the strike price of the 2020 Hedge transactions, which initially corresponds to the initial conversion price of the 2025 Notes, or approximately $ 461.19 per share of common stock.

The 2020 Hedge transactions will expire upon the maturity of the Notes.

On July 24, 2020, the Company sold to the counterparties, warrants (the “2020 Warrants”) to acquire 1.2 million shares of the Company's common stock at an initial strike price of $ 709.52 per share, which represents a premium of 100 % over the last reported sale price of the common stock of $ 354.76 on July 21, 2020.

On July 24, 2020, the Company received aggregate proceeds of approximately $ 61.2 million from the sale of the 2020 Warrants.

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

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

2017 Hedge and Warrants

On May 31, 2017, in connection with the issuance of the 2022 Notes, the Company entered into Convertible Note Hedge (the “2017 Hedge”) and warrant transactions with respect to the Company’s common stock.

The Company used approximately $ 18.1 million of the net proceeds from the 2022 Notes to pay for the cost of the 2017 Hedge, after such cost was partially offset by the proceeds from the warrant transactions.

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 were exercisable upon any conversion of the 2022 Notes.

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

The 2017 Hedge transactions expired on June 1, 2022 upon the maturity of the Notes.

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

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.

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

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

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

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

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

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In connection with the March 8, 2023 repurchases of the 2025 Notes noted above, the Company entered into agreements with the counterparties for the 2020 Hedge and 2020 Warrants transactions to terminate a portion of these call spread transactions effective March 8, 2023 in notional amounts corresponding to the principal amount of the 2025 Notes repurchased.

Subsequent to such termination, the outstanding portion of the 2020 Hedge covers 0.8 million shares of the Company's common stock and 2020 Warrants to acquire 0.8 million shares of the Company's common stock remain outstanding.

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.

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.

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

The remaining proceeds of $ 79.8 million may be used for general corporate purposes and any other purposes not prohibited by the Credit Agreement.

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

As of September 30, 2022, the Company had $ 249.4 million of borrowings outstanding under the Term Loan Facility bearing interest at the LIBO option rate of 6.87 % 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 September 30, 2022, borrowings of $ 2.5 million under the Term Loan Facility are recorded as current portion of long-term debt on the consolidated balance sheet.

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

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

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

At each of September 30, 2022 and December 31, 2021, the Company had outstanding one letter of credit issued in the amount of $ 0.2 million.

The Company’s borrowings under the Credit Facility bear interest at annual rates that, at the Company’s option, will be either:

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

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

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

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

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

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

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

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

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

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

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

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

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

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

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

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

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

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

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

In the first nine months of 2022, the Company recorded interest expense related to its Revolving Facility of $ 1.1 million which consisted of $ 0.4 million in unused commitment fees, and $ 0.7 million associated with the amortization of the debt issuance costs.

In the first nine months of 2022, the Company recorded interest expense related to the Term Loan Facility of $ 13.5 million which consisted of $ 4.9 million associated with borrowings bearing interest at the LIBO rate, $ 5.1 million in unused commitment fees, $ 2.0 million associated with the amortization of the debt issuance costs, and $ 1.5 million associated with the amortization of the original issue discount.

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

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

As of March 31, 2023, the Company had $ 248.1 million of borrowings outstanding under the Term Loan Facility bearing interest at the LIBO option rate of 8.6 % and had no borrowings under the Revolving Facility.

As of December 31, 2022, the Company had $ 248.8 million of borrowings outstanding under the Credit Facility and no borrowings under the Revolving Facility.

As of March 31, 2023, borrowings of $ 2.5 million under the Term Loan Facility are recorded as current portion of long-term debt on the consolidated balance sheet.

At each of March 31, 2023 and December 31, 2022, the Company had outstanding one letter of credit issued in the amount of $ 0.2 million.

The Company was in compliance with all covenants at March 31, 2023.

In the first three months of 2023, the Company recorded interest expense related to its Revolving Facility of $ 0.4 million which consisted of $ 0.2 million in unused commitment fees, and $ 0.2 million associated with the amortization of the debt issuance costs.

In the first three months of 2023, the Company recorded interest expense related to the Term Loan Facility of $ 5.2 million associated with borrowings bearing interest at the LIBO rate.

In the first three months of 2022, the Company recorded interest expense related to its revolving credit facilities of $ 0.4 million which consisted of $ 0.2 million in unused commitment fees, and $ 0.2 million associated with the amortization of the debt issuance costs.

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

NOTE 13— CONTINGENCIES

1 unchanged sentence

In assessing the materiality of a legal proceeding, the Company evaluates, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require it to change its business practices in a manner that could have a material and adverse impact on the Company's business.

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

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

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

With respect to the matters disclosed in this Note 13,

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

unless otherwise indicated, the Company is unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies.

As of March 31, 2023 and December 31, 2022, the Company had litigation settlement accruals of $ 0.2 million and $ 0.1 million, respectively.

NOTE 14— FAIR VALUE MEASUREMENTS

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

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

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

In the third quarter and first nine months of 2021, the company recorded $ 0.2 million and $ 8.2 million, respectively, of income for the change in fair value of the contingent consideration related to the QuoteWizard acquisition.

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

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 are as follows (in thousands) :

Three Months Ended

September 30, Nine Months Ended

September 30,

Contingent consideration, beginning of period $ 196 $ 8,249

Transfers into Level 3 — —

Transfers out of Level 3 — —

Total net losses (gains) included in earnings (realized and unrealized) ( 196 ) ( 8,249 )

Purchases, sales and settlements:

Additions — —

Contingent consideration, end of period $ — $ —

Other than the convertible notes and warrants, as well as the equity interests, the carrying amounts of the Company's financial instruments are equal to fair value at March 31, 2023.

See Note 12—Debt for additional information on the convertible notes and warrants .

NOTE 15— SEGMENT INFORMATION

3 unchanged sentences

The Home segment includes the following products:

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

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

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

The Consumer segment includes the following products:

1 unchanged sentence

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

The following tables are a reconciliation of segment profit, which is the Company's primary segment profitability measure, to income before income taxes and discontinued operations.

Segment marketing expense represents the portion of selling and

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The following tables are a reconciliation of segment profit, which is the Company's primary segment profitability measure, to income before income taxes.

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

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

Three Months Ended September 30, 2022

Three Months Ended March 31, 2023

Home Consumer Insurance Other Total

12 unchanged sentences

Operating loss ( 13,011 )

Interest expense, net ( 5,720 )

Interest income, net 25,029

Other income 1,834

Loss before income taxes and discontinued operations $ ( 22,773 )

Three Months Ended September 30, 2021

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 112,422 $ 100,011 $ 84,837 $ 180 $ 297,450

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

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

Cost of revenue 15,020

Brand and other marketing expense 21,965

General and administrative expense 40,126

Product development 13,384

Depreciation 4,808

Amortization of intangibles 10,345

Change in fair value of contingent consideration ( 196 )

Restructuring and severance 47

Litigation settlements and contingencies 22

Operating income 7,419

Interest expense, net ( 11,826 )

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

Income before income taxes $ 13,852

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2022

Home Consumer Insurance Other Total

14 unchanged sentences

Other income ( 1 )

Loss before income taxes and discontinued operations $ ( 43,588 )

Nine Months Ended September 30, 2021

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 345,408 $ 233,594 $ 260,714 $ 498 $ 840,214

Segment marketing expense 225,884 130,877 168,024 542 525,327

Segment profit (loss) 119,524 102,717 92,690 ( 44 ) 314,887

Cost of revenue 42,849

Brand and other marketing expense 63,816

General and administrative expense 114,926

Product development 39,142

Depreciation 12,969

Amortization of intangibles 32,967

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

Restructuring and severance 47

Litigation settlements and contingencies 360

Operating income 16,060

Interest expense, net ( 31,881 )

Other income 40,072

Income before income taxes and discontinued operations $ 24,251

NOTE 16— DISCONTINUED OPERATIONS

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.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Revenue $ — $ — $ — $ —

Loss before income taxes $ ( 10,444 )

Income tax benefit ( 1 ) 49 2 1,201

Net loss $ ( 1 ) $ ( 54 ) $ ( 4 ) $ ( 3,516 )

NOTE 16— RESTRUCTURING ACTIVITIES

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

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

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

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

On March 24, 2023, the Company committed to a workforce reduction plan (the “Reduction Plan”), that is intended to reduce operating costs.

The Reduction Plan includes the elimination of approximately 158 employees, or 13 %, of the Company’s current workforce.

As a result of the Reduction Plan, the Company estimates that it will incur approximately $ 5.6 million in severance charges in connection with the workforce reduction, consisting of cash expenditures for employee separation costs of approximately $ 4.6 million and non-cash charges for the accelerated vesting of certain equity awards of approximately $ 1.0 million.

The Company incurred restructuring expense of $ 4.3 million in the first quarter of 2023 and expects to incur an additional $ 1.3 million of restructuring expense in the second quarter of 2023 related to the Reduction Plan.

The Reduction Plan, including cash payments, is expected to be completed by the end of the second quarter of 2024.

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.

In the first quarter of 2022, the Company incurred total expense of $ 3.6 million consisting of employee separation costs of $ 2.5 million and non-cash compensation expense of $ 1.1 million due to the accelerated vesting of certain equity awards.

All employee separation costs for 2022 actions are expected to be paid by the third quarter of 2023.

Accrued Balance at December 31, 2022

Income Statement Impact Payments Non-Cash Accrued Balance at March 31, 2023

Employee separation payments $ — $ 4,260 $ — $ — $ 4,260

Non-cash compensation — 71 — ( 71 ) —

Employee separation payments 304 25 $ ( 237 ) — 92

$ 304 $ 4,356 $ ( 237 ) $ ( 71 ) $ 4,352

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

What changed 10-Q

Item 1. Financial Statements