What changed in this filing

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Item 1. Financial Statements

2023-11-01 compared with 2023-07-28 · 148 added, 111 removed, 598 unchanged (30% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

9 unchanged sentences

Amortization of intangibles 1,981 6,582 6,012 21,574

Goodwill impairment 38,600 — 38,600 —

Restructuring and severance 1,955 — 9,967 3,760

1 unchanged sentence

Total costs and expenses 189,180 256,412 578,539 808,347

Operating income (loss) 6,613 ( 3,896 ) ( 6,398 ) ( 6,834 )

Operating loss ( 33,992 ) ( 18,576 ) ( 40,390 ) ( 25,410 )

Other income (expense), net:

Interest (expense) income, net ( 7,097 ) ( 5,720 ) 10,992 ( 19,990 )

Other income 439 284 2,273 283

Income (loss) before income taxes 112 ( 10,377 ) 13,964 ( 20,821 )

Income tax (expense) benefit ( 227 ) 2,339 ( 622 ) 1,957

Net (loss) income and comprehensive (loss) income $ ( 115 ) $ ( 8,038 ) $ 13,342 $ ( 18,864 )

Other (expense) income ( 110,910 ) 1,523 ( 108,637 ) 1,806

Loss before income taxes ( 151,999 ) ( 22,773 ) ( 138,035 ) ( 43,594 )

Income tax benefit (expense) 3,534 ( 135,911 ) 2,912 ( 133,954 )

Net loss and comprehensive loss $ ( 148,465 ) $ ( 158,684 ) $ ( 135,123 ) $ ( 177,548 )

Weighted average shares outstanding:

1 unchanged sentence

Diluted 12,993 12,758 12,919 12,794

Net (loss) income per share:

Net loss per share:

Basic $ ( 11.43 ) $ ( 12.44 ) $ ( 10.46 ) $ ( 13.88 )

4 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2023 December 31,

56 unchanged sentences

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

Net income and comprehensive income ( 115 ) — — — ( 115 ) — —

Net loss and comprehensive loss ( 115 ) — — — ( 115 ) — —

Non-cash compensation 10,199 — — 10,199 — — —

Purchase of treasury stock — — — — — — —

Issuance of common stock for stock options, employee stock purchase plan, restricted stock awards and restricted stock units, net of withholding taxes 652 59 — 652 — — —

Other — — — — — — —

Balance as of June 30, 2023 $ 241,715 16,324 $ 163 $ 1,209,687 $ ( 701,957 ) 3,355 $ ( 266,178 )

Net loss and comprehensive loss ( 148,465 ) — — — ( 148,465 ) — —

Non-cash compensation 9,854 — — 9,854 — — —

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes and cancellations ( 485 ) 33 1 ( 486 ) — — —

Balance as of September 30, 2023 $ 102,619 16,357 $ 164 $ 1,219,055 $ ( 850,422 ) 3,355 $ ( 266,178 )

Common Stock Treasury Stock

11 unchanged sentences

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

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

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

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

Purchase of treasury stock — — — — — — —

Issuance of common stock for stock options, 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 ( 880 ) ( 1 ) — ( 880 ) — — —

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

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

Cash flows from operating activities:

Net income (loss) and comprehensive income (loss) $ 13,342 $ ( 18,864 )

Net loss and comprehensive loss $ ( 135,123 ) $ ( 177,548 )

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

11 unchanged sentences

Loss on impairment of investments 114,504 —

Loss on impairment of goodwill 38,600 —

Changes in current assets and liabilities:

38 unchanged sentences

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of June 30, 2023 and for the three and six months ended June 30, 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.

The accompanying unaudited interim consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 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 six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or any other period.

The results for the three and nine months ended September 30, 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”).

17 unchanged sentences

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

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

The Company considered the impact of the current economic conditions, including interest rates and inflation 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 information is obtained.

LENDINGTREE, INC.

1 unchanged sentence

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.

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 June 30, 2023, consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet.

Financial instruments, which potentially subject the Company to concentration of credit risk at September 30, 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.

25 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

17 unchanged sentences

Approval fees are derived from credit card issuers when the credit card consumer receives card approval from the credit card issuer.

Upfront service fees and subscription fees are derived from consumers in the Company's credit services product.

Upfront fees paid by consumers are recognized as revenue over the estimated time the consumer will remain a customer and receive services.

Subscription fees are recognized over the period a consumer is receiving services.

Upfront service fees and subscription fees were derived from consumers in the Company's credit services product.

Upfront fees paid by consumers were recognized as revenue over the estimated time the consumer will remain a customer and receive services.

Subscription fees were recognized over the period a consumer is receiving services.

As of the second quarter of 2023, the Company discontinued providing its credit services product to consumers and no longer receives upfront and subscription fees.

7 unchanged sentences

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

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 13.5 million and $ 12.2 million at June 30, 2023 and December 31, 2022, respectively.

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 13.7 million and $ 12.2 million at September 30, 2023 and December 31, 2022, respectively.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 at December 31, 2022.

During the second quarter and first six months of 2023, the Company recognized revenue of $ 0.1 million and $ 0.9 million, respectively, that was included in the contract liability balance at December 31, 2022.

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

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

During the first nine months of 2023, the Company recognized revenue of $ 0.9 million, that was included in the contract liability balance at December 31, 2022.

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.

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 decreases to such revenue from prior periods.

This decrease was $ 0.9 million in the second quarter of 2023, and no t material in the second quarter of 2022.

The Company recognizes increases or decreases to such revenue from prior periods.

There was a decrease of $ 0.1 million in the third quarter of 2023, and there was an increase of $ 0.1 million in the third 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,

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

2 unchanged sentences

Write-off of uncollectible accounts receivable ( 102 ) ( 623 ) ( 2,075 ) ( 1,808 )

Recoveries collected 33 — 33 —

Assets held for sale (Note 7)

5 unchanged sentences

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

September 30,

2023 December 31,

6 unchanged sentences

Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill at each of June 30, 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 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.

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.

The Company's goodwill at September 30, 2023 consisted of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 156.1 million associated with the Insurance segment.

During the third quarter of 2023, the Company’s market capitalization declined significantly compared to the second quarter of 2023.

The closing stock price on September 29, 2023 was $ 15.50 reflecting a market capitalization below the Company's book value.

In addition, the effects of the challenging interest rate environment, low for-sale home inventories and the rise in home prices in the Home reporting unit and consumer price inflation negatively impacting carrier underwriting in the Insurance reporting unit continue to provide revenue headwinds.

Based on these factors, it was concluded that a triggering event had occurred, and an interim quantitative impairment test was performed as of September 30, 2023.

Upon completing the quantitative goodwill impairment test, the Company concluded that the carrying value of the Insurance reporting unit exceeded its fair value which resulted in a goodwill impairment charge of $ 38.6 million.

The fair value of the Home and Consumer reporting units exceeded their carrying amounts, indicating no goodwill impairment.

The fair values of each reporting unit were determined using a combination of the income approach and the market approach valuation methodologies.

The Company will continue to monitor the recovery of the Insurance and Home reporting units.

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

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

5 unchanged sentences

Trademarks and tradenames 9,100 ( 8,883 ) 217

Balance at June 30, 2023 $ 86,400 $ ( 42,258 ) $ 44,142

Balance at September 30, 2023 $ 86,400 $ ( 44,240 ) $ 42,160

Cost Accumulated

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of June 30, 2023, future amortization is estimated to be as follows (in thousands) :

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of September 30, 2023, future amortization is estimated to be as follows (in thousands) :

Amortization Expense

33 unchanged sentences

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 the second quarter of 2023, the Company recorded an impairment charge of $ 1.4 million on one of its investments.

The impairment is included within other income on the consolidated statement of operations and comprehensive income.

In the third quarter of 2023, the Company determined there was an impairment indicator related to one of its investments in equity securities and performed a valuation of the investment.

Based on the valuation, the Company determined the estimated fair value was below the carrying value of the investment and recorded an impairment charge of $ 113.1 million.

In the second quarter of 2023, the Company recorded an impairment charge of $ 1.4 million on one of its investments in equity securities.

The impairments are included within other income on the consolidated statement of operations and comprehensive income.

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

1 unchanged sentence

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

September 30,

2023 December 31,

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

3 unchanged sentences

Weighted average diluted common shares 12,993 12,758 12,919 12,794

For the second quarter of 2023, 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.

For the second 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 1.2 million shares of common stock and 0.6 million restricted stock units.

For the first six months 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 0.5 million restricted stock units.

For the second quarter and first six months 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.

For the third quarter and first nine months of 2023, 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 0.2 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the second quarter and first six months of 2022 because their inclusion would have been anti-dilutive.

For the second quarter of 2022, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per

An immaterial amount of 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 2023 because their inclusion would have been anti-dilutive.

For the third 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 1.2 million shares of common stock and 0.5 million restricted stock units.

For the first nine months

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

share, included options to purchase 1.0 million shares of common stock and 0.5 million restricted stock units.

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

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 1.2 million shares of common stock and 0.5 million restricted stock units.

For the third quarter and first nine months 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.

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 and 0.4 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.

4 unchanged sentences

See Note 2—Significant Accounting Policies for additional information.

Approximately 0.8 million and 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 (income) per share for the second quarter and first six months of 2023, respectively, 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 second quarter and first six months of 2022 because their inclusion would have been anti-dilutive.

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

Approximately 0.8 million and 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 (income) per share for the third quarter and first nine months of 2023, respectively, because their inclusion would have been anti-dilutive.

Approximately 1.2 million 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 2020 were excluded from the calculation of diluted loss per share for the third quarter and first nine months 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 third quarter and first nine months 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 first six months of 2023, the Company did no t repurchase shares of its common stock.

During the first six months of 2022, the Company repurchased 379,895 shares of its common stock pursuant to the stock repurchase program.

At June 30, 2023, approximately $ 96.7 million of the previous authorizations to repurchase common stock remain available.

During the first nine months of 2023, the Company did no t repurchase shares of its common stock.

During the first nine months of 2022, the Company repurchased 379,895 shares of its common stock pursuant to the stock repurchase program.

At September 30, 2023, approximately $ 96.7 million of the previous authorizations to repurchase common stock remain available.

NOTE 11— STOCK-BASED COMPENSATION

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

18 unchanged sentences

Expired ( 51,042 ) 227.94

Options outstanding at June 30, 2023 748,066 150.75 4.78 $ —

Options exercisable at June 30, 2023 569,185 $ 129.77 3.80 $ —

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 22.11 on the last trading day of the quarter ended June 30, 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 June 30, 2023.

Options outstanding at September 30, 2023 739,204 150.69 4.02 $ —

Options exercisable at September 30, 2023 579,316 $ 129.61 3.05 $ —

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 15.50 on the last trading day of the quarter ended September 30, 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 September 30, 2023.

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

9 unchanged sentences

Expired ( 16,247 ) 308.96

Options outstanding at June 30, 2023 718,438 229.02 5.18 $ —

Options exercisable at June 30, 2023 481,669 $ 195.10 4.10 $ —

Options outstanding at September 30, 2023 718,438 229.02 4.93 $ —

Options exercisable at September 30, 2023 481,669 $ 195.10 3.85 $ —

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

As of June 30, 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 June 30, 2023, no additional performance-based nonqualified stock options with a market condition had been earned.

As of September 30, 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 September 30, 2023, no additional performance-based nonqualified stock options with a market condition had been earned.

LENDINGTREE, INC.

8 unchanged sentences

Forfeited ( 138,290 ) 72.31

Nonvested at June 30, 2023 594,756 $ 71.79

Nonvested at September 30, 2023 508,839 $ 67.03

Restricted Stock Units with Performance Conditions

4 unchanged sentences

Forfeited ( 16,000 ) 83.25

Nonvested at June 30, 2023 — $ —

Nonvested at September 30, 2023 — $ —

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 June 30, 2023, 190,277 shares of common stock were available for issuance under the ESPP.

As of September 30, 2023, 190,277 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.

1 unchanged sentence

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

During the six months ended June 30, 2023, 36,536 shares were issued under the ESPP.

During the six months ended June 30, 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.

During the nine months ended September 30, 2023, 36,536 shares were issued under the ESPP.

During the nine months ended September 30, 2023 and 2022, the Company granted employee stock purchase rights to certain employees with a grant date fair value per share of $ 8.53 and $ 20.96 , 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:

Six Months Ended

Nine Months Ended

September 30,

Expected term (1)

2 unchanged sentences

Expected volatility (3)

82 % 49 - 73 %

Risk-free interest rate (4)

4.76 - 5.50 %

0.19 - 2.51 %

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

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands, except percentages)

Income tax (expense) benefit $ ( 227 ) $ 2,339 $ ( 622 ) $ 1,957

Income tax benefit (expense) $ 3,534 $ ( 135,911 ) $ 2,912 $ ( 133,954 )

Effective tax rate 2.3 % ( 596.8 ) % 2.1 % ( 307.3 ) %

For the second quarter and first six months 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 second quarter and first six months of 2022, the effective tax rate varied from the federal statutory rate of 21 % primarily due to excess tax expense of $ 0.4 million and $ 2.9 million, resulting from vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

The Company has a valuation allowance against the net deferred tax assets, with the exception of the deferred tax liabilities that result from indefinite-life intangibles.

The Company has determined that using the general methodology for calculating income taxes during an interim period for the quarter ending June 30, 2023 provided for a wide range of potential annual effective rates.

Therefore, the Company has calculated the tax provision on a discrete basis under ASC 740-270-30- 36(b) for the quarter ending June 30, 2023.

For the third quarter and first nine months 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 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 the Company's 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.

The Company has a valuation allowance against the net deferred tax assets, with the exception of the net deferred tax liabilities that result from indefinite-life intangibles.

At September 30, 2022, the Company recorded a net deferred tax asset of zero as the cumulative net deferred tax asset had a full valuation on it and there was not enough positive evidence that would warrant recognizing the benefit of the net deferred tax asset.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

Income tax benefit - excluding excess tax expense on stock compensation $ 3,534 $ 5,511 $ 2,912 $ 10,374

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

Excess tax expense on stock compensation — ( 1,752 ) — ( 4,658 )

Income tax (expense) benefit $ ( 227 ) $ 2,339 $ ( 622 ) $ 1,957

Income tax benefit (expense) $ 3,534 $ ( 135,911 ) $ 2,912 $ ( 133,954 )

NOTE 13— DEBT

10 unchanged sentences

debt repayment costs of $ 1.0 million, all of which are included in interest income/expense, net in the consolidated statements of operations and comprehensive income.

Holders of the 2025 Notes were not entitled to convert the 2025 Notes during the calendar quarter ended June 30, 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 March 31, 2023, was not greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day.

In the first six months of 2023, the Company recorded interest expense on the 2025 Notes of $ 2.3 million which consisted of $ 1.1 million associated with the 0.50 % coupon rate and $ 1.2 million associated with the amortization of the debt issuance costs.

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

As of June 30, 2023, the fair value of the 2025 Notes is estimated to be approximately $ 296.0 million using the Level 1 observable input of the last quoted market price on June 30, 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 June 30, 2023 consolidated balance sheet, are as follows (in thousands) :

Holders of the 2025 Notes were not entitled to convert the 2025 Notes during the calendar quarter ended September 30, 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 June 30, 2023, was not greater than or equal to 130 % of the conversion price of the 2025 Notes on each applicable trading day.

In the first nine months of 2023, the Company recorded interest expense on the 2025 Notes of $ 3.3 million which consisted of $ 1.6 million associated with the 0.50 % coupon rate and $ 1.7 million associated with the amortization of the debt issuance costs.

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.

As of September 30, 2023, the fair value of the 2025 Notes is estimated to be approximately $ 306.6 million using the Level 1 observable input of the last quoted market price on September 30, 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 September 30, 2023 consolidated balance sheet, are as follows (in thousands) :

September 30,

2023 December 31,

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

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

In the first 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.

The 2022 Notes were fully settled in June 2022.

14 unchanged sentences

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.

As of June 30, 2023, the Company had $ 247.5 million of borrowings outstanding under the Term Loan Facility bearing interest at the LIBO option rate of 9.0 % and had no borrowings under the Revolving Facility.

As of September 30, 2023, the Company had $ 247.5 million of borrowings outstanding under the Term Loan Facility bearing interest at the SOFR option rate of 9.2 % 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 June 30, 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 June 30, 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 June 30, 2023.

In the first six months of 2023, the Company recorded interest expense related to its Revolving Facility of $ 0.7 million which consisted of $ 0.2 million in unused commitment fees and $ 0.5 million associated with the amortization of the debt issuance costs.

In the first six months of 2023, the Company recorded interest expense related to the Term Loan Facility of $ 10.7 million associated with borrowings bearing interest at the LIBO rate.

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

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

As of September 30, 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 September 30, 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 September 30, 2023.

In the first nine months of 2023, 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 2023, the Company recorded interest expense related to the Term Loan Facility of $ 16.4 million associated with borrowings bearing interest at the LIBO rate during the first six months of 2023 and the SOFR option rate in the third quarter of 2023.

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.

NOTE 14— CONTINGENCIES

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With respect to the matters disclosed in this Note 14, unless otherwise indicated, the Company is unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies.

As of June 30, 2023 and December 31, 2022, the Company had litigation settlement accruals of $ 0.6 million and $ 0.1 million, respectively.

As of September 30, 2023 and December 31, 2022, the Company had litigation settlement accruals of $ 0.6 million and $ 0.1 million, respectively.

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

NOTE 15— 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 June 30, 2023.

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, 2023.

See Note 13—Debt for additional information on the convertible notes and warrants.

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

The credit repair business was closed at the end of the second quarter of 2023.

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

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

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Home Consumer Insurance Other Total

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Amortization of intangibles 1,981

Goodwill impairment 38,600

Restructuring and severance 1,955

Litigation settlements and contingencies ( 150 )

Operating income 6,613

Operating loss ( 33,992 )

Interest expense, net ( 7,097 )

Other income 439

Income before income taxes $ 112

Other expense ( 110,910 )

Loss before income taxes $ ( 151,999 )

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Home Consumer Insurance Other Total

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Loss before income taxes $ ( 22,773 )

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Home Consumer Insurance Other Total

9 unchanged sentences

Amortization of intangibles 6,012

Goodwill impairment 38,600

Restructuring and severance 9,967

2 unchanged sentences

Interest income, net 10,992

Other income 2,273

Income before income taxes $ 13,964

Other expense ( 108,637 )

Loss before income taxes $ ( 138,035 )

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Home Consumer Insurance Other Total

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NOTE 17— RESTRUCTURING ACTIVITIES

During September 2023, the Company completed workforce reductions of approximately 12 employees.

The Company estimates that it will incur approximately $ 0.9 million in severance charges in connection with the workforce reductions, consisting of cash expenditures for employee separation costs of approximately $ 0.7 million in the third quarter of 2023 and non-cash charges for the accelerated vesting of certain equity awards of approximately $ 0.2 million through the fourth quarter of 2023.

The cash payments are expected to be substantially completed by the third quarter of 2024.

On April 6, 2023, the Company made the decision to close the Ovation credit services business ( the "Ovation Closure".) The Ovation Closure includes the elimination of approximately 197 employees, or 18 %, of the Company's current workforce.

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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 six months of 2022, 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 for 2022 actions are expected to be paid by the third quarter of 2023.

In the first nine months of 2022, 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 for 2022 actions are expected to be paid by the fourth quarter of 2023.

Accrued Balance at December 31, 2022

Income Statement Impact Payments Non-Cash Accrued Balance at June 30, 2023

Income Statement Impact Payments Non-Cash Accrued Balance at September 30, 2023

Q3 2023 action

Employee separation payments $ — $ 654 $ ( 36 ) $ — $ 618

Non-cash compensation — 28 — ( 28 ) —

Q2 2023 action

Employee separation payments — 2,063 ( 1,914 ) — 149

Q1 2023 action

Employee separation payments — 4,296 ( 3,548 ) — 748

Non-cash compensation — 1,066 — ( 1,066 ) —

2 unchanged sentences

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