What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-01 · 209 added, 330 removed, 416 unchanged (56% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands, except per share amounts)

Revenue $ 155,188 $ 237,836 $ 538,149 $ 782,937

Costs and expenses:

Cost of revenue (exclusive of depreciation and amortization shown separately below)

7,570 14,105 30,632 44,240

Selling and marketing expense 97,244 176,875 350,420 565,569

General and administrative expense 26,380 39,540 92,223 115,808

Product development 10,840 14,043 36,096 42,413

Depreciation 4,760 5,274 14,239 15,024

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

Litigation settlements and contingencies ( 150 ) ( 7 ) 350 ( 41 )

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

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 (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:

Basic 12,993 12,758 12,919 12,794

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

Net loss per share:

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

Diluted $ ( 11.43 ) $ ( 12.44 ) $ ( 10.46 ) $ ( 13.88 )

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

LENDINGTREE, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30,

2024 December 31,

5 unchanged sentences

Prepaid and other current assets 31,604 29,472

Assets held for sale (Note 7)

Total current assets 325,683 196,482

10 unchanged sentences

Accrued expenses and other current liabilities 69,717 70,544

Liabilities held for sale (Note 7)

Total current liabilities 87,713 75,629

22 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended

(in thousands, except per share amounts)

Revenue $ 167,768 $ 200,508

Costs and expenses:

Cost of revenue (exclusive of depreciation and amortization shown separately below)

Selling and marketing expense 108,176 137,111

General and administrative expense 25,796 36,683

Product development 11,857 14,655

Depreciation 4,667 4,795

Amortization of intangibles 1,489 2,049

Restructuring and severance 23 4,454

Litigation settlements and contingencies 36 12

Total costs and expenses 160,589 213,519

Operating income (loss) 7,179 ( 13,011 )

Other income (expense), net:

Interest (expense) income, net ( 6,638 ) 25,029

Other income 1,034 1,834

Income before income taxes 1,575 13,852

Income tax expense ( 559 ) ( 395 )

Net income and comprehensive income $ 1,016 $ 13,457

Weighted average shares outstanding:

Basic 13,100 12,846

Diluted 13,276 12,935

Net income per share:

Basic $ 0.08 $ 1.05

Diluted $ 0.08 $ 1.04

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

LENDINGTREE, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

9 unchanged sentences

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes ( 1,422 ) 180 2 ( 1,424 ) — — —

Other 1 — — 1 — — —

Balance as of March 31, 2024 $ 131,515 16,577 $ 166 $ 1,234,214 $ ( 836,687 ) 3,355 $ ( 266,178 )

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

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

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 — — —

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

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 loss 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, 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

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Cash flows from operating activities:

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

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

Net income and comprehensive income $ 1,016 $ 13,457

Adjustments to reconcile net income to net cash provided by operating activities:

Loss on impairments and disposal of assets 368 5,027

9 unchanged sentences

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

Loss on impairment of investments 114,504 —

Loss on impairment of goodwill 38,600 —

Changes in current assets and liabilities:

7 unchanged sentences

Capital expenditures ( 2,746 ) ( 2,452 )

Equity investments — ( 16,440 )

Net cash used in investing activities ( 2,746 ) ( 2,452 )

3 unchanged sentences

Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options ( 1,422 ) ( 1,693 )

Purchase of treasury stock — ( 43,009 )

Repurchase of 0.50 % Convertible Senior Notes

— ( 156,294 )

Repayment of 0.625 % Convertible Senior Notes

— ( 169,659 )

Payment of debt costs ( 1,079 ) ( 4 )

Net cash (used in) provided by financing activities ( 160,150 ) 33,411

Net (decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents ( 123,386 ) 34,323

Payment of debt issuance costs ( 4,085 ) ( 953 )

Payment of original issue discount ( 3,125 ) —

Net cash provided by (used in) financing activities 115,743 ( 159,565 )

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 118,705 ( 148,861 )

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 112,056 298,969

15 unchanged sentences

Basis of Presentation

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.

The accompanying unaudited interim consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, 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, 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 months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or any other period.

The accompanying consolidated balance sheet as of December 31, 2023 was derived from audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”).

1 unchanged sentence

Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in the 2023 Annual Report.

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

NOTE 2— SIGNIFICANT ACCOUNTING POLICIES

15 unchanged sentences

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

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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 fraud.

Financial instruments, which potentially subject the Company to concentration of credit risk at March 31, 2024, 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.

8 unchanged sentences

Litigation settlements and contingencies consists of expenses related to actual or anticipated litigation settlements.

Recently Adopted Accounting Pronouncements

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

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

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

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

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

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

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

The adoption of ASU 2020-06 did not impact the Company's 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 either not applicable or are not expected to have a material impact on the Company's consolidated financial statements.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-07 which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

This ASU is effective for annual periods beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024.

Early adoption is permitted, including adoption in interim periods.

An entity should adopt the guidance as of the beginning of the earliest period presented.

The Company is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.

In December 2023, the FASB issued ASU 2023-09 which expands annual disclosure requirements for income taxes, primarily through disclosure about disaggregated information about an entity's effective tax rate reconciliation and information on income taxes paid.

This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The guidance will be applied on a prospective basis with the option to adopt the guidance retrospectively.

The Company is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.

LENDINGTREE, INC.

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Home $ 30,443 $ 43,675

Credit cards 14,571 24,298 53,942 81,426

Personal loans 20,127 23,599

2 unchanged sentences

Insurance 85,872 77,082

Other 9 17 66 230

Total revenue $ 167,768 $ 200,508

10 unchanged sentences

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.

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

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

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

The Company recognizes revenue on closing fees and approval fees at the point when a loan request or a credit card consumer is delivered to the customer.

6 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 $ 13.7 million and $ 12.2 million at September 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 $ 15.1 million and $ 13.7 million at March 31, 2024 and December 31, 2023, 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 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.

As the contract liability was in the Ovation business that was closed during 2023, there was no contract liability at December 31, 2023.

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.

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 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.

This increase was $ 0.3 million in the first quarter of 2024 and $ 0.2 million in the first quarter of 2023.

NOTE 4— CASH AND RESTRICTED CASH

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

September 30,

2024 December 31,

9 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Balance, beginning of the period $ 2,222 $ 2,317

1 unchanged sentence

Write-off of uncollectible accounts receivable ( 67 ) ( 963 )

Recoveries collected 33 — 33 —

Assets held for sale (Note 7)

Assets held for sale

Balance, end of the period $ 2,026 $ 2,688

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,

2024 December 31,

5 unchanged sentences

Total intangible assets, net $ 49,132 $ 50,620

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill and Indefinite-Lived Intangible Assets

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 Company's goodwill at each of March 31, 2024 and December 31, 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 concluded that a triggering event had occurred related to its goodwill and an interim quantitative impairment test was performed as of September 30, 2023.

During the third quarter of 2023, the Company's market capitalization fell below its book value.

Additionally, the Home reporting unit continued to struggle due to the effects of the significant increases in mortgage rates, low for-sale home inventories and the rise in home prices.

The Insurance reporting unit continued to see pressure due to the consumer price inflation negatively impacting carrier underwriting.

Upon completing a 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 in the third quarter of 2023.

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.

The Company will monitor the recovery of the Insurance reporting unit and the Home reporting unit and any changes in the timing of the recovery could cause an impairment to the Insurance or Home reporting unit.

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

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Customer lists 76,100 ( 37,110 ) 38,990

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

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

Balance at March 31, 2024 $ 76,100 $ ( 37,110 ) $ 38,990

Cost Accumulated

3 unchanged sentences

Balance at December 31, 2023 $ 77,400 $ ( 36,922 ) $ 40,478

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 September 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 March 31, 2024, future amortization is estimated to be as follows (in thousands) :

Amortization Expense

6 unchanged sentences

Total intangible assets with definite lives, net $ 38,990

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 were 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8— EQUITY INVESTMENT

The investments in equity securities do not have a readily determinable fair value and, upon their 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 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.

NOTE 7— EQUITY INVESTMENTS

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

Accordingly, the equity investments 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.

Additionally, if a qualitative assessment identifies impairment indicators, then the equity investments must be evaluated for impairment and written down to its fair value, if it is determined that the fair value is less than the carrying value.

Any gains or losses are included within other income (expense) in the consolidated statement of operations and comprehensive income.

In the third quarter of 2023, the Company determined there was an impairment indicator related to its Stash investment 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.

NOTE 8— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

September 30,

2024 December 31,

3 unchanged sentences

Customer deposits and escrows 7,113 7,732

Contribution to LendingTree Foundation — 500

Current lease liabilities 6,637 7,387

Accrued restructuring and severance 2,002 304

Other 9,745 11,374

Total accrued expenses and other current liabilities $ 69,717 $ 70,544

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,

2023 2022 2023 2022

Weighted average basic common shares 13,100 12,846

2 unchanged sentences

Weighted average diluted common shares 13,276 12,935

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.

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

For the first quarter of 2024, 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 0.3 million restricted stock units.

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.

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

Approximately 0.6 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 2024 because their inclusion would have been anti-dilutive.

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 for the first quarter of 2023 were excluded from the calculation of diluted income

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

See Note 13—Debt for additional information.

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

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

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

See Note 2—Significant Accounting Policies for additional information.

Approximately 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.

per share for the first quarter of 2023 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 first quarter of 2024 and for the first quarter of 2023, 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 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.

The Company has a plan authorized for the repurchase of LendingTree's common stock.

During the first quarter of 2024 and the first quarter of 2023, the Company did no t purchase shares of its common stock.

At March 31, 2024, approximately $ 96.7 million of the previous authorizations to repurchase common stock remain available.

NOTE 10— STOCK-BASED COMPENSATION

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Cost of revenue $ 95 $ 214

4 unchanged sentences

Total non-cash compensation $ 7,789 $ 11,274

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock Options

7 unchanged sentences

Forfeited — —

Expired ( 51,042 ) 227.94

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.

Options outstanding at March 31, 2024 680,672 160.83 3.74 $ 3,199

Options exercisable at March 31, 2024 590,523 $ 148.04 3.23 $ 3,199

(a) The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 42.34 on the last trading day of the quarter ended March 31, 2024 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, 2024.

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock Options with Market Conditions

8 unchanged sentences

Expired ( 19,126 ) 275.82

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

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

Options outstanding at March 31, 2024 699,312 227.74 4.39 $ —

Options exercisable at March 31, 2024 481,669 $ 195.10 3.35 $ —

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

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of March 31, 2024, a maximum of 363,464 shares may be earned for achieving superior performance up to 167 % of the remaining unvested target number of shares.

As of March 31, 2024, no additional performance-based nonqualified stock options with a market condition had been earned.

Restricted Stock Units

5 unchanged sentences

Forfeited ( 17,931 ) 55.31

Nonvested at September 30, 2023 508,839 $ 67.03

Restricted Stock Units with Performance Conditions

Nonvested at March 31, 2024 622,435 $ 48.02

Restricted Stock Units with Market Conditions

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

RSUs with Performance Conditions

RSUs with Market Conditions

Number of Units Weighted Average Grant Date Fair Value

1 unchanged sentence

Forfeited — —

Nonvested at September 30, 2023 — $ —

Nonvested at March 31, 2024 69,000 $ 35.83

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(a) During the three months ended March 31, 2024, the Company granted RSUs with market conditions that will vest if the Company's 45 trading day average closing stock prices equals or exceeds certain price hurdles ($ 41.17 , $ 52.94 and $ 64.70 ) during the performance period of March 1, 2024 to March 1, 2028.

Upon achievement of each price hurdle, one-half of the awards will vest immediately, and the other half of the awards will vest on the first anniversary of the achievement date.

For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the RSUs with market conditions was estimated using the Monte Carlo simulation model, which requires the use of various key assumptions.

Expected term (1)

Expected volatility (2)

Risk-free interest rate (3)

Expected dividend (4)

(1) The expected term of RSUs with market conditions granted was calculated using a four-year performance period plus one year to account for the time-based vesting requirement.

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

(3) 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.

(4) For all RSUs with market conditions granted, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.

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

As of March 31, 2024, 162,264 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 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.

No shares were issued under the ESPP during the three months ended March 31, 2024.

During the three months ended March 31, 2024 and 2023, the Company granted employee stock purchase rights to certain employees with a grant date fair value per share of $ 11.27 and $ 8.19 , 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:

Nine Months Ended

September 30,

Three Months Ended

Expected term (1)

2 unchanged sentences

Expected volatility (3)

82 % 49 - 73 %

Risk-free interest rate (4)

5.28 % 4.76 %

0.19 - 2.51 %

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

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

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

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands, except percentages)

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

Income tax expense $ ( 559 ) $ ( 395 )

Effective tax rate 35.5 % 2.9 %

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.

In addition, the net indefinite lived deferred tax items were determined to be a net liability resulting in the recognition of a deferred tax liability.

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands)

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

For the first quarter of 2024 and 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.

NOTE 12— DEBT

5 unchanged sentences

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

On December 7, 2023, the Company repurchased approximately $ 100.2 million in principal amount of its 2025 Notes, through individual privately-negotiated transactions with certain holders of the 2025 Notes, for $ 81.2 million in cash plus accrued and unpaid interest of approximately $ 0.2 million.

During the year ended December 31, 2023, the Company recognized a gain on the extinguishment of debt of $ 53.3 million, a loss on the write-off of unamortized debt issuance costs of $ 3.2 million and incurred debt repayment costs of $ 1.6 million, all of which are included in interest (expense) income, 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 March 31, 2024 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, 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 three months of 2024, the Company recorded interest expense on the 2025 Notes of $ 0.8 million which consisted of $ 0.4 million associated with the 0.50 % coupon rate and $ 0.4 million associated with the amortization of the debt issuance costs.

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.

As of March 31, 2024, the fair value of the 2025 Notes is estimated to be approximately $ 265.0 million using the Level 1 observable input of the last quoted market price on March 31, 2024.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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,

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, 2024 consolidated balance sheet, are as follows (in thousands) :

2024 December 31,

2 unchanged sentences

Net carrying amount $ 282,243 $ 281,867

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 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.

Convertible Note Hedge and Warrant Transactions

6 unchanged sentences

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.

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.

In connection with the December 7, 2023 and 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 December 7, 2023 and March 8, 2023, respectively, in notional amounts corresponding to the principal amount of the 2025 Notes repurchased.

Subsequent to such terminations, the outstanding portion of the 2020 Hedge covers 0.6 million shares of the Company's common stock and the 2020 Warrants to acquire 0.6 million shares of the Company's common stock remain outstanding.

2021 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 “2021 Term Loan” and together with the Revolving Facility, the “Credit Facility”), which matures on September 15, 2028.

As of March 31, 2024, the Company had $ 246.3 million of borrowings outstanding under the 2021 Term Loan bearing interest at the SOFR option rate of 9.2 % and had no borrowings under the Revolving Facility.

As of December 31, 2023, the Company had $ 246.9 million of borrowings outstanding under the 2021 Term Loan and no borrowings under the Revolving Facility.

As of March 31, 2024, borrowings of $ 3.1 million under the 2021 Term Loan are recorded as current portion of long-term debt on the consolidated balance sheet.

At each of March 31, 2024 and December 31, 2023, 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, 2024.

In the first three months of 2024, 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

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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 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.

issuance costs.

In the first three months of 2024, the Company recorded interest expense related to the 2021 Term Loan of $ 5.7 million associated with borrowings bearing interest at the SOFR rate.

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 2021 Term Loan of $ 5.2 million associated with borrowings bearing interest at the LIBO rate.

2024 Term Loan

On March 27, 2024, the Company entered into a $ 175.0 million first lien term loan facility (the “2024 Term Loan”), which matures on March 27, 2031.

The Company drew $ 125.0 million of the 2024 Term Loan upon closing while the remaining $ 50.0 million will be available as a delayed draw term loan until March 27, 2025.

The proceeds of the 2024 Term Loan made on March 27, 2024 will be used to pay fees and expenses incurred in connection with the closing of the 2024 Term Loan and delayed draw term loan, and will be used for working capital and general corporate purposes, which may include repayment of the 2025 Notes.

As of March 31, 2024, the Company had $ 125.0 million borrowings outstanding under the 2024 Term Loan bearing interest at the SOFR rate of 11.08 %.

As of March 31, 2024, borrowings of $ 12.5 million under the 2024 Term Loan are recorded as current portion of long-term debt on the consolidated balance sheet.

The 2024 Term Loan is pre-payable at par, after 12 months of call protection (during which time prepayment would be at 101 % of par), or with respect to prepayments made with respect to a change of control, at 101 % of par, and carries a seven-year term.

The Company's borrowings under the 2024 Term Loan bear interest at annual rates at (i) a SOFR rate on a daily basis applicable for an interest period of one month and (ii) 5.75 %, with the opportunity for a one-time 25 basis point step-down at a gross first lien leverage ratio less than or equal to 3.75 x after six fiscal quarters from the date of closing.

The 2024 Term Loan has certain financial covenants which are tested on a quarterly basis.

The covenants include a requirement for the Company to have a minimum cash balance of $ 40.0 million and a minimum Consolidated EBITDA (as such term is defined in the 2024 Term Loan agreement dated as of March 27, 2024) based on the applicable quarter.

The Company was in compliance with all covenants at March 31, 2024.

In addition, the 2024 Term Loan 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 agreements of this type, all subject to certain exceptions.

In addition, the Company is required to file an ATM Shelf Registration (as defined in the 2024 Term Loan agreement) with the SEC.

In the event of a default in the minimum Consolidated EBITDA covenant, the Company is required to utilize the ATM Equity Program (as defined in the 2024 Term Loan agreement) to sell common stock and use the proceeds to cure the event of default in the minimum Consolidated EBITDA covenant.

The Company is required to make mandatory prepayments of the outstanding principal amount of loans under the 2024 Term Loan 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 2024 Term Loan includes customary events of default, that include among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control, and certain material ERISA events.

The occurrence of a default could result in the acceleration of the obligations under the facility.

As security for its obligations under the facility, the Company granted a security interest to substantially all of the Company’s assets and the assets of its material subsidiaries, subject to certain exceptions.

With respect to the 2024 Term Loan, the Company incurred financing costs of $ 7.3 million upon closing consisting of $ 4.2 million of debt issuance costs and $ 3.1 million of original issue discount which are being amortized to interest expense over the life of the 2024 Term Loan.

Additionally, the Company is required to pay an unused commitment fee quarterly in arrears in an amount equal to 1.50 % per annum on the amount of the undrawn portion of the delayed draw term loan commitments under the 2024 Term Loan.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In the first three months of 2024, the Company recorded interest expense related to the 2024 Term Loan of $ 0.2 million which consisted of $ 0.2 million associated with borrowings bearing interest at the SOFR rate and immaterial amounts associated with unused commitment fees, the amortization of debt issuance costs, and accretion of the original issue discount.

A summary of the gross carrying amount, debt issuance costs, original issue discount, and net carrying value of the 2024 Term Loan in the March 31, 2024 consolidated balance sheet, are as follows (in thousands) :

Current Portion

Gross carrying amount $ 12,500

Debt issuance costs 414

Unamortized original issue discount 312

Net carrying amount $ 11,774

Long-term Portion

Gross carrying amount $ 112,500

Debt issuance costs 3,728

Unamortized original issue discount 2,807

Net carrying amount $ 105,965

NOTE 13— CONTINGENCIES

2 unchanged sentences

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

As of March 31, 2024 and December 31, 2023, the Company had litigation settlement accruals of $ 0.7 million and $ 0.6 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 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, 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 March 31, 2024.

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

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 15— SEGMENT INFORMATION

4 unchanged sentences

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:

2 unchanged sentences

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.

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, 2023

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 33,390 $ 67,253 $ 54,536 $ 9 $ 155,188

Segment marketing expense 22,095 32,826 31,177 21 86,119

Segment profit (loss) 11,295 34,427 23,359 ( 12 ) 69,069

Cost of revenue 7,570

Brand and other marketing expense 11,125

General and administrative expense 26,380

Product development 10,840

Depreciation 4,760

Amortization of intangibles 1,981

Goodwill impairment 38,600

Restructuring and severance 1,955

Litigation settlements and contingencies ( 150 )

Operating loss ( 33,992 )

Interest expense, net ( 7,097 )

Other expense ( 110,910 )

Loss before income taxes $ ( 151,999 )

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended September 30, 2022

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

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

Three Months Ended March 31, 2024

Home Consumer Insurance Other Total

2 unchanged sentences

Segment marketing expense 20,833 24,011 52,423 ( 21 ) 97,246

Segment profit (loss) 24,117 45,793 22,568 ( 211 ) 92,267

Segment profit 9,610 27,440 33,449 23 70,522

Cost of revenue 8,545

6 unchanged sentences

Litigation settlements and contingencies 36

Operating loss ( 18,576 )

Operating income 7,179

Interest expense, net ( 6,638 )

Other income 1,034

Loss before income taxes $ ( 22,773 )

Nine Months Ended September 30, 2023

Income before income taxes $ 1,575

Three Months Ended March 31, 2023

Home Consumer Insurance Other Total

9 unchanged sentences

Amortization of intangibles 2,049

Goodwill impairment 38,600

Restructuring and severance 4,454

2 unchanged sentences

Interest income, net 25,029

Other expense ( 108,637 )

Loss before income taxes $ ( 138,035 )

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Nine Months Ended September 30, 2022

Home Consumer Insurance Other Total

(in thousands)

Revenue $ 240,809 $ 309,873 $ 232,025 $ 230 $ 782,937

Segment marketing expense 154,043 176,985 165,770 643 497,441

Segment profit (loss) 86,766 132,888 66,255 ( 413 ) 285,496

Cost of revenue 44,240

Brand and other marketing expense 68,128

General and administrative expense 115,808

Product development 42,413

Depreciation 15,024

Amortization of intangibles 21,574

Restructuring and severance 3,760

Litigation settlements and contingencies ( 41 )

Operating loss ( 25,410 )

Interest expense, net ( 19,990 )

Other income 1,834

Loss before income taxes $ ( 43,594 )

Income before income taxes $ 13,852

NOTE 16— 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.

During September 2023, the Company initiated workforce reductions of 14 employees.

The Company incurred 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 and non-cash charges for the accelerated vesting of certain equity awards of approximately $ 0.2 million.

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.

As a result of the Ovation Closure, the Company incurred $ 2.1 million in restructuring expense in connection with cash expenditures for employee separation costs.

The Ovation Closure, including cash payments, is expected to be completed by the first quarter of 2024.

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

The Reduction Plan includes the elimination of approximately 162 employees, or 13 %, of the Company’s current workforce.

As a result of the Reduction Plan, the Company estimates that it will incur approximately $ 5.3 million in severance charges in connection with the workforce reduction, consisting of cash expenditures for employee separation costs of approximately $ 4.3 million and non-cash charges for the accelerated vesting of certain equity awards of approximately $ 1.0 million.

The Company has incurred restructuring expense of $ 4.3 million in the first quarter of 2023 and an additional $ 1.0 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 substantially completed by the end of the second 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 included the elimination of approximately 197 employees, or 18 %, of the Company's workforce.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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 September 30, 2023

result of the Ovation Closure, the Company incurred $ 2.1 million in restructuring expense in connection with cash expenditures for employee separation costs.

The Ovation Closure, including cash payments, was completed in the first quarter of 2024.

In connection with the Ovation Closure, in the first quarter of 2023, 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.

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

The Reduction Plan included the elimination of approximately 162 employees, or 13 %, of the Company’s workforce.

As a result of the Reduction Plan, the Company incurred approximately $ 5.3 million in severance charges in connection with the workforce reduction, consisting of cash expenditures for employee separation costs of approximately $ 4.3 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 related to the Reduction Plan.

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

Accrued Balance at December 31, 2023 Income Statement Impact Payments Accrued Balance at March 31, 2024

Q3 2023 action

Employee separation payments $ 254 $ ( 7 ) $ ( 82 ) $ 165

Non-cash compensation — 28 — ( 28 ) —

Q2 2023 action

2 unchanged sentences

Employee separation payments 421 15 ( 181 ) 255

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

Employee separation payments 304 25 ( 310 ) — 19

$ 709 $ 12 $ ( 301 ) $ 420

NOTE 17— SUBSEQUENT EVENTS

In April 2024, the Company repurchased approximately $ 37.7 million in principal amount of its 2025 Notes, through individual privately-negotiated transactions with certain holders of the 2025 Notes, for $ 35.3 million in cash plus accrued and unpaid interest.

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