UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September~~June 30, ~~2017~~2021



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-34063

LendingTree, Inc.

(Exact name of Registrant as specified in its charter)



Delaware						26-2414818
(State or other jurisdiction of incorporation or organization)						~~26-2414818~~ (I.R.S. Employer Identification No.)

~~11115 Rushmore Drive,~~1415 Vantage Park Dr., Suite 700, Charlotte, North Carolina ~~28277~~28203

(Address of principal executive offices)(Zip Code)

(704) 541-5351

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

TREE

The Nasdaq Stock Market LLC

Indicate by check mark whether the ~~Registrant~~registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No o☐

Indicate by check mark whether the ~~Registrant~~registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the ~~Registrant~~registrant was required to submit ~~and post~~ such files). Yes ý☒ No o☐

Indicate by check mark whether the ~~Registrant~~registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting ~~company"~~company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

~~Large accelerated filer~~ o

~~Accelerated filer~~ x

~~Non-accelerated filer~~ o

~~Smaller reporting company~~ o

~~(Do not check if a smaller reporting company)~~

Emerging growth companyo

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the ~~Registrant~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No ý☒

As of ~~October~~July 23, ~~2017,~~2021, there were ~~11,968,798~~13,315,038 shares of the ~~Registrant's~~registrant's common stock, par value $.01 per share, outstanding, excluding treasury shares.

~~TABLE OF CONTENTS~~

TABLE OF CONTENTS

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
(in thousands, except per share amounts)
Revenue $ 171,494

$ 94,558

$ 456,782

$ 283,561
Costs and expenses:

Cost of revenue (exclusive of depreciation and amortization shown separately below)
4,388

3,392

12,143

10,329
Selling and marketing expense 118,538

62,819

320,930

192,416
General and administrative expense 17,920

9,008

41,561

26,820
Product development 4,805

3,718

12,492

11,384
Depreciation 1,798

1,286

5,309

3,458
Amortization of intangibles 3,817

166

9,034

263
Change in fair value of contingent consideration 2,501

—

20,640

—
Severance —

—

404

72
Litigation settlements and contingencies 272

19

961

109
Total costs and expenses 154,039

80,408

423,474

244,851
Operating income 17,455

14,150

33,308

38,710
Other income (expense), net:

Interest expense, net (2,804 )
(141 )
(4,048 )
(424 )
Other (expense) income (228 )
—

(215 ) —
Income before income taxes 14,423

14,009

29,045

38,286
Income tax expense (4,292 )
(6,729 )
(3,109 )
(15,099 )
Net income from continuing operations 10,131

7,280

25,936

23,187
Loss from discontinued operations, net of tax (1,011 )
(664 )
(2,632 )
(3,017 )
Net income and comprehensive income $ 9,120

$ 6,616

$ 23,304

$ 20,170

Weighted average shares outstanding:

Basic 11,999

11,754

11,931

11,827
Diluted 13,774

12,742

13,625

12,782
Income per share from continuing operations:

Basic $ 0.84

$ 0.62

$ 2.17

$ 1.96
Diluted $ 0.74

$ 0.57

$ 1.90

$ 1.81
Loss per share from discontinued operations:

Basic $ (0.08 )
$ (0.06 )
$ (0.22 )
$ (0.26 )
Diluted $ (0.07 )
$ (0.05 )
$ (0.19 )
$ (0.24 )
Net income per share:

Basic $ 0.76

$ 0.56

$ 1.95

$ 1.71
Diluted $ 0.66

$ 0.52

$ 1.71

$ 1.58


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(in thousands, except per share amounts)
Revenue	$	270,014	$	184,326	$	542,764	$	467,410
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	13,934		13,464		27,829		27,716
Selling and marketing expense	185,206		113,921		382,668		309,459
General and administrative expense	39,811		28,489		74,800		60,571
Product development	13,290		10,812		25,758		21,775
Depreciation	4,443		3,550		8,161		6,928
Amortization of intangibles	11,310		13,756		22,622		27,513
Change in fair value of contingent consideration	(8,850)		9,175		(8,053)		1,053
Severance	0		32		0		190
Litigation settlements and contingencies	322		(1,325)		338		(996)
Total costs and expenses	259,466		191,874		534,123		454,209
Operating income (loss)	10,548		(7,548)		8,641		13,201
Other (expense) income, net:
Interest expense, net	(9,840)		(4,955)		(20,055)		(9,789)
Other income	0		7		40,072		7
Income (loss) before income taxes	708		(12,496)		28,658		3,419
Income tax benefit	9,092		3,880		454		6,941
Net income (loss) from continuing operations	9,800		(8,616)		29,112		10,360
Loss from discontinued operations, net of tax	(3,199)		(21,141)		(3,462)		(25,716)
Net income (loss) and comprehensive income (loss)	$	6,601	$	(29,757)	$	25,650	$	(15,356)

Weighted average shares outstanding:
Basic	13,243		12,984		13,157		12,971
Diluted	13,719		12,984		13,913		13,954
Income (loss) per share from continuing operations:
Basic	$	0.74	$	(0.66)	$	2.21	$	0.80
Diluted	$	0.71	$	(0.66)	$	2.09	$	0.74
Loss per share from discontinued operations:
Basic	$	(0.24)	$	(1.63)	$	(0.26)	$	(1.98)
Diluted	$	(0.23)	$	(1.63)	$	(0.25)	$	(1.84)
Net income (loss) per share:
Basic	$	0.50	$	(2.29)	$	1.95	$	(1.18)
Diluted	$	0.48	$	(2.29)	$	1.84	$	(1.10)

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

Table of Contents

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2017			December 31, 2016				June 30, 2021		December 31, 2020
	(in thousands, except par value and share amounts)							(in thousands, except par value and share amounts)
ASSETS:							ASSETS:
Cash and cash equivalents	$	345,239		$	91,131		Cash and cash equivalents	$	203,164	$	169,932
Restricted cash and cash equivalents	4,087			4,089			Restricted cash and cash equivalents	83		117
Accounts receivable (net of allowance of $1,260 and $1,059, respectively)	64,128			41,382
Accounts receivable (net of allowance of $1,473 and $1,402, respectively)							Accounts receivable (net of allowance of $1,473 and $1,402, respectively)	124,076		89,841
Prepaid and other current assets	9,690			4,021			Prepaid and other current assets	18,211		27,949
Current assets of discontinued operations							Current assets of discontinued operations	0		8,570
Total current assets	423,144			140,623			Total current assets	345,534		296,409
Property and equipment (net of accumulated depreciation of $12,172 and $9,739, respectively)	35,345			35,462
Property and equipment (net of accumulated depreciation of $23,696 and $20,238, respectively)							Property and equipment (net of accumulated depreciation of $23,696 and $20,238, respectively)	74,701		62,381
Operating lease right-of-use assets							Operating lease right-of-use assets	79,967		84,109
Goodwill	113,558			56,457			Goodwill	420,139		420,139
Intangible assets, net	85,265			71,684			Intangible assets, net	105,880		128,502
Deferred income tax assets	17,737			14,610			Deferred income tax assets	96,679		96,224
Equity investment							Equity investment	121,253		80,000
Other non-current assets	826			810			Other non-current assets	5,440		5,334
Non-current assets of discontinued operations	3,781			3,781			Non-current assets of discontinued operations	17,044		15,892
Total assets	$	679,656		$	323,427		Total assets	$	1,266,637	$	1,188,990

LIABILITIES:							LIABILITIES:
Current portion of long-term debt							Current portion of long-term debt	$	161,723	$	0
Accounts payable, trade	$	3,552		$	5,593		Accounts payable, trade	6,623		10,111
Accrued expenses and other current liabilities	68,744			49,403			Accrued expenses and other current liabilities	106,376		101,196
Current contingent consideration	24,014			—			Current contingent consideration	196		0
Current liabilities of discontinued operations (Note 14)	13,396			11,711
Current liabilities of discontinued operations							Current liabilities of discontinued operations	4,933		536
Total current liabilities	109,706			66,707			Total current liabilities	279,851		111,843
Long-term debt	235,120			—			Long-term debt	465,876		611,412
Operating lease liabilities							Operating lease liabilities	100,153		92,363
Non-current contingent consideration	30,544			23,600			Non-current contingent consideration	0		8,249

Other non-current liabilities	1,473			1,685			Other non-current liabilities	389		362
Total liabilities	376,843			91,992			Total liabilities	846,269		824,229
Commitments and contingencies (Note 11)
Commitments and contingencies (Note 14)							Commitments and contingencies (Note 14)	0		0
SHAREHOLDERS' EQUITY:							SHAREHOLDERS' EQUITY:
Preferred stock $.01 par value; 5,000,000 shares authorized; none issued or outstanding	—			—
Common stock $.01 par value; 50,000,000 shares authorized; 14,174,357 and 13,955,378 shares issued, respectively, and 11,968,459 and 11,791,633 shares outstanding, respectively	142			140
Preferred stock $.01 par value; 5,000,000 shares authorized; NaN issued or outstanding							Preferred stock $.01 par value; 5,000,000 shares authorized; NaN issued or outstanding	0		0
Common stock $.01 par value; 50,000,000 shares authorized; 15,955,742 and 15,766,193 shares issued, respectively, and 13,314,424 and 13,124,875 shares outstanding, respectively							Common stock $.01 par value; 50,000,000 shares authorized; 15,955,742 and 15,766,193 shares issued, respectively, and 13,314,424 and 13,124,875 shares outstanding, respectively	160		158
Additional paid-in capital	1,076,748			1,018,010			Additional paid-in capital	1,218,628		1,188,673
Accumulated deficit	(700,628		)	(722,630		)	Accumulated deficit	(615,259)		(640,909)
Treasury stock; 2,205,898 and 2,163,745 shares, respectively	(74,086		)	(64,085		)
Noncontrolling interest (Note 5)	637			—
Treasury stock; 2,641,318 shares							Treasury stock; 2,641,318 shares	(183,161)		(183,161)
Total shareholders' equity	302,813			231,435			Total shareholders' equity	420,368		364,761
Total liabilities and shareholders' equity	$	679,656		$	323,427		Total liabilities and shareholders' equity	$	1,266,637	$	1,188,990

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

Table of Contents

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


			Common Stock							Treasury Stock
	Total		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Number of Shares	Amount
	(in thousands)
Balance as of December 31, 2020	$	364,761	15,766	$	158	$	1,188,673	$	(640,909)	2,641	$	(183,161)
Net income and comprehensive income	19,049		—	—		—		19,049		—	—
Non-cash compensation	16,436		—	—		16,436		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(4,801)		31	—		(4,801)		—		—	—
Other	(2)		—	—		(2)		—		—	—
Balance as of March 31, 2021	$	395,443	15,797	$	158	$	1,200,306	$	(621,860)	2,641	$	(183,161)
Net income and comprehensive income	6,601		—	—		—		6,601		—	—
Non-cash compensation	18,294		—	—		18,294		—		—	—

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

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

Common Stock Treasury Stock
Total
Number
of Shares
Amount
Additional
Paid-in
Capital

Accumulated
Deficit

Number
of Shares
Amount Noncontrolling Interest
(in thousands)
Balance as of December 31, 2016 $ 231,435
13,955
$ 140
$ 1,018,010
$ (722,630 ) 2,164
$ (64,085 ) $ —
Net income and comprehensive income 23,304
—
—
—
23,304
—
—
—
Non-cash compensation 13,068
—
—
13,068
—
—
—
—
Purchase of treasury stock (10,001 ) —
—
—
—
42
(10,001 ) —
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes 1,064
219
2
1,062
—
—
—

Cumulative effect adjustment due to ASU 2016-09 985
—
—
2,287
(1,302 ) —
—
—
Issuance of 0.625% Convertible Senior Notes, net 60,411
—
—
60,411
—
—
—
—
Convertible note hedge (61,500 ) —
—
(61,500 ) —
—
—
—
Sale of warrants 43,410
—
—
43,410
—
—
—
—
Noncontrolling interest (Note 5) 637
637
Balance as of September 30, 2017 $ 302,813
14,174
$ 142
$ 1,076,748
$ (700,628 ) 2,206
$ (74,086 ) $ 637


			Common Stock							Treasury Stock
	Total		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Number of Shares	Amount
	(in thousands)
Balance as of December 31, 2019	$	402,326	15,677	$	157	$	1,177,984	$	(592,654)	2,641	$	(183,161)
Net income and comprehensive income	14,401		—	—		—		14,401		—	—
Non-cash compensation	11,917		—	—		11,917		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(5,087)		27	—		(5,087)		—		—	—
Other	0		—	—		(1)		1		—	—
Balance as of March 31, 2020	$	423,557	15,704	$	157	$	1,184,813	$	(578,252)	2,641	$	(183,161)
Net loss and comprehensive loss	(29,757)		—	—		—		(29,757)		—	—
Non-cash compensation	13,158		—	—		13,158		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(981)		27	—		(981)		—		—	—

Balance as of June 30, 2020	$	405,977	15,731	$	157	$	1,196,990	$	(608,009)	2,641	$	(183,161)

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

Table of Contents

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


								Six Months Ended June 30,
								2021		2020
								(in thousands)
Cash flows from operating activities attributable to continuing operations:							Cash flows from operating activities attributable to continuing operations:
Net income (loss) and comprehensive income (loss)							Net income (loss) and comprehensive income (loss)	$	25,650	$	(15,356)
Less: Loss from discontinued operations, net of tax							Less: Loss from discontinued operations, net of tax	3,462		25,716
Income from continuing operations							Income from continuing operations	29,112		10,360
Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable to continuing operations:							Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable to continuing operations:
Loss on impairments and disposal of assets							Loss on impairments and disposal of assets	1,400		552
Amortization of intangibles							Amortization of intangibles	22,622		27,513
Depreciation							Depreciation	8,161		6,928
Non-cash compensation expense							Non-cash compensation expense	34,730		25,075
Deferred income taxes							Deferred income taxes	(455)		(7,000)
Change in fair value of contingent consideration							Change in fair value of contingent consideration	(8,053)		1,053
Unrealized gain on investments							Unrealized gain on investments	(40,072)		0
Bad debt expense							Bad debt expense	1,145		949
Amortization of debt issuance costs							Amortization of debt issuance costs	2,547		1,158

Amortization of convertible debt discount							Amortization of convertible debt discount	14,670		6,250

Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities							Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities	11,079		1,956
Changes in current assets and liabilities:							Changes in current assets and liabilities:
Accounts receivable							Accounts receivable	(35,381)		35,501
Prepaid and other current assets							Prepaid and other current assets	(680)		1,369
Accounts payable, accrued expenses and other current liabilities							Accounts payable, accrued expenses and other current liabilities	3,845		(19,134)
Current contingent consideration							Current contingent consideration	0		(2,670)
Income taxes receivable							Income taxes receivable	10,322		63
Other, net							Other, net	(412)		(2,007)
Net cash provided by operating activities attributable to continuing operations							Net cash provided by operating activities attributable to continuing operations	54,580		87,916
Cash flows from investing activities attributable to continuing operations:							Cash flows from investing activities attributable to continuing operations:
Capital expenditures							Capital expenditures	(23,585)		(9,108)

Equity investment							Equity investment	(1,180)		(80,000)

Net cash used in investing activities attributable to continuing operations							Net cash used in investing activities attributable to continuing operations	(24,765)		(89,108)
Cash flows from financing activities attributable to continuing operations:							Cash flows from financing activities attributable to continuing operations:
Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options							Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options	(4,771)		(6,068)

	Nine Months Ended September 30,
	2017			2016
	(in thousands)
Cash flows from operating activities attributable to continuing operations:
Net income and comprehensive income	$	23,304		$	20,170
Less: Loss from discontinued operations, net of tax	2,632			3,017
Income from continuing operations	25,936			23,187
Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable to continuing operations:
Loss on disposal of fixed assets	673			388
Amortization of intangibles	9,034			263
Depreciation	5,309			3,458
Rental amortization of intangibles and depreciation	1,011			—
Non-cash compensation expense	13,068			7,410
Deferred income taxes	(5,571		)	333
Change in fair value of contingent consideration	20,640			—
Bad debt expense	401			378
Amortization of debt issuance costs	622			183
Amortization of convertible debt discount	3,635			—
Changes in current assets and liabilities:
Accounts receivable	(22,271		)	(8,565		)
Prepaid and other current assets	(5,070		)	(2,051		)
Accounts payable, accrued expenses and other current liabilities	19,361			(5		)
Income taxes payable	(1,399		)	13,261
Other, net	(296		)	645
Net cash provided by operating activities attributable to continuing operations	65,083			38,885
Cash flows from investing activities attributable to continuing operations:
Capital expenditures	(5,925		)	(8,017		)
Acquisition of SnapCap	(11,886		)	—
Acquisition of DepositAccounts	(25,000		)	—
Acquisition of MagnifyMoney, net of cash acquired	(29,511		)	—
Acquisition of a business	—			(4,500		)
Decrease in restricted cash	2			2,450
Net cash used in investing activities attributable to continuing operations	(72,320		)	(10,067		)
Cash flows from financing activities attributable to continuing operations:
Proceeds from exercise of stock options, net of payments related to net-share settlement of stock-based compensation	1,065			(3,093		)
Proceeds from the issuance of 0.625% Convertible Senior Notes	300,000			—
Payment of convertible note hedge transactions	(61,500		)	—
Proceeds from the sale of warrants	43,410			—
Payment of equity offering costs	—			(23		)

Net proceeds from revolving credit facility							Net proceeds from revolving credit facility	0		55,000
Payment of debt issuance costs	(9,264		)	(8		)	Payment of debt issuance costs	(168)		(306)
Purchase of treasury stock	(10,001		)	(48,524		)
Net cash provided by (used in) financing activities attributable to continuing operations	263,710			(51,648		)
Total cash provided by (used in) continuing operations	256,473			(22,830		)
Net cash used in operating activities attributable to discontinued operations	(2,365		)	(7,220		)
Total cash used in discontinued operations	(2,365		)	(7,220		)
Net increase (decrease) in cash and cash equivalents	254,108			(30,050		)
Cash and cash equivalents at beginning of period	91,131			206,975
Cash and cash equivalents at end of period	$	345,239		$	176,925
Contingent consideration payments							Contingent consideration payments	0		(3,330)

Other financing activities							Other financing activities	(31)		(14)
Net cash (used in) provided by financing activities attributable to continuing operations							Net cash (used in) provided by financing activities attributable to continuing operations	(4,970)		45,282
Total cash provided by continuing operations							Total cash provided by continuing operations	24,845		44,090
Discontinued operations:							Discontinued operations:
Net cash provided by (used in) operating activities attributable to discontinued operations							Net cash provided by (used in) operating activities attributable to discontinued operations	8,353		(2,571)
Total cash provided by (used in) discontinued operations							Total cash provided by (used in) discontinued operations	8,353		(2,571)
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents							Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents	33,198		41,519
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period							Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	170,049		60,339
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period							Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	203,247	$	101,858

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

Table of Contents

LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—ORGANIZATION

Company Overview

LendingTree, Inc. ~~("LendingTree" or the "Company"),~~ is the parent of LT Intermediate Company, LLC, which holds all of the outstanding ownership interests of LendingTree, LLC, and LendingTree, LLC owns several companies ~~owned by LendingTree, LLC.~~(collectively, "LendingTree" or the "Company").

LendingTree operates what it believes to be the leading online ~~loan marketplace for~~consumer platform that connects consumers ~~seeking loans and other credit-based offerings.~~with the choices they need to be confident in their financial decisions. The Company offers consumers tools and resources, including free credit scores, that facilitate comparison-shopping for mortgage loans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, deposit accounts, personal loans, ~~deposit accounts,~~ student loans, small business loans, insurance quotes and other related offerings. The Company primarily seeks to match in-market consumers with multiple ~~lenders~~providers on its marketplace who can provide them with competing quotes for ~~the~~ loans, ~~deposits~~deposit products, insurance or ~~credit-based~~other related offerings they are seeking. The Company also serves as a valued partner to lenders and other providers seeking an efficient, scalable and flexible source of customer acquisition with directly measurable benefits, by matching the consumer ~~loan~~ inquiries it generates with these ~~lenders.~~providers.

The consolidated financial statements include the accounts of LendingTree and all its wholly-owned ~~entities.~~entities, except Home Loan Center, Inc. ("HLC") subsequent to its bankruptcy filing on July 21, 2019 which resulted in the Company's loss of a controlling interest in HLC under applicable accounting standards. The HLC Bankruptcy case was closed on July 14, 2021. See Note 17—Discontinued Operations for additional information. Intercompany transactions and accounts have been eliminated.

Discontinued Operations

The LendingTree Loans business, which consisted of originating various consumer mortgage loans through HLC (the "LendingTree Loans Business"), is presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements of operations and comprehensive income and consolidated cash flows for all periods presented. The notes accompanying these consolidated financial statements reflect the Company's continuing operations and, unless otherwise noted, exclude information related to the discontinued operations. See Note 14 17—Discontinued Operations for additional information.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of ~~September~~June 30, ~~2017~~2021 and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~,2020, 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~~six months ended ~~September~~June 30, ~~2017~~2021 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2017~~,2021, or any other period. The accompanying consolidated balance sheet as of December 31, ~~2016~~2020 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, ~~2016~~2020 (the ~~"2016~~"2020 Annual Report"). The accompanying consolidated financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in the ~~2016~~2020 Annual Report.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

Management is required to make certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Significant estimates underlying the accompanying consolidated financial statements, including discontinued operations, include: ~~loan loss obligations;~~ the recoverability of long-lived assets, goodwill and intangible assets; the determination of income taxes payable and deferred income taxes, including related valuation allowances; fair value of assets acquired in a business combination; contingent consideration related to business combinations; litigation accruals; HLC ownership related claims; contract assets; various other allowances, reserves and accruals; ~~and~~ assumptions related to the determination of stock-based ~~compensation.~~compensation; and the determination of right-of-use assets and lease liabilities.

~~Table~~The Company considered the impact of ~~Contents~~

~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

the COVID-19 pandemic on the assumptions and estimates used when preparing its financial statements including, but not limited to, the allowance for doubtful accounts, valuation allowances, contract asset and contingent consideration. These assumptions and estimates may change as new events occur and additional information is obtained. If economic conditions caused by the COVID-19 pandemic do not recover as currently estimated by management, such future changes may have an adverse impact on the Company's results of operations, financial position and liquidity.

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~~June 30, ~~2017~~,2021, 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. The Company ~~generally~~ requires certain ~~network lenders~~Network Partners to maintain security deposits with the Company, which in the event of non-payment, would be applied against any accounts receivable outstanding.

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

Lenders and lead purchasers participating on the Company's marketplace can offer their products directly to consumers through brokers, mass marketing campaigns or through other traditional methods of credit distribution. These lenders and lead purchasers can also offer their products online, either directly to prospective borrowers, through one or more online competitors, or both. If a significant number of potential consumers are able to obtain loans and other products from ~~participating lenders~~Network Partners without utilizing the Company's services, ~~its~~the Company's ability to generate revenue may be limited. Because the Company does not have exclusive relationships with the ~~lenders~~Network Partners whose ~~loan offerings~~loans and other financial products are offered on its online marketplace, consumers may obtain offers ~~and loans~~ from these ~~lenders~~Network Partners without using its service.

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

Litigation Settlements and Contingencies

Litigation settlements and contingencies consists of expenses related to actual or anticipated litigation ~~settlements, in addition to legal fees incurred in connection with various patent litigation claims the Company pursues against others.~~settlements.

~~Recent~~Recently Adopted Accounting Pronouncements

In May ~~2017,~~2021, the FASB issued ASU 2021-04 to clarify and reduce diversity in accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The amendments clarify that a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be accounted for as an exchange of the original instrument for a new instrument. This ASU is effective for annual and interim reporting periods beginning after December 15, 2021. Early adoption is permitted, including adoption in interim periods. An entity should adopt the guidance as of the beginning of its annual fiscal year. The amendments should be applied prospectively to modifications or exchanges occurring on or after the date of adoption. The Company adopted ASU 2021-04 in the second quarter of 2021.

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2017-09~~2019-12, which ~~clarifies when to account~~simplifies the accounting for ~~a change~~income taxes by removing certain exceptions to the ~~terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions or the classification~~general principles in ASC Topic 740, Income Taxes, and clarifies certain aspects of the ~~award changes as a result of the change in terms or conditions.~~current guidance to improve consistency among reporting entities. This ASU is effective ~~prospectively~~ for annual and interim reporting periods beginning ~~on or~~ after December 15, ~~2017, with~~2020. Early adoption was permitted, including adoption in interim periods. Entities electing early adoption ~~permitted.~~were required to adopt all amendments in the same period. Most amendments require prospective application while others are to be applied on a retrospective basis for all

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company adopted ASU 2019-12 in the first quarter of 2021. The amendments applicable to the Company required prospective application, and do not have material impacts to its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible instruments, amends the derivatives scope exception guidance for contracts in an entity’s own equity, and amends the related earnings-per-share guidance. This ASU is effective for annual and interim reporting periods beginning after December 15, 2021. Early adoption is permitted for fiscal years beginning after December 15, 2020, including adoption in interim periods. An entity should adopt the guidance as of the beginning of its annual fiscal year. An entity may adopt the amendments through either a modified retrospective method of transition or a fully retrospective method of transition. The Company expects the amendments to impact its convertible senior notes and warrants issued and is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.

~~In January 2017,~~

NOTE 3—REVENUE

Revenue is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Home	$	104,861	$	74,123	$	232,986	$	153,297
Credit cards	22,424		7,194		40,061		58,780
Personal loans	25,208		8,827		40,076		40,336
Other Consumer	28,044		21,097		53,446		57,926
Total Consumer	75,676		37,118		133,583		157,042
Insurance	89,263		72,919		175,877		155,656
Other	214		166		318		1,415
Total revenue	$	270,014	$	184,326	$	542,764	$	467,410

The Company derives its revenue primarily from match fees and closing fees. Revenue is recognized when performance obligations under the ~~FASB issued ASU 2017-04 which eliminates~~terms of a contract with a customer are satisfied and promised services have transferred to the ~~requirement~~customer. The Company's services are generally transferred to ~~calculate~~ the ~~implied fair value~~customer at a point in time.

Revenue from Home products is primarily generated from upfront match fees paid by mortgage Network Partners that receive a loan request, and in some cases upfront fees for clicks or call transfers. Match fees and upfront fees for clicks and call transfers are earned through the delivery of ~~goodwill~~loan requests that originated through the Company's websites or affiliates. The Company recognizes revenue at the time a loan request is delivered to ~~measure a goodwill impairment charge (Step 2~~the customer, provided that no significant obligations remain. The Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the ~~goodwill impairment test). Instead, an impairment charge will be based~~performance obligation to deliver a loan request to the customer.

Revenue from Consumer products is generated by match and other upfront fees for clicks or call transfers, as well as from closing fees, approval fees and upfront service and subscription fees. Closing fees are derived from lenders on certain auto loans, business loans, personal loans and student loans when the ~~excess of~~lender funds a loan with the ~~carrying amount~~consumer. 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 ~~fair value. This ASU~~estimated time the consumer will remain a customer and receive services. Subscription fees are recognized over the period a consumer is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. receiving services.

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

In November 2016, the FASB issued ASU 2016-18 which is intended to reduce the diversity in the classification and presentation of changes in restricted cash in the statement of cash flows, by requiring entities to combine the changes in cash and cash equivalents and restricted cash in one line. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. In addition, if more than one line item is recorded on the balance sheet for cash and cash equivalents and restricted cash, a reconciliation between the statement of cash flows and balance sheet is required. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The retrospective transition method, requiring adjustment to all comparative periods presented, is required. The Company is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.

In August 2016, the FASB issued ASU 2016-15 which addresses eight cash flow classification issues, eliminating the diversity in practice. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The retrospective transition method, requiring adjustment to all comparative periods presented, is required unless it is impracticable for some of the amendments, in which case those amendments would be prospectively applied as of the earliest date practicable. The Company is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

In March 2016, the FASB issued ASU 2016-09 which simplifies various aspects related to how share-based payments are accounted for and presented in the financial statements, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures and classification of excess tax benefits on the statement of cash flows. This ASU was effective for annual and interim reporting periods beginning after December 15, 2016, with early adoption permitted. Upon adoption, any adjustments are to be reflected as of the beginning of the fiscal year of adoption. The Company adopted this ASU during the first quarter of 2017.

The new standard requires excess tax benefits and deficiencies, which arise due to the difference in the measure of stock compensation and the amount deductible for tax purposes, to be recorded in earnings in income tax expense. These excess tax benefits and deficiencies were generally previously recorded in additional paid-in capital and had no impact on net income. The standard required prospective adoption for this portion of the new guidance. During the third quarter and first nine months of 2017, the Company recognized $0.8 million and $8.4 million, respectively, of excess tax benefit in income tax expense in the accompanying consolidated statements of operations and comprehensive income. Additionally, the new standard requires the excess tax benefits and deficiencies to be classified as an operating activity in the accompanying consolidated statements of cash flows. These excess tax benefits and deficiencies were previously recorded as a financing activity in the statement of cash flows. The standard allowed for either prospective or retrospective adoption for the change in presentation in the statement of cash flows. The Company elected to retrospectively adopt the classification change in the statement of cash flows. Accordingly, prior periods have been adjusted, which increased the cash provided by operating activities and decreased the cash provided by financing activities by $5.7 million in the first nine months of 2016 in the accompanying consolidated statements of cash flows. The standard also allows for an election by the Company to either estimate forfeitures, as required under previous guidance, or recognize forfeitures when they occur. The Company elected to recognize forfeitures of stock awards as they occur, with the modified retrospective transition method required. Accordingly, the Company recognized a $1.4 million cumulative-effect adjustment to retained earnings as of January 1, 2017.

In February 2016, the FASB issued ASU 2016-02 related to leases. This ASU requires the recognition of a right-of-use lease asset and a lease liability by lessees for all leases greater than one year in duration. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The guidance must be adopted using a modified retrospective transition. The Company is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.

In May 2014, the FASB issued ASU 2014-09 related to revenue recognition. This ASU was initiated as a joint project between the FASB and the International Accounting Standards Board ("IASB") to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and international financial reporting standards ("IFRS"). This guidance will supersede the existing revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition and was set to be effective for annual reporting periods beginning after December 15, 2016. However, in July 2015, the FASB deferred the effective date by one year, such that the standard will be effective for annual reporting periods beginning after December 15, 2017. The ASU can be applied (i) retrospectively to each prior period presented or (ii) retrospectively with the cumulative effect of initially adopting the ASU recognized at the date of initial application. In March 2016, the FASB issued ASU 2016-08, which clarifies the principal versus agent guidance under ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, which clarifies the identification of distinct performance obligations in a contract. In May 2016, the FASB issued ASU 2016-12, which clarifies the guidance on assessing collectability, presenting sales taxes, measuring noncash consideration and certain other transition matters. The clarification ASUs must be adopted concurrently with the adoption of ASU 2014-09. The Company will adopt the ASUs as of January 1, 2018 and apply the modified retrospective transition approach. Under this approach revenue for 2016 and 2017 will be reported in the consolidated statements of operations and comprehensive income on the historical basis and revenue for 2018 will be reported in the consolidated statements of operations and comprehensive income applying the new ASUs. Additionally, the Company will disclose revenue for 2018 periods on the historical basis in the footnotes to the financial statements. Under the new ASUs, the timing of recognizing revenue for closing fees and approval fees ~~will be accelerated to~~at the point when a loan request or a credit card consumer is delivered to the ~~customer as opposed~~customer. The Company's contractual right to ~~when~~closing fees and approval fees is not contemporaneous with the ~~consumer~~satisfaction of the performance obligation to deliver a loan ~~is closed by the lender~~request or a credit card ~~approval is made by~~consumer to the ~~issuer. The~~customer. As such, the Company ~~does not expect~~records a contract asset at each reporting period-end related to the ~~adoption of the ASUs to have a material effect on annual revenue or net income from continuing operations.~~estimated variable

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

consideration on closing fees and approval fees for which the Company has satisfied the related performance obligation but are still pending the loan closing or credit card approval before the Company has a contractual right to payment. This estimate is based on the Company's historical closing rates and historical time between when a consumer request for a loan or credit card is delivered to the lender or card issuer and when the loan is closed by the lender or approved by the card issuer.

Revenue from the Company's Insurance products is primarily generated from upfront match fees and upfront fees for website clicks or fees for calls. Match fees and upfront fees for clicks and call transfers are earned through the delivery of consumer requests that originated through the Company's websites or affiliates. The Company recognizes revenue at the time a consumer request is delivered to the customer, provided that no significant obligations remain. The Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the performance obligation to deliver a consumer request to the customer.

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration in the Company's Consumer business was $7.3 million and $6.4 million at June 30, 2021 and December 31, 2020, respectively.

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers in the Company's Consumer business was $1.1 million and $0.7 million at June 30, 2021 and December 31, 2020, respectively. During the second quarter and first six months of 2021, the Company recognized revenue of $0.1 million and $0.7 million, respectively, that was included in the contract liability balance at December 31, 2020. During the second quarter and first six months of 2020, the Company recognized revenue of $0.1 million and $0.6 million, respectively, that was included in the contract liability balance at December 31, 2019.

Revenue recognized in any reporting period includes estimated variable consideration for which the Company has satisfied the related performance obligations but are still pending the occurrence or non-occurrence of a future event outside the Company's control (such as lenders providing loans to consumers or credit card approvals of consumers) before the Company has a contractual right to payment. The Company recognized increases to such revenue from prior periods of $0.1 million and $0.3 million in the second quarters of 2021 and 2020, respectively.

NOTE 3—4—CASH AND RESTRICTED CASH

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


	June 30, 2021		December 31, 2020
Cash and cash equivalents	$	203,164	$	169,932
Restricted cash and cash equivalents	83		117
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	203,247	$	170,049

September 30,
2017 December 31,
2016
Cash in escrow from sale of LendingTree Loans ^(a)
$ 4,033
$ 4,032
Other 54
57
Total restricted cash and cash equivalents $ 4,087
$ 4,089


~~(a)~~	Home Loan Center, Inc. ("HLC"), a subsidiary of the Company, continues to be liable for certain indemnification obligations, repurchase obligations and premium repayment obligations following the sale of substantially all of the operating assets of its LendingTree Loans business in the second quarter of 2012.

NOTE 4—5—ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts.

The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time accounts receivable are past due, previous loss history, current and expected economic conditions and the specific customer's current and expected ability to pay its obligation. Accounts receivable are considered past due when they are outstanding longer than the contractual payment terms. Accounts receivable are written off when management deems them uncollectible.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of the beginning and ending balances of the allowance for doubtful accounts is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Balance, beginning of the period	$	1,429	$	2,021	$	1,402	$	1,466
Charges to earnings	629		69		1,145		949
Write-off of uncollectible accounts receivable	(585)		(337)		(1,079)		(669)
Recoveries collected	0		3		5		10
Balance, end of the period	$	1,473	$	1,756	$	1,473	$	1,756

NOTE 6—GOODWILL AND INTANGIBLE ASSETS

The balance of goodwill, net ~~is as follows~~ ~~(in thousands)~~:

Goodwill Accumulated Impairment Loss Net Goodwill
Balance at December 31, 2016 $ 539,545
$ (483,088 ) $ 56,457
Acquisition of DepositAccounts 19,389
—
19,389
Acquisition of MagnifyMoney 23,784
—
23,784
Acquisition of SnapCap 13,928
—
13,928
Balance at September 30, 2017 $ 596,646
$ (483,088 ) $ 113,558

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


						June 30, 2021		December 31, 2020
Goodwill					Goodwill	$	903,227	$	903,227
Accumulated impairment losses					Accumulated impairment losses	(483,088)		(483,088)
Net goodwill					Net goodwill	$	420,139	$	420,139
	September 30, 2017		December 31, 2016
Intangible assets with indefinite lives	$	10,142	$	10,142	Intangible assets with indefinite lives	$	10,142	$	10,142
Intangible assets with definite lives, net	75,123		61,542		Intangible assets with definite lives, net	95,738		118,360
Total intangible assets, net	$	85,265	$	71,684	Total intangible assets, net	$	105,880	$	128,502

Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill isat each of June 30, 2021 and December 31, 2020 consists of $59.3 million associated with ~~its one reportable~~the Home segment, $166.1 million associated with the Consumer segment, and $194.7 million associated with the Insurance segment.

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

Intangible Assets with Definite Lives

Intangible assets with definite lives relate to the following (in thousands):


	Cost		Accumulated Amortization		Net
Technology	$	87,700	$	(58,768)	$	28,932
Customer lists	77,300		(21,614)		55,686
Trademarks and tradenames	17,000		(11,513)		5,487
Website content	43,200		(37,567)		5,633
Balance at June 30, 2021	$	225,200	$	(129,462)	$	95,738


	Cost		Accumulated Amortization		Net
Technology	$	87,700	$	(48,166)	$	39,534
Customer lists	77,300		(18,560)		58,740
Trademarks and tradenames	17,200		(9,947)		7,253
Website content	43,200		(30,367)		12,833
Balance at December 31, 2020	$	225,400	$	(107,040)	$	118,360

Cost
Accumulated
Amortization
Net
Technology $ 37,500
$ (6,437 ) $ 31,063
Customer lists 32,900
(2,506 ) 30,394
Trademarks and tradenames 6,942
(1,674 ) 5,268
Tenant leases 2,030
(785 ) 1,245
Website content 7,800
(650 ) 7,150
Other 250
(247 ) 3
Balance at September 30, 2017 $ 87,422
$ (12,299 ) $ 75,123

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cost
Accumulated
Amortization
Net
Technology $ 28,300
$ (659 ) $ 27,641
Customer lists 28,100
(639 ) 27,461
Trademarks and tradenames 5,342
(937 ) 4,405
Tenant leases 2,030
—
2,030
Other 250
(245 ) 5
Balance at December 31, 2016 $ 64,022
$ (2,480 ) $ 61,542

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of ~~September~~June 30, ~~2017~~,2021, future amortization is estimated to be as follows (in thousands):

Amortization Expense
Remainder of current year $ 4,345
Year ending December 31, 2018 16,228
Year ending December 31, 2019 15,973
Year ending December 31, 2020 13,948
Year ending December 31, 2021 5,743
Thereafter 18,886
Total intangible assets with definite lives, net $ 75,123


	Amortization Expense
Remainder of current year	$	20,116
Year ending December 31, 2022	25,256
Year ending December 31, 2023	8,602
Year ending December 31, 2024	6,747
Year ending December 31, 2025	6,259
Thereafter	28,758
Total intangible assets with definite lives, net	$	95,738

NOTE ~~5—BUSINESS ACQUISITION~~

~~CompareCards~~7—EQUITY INVESTMENT

On ~~November 16, 2016,~~February 28, 2020, the Company acquired ~~all of the membership interests of Iron Horse Holdings, LLC, which does business under the name CompareCards ("CompareCards"). CompareCards is~~ an ~~online marketing platform~~equity interest in Stash Financial, Inc. (“Stash”) for ~~credit cards, which~~$80.0 million. On January 6, 2021, the Company acquired additional equity interest for $1.2 million. Stash is ~~utilizing to grow its existing credit card business.~~ a consumer investing and banking platform. Stash brings together banking, investing, and financial services education into one seamless experience offering a full suite of personal investment accounts, traditional and Roth IRAs, custodial investment accounts, and banking services, including checking accounts and debit cards with a Stock-Back® rewards program.

The Company paid $80.7 million in initial cash consideration and will make two earnout payments, each ranging from zero to $22.5 million, based on the amount of earnings before interest, taxes, depreciation and amortization CompareCards generates during the periods of January 1, 2017 through December 31, 2017 and January 1, 2018 through December 31, 2018, or up to $45.0 million in aggregate payments (the “Earnout Payments”). The purchase price for the acquisition is $103.8 million comprised of an upfront cash payment of $80.7 million on November 16, 2016 and $23.1 million for the estimatedStash equity securities do not have a readily determinable fair value ofand, upon acquisition, the ~~Earnout Payments at~~Company elected the ~~time of closing the acquisition.~~

~~As of September 30, 2017, the estimated fair~~measurement alternative to value of the Earnout Payments totaled $43.1 million, $22.0 million of which is included in current contingent consideration and $21.1 million of which is included in non-current contingent consideration in the accompanying consolidated balance sheet.its securities. The estimated fair value of the Earnout Payments is determined using an option pricing model. The estimated value of the Earnout Payments is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable. Any differences in the actual Earnout Payments from the current estimated fair value of the Earnout PaymentsStash equity securities will be carried at cost and subsequently marked to market upon observable market events with any gains or losses recorded in operating income in the consolidated statements of operations. During the third quarter and first nine months of 2017, the Company recorded $1.9 million and $20.0 million, respectively, of contingent consideration expense into the consolidated statement of operations and comprehensive ~~income due~~income. During the first six months of 2021, the Company recorded a gain on the investment in Stash of $40.1 million as a result of an adjustment to the ~~change in estimated~~ fair value of the ~~Earnout Payments.~~

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The acquisition has been accounted for as a business combination. During the quarter ended March 31, 2017, the Company completed the determination of the final allocation of the purchase price with respect to the assets acquired and liabilities assumed as follows ~~(in thousands)~~:

Fair Value
Accounts receivable $ 3,538
Total intangible assets with definite lives, net 55,400
Goodwill 52,450
Accounts payable and accrued liabilities (7,638 )
Total purchase price $ 103,750

Acquisition-related costs in the first nine months of 2017 of $0.1 million are included in general and administrative expense in the accompanying consolidated statement of operations and comprehensive income.

~~DepositAccounts~~

On June 14, 2017, the Company acquired substantially all of the assets of Deposits Online, LLC, which does business under the name DepositAccounts.com (“DepositAccounts”). DepositAccounts is a leading consumer-facing media property in the depository industry and is one of the most comprehensive sources of depository deals and analysis on the Web, covering all major deposit product categories through editorial content, programmatic rate tables and user-generated content.

The Company paid $24.0 million of initial cash consideration and could make additional contingent consideration payments of up to $9.0 million. The potential contingent consideration payments are comprised of (i) up to seven payments of $1.0 million eachStash equity securities based on specified increases in Federal Funds interest rates during the period commencing on the closing date and ending on June 30, 2020 and (ii) a one-time performance payment of up to $2.0 million based on the net revenue of deposit products during the period of January 1, 2018 through December 31, 2018 (the “Contingent Consideration”). These additional payments, to the extent earned, will be payable in cash. The purchase price for the acquisition is $29.0 million, comprised of the upfront cash payment of $24.0 million and $5.0 million for the estimated fair value of the Contingent Consideration at the time of closing the acquisition.

In the third quarter of 2017, the Company made a payment of $1.0 million associated with a specified increase in the Federal Funds rate in June 2017. As of September 30, 2017, the estimated fair value of the Contingent Consideration totaled $4.6 million, of which $1.5 million is included in current contingent consideration and $3.1 million ofobservable market events, which is included in non-current contingent consideration in the accompanying consolidated balance sheet. The estimated fair value of the portion of the Contingent Consideration payments based on increases in interest rates is determined using a scenario approach based on the interest rate forecasts of Federal Open Market Committee participants. The estimated fair value of the portion of the Contingent Consideration payments potentially earned based on net revenue is determined using an option pricing model. The estimated value of the Contingent Consideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable. Any differences in the actual Contingent Consideration payments will be recorded in operatingwithin other income in the consolidated statements of operations and comprehensive income. During the third quarter and first nine months of 2017, the Company recorded $0.6 million of contingent consideration expense in the consolidated statement of operations and comprehensive income due to the change in estimated fair value of the Contingent Consideration.

The acquisition has been accounted for as a business combination. During the quarter ended September 30, 2017, the Company completed the determination of the final allocation of purchase price to the assets acquired and liabilities assumed as follows ~~(in thousands)~~:

Fair Value
Intangible assets $ 9,600
Goodwill 19,389
Total purchase price $ 28,989

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~and fair value is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.~~

The acquired intangible assets are definite-lived assets consisting primarily of developed technology, customer relationships and trade name and trademarks. The estimated fair values of the developed technology were determined using excess earnings analysis, the customer relationships were determined using the distributor method and the trade name and trademarks were determined using relief from royalty analysis. The fair value of the intangible assets with definite lives are as follows ~~(dollars in thousands)~~:

Fair Value Weighted Average Amortization Life
Technology $ 8,600
5 years
Customer lists 600
8 years
Trade name and trademarks 400
4 years
Total intangible assets $ 9,600
5.2 years

The Company recorded goodwill of $19.4 million, which represents the excess of the purchase price over the estimated fair value of the intangible assets acquired. The goodwill is primarily attributable to DepositAccounts as a going concern which represents the ability of the Company to earn a higher return on the collection of assets and business of DepositAccounts than if those assets were to be acquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill is recorded in the Company’s one reportable segment. For income tax purposes, the Company treated the acquisition as an asset purchase and the goodwill will be tax deductible.

As of the acquisition date, the Company’s consolidated results of operations include the results of the acquired DepositAccounts business. In the third quarter and first nine months of 2017, revenue of $1.9 million and $2.2 million, respectively, and net income from continuing operations of $0.4 million and $0.6 million, respectively, have been included in the Company’s consolidated results of operations. Acquisition-related costs were $0.1 million and $0.3 million, respectively, in the third quarter and first nine months of 2017 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income. As of June 30, 2021, there have been 0 impairments to the acquisition cost of the Stash equity securities.

~~MagnifyMoney~~

~~On June 20, 2017,~~NOTE 8—BUSINESS ACQUISITIONS

Changes in Contingent Consideration

In 2018, the Company acquired all of the ~~membership~~outstanding equity interests of ~~Camino Del Avion (Delaware),~~QuoteWizard.com, LLC ~~which does business under the name MagnifyMoney~~ (“~~MagnifyMoney”~~QuoteWizard”) ~~for $29.6 million cash consideration at the closing of the transaction. Camino del Avion (Delaware), LLC was immediately merged with~~ and into LendingTree, LLC following such acquisition. MagnifyMoney is a leading consumer-facing media property that offers unbiased editorial content, expert commentary, tools and resources to help consumers compare financial products and make informed financial decisions. The Company also has an option to acquire a foreign affiliate of one of the principals for $0.5 million at any time during the three years after the closing. This foreign affiliate provides technology and research support to MagnifyMoney under a services agreement.

~~In addition,~~Ovation Credit Services, Inc. (“Ovation”). During 2020, the Company issued two key employees of MagnifyMoney restricted stock unit awards for a total of 38,468 shares of Company common stock, and may issue a further restricted stock unit award for 19,234 shares to a third key employee of the foreign affiliate should he become employed by the Company following the Company’s exercise of the option to acquire the foreign affiliate. The total value of these restricted stock unit awards was $10.0 million on June 20, 2017. All of these restricted stock units will vest, if at all, on the basis of performance conditions following the acquisition.

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~The acquisition has been accounted for as a business combination. During the quarter ended September 30, 2017, the Company completed the determination of~~made the final ~~allocation of purchase price~~earnout payment related to the ~~assets acquired and liabilities assumed as follows~~ ~~(in thousands)~~:achievement of certain defined operating metrics for Ovation.

Fair Value
Net working capital $ 921
Intangible assets 9,700
Goodwill 23,784
Deferred tax liabilities (4,176 )
Noncontrolling interest (637 )
Total purchase price $ 29,592

The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that were based on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.

The acquired intangible assets are definite-lived assets consisting primarily of content, developed technology, customer relationships and trade name and trademarks. The estimated fair values of the content was determined using excess earnings analysis, developed technology was determined using cost savings analysis, the customer relationships were determined using the distributor method and the trade name and trademarks were determined using relief from royalty analysis.

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

Fair Value Weighted Average Amortization Life
Technology $ 200
3 years
Customer lists 1,100
9 years
Trade name and trademarks 600
4 years
Content 7,800
3 years
Total intangible assets $ 9,700
3.7 years

The Company recorded goodwill of $23.8 million, which represents the excess of the purchase price over the estimated fair value of the tangible and intangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to MagnifyMoney as a going concern which represents the ability of the Company to earn a higher return on the collection of assets and business of MagnifyMoney than if those assets were to be acquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill is recorded in the Company’s one reportable segment. For income tax purposes, the Company treated the acquisition as an equity purchase and the goodwill will not be tax deductible.

The Company has determined that the foreign entity which provides technology and research support to MagnifyMoney under a services agreement is a variable interest entity which must be consolidated for financial reporting. The Company has recorded the assets, liabilities and non-controlling interest in this entity at their estimated fair value.

~~As of the acquisition date, the Company’s consolidated results of operations include the results of the acquired MagnifyMoney business.~~ In the third quarter and first nine months of 2017, revenue of $1.2 million and $1.3 million, respectively, and net loss from continuing operations of $0.3 million and $0.3 million, respectively, have been included in the Company’s consolidated results of operations and comprehensive income. Acquisition-related costs were $0.4 million in the first nine months of 2017 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income.

~~SnapCap~~

~~On September 19,~~ 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”). ~~SnapCap, a tech-enabled online platform, connects business owners with lenders offering small business loans, lines~~During 2020, the Company made the final earnout payments related to the achievement of ~~credit and merchant cash advance products through a concierge-based sales approach.~~certain defined earnings targets for SnapCap.

The Company will make an earnout payment ranging from 0 to $23.4 million based on the achievement of certain defined performance targets for QuoteWizard.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
QuoteWizard	$	(8,850)	$	8,058	$	(8,053)	$	(204)
Ovation	0		1,039		0		1,180
SnapCap	0		78		0		77
Total changes in fair value of contingent consideration	$	(8,850)	$	9,175	$	(8,053)	$	1,053

As of June 30, 2021, the estimated fair value of the contingent consideration for the QuoteWizard acquisition totaled $0.2 million, which is included in current contingent consideration in the accompanying consolidated balance sheet. The

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company paid $11.9 million of initial cash consideration and could make up to three additional contingent consideration payments, each ranging from zero to $3.0 million, based on certain defined operating results during the periods of October 1, 2017 through September 30, 2018, October 1, 2018 through September 30, 2019 and October 1, 2019 through March 31, 2020. These additional payments, to the extent earned, will be payable in cash. The Company has estimated a preliminary purchase price of $18.2 million, comprised of the upfront cash payment of $11.9 million and $6.3 million for the estimated fair value of the contingent consideration, which is included in non-current contingent consideration in the accompanying balance sheet.

~~The~~ estimated fair value of the contingent consideration payments is determined using an option pricing model. The estimated value of the contingent consideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable.

Any differences in the actual contingent consideration payments ~~after the final determination of purchase price~~ will be recorded in operating income ~~(expense)~~ in the consolidated statements of operations and comprehensive income.

~~The acquisition has been accounted for as a business combination. The preliminary allocation of purchase price to the assets acquired and liabilities assumed is as follows~~ ~~(in thousands)~~:

Preliminary Fair Value
Net working capital and other assets $ 42
Fixed assets 146
Intangible assets 4,100
Goodwill 13,928
Total preliminary purchase price $ 18,216

Preliminary Fair Value Weighted Average Amortization Life
Technology $ 400
3 years
Customer lists 3,100
10 years
Trade name and trademarks 600
5 years
Total intangible assets $ 4,100
8.6 years

As of September 30, 2017, the Company has not completed its determination of the final purchase price or the final allocation of the purchase price to the assets and liabilities of the acquisition. The purchase price and final allocation of purchase price is expected to be finalized in the fourth quarter of 2017. Any adjustment to the preliminary purchase price or the assets and liabilities assumed with the acquisition will adjust goodwill.

The Company recorded preliminary goodwill of $13.9 million, which represents the excess of the purchase price over the estimated fair value of the intangible assets acquired. The goodwill is primarily attributable to SnapCap as a going concern which represents the ability of the Company to earn a higher return on the collection of assets and business of SnapCap than if those assets were to be acquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill is recorded in the Company’s one reportable segment. For income tax purposes, the Company treated the acquisition as an asset purchase and the goodwill will be tax deductible.

As of the acquisition date, the Company’s consolidated results of operations include the results of the acquired SnapCap business. In the third quarter of 2017, revenue of $0.2 million and net loss from continuing operations of $0.1 million have be

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

en included in the Company’s consolidated results of operations. Acquisition-related costs were $0.2 million in the third quarter of 2017 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income.

~~Pro forma Financial Results~~

The unaudited pro forma financial results for the third quarter and first nine months of 2017 and 2016 combines the consolidated results of the Company and CompareCards, DepositAccounts, MagnifyMoney and SnapCap giving effect to the acquisitions as if the CompareCards acquisition had been completed on January 1, 2015 and as if the DepositAccounts, MagnifyMoney and SnapCap acquisitions had been completed on January 1, 2016. This unaudited pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the acquisition been completed as of January 1, 2015 or 2016, or any other date.

The unaudited pro forma financial results include adjustments for additional amortization expense based on the fair value of the intangible assets with definite lives and their estimated useful lives. The provision for income taxes from continuing operations has also been adjusted to reflect taxes on the historical results of operations of CompareCards, DepositAccounts and SnapCap. CompareCards, DepositAccounts and SnapCap did not pay taxes at the entity level as these entities were limited liability companies whose members elected for them to be taxed as a partnership.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
(in thousands)
Pro forma revenue $ 172,400
$ 118,219
$ 465,624
$ 347,442
Pro forma net income from continuing operations $ 10,043
$ 8,776
$ 26,072
$ 23,556

The pro forma net income from continuing operations in the third quarter and first nine months of 2017 include the after tax contingent consideration expense associated with the CompareCards and DepositAccounts Earnouts of $1.5 million and $12.4 million, respectively. The pro forma net income from continuing operations for the first nine months of 2016 have been adjusted to include acquisition-related costs of $1.0 million incurred by the Company, DepositAccounts, MagnifyMoney and SnapCap that are directly attributable to the acquisitions, which will not have an on-going impact. Accordingly, the acquisition-related costs have been eliminated from the pro forma net income from continuing operations for the third quarter and first nine month of 2017.

NOTE 6—9—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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


	June 30, 2021		December 31, 2020
Accrued advertising expense	$	62,840	$	54,045
Accrued compensation and benefits	10,632		14,081
Accrued professional fees	3,278		1,869
Customer deposits and escrows	7,467		8,153
Contribution to LendingTree Foundation	3,333		3,333
Current lease liabilities	5,286		5,375
Other	13,540		14,340
Total accrued expenses and other current liabilities	$	106,376	$	101,196

September 30,
2017 December 31,
2016
Accrued litigation liabilities $ 588
$ 736
Accrued advertising expense 44,698
26,976
Accrued compensation and benefits 5,905
5,626
Accrued professional fees 1,003
1,411
Customer deposits and escrows 5,522
5,041
Other 11,028
9,613
Total accrued expenses and other current liabilities $ 68,744
$ 49,403

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

NOTE 7—10—SHAREHOLDERS' EQUITY

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


	Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016		2021	2020	2021	2020
Weighted average basic common shares	11,999	11,754	11,931	11,827	Weighted average basic common shares	13,243	12,984	13,157	12,971
Effect of stock options	1,619	913	1,598	877	Effect of stock options	394	0	523	592
Effect of dilutive share awards	101	75	96	78	Effect of dilutive share awards	72	0	103	91
Effect of Convertible Senior Notes	55	—	—	—
Effect of Convertible Senior Notes and warrants					Effect of Convertible Senior Notes and warrants	10	0	130	300
Weighted average diluted common shares	13,774	12,742	13,625	12,782	Weighted average diluted common shares	13,719	12,984	13,913	13,954

For the ~~three months ended September 30, 2017,~~second quarter of 2021, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase ~~0.3~~0.9 million shares of common stock and 0.2 million restricted stock units. For the first six months of 2021, the weighted average shares that were anti-dilutive included options to purchase 0.4 million shares of common stock.

For the second quarter of 2020, the Company had a loss from continuing operations and, as a result, no potentially dilutive securities were included in the denominator for computing diluted loss per share, because the impact would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding was used to compute loss per share. Approximately 0.8 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the second quarter of 2020, because their inclusion would have been anti-dilutive. For the second quarter of 2020, the weighted average shares that were anti-dilutive included options to purchase 0.7 million shares of common stock and 0.1 million restricted stock ~~awards.~~units. For the ~~nine~~first six months ~~ended September 30, 2017,~~of 2020, the weighted average shares that were anti-dilutive ~~and therefore excluded from the calculation of diluted income per share~~ included options to purchase ~~0.1~~0.2 million shares of common stock.

The ~~0.625% Convertible Senior Notes due June 1, 2022~~convertible notes and the warrants issued by the Company ~~in the second quarter of 2017~~ could be converted into the Company’s common stock, ~~in the future,~~ subject to certain contingencies. See Note ~~10 —Debt~~13—Debt for additional information. Shares of the ~~Company’s~~Company's common stock associated with ~~these instruments~~the 0.50% Convertible Senior Notes due July 15, 2025 were excluded from the calculation of diluted income per share ~~during~~for the second quarter and first ~~nine~~six months of ~~2017~~2021 as they ~~are~~were anti-dilutive since the conversion price of the ~~Convertible Senior Notes and the strike price of the warrants were~~notes was greater than the average market price of the Company’s common ~~stock.~~stock during the relevant periods. Shares of the Company's common stock associated with the warrants were excluded from the calculation of diluted income per share ~~during~~for the ~~three~~

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

second quarter and first six months ~~ended September 30, 2017~~of 2021 and the first six months of 2020 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.~~

stock during the relevant periods.

Common Stock Repurchases

In each of ~~January 2010, May 2014, January 2016~~February 2018 and February ~~2016,~~2019, the board of directors authorized and the Company announced the repurchase of up to ~~$10.0 million, $10.0 million, $50.0~~$100.0 million and ~~$40.0~~$150.0 million, respectively, of LendingTree's common stock. ~~During~~There were no repurchases of the ~~nine months ended September 30, 2017 and 2016, the Company purchased 42,153 and 690,218 shares, respectively, of its~~Company's common stock ~~pursuant to this stock repurchase program.~~during the first six months of 2021 and 2020. At ~~September~~June 30, ~~2017~~,2021, approximately ~~$38.7~~$179.7 million of the previous authorizations to repurchase common stock remain ~~available for the Company to purchase its common stock.~~ available.

NOTE 8—11—STOCK-BASED COMPENSATION

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

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Cost of revenue $ 41

$ 29
$ 129
$ 99
Selling and marketing expense 1,366

737
2,543
2,118
General and administrative expense 5,864

1,072
8,684
3,511
Product development 667

510
1,712
1,682
Total non-cash compensation $ 7,938
$ 2,348
$ 13,068
$ 7,410

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of revenue	$	463	$	333	$	860	$	575
Selling and marketing expense	1,976		1,597		3,778		2,753
General and administrative expense	13,254		9,729		25,425		18,852
Product development	2,601		1,499		4,667		2,895
Total non-cash compensation	$	18,294	$	13,158	$	34,730	$	25,075

Stock Options

A summary of changes in outstanding stock options is as follows:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value(a)
		(per option)		(in years)	(in thousands)
Options outstanding at January 1, 2021	924,710	$	111.82
Granted (b)	69,258	243.71
Exercised	(156,113)	7.17
Forfeited	(4,727)	263.72
Expired	(35)	371.25
Options outstanding at June 30, 2021	833,093	141.52		5.20	$	82,110
Options exercisable at June 30, 2021	543,666	$	71.06	3.20	$	82,039

(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $211.88 on the last trading day of the quarter ended June 30, 2021 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, 2021. The intrinsic value changes based on the market value of the Company's common stock.

(b)During the six months ended June 30, 2021, the Company granted stock options to certain employees and members of the board of directors with a weighted average grant date fair value per share of $130.25, calculated using the Black-Scholes option pricing model, which vesting periods include (a) immediate vesting on grant date (b) earlier of one year from grant date and the Company's annual meeting of stockholders for 2022 and (c) three years from grant date.

Number of Options
Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value^(a)
(per option) (in years) (in thousands)
Options outstanding at January 1, 2017 1,991,802
$ 21.23

Granted ^(b)
51,089
187.82

Exercised (179,165 ) 31.75

Forfeited (20,001 ) 71.04

Expired —
—

Options outstanding at September 30, 2017 1,843,725
24.28
4.58 $ 405,934
Options exercisable at September 30, 2017 1,072,151
$ 11.82
2.71 $ 249,411

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~~(a)~~

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $244.45 on the last trading day of the quarter ended September 30, 2017 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2017. The intrinsic value changes based on the market value of the Company's common stock.


~~(b)~~	During the nine months ended September 30, 2017, the Company granted stock options to certain employees and members of the board of directors with a weighted average grant date fair value per share of $93.26, calculated using the Black-Scholes option pricing model, which vesting periods include (a) three years from the grant date, (b) two years from the grant date and (c) immediately upon grant.

LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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



Expected term ⁽¹⁾		5.00 - 6.00 years
Expected dividend (2)		0
Expected ~~dividend~~ ⁽²⁾volatility (3)		—		53 - 59%
~~Expected volatility~~ ⁽³⁾		~~51% - 52%~~
Risk-free interest rate ⁽⁴⁾	~~1.74%~~0.59 - ~~2.17%~~		1.07%


~~(1)~~	(1)The expected term of stock options granted was calculated using the "Simplified Method," which utilizes the midpoint between the weighted average time of vesting and the end ~~of the contractual term. This method was utilized for the stock options due to a lack of historical exercise behavior by the Company's employees.~~


~~(2)~~	~~For all stock options granted in 2017, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.~~


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


~~(4)~~	The risk-free interest rate is specific to the date of grant. The risk-free interest rate is based on U.S. Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date.

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Restricted Stock Units and Restricted Stock~~

~~A summary~~ of the ~~changes~~contractual term. This method was utilized for the stock options due to a lack of historical exercise behavior by the Company's employees.

(2)For all stock options granted in ~~outstanding nonvested restricted stock units ("RSUs") and restricted stock is as follows:~~

RSUs
Number of Units Weighted Average Grant Date Fair Value
(per unit)
Nonvested at January 1, 2017 152,374
$ 65.64
Granted 83,113
138.07
Vested (72,112 ) 54.79
Forfeited (14,078 ) 82.37
Nonvested at September 30, 2017 149,297
$ 109.64

Restricted Stock

Number of
Shares
Weighted Average Grant Date Fair Value
(per share)
Nonvested at January 1, 2017 14,464
$ 25.14
Granted —
—
Vested (14,464 ) 25.14
Forfeited —
—
Nonvested at September 30, 2017 —
$ —

~~Restricted Stock Units with Performance Conditions~~

~~A summary~~2021, 0 dividends are expected to be paid over the contractual term of the ~~changes~~stock options, resulting in ~~outstanding nonvested RSUs with performance conditions~~a zero expected dividend rate.

(3)The expected volatility rate is ~~as follows:~~

RSUs with Performance Conditions
Number of Units Weighted Average Grant Date Fair Value
(per unit)
Nonvested at January 1, 2017 44,509
$ 88.28
Granted 53,306
164.07
Vested (1,931 ) 96.46
Forfeited —
—
Nonvested at September 30, 2017 95,884
$ 130.25

~~Chairman and Chief Executive Officer Grants~~

~~As disclosed in~~based on the historical volatility of the Company's ~~report~~common stock.

(4)The risk-free interest rate is specific to the date of grant. The risk-free interest rate is based on ~~Form 10-Q~~U.S. Treasury yields for notes with comparable expected terms as the ~~quarterly period ending June 30, 2017, on July 25, 2017,~~awards, in effect at the Company’s Compensation Committee of its Board of Directors approved new compensation arrangements for its Chairman and Chief Executive Officer. The new compensation arrangements include the issuance of performance based equity compensation grants with a modeled total grant date value of $87.5 million of which 25% (119,015 shares) would be in the form of time-vested restricted stock awards with a performance condition and 75% (a maximum of 769,376 shares) would be in the form of performance-based nonqualified stock options.

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

date.

Stock Options with Market Conditions

~~The performance-based nonqualified~~A summary of changes in outstanding stock options ~~have a~~with market conditions at target is as follows:


	Number of Options with Market Conditions	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value(a)
		(per option)		(in years)	(in thousands)
Options outstanding at January 1, 2021	700,209	$	236.01
Granted	0	0
Exercised	0	0
Forfeited	0	0
Expired	0	0
Options outstanding at June 30, 2021	700,209	236.01		7.25	$	11,308
Options exercisable at June 30, 2021	0	$	0	0.00	$	0

(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $211.88 on the last trading day of the quarter ended June 30, 2021 and the exercise price, multiplied by the number of shares covered by in-the-money options) that ~~vest upon achieving targeted total shareholder return performance~~would have been received by the option holder had the option holder exercised these options on June 30, 2021. The intrinsic value changes based on the market value of ~~110% stock price appreciation and a~~the Company's common stock.

A maximum ~~number~~ of 1,169,349 shares may be earned for achieving superior performance up to 167% of the target number of shares. ~~No shares will vest unless 70%~~As of the targeted performance is achieved. Time-based service vesting conditions would also have to be satisfied in order for performance-vested shares to become fully vested and no longer subject to forfeiture. In connection with the new compensation arrangements, on July 26, 2017, an initial grant ofJune 30, 2021, performance-based nonqualified stock options with a ~~target number~~market condition of ~~shares of 402,694 and~~481,669 had been earned, which have a maximum number of shares of 672,499 were issued with an exercise price of $183.80, the closing stock price on July 26, 2017. The fair value of the performance-based stock options will be recognized on a straight-line basis through the vest date of September 30, 2022, whether or not any of the total shareholder return targets are met. In the three months ended September 30, 2017, the Company recorded $2.0 million in stock-based compensation expense in the consolidated statement of operations and comprehensive income.

The Company's Fifth Amended and Restated 2008 Stock and Annual Incentive Plan (the "2008 Plan") imposes a per employee upper annual grant limit of 672,500 shares. As a result, the remaining 58,010 target performance-based nonqualified stock options (and potential performance-based restricted stock awards) will be awarded on or about January 2, 2018. The form of the awards will consist of a performance-based nonqualified stock option award with a per share exercise price of $183.80 or the closing price of the Company's common stock on such future grant date (“2018 Performance Option”) if the closing price on such future grant date is greater than $183.80; and, if the closing share price of the Company's common stock on January 2, 2018 is greater than the closing share price on July 26, 2017, a second performance-based restricted stock award will be granted, substituting for an equal number of the performance-based options, to compensate for the increase in the exercise price of the performance-based option granted on July 26, 2017. The number of performance-based options and performance-based restricted stock shares will not be determined until January 2, 2018. As of September 30, 2017, the Company estimated the fair value of the remaining 58,010 target shares using a Monte Carlo simulation model and the Company's common stock price on September 30, 2017 to record mark-to-market expense associated with the commitment to issue the shares. In the three months ended September 30, 2017, the Company recorded $0.4 million in stock-based compensation expense based on the current estimated fair value on a straight-line basis.

~~As of September 30, 2017, the performance conditions associated with the performance-based nonqualified stock options and the potential performance-based restricted stock shares had not been met.~~

~~A summary of changes in outstanding stock options with market conditions is as follows:~~2022.

Number of Options with Market Conditions
Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value^(a)
(per option) (in years) (in thousands)
Options outstanding at January 1, 2017 —
$ —

Granted (b) 402,694
183.80

Exercised —
—

Forfeited —
—

Expired —
—

Options outstanding at September 30, 2017 402,694
183.80
9.82 $ 24,423
Options exercisable at September 30, 2017 —
$ —
0 $ —

~~(a)~~


~~(b)~~	During the nine months ended September 30, 2017, the Company granted stock options to an employee with a weighted average grant date fair value per share of $142.45, calculated using the Monte Carlo simulation model, which have a vesting date of September 30, 2022.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Units

~~For purposes~~A summary of ~~determining stock-based compensation expense, the weighted average grant date fair value per share of the~~changes in outstanding nonvested restricted stock ~~options was estimated using the Monte Carlo simulation model, which requires the use of various key assumptions. The weighted average assumptions used are~~units ("RSUs") is as follows:


	RSUs
	Number of Units	Weighted Average Grant Date Fair Value
		(per unit)
Nonvested at January 1, 2021	194,686	$	289.82
Granted	149,259	245.00
Vested	(54,644)	290.38
Forfeited	(20,735)	269.88
Nonvested at June 30, 2021	268,566	$	266.34

Restricted Stock Units with Performance Conditions

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


	RSUs with Performance Conditions
	Number of Units	Weighted Average Grant Date Fair Value
		(per unit)
Nonvested at January 1, 2021	6,328	$	223.90
Granted	0	0
Vested	0	0
Forfeited	0	0
Nonvested at June 30, 2021	6,328	$	223.90

~~Expected term~~ ⁽¹⁾

~~7.50 years~~

~~Expected dividend~~ ⁽²⁾

—

~~Expected volatility~~ ⁽³⁾

~~50%~~

~~Risk-free interest rate~~ ⁽⁴⁾

~~2.12%~~


~~(1)~~	The expected term of stock options with a market condition granted was calculated using the "Simplified Method," which utilizes the midpoint between the weighted average time of vesting and the end of the contractual term. This method was utilized for the stock options with market conditions due to a lack of historical exercise behavior by the Company's employees.


~~(2)~~	~~For all stock options with a market condition granted in 2017, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.~~


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


~~(4)~~	The risk-free interest rate is specific to the date of grant. The risk-free interest rate is based on U.S. Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date.

~~Time Vested~~ Restricted Stock Awards with Performance Conditions

~~On January 2, 2018, 119,015~~A summary of changes in outstanding nonvested restricted stock awards ("RSAs") with performance conditions is as follows:


	RSAs with Performance Conditions
	Number of Awards	Weighted Average Grant Date Fair Value
		(per unit)
Nonvested at January 1, 2021	23,804	$	340.25
Granted	0	0
Vested	(11,902)	340.25
Forfeited	0	0
Nonvested at June 30, 2021	11,902	$	340.25

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Awards with Market Conditions

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


	RSAs with Market Conditions
	Number of Awards	Weighted Average Grant Date Fair Value
		(per unit)
Nonvested at January 1, 2021	26,674	$	340.25
Granted	0	0
Vested	0	0
Forfeited	0	0
Nonvested at June 30, 2021	26,674	$	340.25

A maximum of 44,545 shares may be earned for achieving superior performance up to 167% of the target number of shares. As of June 30, 2021, performance-based restricted stock awards with ~~time-vesting and~~ a ~~performance~~market condition ~~will be granted. The terms~~ of ~~these awards were fixed in the approved new compensation agreements in July 2017. In the three months ended~~29,601 had been earned, which have a vest date of September 30, ~~2017,~~2022.

NOTE 12—INCOME TAXES


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	(in thousands, except percentages)
Income tax benefit	$	9,092		$	3,880		$	454		$	6,941
Effective tax rate	(1,284.2)		%	31.0		%	(1.6)		%	(203.0)		%

For the ~~Company recorded $1.3 million in stock-based compensation to reflect the commitment to issue the shares in the consolidated statement of operations~~second quarter and ~~comprehensive income. The performance condition is tied to the Company's operating results during the~~ first six months of ~~2018. As of September 30, 2017, the performance condition associated with the awards had not been met.~~

~~NOTE 9—INCOME TAXES~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
(in thousands, except percentages)
Income tax expense $ (4,292 ) $ (6,729 ) $ (3,109 ) $ (15,099 )
Effective tax rate 29.8 % 48.0 % 10.7 % 39.4 %

~~For the three and nine months ended September 30, 2017,~~2021, the effective tax rate varied from the federal statutory rate of ~~35% primarily~~21% in part due to a tax benefit of ~~$0.8~~$8.3 million ~~and $8.4 million, respectively,~~ recognized for excess tax benefits ~~due to~~resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU ~~2016-09.~~ ~~See~~ ~~Note 2~~ —~~Significant Accounting Policies~~ —~~Recent Accounting Pronouncements for additional information.~~2016-09 and the effect of state taxes.

For the ~~third~~second quarter and first six months of ~~2016,~~2020, the effective tax rate varied from the federal statutory rate of ~~35% primarily~~21% in part due to a tax benefit of $0.8 million and $1.8 million, respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state ~~taxes, including~~taxes. The effective tax rate for the first six months of 2020 was also impacted by a tax benefit of $6.1 million for the impact of ~~a reduction~~the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, as described below.

On March 27, 2020, President Trump signed into law the CARES Act. This legislation is an economic relief package in response to the public health and economic impacts of COVID-19 and includes various provisions that impact the Company, including, but not limited to, modifications for net operating losses, accelerated timeframe for refunds associated with prior minimum taxes and modifications of the limitation on business interest.

The Company revalued deferred tax assets related to net operating losses in light of the changes in the ~~North Carolina state income~~CARES Act and recorded a net tax ~~rates which reduced~~benefit of $6.1 million during the ~~value~~first six months of ~~the Company's~~2020. These deferred tax ~~assets.~~

~~For~~assets are being revalued, as they have been carried back to 2016 and 2017, which are tax periods prior to the ~~nine months ended September 30, 2016, the effective tax rate varied from~~Tax Cuts and Jobs Act ("TCJA") when the federal statutory tax rate ofwas 35% ~~primarily due to~~versus the ~~benefit derived from~~21% federal statutory tax rate in effect after the federal research tax credit, partially offset by state taxes. The federal research tax credit benefit was the result of a study completed during the second quarter of 2016 for the open tax years 2011 through 2015, plus an estimateenactment of the ~~benefit from 2016 research activities.~~

TCJA.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(in thousands)
Income tax benefit (expense) - excluding excess tax benefit on stock compensation and CARES Act	$	831	$	3,127	$	(7,839)	$	(970)
Excess tax benefit on stock compensation	8,261		753		8,293		1,807
Income tax benefit from CARES Act	0		0		0		6,104
Income tax benefit	$	9,092	$	3,880	$	454	$	6,941

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
(in thousands)
Income tax expense - excluding excess tax benefit on stock compensation $ (5,103 ) $ (6,729 ) $ (11,523 ) $ (15,099 )
Excess tax benefit on stock compensation 811
—
8,414
—
Income tax expense $ (4,292 ) $ (6,729 ) $ (3,109 ) $ (15,099 )

NOTE ~~10—~~13—DEBT

Convertible Senior Notes

2025 Notes

On July 24, 2020, the Company issued $575.0 million aggregate principal amount of its 0.50% Convertible Senior Notes due July 15, 2025 (the “2025 Notes”) in a private placement. The issuance included $75.0 million aggregate principal amount of 2025 Notes under a 13-day purchase option which was exercised in full. The 2025 Notes bear interest at a rate of 0.50% per year, payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2021. The 2025 Notes will mature on July 15, 2025, unless earlier repurchased, redeemed or converted.

The initial conversion rate of the 2025 Notes is 2.1683 shares of the Company's common stock per $1,000 principal amount of 2025 Notes (which is equivalent to an initial conversion price of approximately $461.19 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change prior to the maturity of the 2025 Notes or if the Company issues a notice of redemption for the 2025 Notes, the Company will, in certain circumstances, increase the conversion rate by a specified number of additional shares for a holder that elects to convert the 2025 Notes in connection with such make-whole fundamental change or to convert its 2025 Notes called for redemption, as the case may be. Upon conversion, the 2025 Notes will settle for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option. It is the intent of the Company to settle the principal amount of the 2025 Notes in cash and any conversion premium in shares of its common stock.

The 2025 Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the senior secured revolving credit facility, described below, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

Prior to the close of business on the business day immediately preceding March 13, 2025, the 2025 Notes will be convertible at the option of the holders thereof only under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•during the 5 business day period after any 5 consecutive trading day period in which, for each trading day of that period, the trading price (as defined in the 2025 Notes) per $1,000 principal amount of 2025 Notes for such trading day was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;

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

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Holders of the 2025 Notes were not entitled to convert the 2025 Notes during the calendar quarter ended June 30, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on March 31, 2021, was not greater than or equal to 130% of the conversion price of the 2025 Notes on each applicable trading day. Holders of the 2025 Notes are not entitled to convert the 2025 Notes during the calendar quarter ended September 30, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on June 30, 2021, was not greater than or equal to 130% of the conversion price of the 2025 Notes on each applicable trading day.

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

The Company may not redeem the 2025 Notes prior to July 20, 2023. On or after July 20, 2023 and before the 41st scheduled trading day immediately before the maturity date, the Company may redeem for cash all or a portion of the 2025 Notes, at its option, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period (and including the last trading day of such period) ending on, and including the last trading day immediately preceding the date of notice of redemption is greater than or equal to 130% of the conversion price on each applicable trading day. The redemption price will be equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes.

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

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

The initial measurement of convertible debt instruments that may be settled in cash is separated into a debt and an equity component whereby the debt component is based on the fair value of a similar instrument that does not contain an equity conversion option. The separate components of debt and equity of the Company’s 2025 Notes were determined using an interest rate of 5.30%, which reflects the nonconvertible debt borrowing rate of the Company at the date of issuance. As a result, the initial components of debt and equity were $455.6 million and $119.4 million, respectively. Financing costs related to the issuance of the 2025 Notes were approximately $15.1 million, of which $12.0 million were allocated to the liability component and are being amortized to interest expense over the term of the debt and $3.1 million were allocated to the equity component.

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

As of June 30, 2021, the fair value of the 2025 Notes is estimated to be approximately $520.4 million using the Level 1 observable input of the last quoted market price on June 30, 2021.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the gross carrying amount, unamortized debt cost, debt issuance costs and net carrying value of the liability component of the 2025 Notes, all of which is recorded as a non-current liability in the June 30, 2021 consolidated balance sheet, are as follows (in thousands):


	June 30, 2021		December 31, 2020
Gross carrying amount	$	575,000	$	575,000
Unamortized debt discount	99,166		110,110
Debt issuance costs	9,958		11,056
Net carrying amount	$	465,876	$	453,834

2022 Notes

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 ~~“Notes”~~“2022 Notes”) in a private placement. The ~~issuance included $35.0 million aggregate principal amount of Notes under a 30-day purchase option, solely to cover over-allotments, which was exercised in full. The~~2022 Notes bear interest at a rate of 0.625% per year, payable semi-annually on June 1 and December 1 of each year, beginning on December 1, 2017. The 2022 Notes will mature on June 1, 2022, unless earlier repurchased or converted.

The initial conversion rate of the 2022 Notes is 4.8163 shares of ~~Common Stock~~the Company's common stock per $1,000 principal amount of 2022 Notes (which is equivalent to an initial conversion price of approximately $207.63 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change prior to the maturity of the 2022 Notes, the Company will, in certain circumstances, increase the conversion rate by a specified number of additional shares for a holder that elects to convert the 2022 Notes in connection with such make-whole fundamental change. Upon conversion, the 2022 Notes will settle for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option. It is the intent of the Company to settle the principal amount of the 2022 Notes in cash and any conversion premium in shares of its common stock.

The 2022 Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2022 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the ~~Senior Secured Credit Facility,~~senior secured revolving credit facility, described below, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

Prior to the close of business on the business day immediately preceding February 1, 2022, the 2022 Notes will be convertible at the option of the holders thereof only under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ending on September 30, 2017 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•during the ~~five~~5 business day period after any ~~five~~5 consecutive trading day period in which, for each trading day of that period, the trading price (as defined in the 2022 Notes) per $1,000 principal amount of 2022 Notes for such trading day was less than 98% of the product of the last reported sale price of the ~~Common Stock~~common stock and the conversion rate on each such trading day; or

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

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

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The Company may not redeem the 2022 Notes prior to the maturity date and no sinking fund is provided for the 2022 Notes. Upon the occurrence of a fundamental change prior to the maturity date of the 2022 Notes, holders of the 2022 Notes may require the Company to

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

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

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

The initial measurement of convertible debt instruments that may be settled in cash are separated into a debt and equity component whereby the debt component is based on the fair value of a similar instrument that does not contain an equity conversion option. The separate components of debt and equity of the Company’s 2022 Notes were determined using an interest rate of 5.36%, which reflects the nonconvertible debt borrowing rate of the Company at the date of issuance. As a result, the initial components of debt and equity were $238.4 million and $61.6 million, respectively.

In the first nine months of 2017, the Company recorded interest expense on the Notes of $4.7 million which consisted of $0.6 million associated with the 0.625% coupon rate, $3.6 million associated with the accretion of the debt discount, and $0.4 million associated with the amortization of the debt issuance costs. The debt discount will be amortized over the term of the debt.

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

On July 24, 2020, the Company used approximately $234.0 million of the net proceeds from the issuance of the 2025 Notes to repurchase approximately $130.3 million principal amount of the 2022 Notes, including the payment of accrued and unpaid interest of approximately $0.1 million, through separate transactions with certain holders of the 2022 Notes. Of the consideration paid, $126.0 million was allocated to the extinguishment of the liability component of the notes, while the remaining $107.9 million was allocated to the reacquisition of the equity component and recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity. The Company recognized a loss on debt extinguishment of $7.8 million in the third quarter of 2020.

In the first six months of 2021, the Company recorded interest expense on the 2022 Notes of $4.7 million which consisted of $0.5 million associated with the 0.625% coupon rate, $3.8 million associated with the accretion of the debt discount, and $0.4 million associated with the amortization of the debt issuance costs. In the first six months of 2020, the Company recorded interest expense on the 2022 Notes of $7.9 million which consisted of $0.9 million associated with the 0.625% coupon rate, $6.3 million associated with the accretion of the debt discount, and $0.7 million associated with the amortization of the debt issuance costs. The debt discount is being amortized over the term of the debt.

As of ~~September~~June 30, ~~2017,~~2021, the fair value of the 2022 Notes is estimated to be approximately ~~$398.7~~$208.7 million using the Level 1 observable input of the last quoted market price on ~~September 29, 2017.~~June 30, 2021.

A summary of the gross carrying amount, unamortized debt cost, debt issuance costs and net carrying value of the liability component of the 2022 Notes, all of which is recorded as a current liability in the June 30, 2021 consolidated balance sheet, are as follows (in thousands):


	September 30, 2017		December 31, 2016			June 30, 2021		December 31, 2020
Gross carrying amount	$	300,000	$	—	Gross carrying amount	$	169,659	$	169,690
Unamortized debt discount	57,953		—		Unamortized debt discount	7,086		10,815
Debt issuance costs	6,927		—		Debt issuance costs	850		1,297
Net carrying amount	$	235,120	$	—	Net carrying amount	$	161,723	$	157,578

Convertible Note Hedge and Warrant Transactions

2020 Hedge and Warrants

On ~~May 31, 2017,~~July 24, 2020, in connection with the issuance of the 2025 Notes, the Company entered into Convertible Note Hedge (the ~~“Hedge”~~“2020 Hedge”) and ~~Warrant~~warrant transactions with respect to the Company’s common stock. The Company used approximately ~~$18.1~~$63.0 million of the net proceeds from the 2025 Notes to pay for the cost of the 2020 Hedge, after such cost was partially offset by the proceeds from the ~~Warrant~~warrant transactions.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On ~~May 31, 2017,~~July 24, 2020, the Company paid ~~$61.5~~$124.2 million to the counterparties for the 2020 Hedge transactions. The 2020 Hedge transactions cover ~~approximately 1.4~~1.2 million shares of the Company’s common stock, the same number of shares initially underlying the 2025 Notes, and are exercisable upon any conversion of the 2025 Notes. The 2020 Hedge ~~Transactions~~transactions are expected generally to reduce the potential dilution to the ~~Common Stock~~Company's common stock upon conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2025 Notes, as the case may be, in the event that the market price per share of ~~Common Stock,~~common stock, as measured under the terms of the 2020 Hedge transactions, is greater than the strike price of the 2020 Hedge transactions, which initially corresponds to the initial conversion price of the 2025 Notes, or approximately $461.19 per share of common stock. The 2020 Hedge transactions will expire upon the maturity of the Notes.

On July 24, 2020, the Company sold to the counterparties, warrants (the “2020 Warrants”) to acquire 1.2 million shares of the Company's common stock at an initial strike price of $709.52 per share, which represents a premium of 100% over the last reported sale price of the common stock of $354.76 on July 21, 2020. On July 24, 2020, the Company received aggregate proceeds of approximately $61.2 million from the sale of the 2020 Warrants. If the market price per share of the common stock, as measured under the terms of the 2020 Warrants, exceeds the strike price of the 2020 Warrants, the 2020 Warrants could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the 2020 Warrants in cash.

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

2017 Hedge and Warrants

On May 31, 2017, in connection with the issuance of the 2022 Notes, the Company entered into Convertible Note Hedge (the “2017 Hedge”) and warrant transactions with respect to the Company’s common stock. The Company used approximately $18.1 million of the net proceeds from the 2022 Notes to pay for the cost of the 2017 Hedge, after such cost was partially offset by the proceeds from the warrant transactions.

On May 31, 2017, the Company paid $61.5 million to the counterparties for the 2017 Hedge transactions. The 2017 Hedge transactions initially covered 1.4 million shares of the Company’s common stock, the same number of shares initially underlying the 2022 Notes, and are exercisable upon any conversion of the 2022 Notes. The 2017 Hedge transactions are expected generally to reduce the potential dilution to the Company's common stock upon conversion of the 2022 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2022 Notes, as the case may be, in the event that the market price per share of common stock, as measured under the terms of the 2017 Hedge transactions, is greater than the strike price of the 2017 Hedge transactions, which initially corresponds to the initial conversion price of the 2022 Notes, or approximately $207.63 per share of ~~Common Stock.~~common stock. The 2017 Hedge transactions will expire upon the maturity of the Notes.

On May 31, 2017, the Company sold to the counterparties, warrants (the ~~"Warrants"~~“2017 Warrants”) to acquire 1.4 million shares of ~~Common Stock~~the Company's common stock at an initial strike price of $266.39 per share, which represents a premium of 70% over the last reported sale price of the ~~Common Stock~~common stock of $156.70 on May 24, 2017. On May 31, 2017, the Company received aggregate proceeds of approximately $43.4 million from the sale of the 2017 Warrants.

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

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

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

To the extent of the repurchases of the 2022 Notes noted above, the Company entered into agreements with the counterparties for the 2017 Hedge and 2017 Warrants transactions to terminate a portion of these call spread transactions effective July 24, 2020 in notional amounts corresponding to the principal amount of the 2022 Notes repurchased. Subsequent to such termination, the outstanding portion of the 2017 Hedge covers 0.8 million shares of the Company's common stock and 2017 Warrants to acquire 0.8 million shares of the Company's common stock remain outstanding. The Company received $109.9 million and paid $94.3 million as a result of terminating such portions of the 2017 Hedge and 2017 Warrants, respectively. The net $15.6 million has been recorded as an increase to additional paid-in capital in the consolidated statement of shareholders’ equity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Senior Secured Revolving Credit Facility

On ~~October 22, 2015,~~December 10, 2019, the Company's wholly-owned subsidiary, LendingTree, LLC, entered into ~~a $125.0~~an amended and restated $500.0 million five-year senior secured revolving credit facility (the "Amended Revolving Credit Facility") which ~~matures on October 22, 2020~~amended and restated the Company's previous $350.0 million five-year senior secured revolving credit facility (the ~~“Revolving~~“2017 Revolving Credit Facility”). The ~~proceeds of~~Amended Revolving Credit Facility matures on December 10, 2024. Borrowings under the Amended Revolving Credit Facility can be used to finance ~~the~~ working capital needs, capital expenditures and general corporate purposes, including to finance permitted acquisitions. As of ~~September~~June 30, ~~2017,~~2021 and December 31, 2020, the Company ~~does not have any~~had 0 borrowings outstanding under the Amended Revolving Credit Facility.

Up to $10.0 million of the Amended Revolving Credit Facility will be available for short-term loans, referred to as swingline loans. ~~Additionally, up to $10.0 million of the Revolving Credit Facility will be available for the issuance of letters of credit.~~ Under certain conditions, the Company will be permitted to add one or more term loans and/or increase revolving commitments under the Amended Revolving Credit Facility by an additional amount equal to the greater of $185.0 million or 100% of Consolidated EBITDA as defined, or a greater amount provided that a total consolidated senior secured debt to EBITDA ratio does not exceed 2.50 to 1.00. Additionally, up to ~~an aggregate~~$10.0 million of the Amended Revolving Credit Facility will be available for the issuance of letters of credit. At each of June 30, 2021 and December 31, 2020, the Company had outstanding one letter of credit issued in the amount of ~~$50.0~~$0.2 million.

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

•a base rate generally defined as the sum of (i) the greater of (a) the prime rate of ~~SunTrust~~Truist Bank, (b) the federal funds effective rate plus 0.5% and (c) the LIBO rate (defined below) on a daily basis applicable for an interest period of one month plus 1.0% and (ii) an applicable percentage of ~~1.0%~~0.25% to ~~2.0%~~1.0% based on ~~the funded~~a total consolidated debt to ~~consolidated~~ EBITDA ratio; or

•a LIBO rate generally defined as the sum of (i) the rate for Eurodollar deposits in the applicable currency and (ii) an applicable percentage of ~~2.0%~~1.25% to ~~3.0%~~2.0% based on ~~the funded~~a total consolidated debt to ~~consolidated~~ EBITDA ratio.

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

The Amended Revolving Credit Facility contains ~~certain~~a restrictive financial ~~covenants,~~covenant, which ~~include a funded~~initially limits the total consolidated debt to ~~consolidated~~ EBITDA ratio ~~and~~to 4.5, with step downs to 4.0 over time, except that this may increase by 0.5 for the four fiscal quarters following a ~~consolidated EBITDA to interest expense ratio.~~material acquisition. In addition, the Amended Revolving Credit Facility contains customary affirmative and negative covenants in addition to events of default for a transaction of this type that, among other things, restrict additional indebtedness, liens, mergers or certain fundamental changes, asset dispositions, dividends, stock repurchases and other restricted payments, transactions with affiliates, sale-leaseback transactions, hedging transactions, loans and investments and other matters customarily restricted in such agreements.

On July 21, 2020, the Company executed a temporary amendment to its Amended Revolving Credit Facility to provide for certain covenant relief, primarily to facilitate the issuance of the 2025 Notes, the repurchase of a portion of the 2022 Notes, and to pay down existing borrowings under the credit facility.

The amendment amends the existing credit agreement to, among other things: (i) temporarily replace the total consolidated debt to EBITDA ratio covenant with a consolidated liquidity covenant requiring the Company to maintain unrestricted cash and cash equivalents in the United States plus amounts available and permitted to be drawn under the Amended Revolving Credit Facility to be no less than $200.0 million; (ii) impose additional limitations on certain restricted payments during such temporary period; and (iii) increase the applicable margins to (x) 2.25% for loans based on the LIBO rate and (y) 1.25% for loans based on the base rate, subject to a 0.75% floor, and unused commitment fees to 0.50% under the Amended Revolving Credit Facility during the temporary period. These amendments were applicable from the effective date through the fiscal quarter ending June 30, 2021.

The Company was in compliance with all covenants at ~~September~~June 30, ~~2017.~~

During the second quarter of 2017, the Company entered into the Second Amendment to Credit Agreement (the “Second Amendment”). Among other things, the Second Amendment modified the original credit agreement to allow for the Notes and the Hedge and Warrant transactions, discussed above. The Second Amendment also increased the restrictive financial covenant for funded debt to consolidated EBITDA ratio. In addition, the Second Amendment also allows the Company to enter into a potential real estate term loan of an aggregate principal amount of no more than (a) $20.0 million which shall be used to finance all or a portion of the purchase price of certain real estate purchased in December 2016 and located in Charlotte, North Carolina, and (b) $25.0 million which shall be used to finance post-acquisition improvements to such real estate, related equipment, and related hedging obligations. As of October 26, 2017, the Company has not entered into the real estate term loan.2021.

The Amended Revolving Credit Facility requires LendingTree, LLC to pledge as collateral, subject to certain customary exclusions, ~~100%~~substantially all of its assets, including 100% of its equity in all of its ~~subsidiaries.~~domestic subsidiaries and 66% of the voting

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

equity, and 100% of the non-voting equity, in all of its material foreign subsidiaries (of which there are currently none). The obligations under this facility are unconditionally guaranteed on a senior basis by LendingTree, Inc. and ~~specific~~material domestic subsidiaries of LendingTree, LLC, which guaranties are secured by a pledge as collateral, subject to certain customary exclusions, of 100% of each of such guarantor's assets, including 100% of ~~its~~each such guarantor’s equity in all of its ~~subsidiaries.~~domestic subsidiaries and 66% of the voting equity, and 100% of the non-voting equity, in all of its material foreign subsidiaries (of which there are currently none).

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~The~~Except as noted in the covenant relief discussion above, the Company is required to pay an unused commitment fee quarterly in arrears on the difference between committed amounts and amounts actually borrowed under the Amended Revolving Credit Facility equal to an applicable percentage of 0.25% to ~~0.5%~~0.45% per annum based on a ~~funded~~total consolidated debt to ~~consolidated~~ EBITDA ratio. The Company is required to pay a letter of credit participation fee and a letter of credit fronting fee quarterly in arrears. The letter of credit participation fee is based upon the aggregate face amount of outstanding letters of credit at an applicable percentage of ~~2.0%~~1.25% to ~~3.0%~~2.0% based on ~~the funded~~a total consolidated debt to ~~consolidated~~ EBITDA ratio. The letter of credit fronting fee is 0.125% per annum on the face amount of each letter of credit.

~~The Company incurred~~In addition to the remaining unamortized debt issuance costs associated with the original revolving credit facility and the Revolving Credit Facility, debt issuance costs of ~~$1.3~~$2.8 million ~~for~~related to the Amended Revolving Credit Facility ~~which is~~entered into on December 10, 2019 are being amortized to interest expense over the life of the Amended Revolving Credit Facility. Debt issuance costs of $1.1 million related to the July 21, 2020 temporary amendment were amortized to interest expense through June 30, 2021. Unamortized debt issuance costs are included in prepaid and other current assets and other non-current assets in the Company's consolidated balance ~~sheet and is being amortized to~~sheet.

In the first six months of 2021, the Company recorded interest expense ~~over~~related to the ~~life of the~~Amended Revolving Credit Facility of ~~five years.~~$2.3 million which consisted of $1.3 million in unused commitment fees and $1.0 million associated with the amortization of the debt issuance costs. In the first six months of 2020, the Company recorded interest expense related to the Amended Revolving Credit Facility of $2.1 million which consisted of $1.1 million associated with borrowings bearing interest at the LIBO rate, $0.5 million in unused commitment fees, and $0.5 million associated with the amortization of the debt issuance costs.

NOTE ~~11—~~14—CONTINGENCIES

Overview

LendingTree is involved in legal proceedings on an ongoing basis. In assessing the materiality of a legal proceeding, the Company evaluates, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require it to change its business practices in a manner that could have a material and adverse impact on the Company's business. With respect to the matters disclosed in this Note ~~11,~~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 ~~September~~June 30, ~~2017 and December 31, 2016,~~2021, the Company had a litigation settlement ~~accrual~~accruals of ~~$0.6~~$1.0 million and ~~$0.7~~$4.9 million ~~respectively,~~ in continuing operations and ~~$4.0~~discontinued operations, respectively. As of December 31, 2020, the Company had litigation settlement accruals of $0.1 million and ~~$4.0~~$0.5 million ~~respectively,~~ in continuing operations and discontinued ~~operations.~~operations, respectively. The litigation settlement ~~accrual relates~~accruals relate to litigation matters that were either settled or a firm offer for settlement was extended, thereby establishing an accrual amount that is both probable and reasonably estimable. See Note 17—Discontinued Operations for additional information.

~~Specific Matters~~

~~Intellectual Property Litigation~~NOTE 15—FAIR VALUE MEASUREMENTS

~~Zillow~~

~~LendingTree v. Zillow, Inc., et al. Civil Action No. 3:10-cv-439. On September 8, 2010,~~Other than the ~~Company filed an action for patent infringement~~convertible notes and warrants, as well as the equity interest in Stash, the US District Court for the Western District of North Carolina against Zillow, Inc., NexTag, Inc., Quinstreet, Inc., Quinstreet Media, Inc. and Adchemy, Inc. The complaint was amended to include Leadpoint, Inc. d/b/a Securerights on September 24, 2010. The complaint alleged that each of the defendants infringed one or bothcarrying amounts of the Company's ~~patents-U.S. Patent No. 6,385,594, entitled "Method and Computer Network~~financial instruments are equal to fair value at June 30, 2021. See Note 13—Debt for Co-Ordinating a Loan over the Internet," and U.S. Patent No. 6,611,816, entitled "Method and Computer Network for Co-Ordinating a Loan over the Internet." The defendants in this action asserted various defenses and counterclaims against the Company, including the assertion by certain of the defendants of counterclaims alleging illegal monopolization via the Company's maintenance of the asserted patents. Defendant NexTag asserted defenses of laches and equitable estoppel. In July 2011, the Company reached a settlement agreement with Leadpoint, Inc., pursuant to which all claims against Leadpoint, Inc. and all counterclaims against the Company by Leadpoint, Inc. were dismissed. In November 2012, the Company reached a settlement agreement with Quinstreet, Inc. and Quinstreet Media, Inc. (collectively, the "Quinstreet Parties"), pursuant to which all claims against the Quinstreet Parties and all counterclaims against the Company by the Quinstreet Parties were dismissed. After an unsuccessful attempt to reach settlement through mediation with the remaining parties, this matter went to trial beginning in February 2014, and on March 12, 2014, the jury returned a verdict. The jury found that the defendants Zillow, Inc., Adchemy, Inc. and NexTag, Inc. did not infringe the two patents referenced above and determined that those patents are invalid due to an inventorship defect, and the court found that NexTag was entitled to defense of laches and equitable estoppel. The jury found in the Company's favoradditional information on the ~~defendants' counterclaims alleging inequitable conduct~~convertible notes and ~~antitrust violations. Judgment was entered~~warrants, and see Note7—Equity Investment for additional information on ~~March 31, 2014. After~~ the court entered judgment, on May 27, 2014, the Company reached a settlement agreement with defendant Adchemy, Inc., including an agreement to dismiss and withdraw all claims, counterclaims, and motions between the Company and Adchemy, Inc. As a result, a joint and voluntary dismissal was filed June 12, 2014 with respect to claims between the Company and Adchemy. The parties filed various post-trial motions;equity interest in particular, defendants collectively sought up to $9.7 million in fees and costs. On October 9, 2014, the court denied the Company's post-trial motion for judgment as a matter of law and denied Zillow's post-trial motions for sanctions and attorneys' fees. The court also

Stash.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~denied in part and granted in part NexTag's post-trial motion for attorneys' fees, awarding NexTag a portion of its attorney's fees and costs totaling $2.3 million, plus interest.~~

In November 2014, the Company filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit with respect to the jury verdict concerning Zillow, Inc. and NexTag, Inc. and the award of attorneys' fees. In March 2015, the U.S. Court of Appeals for the Federal Circuit granted the Company's motion to stay appellate briefing pending an ~~en banc~~ ~~review by such court of the laches defense in an unrelated patent infringement matter and ruled in favor of Zillow, Inc. on an immaterial amount of costs~~Contingent consideration payments related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. The changes in the trial process. In June 2015, the Company reached a settlement agreement for $1.1 million with defendant NexTag pursuant to which the Company dismissed its appeal of the jury verdict and the award of attorney's fees concerning NexTag, and NexTag dismissed its cross-appeal and claims relating to the jury verdict and the award of attorneys' fees. In July 2015, the stay was lifted on the Company's appeal with respect to the jury verdict concerning Zillow, Inc. The appeal was heard by the U.S. Court of Appeals for the Federal Circuit in June 2016, and in July 2016 the Court determined that certain of the claims of the two patents referenced above were directed to ineligible subject matter and thus such claims were invalid under 35 U.S.C. Section 101. With respect to the remaining claims that the Court did not hold were ineligible, the Court granted a remand to the federal district court to allow LendingTree to file a motion to vacate the judgment of invalidity for incorrect inventorship.

~~In June 2017, the Federal District Court vacated the invalidity judgment arising from the March 2014 jury verdict. As a result, certain claims~~fair value of the Company's ~~two issued patents remain valid.~~ Level 3 liabilities are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Contingent consideration, beginning of period	$	9,046	$	22,342	$	8,249	$	33,464
Transfers into Level 3	—		—		—		—
Transfers out of Level 3	—		—		—		—
Total net losses (gains) included in earnings (realized and unrealized)	(8,850)		9,175		(8,053)		1,053
Purchases, sales and settlements:
Additions	0		0		0		0
Payments	0		(3,000)		0		(6,000)
Contingent consideration, end of period	$	196	$	28,517	$	196	$	28,517

The ~~case~~contingent consideration liability at June 30, 2021 is ~~now closed~~the estimated fair value of the remaining earnout payment for the QuoteWizard acquisition. The Company will make an earnout payment ranging from 0 to $23.4 million based on the achievement of certain defined performance targets for QuoteWizard. See Note 8—Business Acquisitions for additional information.

The significant unobservable inputs used to calculate the fair value of the contingent consideration for QuoteWizard are the operating results growth rate and the ~~Company expects no further~~discount rate. Actual results will differ from the projected results and could have a significant ~~events regarding this litigation.~~

~~Legal Matters~~

~~Next Advisor Continued, Inc.~~

~~Next Advisor Continued, Inc. v. LendingTree, Inc. and LendingTree, LLC, No. 15-cvs-20775 (N.C. Super. Ct.). On November 6, 2015,~~impact on the plaintiff filed this action against LendingTree, Inc. and LendingTree, LLC (together "LendingTree"). The plaintiff generally alleged that LendingTree breached a non-disclosure agreement and misappropriated trade secretsestimated fair value of the contingent consideration. Additionally, as the liability is stated at present value, the passage of time alone will increase the estimated fair value of the liability each reporting period. Any changes in fair value will be recorded in operating income in the ~~context~~consolidated statements of aoperations and comprehensive income.

The following table provides quantitative information about Level 3 fair value measurements.


	Fair Value at June 30, 2021		Valuation Technique	Unobservable Input	Range (Weighted Average)(a)
	(in thousands)
Contingent consideration	$	196	Option pricing model	Operating results growth rate	(21.4)	%
				Discount rate	3.1	%

(a) Discount rates are weighted by the relative undiscounted value of expected earnout payments. Other unobservable inputs are weighted by the relative maximum potential earnout payments.

NOTE 16—SEGMENT INFORMATION

The Company manages its business ~~acquisition~~and reports its financial results through the following 3 operating and reportable segments: Home, Consumer and Insurance. Characteristics which were relied upon in making the determination of the ~~plaintiff by LendingTree. Based upon these allegations,~~reportable segments include the plaintiff asserted claims for breach of contract, misappropriation of trade secrets and violation of North Carolina Unfair and Deceptive Trade Practices Act. The plaintiff requested money damages, attorneys' fees and injunctive relief.

On December 16, 2015, LendingTree filed its answer to the plaintiff's complaint, denying the material allegations and asserting numerous defenses thereto. In June 2016, the Court granted the plaintiff's motion for preliminary injunction and temporarily ordered, pending trial, that LendingTree cease any utilization of confidential and trade secret informationnature of the ~~plaintiff and cease marketing credit card~~ products, ~~via certain third party content marketing platforms. However, LendingTree continued to believe that~~ the plaintiff's allegations lacked merit and to vigorously defend the case. In July 2016, LendingTree filed a notice of interlocutory appeal to the North Carolina Supreme Court with respect to the preliminary injunction, but the interlocutory appeal was dismissed in December 2016. In February 2017, LendingTree filed a motion for partial summary judgment. In June 2017, the court granted LendingTree's motion for partial summary judgment, restricting the duration of any injunction and ruling that the plaintiff is not entitled to recover compensatory damages on any of its claims. On September 14, 2017, LendingTreeorganization's internal structure, and the ~~plaintiff finalized~~information that is regularly reviewed by the chief operating decision maker for the purpose of assessing performance and allocating resources.

The Home segment includes the following products: purchase mortgage, refinance mortgage, home equity loans and lines of credit, reverse mortgage loans, and real estate. The Consumer segment includes the following products: credit cards, personal loans, small business loans, student loans, auto loans, deposit accounts, and other credit products such as credit repair and debt settlement. The Insurance segment consists of insurance quote products. Revenue from the resale of online advertising space to third parties in the first six months of 2020 is included within the Other category. The Company ceased reselling online advertising space during the first quarter of 2020.

The following tables are a ~~settlement agreement pursuant~~reconciliation of segment profit, which is the Company's primary segment profitability measure, to ~~which (i) LendingTree defrayed a~~income before income taxes and discontinued operations. Segment cost of revenue and marketing expense represents the portion of ~~plaintiff’s litigation~~selling and marketing expense attributable to variable costs paid for advertising, direct marketing and (ii) the parties agreed that the injunction would be of no further effect as of January 3, 2018. The Court’s order approving the settlement was a final judgment and this matter is otherwise now closed.

~~Massachusetts Division of Banks~~

On February 11, 2011, the Massachusetts Division of Banks (the "Division") delivered a Report of Examination/Inspection to LendingTree, LLC, which identified various alleged violations of Massachusetts and federal laws, including the alleged insufficient delivery by LendingTree, LLC of various disclosures to its customers. On October 14, 2011, the Division provided a proposed Consent Agreement and Order to settle the Division's allegations, which the Division had shared with other state mortgage lending regulators. Thirty-four of such state mortgage lending regulators (the "Joining Regulators") indicated that if LendingTree, LLC would enter into the Consent Agreement and Order, they would agree not to pursue any analogous allegations that they otherwise might assert. None of the Joining Regulators have asserted any such allegations.

The proposed Consent Agreement and Order calls for a fine to be allocated among the Division and the Joining Regulators and for LendingTree, LLC to adopt various new procedures and practices. The Company has commenced negotiations toward an acceptable Consent Agreement and Order. It does not believe its mortgage marketplace business violated any federal or state

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

expenses, that are directly attributable to the segments' products. This measure excludes overhead, fixed costs and personnel-related expenses. For the Other category, segment cost of revenue and marketing expense in the first six months of 2020 also includes the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties.


	Three Months Ended June 30, 2021
	Home		Consumer		Insurance		Other		Total
	(in thousands)
Revenue	$	104,861	$	75,676	$	89,263	$	214	$	270,014
Segment marketing expense	65,844		42,282		56,025		263		164,414
Segment profit (loss)	39,017		33,394		33,238		(49)		105,600
Cost of revenue									13,934
Brand and other marketing expense									20,792
General and administrative expense									39,811
Product development									13,290
Depreciation									4,443
Amortization of intangibles									11,310
Change in fair value of contingent consideration									(8,850)

Litigation settlements and contingencies									322
Operating income									10,548
Interest expense, net									(9,840)

Income before income taxes and discontinued operations									$	708


	Three Months Ended June 30, 2020
	Home		Consumer		Insurance		Other		Total
	(in thousands)
Revenue	$	74,123	$	37,118	$	72,919	$	166	$	184,326
Segment marketing expense	35,397		17,716		42,797		85		95,995
Segment profit (loss)	38,726		19,402		30,122		81		88,331
Cost of revenue									13,464
Brand and other marketing expense									17,926
General and administrative expense									28,489
Product development									10,812
Depreciation									3,550
Amortization of intangibles									13,756
Change in fair value of contingent consideration									9,175
Severance									32
Litigation settlements and contingencies									(1,325)
Operating loss									(7,548)
Interest expense, net									(4,955)
Other income									7
Loss before income taxes and discontinued operations									$	(12,496)

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Six Months Ended June 30, 2021
	Home		Consumer		Insurance		Other		Total
	(in thousands)
Revenue	$	232,986	$	133,583	$	175,877	$	318	$	542,764
Segment marketing expense	154,979		75,582		109,797		459		340,817
Segment profit (loss)	78,007		58,001		66,080		(141)		201,947
Cost of revenue									27,829
Brand and other marketing expense									41,851
General and administrative expense									74,800
Product development									25,758
Depreciation									8,161
Amortization of intangibles									22,622
Change in fair value of contingent consideration									(8,053)

Litigation settlements and contingencies									338
Operating income									8,641
Interest expense, net									(20,055)
Other income									40,072
Income before income taxes and discontinued operations									$	28,658


	Six Months Ended June 30, 2020
	Home		Consumer		Insurance		Other		Total
	(in thousands)
Revenue	$	153,297	$	157,042	$	155,656	$	1,415	$	467,410
Segment cost of revenue and marketing expense	78,660		94,541		95,001		1,662		269,864
Segment profit (loss)	74,637		62,501		60,655		(247)		197,546
Cost of revenue (exclusive of cost of advertising re-sold to third parties included above)									26,630
Brand and other marketing expense									40,681
General and administrative expense									60,571
Product development									21,775
Depreciation									6,928
Amortization of intangibles									27,513
Change in fair value of contingent consideration									1,053
Severance									190
Litigation settlements and contingencies									(996)
Operating income									13,201
Interest expense, net									(9,789)
Other income									7
Income before income taxes and discontinued operations									$	3,419

NOTE 17—DISCONTINUED OPERATIONS

The LendingTree Loans Business is presented as discontinued operations in the accompanying financial statements. The LendingTree Loans Business originated various consumer mortgage ~~lending laws; nor does it believe that any past operations~~loans through HLC. On June 6, 2012, the Company sold substantially all of the ~~mortgage business~~operating assets of HLC, including the LendingTree Loans Business, for $55.9 million in cash to a wholly-owned subsidiary of Discover Financial Services ("Discover"). Discover generally did not assume liabilities of HLC that arose before the closing date, except for certain liabilities directly related to assets Discover acquired. A portion of the purchase price received was deposited in escrow in accordance with the purchase agreement with Discover for certain loan loss obligations that remained with HLC following the sale. During 2018, the remaining funds in escrow were released to HLC in accordance with the terms of the purchase agreement with Discover.

Upon closing of the sale of substantially all of the operating assets of HLC on June 6, 2012, HLC ceased to originate consumer loans. HLC agreed to retain certain liability for losses on previously sold loans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Home Loan Center, Inc. Bankruptcy Filing

On June 21, 2019, the U.S. District Court of Minnesota entered judgment in ResCap Liquidating Trust v. Home Loan Center, Inc., against HLC for $68.5 million, see Litigation Related to Discontinued Operations below. The judgment against HLC exceeded the assets of HLC, which were $11.2 million at July 21, 2019, including cash of $5.9 million. On July 19, 2019, HLC appealed the judgment to the United States Court of Appeals for the Eighth Circuit.

On July 21, 2019, at the direction of the sole independent director of HLC, HLC voluntarily filed a petition under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) with the U.S. Bankruptcy Court in the Northern District of California in San Jose, California (the “Bankruptcy Court”) in order to preserve assets for the benefit of all creditors of HLC. On September 16, 2019, the Bankruptcy Court converted the bankruptcy to Chapter 7 of the Bankruptcy Code and appointed a Trustee to liquidate HLC's assets.

HLC’s voluntary petition under the Bankruptcy Code does not represent an event of default under LendingTree, LLC’s Second Amended and Restated Credit Agreement dated as of December 10, 2019, the Company’s indenture dated May 31, 2017 with respect to the Company’s 0.625% Convertible Senior Notes due 2022, or the Company’s indenture dated July 24, 2020 with respect to the Company’s 0.50% Convertible Senior Notes due 2025.

As a result of the voluntary petition, LendingTree, LLC was, as of the initial July 21, 2019 bankruptcy petition filing date, no longer deemed to have ~~resulted~~a controlling interest in HLC under applicable accounting standards. As a ~~material violation~~result, HLC and its consolidated subsidiary were deconsolidated from the Company’s consolidated financial statements as of ~~any~~July 21, 2019. The effect of such ~~laws. Should~~deconsolidation was the ~~Division or any Joining Regulator bring any actions~~elimination of the consolidated assets and liabilities of HLC (and its consolidated subsidiary) from the Company’s consolidated balance sheets. Upon deconsolidation, in 2019 the Company recognized a loss of $5.5 million which includes a net gain of $4.5 million related to the removal of HLC's (and its consolidated subsidiary's) assets and liabilities and the recognition of a liability of $10.0 million related to LendingTree, LLC's ownership in HLC. No consideration was received by the Company as a result of the deconsolidation.

During its bankruptcy, HLC indicated that it believed that it had claims against HLC’s sole shareholder, LendingTree, LLC, and certain of its officers and directors, relating to the ~~matters alleged~~declaration of a dividend by HLC in January 2016 of $40.0 million. LendingTree, LLC believes the declaration of the dividend was proper, that the amounts paid to LendingTree, LLC following such declaration are not subject to recovery by HLC and that any claims by HLC relating to such dividend declaration are without merit. During the second quarter of 2020, LendingTree, LLC and HLC entered into a settlement agreement in the ~~February 2011 Report~~amount of ~~Examination/Inspection,~~$36.0 million for the release of any and all claims against the Company ~~intends~~defendants by HLC, including the dividend claim. The bankruptcy court held a hearing on July 16, 2020 on the motion to ~~defend against such actions vigorously.~~approve the settlement to which no objections were made, and approved the settlement the same day. The ~~range of possible loss is estimated to be between $0.5~~$36.0 million ~~and $6.5 million, and an estimated liability of $0.5 million has been established for this matter~~settlement payment was made in the ~~accompanying consolidated balance sheet as~~third quarter of ~~September 30, 2017.~~ 2020.

During the HLC bankruptcy, a bar date for claims against HLC was set, establishing a deadline for all HLC’s creditors to assert any claim they may have had against HLC. Distributions were made to holders of allowed claims deemed timely filed. After all distributions to creditors were made and HLC’s Chapter 7 bankruptcy estate was fully administered, the HLC bankruptcy case was closed on July 14, 2021.

Litigation Related to Discontinued Operations

Residential Funding Company

ResCap Liquidating Trust v. Home Loan Center, Inc., Case No. 14-cv-1716 (U.S. Dist. Ct., Minn.), successor toResidential Funding Company, LLC v Home Loan Center, Inc., No. 13-cv-3451 (U.S. Dist. Ct., Minn.). On or about December 16, 2013, Home Loan Center, Inc. was served in the ~~above~~original captioned ~~matter. Generally,~~matter, which involves claims of Residential Funding Company, LLC ("RFC") ~~seeks~~for damages for breach of contract and indemnification for certain residential mortgage loans as well as residential mortgage-backed securitizations ("RMBS") containing mortgage loans. RFC ~~asserts~~asserted that, beginning in 2008, RFC faced massive repurchase demands and lawsuits from purchasers or insurers of the loans and RMBS that RFC had sold. RFC filed for bankruptcy protection in May 2012. Plaintiff ~~alleges~~alleged that, after RFC filed for Chapter 11 protection, hundreds of proofs of claim were filed, many of which mirrored the litigation filed against RFC prior to its bankruptcy.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2013, the United States Bankruptcy Court for the Southern District of New York entered an Order confirming the Second Amended Joint Chapter 11 Plan Proposed by Residential Capital, LLC et al. and the Official Committee of Unsecured Creditors. Plaintiff then began filing substantially similar complaints against approximately 80 of the loan originators from whom RFC had purchased loans, including ~~Home Loan Center,~~HLC, in federal and state courts in Minnesota and New York. In each case, ~~Plaintiff claims~~plaintiff claimed that the defendant is liable for a portion of the global settlement in RFC’s bankruptcy.

~~Plaintiff asserts two~~HLC’s filing under the Bankruptcy Code discussed above in Home Loan Center, Inc. Bankruptcy Filing created an automatic stay of enforcement of the judgment entered against HLC by the U.S. District Court in Minnesota. On August 27, 2019, plaintiff filed a lawsuit captioned ResCap Liquidating Trust v. LendingTree, LLC, et al., Case No. 19-cv-2360 (U.S. Dist. Ct., Minn.), seeking to hold the Company liable for the judgment against HLC, under assumption of liability, agency and alter ego theories. On June 17, 2020, the Company entered into a settlement agreement with ResCap, pursuant to which, the Company agreed to, among other things, pay ResCap $58.5 million, less any amounts ResCap receives in the HLC bankruptcy, in exchange for, among other things, ResCap releasing any and all claims against ~~HLC: (1) breach~~the Company, and the Company’s directors and officers, including any claims asserted in ResCap v. LendingTree. Pursuant to the settlement agreement, the Company was responsible for the difference of ~~contract based~~$58.5 million minus the amount that ResCap received through the HLC Bankruptcy. In the third and fourth quarters of 2020, the Company made payments of $26.5 million and $6.4 million, respectively, to the ResCap Liquidating Trust, and the ResCap Liquidating Trust, in turn, assigned its allowed claims against HLC to the Company. In the second quarter of 2021, the Company received a refund of $8.6 million related to these amounts, from the final distributions in the HLC Bankruptcy on ~~HLC’s alleged breach of representations and warranties concerning the quality and characteristics~~account of the mortgage loans it sold to RFC (Count One); and (2) contractual indemnification for alleged liabilities, losses, and damages incurred by RFC arising out of purported defects in loans that RFC purchased from HSBC and sold to third parties (Count Two). Plaintiff allegesallowed claims that the ~~“types of defects” contained in~~ResCap Liquidating Trust had assigned to the ~~loans it purchased from HLC included “income misrepresentation, employment misrepresentation, appraisal misrepresentations or inaccuracies, undisclosed debt, and missing or inaccurate documents.”~~

HLC filed a Motion to Dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure or, in the alternative, a Motion for More Definite Statement under Rule 12(e). On June 25, 2015 the judge denied HLC's motion.

On July 9, 2015, HLC filed its answer to RFC’s complaint, denying the material allegations of the complaint and asserting numerous defenses thereto. Discovery is ongoing in this matter. Plaintiff is seeking damages of $61.0 million in this action; HLC intends to vigorously defend this action. An estimated liability of $3.0 million for this matter is included in the accompanying consolidated balance sheet as of September 30, 2017.Company.

Lehman Brothers Holdings, Inc.

Lehman Brothers Holdings Inc. v. 1st Advantage Mortgage, LLC et al., Case No. 08-13555 (SCC), Adversary Proceeding No. 16-01342 (SCC) (Bankr. S.D.N.Y.). In February 2016, Lehman Brothers Holdings, Inc. (“LBHI”) filed an Adversary Complaint against ~~Home Loan Center~~HLC and approximately 149 other defendants (the "Complaint"). ~~The Complaint generally seeks (1)~~On December 4, 2019, LBHI filed a ~~declaratory judgment that~~$44.7 million proof of claim in HLC’s bankruptcy seeking recovery for the ~~settlements entered into by LBHI with Fannie Mae and Freddie Mac as part of LBHI's bankruptcy proceedings gave rise to LBHI's contractual indemnification~~ claims ~~against defendants alleged~~asserted in the ~~Complaint; (2) indemnification from HLC and~~lawsuit.

HLC’s filing under the ~~other defendants for losses allegedly incurred by~~Bankruptcy Code discussed above in Home Loan Center, Inc. Bankruptcy Filing created an automatic stay of this proceeding. On June 11, 2020, LBHI ~~in respect of defective mortgage loans sold by defendants to LBHI or its affiliates; and (3) interest, attorneys' fees and costs incurred by LBHI in the litigation. On March 31, 2017, HLC~~ filed ~~an omnibus motion to dismiss with other defendants. HLC intends to defend this action vigorously. HLC had previously received~~ a ~~demand letter (the "Letter") from LBHI in December 2014 with respect to 64 loans (the “Loans”) that LBHI alleges were sold by HLC to~~ lawsuit captioned Lehman Brothers ~~Bank, FSB (“LBB”~~Holdings Inc. v. LendingTree, LLC, et al., Case No. 20-cv-01351 (U.S. Dist. Ct., Minn.) ~~between 2004 and 2008 pursuant~~, transferred to Case No. 08-13555 (SCC), Adversary Proceeding No. 21-01107 (SCC) (Bankr. S.D.N.Y.), seeking to hold the Company liable for its allowed bankruptcy claim of $13.3 million. In July 2021, the Company reached a ~~loan purchase agreement (the “LPA”) between HLC and LBB. The Letter generally sought indemnification from HLC in accordance~~settlement with ~~the LPA for certain claims that~~ LBHI, ~~alleged it allowed in its bankruptcy with respect to the Loans. An estimated liability of $1.0 million for this matter~~which is included inas a liability on the accompanying consolidated balance sheet as of ~~September~~June 30, ~~2017.~~2021.

Financial Information of Discontinued Operations

~~Table~~The components of ~~Contents~~

~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~NOTE 12—FAIR VALUE MEASUREMENTS~~

~~Other than the 0.625% Convertible Senior Notes and the Warrants, the carrying amounts of the Company's financial instruments are equal to fair value at September 30, 2017.~~ ~~See~~ ~~Note 10—Debt for additional information on the 0.625% Convertible Senior Notes and the Warrants.~~

Contingent consideration payments related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. The changes in the fair value of the Company's Level 3 liabilities during the nine months ended September 30, 2017 are as follows ~~(in thousands)~~:

Contingent Consideration
Balance at December 31, 2016 $ 23,100
Transfers into Level 3 —
Transfers out of Level 3 —
Total net (gains) losses included in earnings (realized and unrealized) 20,640
Purchases, sales and settlements:
Additions 11,318
Payments (1,000 )
Balance at September 30, 2017 $ 54,058

The contingent consideration liability at September 30, 2017 is the estimated fair value of the earnout payments of the CompareCards, DepositAccounts and SnapCap acquisitions. The Company will make earnout payments ranging from zero to $45.0 million based on the achievement of certain defined earnings targets for CompareCards, payments ranging from zero to $9.0 million based on the achievement of defined milestone and performance targets for DepositAccounts, and payments ranging from zero to $9.0 million based on the achievement of certain defined earnings targets for SnapCap. ~~See~~ Note 5—Business Acquisition for additional information on the contingent consideration for each of these respective acquisitions. The significant unobservable inputs used to calculate the fair value of the contingent consideration are estimated future cash flows for the acquisitions, estimated date and likelihood of an increase in interest rates and the discount rate. Actual results will differ from the projected results and could have a significant impact on the estimated fair value of the contingent considerations. Additionally, as the liability is stated at present value, the passage of time alone will increase the estimated fair value of the liability each reporting period. Any changes in fair value will be recorded in operating income in the consolidated statements of operations and comprehensive income.

~~NOTE 13—SEGMENT INFORMATION~~

~~The Company has one reportable segment.~~

~~Mortgage and non-mortgage product revenue is as follows~~ ~~(in thousands)~~:

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Mortgage products $ 73,756
$ 53,523
$ 208,209
$ 164,571
Non-mortgage products 97,738
41,035
248,573
118,990
Total revenue $ 171,494
$ 94,558
$ 456,782
$ 283,561

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~NOTE 14—DISCONTINUED OPERATIONS~~

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue	$	0	$	0	$	0	$	0

Loss before income taxes	(4,261)		(28,424)		(4,614)		(34,526)
Income tax benefit	1,062		7,283		1,152		8,810
Net loss	$	(3,199)	$	(21,141)	$	(3,462)	$	(25,716)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenue $ —
$ 1,834
$ (750 ) $ 1,835

Loss before income taxes $ (1,555 ) $ (1,021 ) $ (4,049 ) $ (4,640 )
Income tax benefit 544
357
1,417
1,623
Net loss $ (1,011 ) $ (664 ) $ (2,632 ) $ (3,017 )
Losses from discontinued operations included all activity of HLC prior to bankruptcy, including litigation settlements, contingencies and legal fees associated with legal proceedings.

The results of discontinued operations also include litigation settlements and contingencies and legal fees associated with ongoing legal proceedings against LendingTree, ~~Loans~~

~~On June 6, 2012, the Company sold substantially all of the operating assets of its~~Inc. or LendingTree, ~~Loans business for $55.9 million in cash~~LLC that arose due to ~~a wholly-owned subsidiary of Discover Financial Services ("Discover"). Discover generally did not assume liabilities of~~ the LendingTree Loans ~~business that arose before~~Business or the closing date, except for certain liabilities directly related to assets Discover acquired. Of the purchase price paid, as of September 30, 2017, $4.0 million is being held in escrow in accordance with the agreement with Discover for certain loan loss obligations that remain with the Company following the sale. The escrowed amount is recorded as restricted cash as of September 30, 2017.HLC bankruptcy filing.

~~Significant Assets and Liabilities of LendingTree Loans~~

Upon closing of the sale of substantially all of the operating assets of the LendingTree Loans business on June 6, 2012, LendingTree Loans ceased to originate consumer loans. Liability for losses on previously sold loans will remain with LendingTree Loans and are discussed below.

~~Loan Loss Obligations~~

LendingTree Loans sold loans it originated to investors on a servicing-released basis, so the risk of loss or default by the borrower was generally transferred to the investor. However, LendingTree Loans was required by these investors to make certain representations and warranties relating to credit information, loan documentation and collateral. These representations and warranties may extend through the contractual life of the loan. Subsequent to the loan sale, if underwriting deficiencies, borrower fraud or documentation defects are discovered in individual loans, LendingTree Loans may be obligated to repurchase the respective loan or indemnify the investors for any losses from borrower defaults if such deficiency or defect cannot be cured within the specified period following discovery. In the case of early loan payoffs and early defaults on certain loans, LendingTree Loans may be required to repay all or a portion of the premium initially paid by the investor.

HLC, a subsidiary of the Company, continues to be liable for these indemnification obligations, repurchase obligations and premium repayment obligations following the sale of substantially all of the operating assets of its LendingTree Loans business in the second quarter of 2012.

~~The following table represents the aggregate loans sold, subsequent settlements and remaining unsettled loans.~~

Number of Loans Original Issue Balance
(in thousands) (in billions)
Loans sold by HLC 234
$ 38.9
Subsequent settlements (172 ) (28.8 )
Remaining unsettled balance as of September 30, 2017 62
$ 10.1

During the fourth quarter of 2015, LendingTree Loans completed a settlement agreement for $0.6 million with one of the investors to which it had sold loans. This investor accounted for approximately 10% of the total number of loans sold and 12% of the original issue balance. This settlement related to all existing and future losses on loans sold to this investor.

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~~LENDINGTREE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

During the fourth quarter of 2014, LendingTree Loans completed a settlement agreement for $5.4 million with the largest investor to which it had sold loans. This investor accounted for approximately 40% of both the total number of loans sold and the original issue balance. This settlement related to all existing and future losses on loans sold to this investor.

~~In the second quarter of 2014, LendingTree Loans completed settlements with two buyers of previously purchased loans.~~

The Company has been negotiating with certain of the remaining secondary market purchasers to settle any existing and future contingent liabilities, but it may not be able to complete such negotiations on acceptable terms, or at all. Because LendingTree Loans does not service the loans it sold, it does not maintain nor generally have access to the current balances and loan performance data with respect to the individual loans previously sold to investors. Accordingly, LendingTree Loans is unable to determine, with precision, its maximum exposure for breaches of the representations and warranties it made to the investors that purchased such loans.

The Company uses a settlement discount framework for evaluating the adequacy of the reserve for loan losses. This model estimates lifetime losses on the population of remaining loans originated and sold by LendingTree Loans using actual defaults for loans with similar characteristics and projected future defaults. It also considers the likelihood of claims expected due to alleged breaches of representations and warranties made by LendingTree Loans and the percentage of those claims investors estimate LendingTree Loans may agree to repurchase. A settlement discount factor is then applied to the result of the foregoing to reflect publicly-announced bulk settlements for similar loan types and vintages, as well as LendingTree Loans' non-operating status, in order to estimate a range of potential obligation.

The estimated range of remaining loan losses using this settlement discount framework was determined to be $4.3 million to $7.9 million at September 30, 2017. The reserve balance recorded as of September 30, 2017 was $7.6 million. Management has considered both objective and subjective factors in the estimation process, but given current general industry trends in mortgage loans as well as housing prices and market expectations, actual losses related to LendingTree Loans' obligations could vary significantly from the obligation recorded as of the balance sheet date or the range estimated above.

~~Additionally, LendingTree has guaranteed certain loans sold to~~ ~~two~~ ~~investors in the event that LendingTree Loans is unable to satisfy its repurchase and warranty obligations related to such loans.~~

~~Based on historical experience, it is anticipated that LendingTree Loans will continue to receive repurchase requests and incur losses on loans sold in prior years.~~

~~The activity related to loss reserves on previously sold loans is as follows~~ ~~(in thousands)~~:

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Loan loss reserve, beginning of period $ 7,554
$ 8,127
$ 6,804
$ 8,127
Provisions —
(1,834 ) 750
(1,834 )
Charge-offs to reserves —
—
—
—
Loan loss reserve, end of period $ 7,554
$ 6,293
$ 7,554
$ 6,293

~~The liability for losses on previously sold loans is presented as current liabilities of discontinued operations in the accompanying consolidated balance sheet as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Information

This report contains "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements ~~also~~ include statements related to our anticipated financial performance, business prospects and strategy; anticipated trends and prospects in the various industries in which our businesses operate; new products, services and related strategies; and other similar matters. These forward-looking statements are based on management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. The use of words such as "anticipates," "estimates," "expects," "projects," "intends," "plans" and "believes," among others, generally ~~identify~~identifies forward-looking statements.

Actual results could differ materially from those contained in the forward-looking statements. Factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include those matters discussed or referenced in Part II, Item 1A. Risk Factors included elsewhere in this quarterly report and Part I, Item 1A. Risk Factors of the ~~2016~~2020 Annual Report.

Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of LendingTree, Inc.'s management as of the date of this report. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations, except as required by law.

Company Overview

LendingTree, Inc., is the parent of LT Intermediate Company, LLC, which holds all of the outstanding ownership interests of LendingTree, LLC, and LendingTree, LLC owns several ~~companies owned by LendingTree, LLC.~~companies.

~~LendingTree operates~~We operate what we believe to be the leading online ~~loan marketplace for~~consumer platform that connects consumers ~~seeking loans, deposit accounts and other credit-based offerings.~~with the choices they need to be confident in their financial decisions. Our online ~~marketplace~~consumer platform provides consumers with access to product offerings from our Network ~~Lenders,~~Partners, including mortgage loans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, deposit accounts, personal loans, student loans, small business loans, insurance quotes and other related offerings. In addition, we offer tools and resources, including free credit scores, that facilitate comparison shopping for ~~these loan~~loans, deposit products, insurance and other ~~credit-based~~ offerings. We seek to match consumers with multiple ~~lenders,~~providers, who can ~~provide~~offer them ~~with~~ competing quotes for the product, or products, they are seeking. We also serve as a valued partner to lenders and other providers seeking an efficient, scalable and flexible source of customer acquisition with directly measurable benefits, by matching the consumer inquiries we generate with these ~~lenders.~~ Network Partners.

Our My LendingTree platform offers a personalized ~~loan~~ comparison-shopping experience by providing free credit scores and credit score analysis. This platform enables us to ~~observe~~monitor consumers' credit profiles and then identify and alert them to ~~loan~~loans and other ~~credit-based opportunities~~offerings on our marketplace that may be more favorable than the ~~loans~~terms they may have at a given point in time. This is designed to provide consumers with measurable savings opportunities over their lifetimes.

~~In addition to operating our core mortgage business, we~~We are focused on ~~growing our non-mortgage lending businesses and~~ developing new product offerings and enhancements to improve the experiences that consumers and ~~lenders~~Network Partners have as they interact with us. By expanding our portfolio of ~~loan and credit-based~~financial services offerings, we are growing and diversifying our business and sources of revenue. We intend to capitalize on our expertise in performance marketing, product development and technology, and to leverage the widespread recognition of the LendingTree brand, to effect this strategy.

We believe the consumer and small business financial services industry is still in the early stages of a fundamental shift to online product offerings, similar to the shift that started in retail and travel many years ago and is now well established. We believe that like retail and travel, as consumers continue to move towards online shopping and transactions for financial services, suppliers will increasingly shift their product offerings and advertising budgets toward the online channel. We believe the strength of our brands and of our ~~lender~~partner network place us in a strong position to continue to benefit from this market shift.

The LendingTree Loans business is presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements of operations and comprehensive income and consolidated cash flows for all periods presented. Except

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for the discussion under the heading "Discontinued ~~operations,~~Operations," the analysis within Management's Discussion and Analysis of Financial Condition and Results of Operations reflects our continuing operations.

Economic Conditions

~~Table~~During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of ~~Contents~~

a novel strain of coronavirus ("COVID-19"). The pandemic has significantly impacted the economic conditions in the U.S., as federal, state and local governments react to the public health crisis, creating significant uncertainties in the U.S. economy. The downstream impact of various lockdown orders and related economic pullback are affecting our business and marketplace participants to varying degrees. We are continuously monitoring the impacts of the current economic conditions related to the COVID-19 pandemic and the effect on our business, financial condition and results of operations.

~~Convertible Senior Notes~~Of our three reportable segments, the Consumer segment has been most impacted. The impact to our Home and ~~Hedge~~Insurance segments was much less substantial and ~~Warrant Transactions~~

~~On May 31, 2017, we issued $300.0 million aggregate principal amount~~these segments recovered by the end of 2020. While forecasting the timeline of full recovery for the Consumer segment remains challenging, the momentum of recovery has increased in each quarter subsequent to the onset of the COVID-19 pandemic. We are encouraged by the progress made, and continue to view the Consumer segment with optimism over the medium to long term. Most of our ~~0.625% Convertible Senior Notes due June 1, 2022~~selling and marketing expenses are variable costs that we adjust dynamically in ~~connection therewith, entered into Convertible Note Hedge~~relation to revenue opportunities to profitably meet demand. Thus, as our revenue was negatively impacted during the recession, our marketing expenses generally decreased in line with revenue.

Segment Reporting

We have three reportable segments: Home, Consumer and ~~Warrant transactions with respect to our common stock. For more information,~~ ~~see~~ ~~Note 10—Debt, in the notes to the consolidated financial statements included elsewhere in this report.~~Insurance.

Recent Business Acquisitions

On ~~September 19, 2017,~~February 28, 2020, we acquired ~~certain assets of Snap Capital LLC, which does business under the name SnapCap~~an equity interest in Stash Financial, Inc. (“Stash”) for ~~$11.9 million in cash at closing and contingent consideration payments of up to $9.0 million through March 31, 2020. SnapCap~~$80.0 million. On January 6, 2021, we acquired additional equity interest for $1.2 million. Stash is a ~~tech-enabled online platform, which connects business owners~~consumer investing and banking platform. Stash brings together banking, investing, and financial services education into one seamless experience offering a full suite of personal investment accounts, traditional and Roth IRAs, custodial investment accounts, and banking services, including checking accounts and debit cards with ~~lenders offering small business loans, lines of credit and merchant cash advance products through~~ a ~~concierge-based sales approach.~~

~~On June 20, 2017, we acquired the membership interests of Camino Del Avion, LLC, which does business under the name MagnifyMoney~~Stock-Back® rewards program. See Note 7—Equity Investment for $29.6 million cash consideration at the closing of the transaction. MagnifyMoney is a leading consumer-facing media property that offers unbiased editorial content, expert commentary, tools and resources to help consumers compare financial products and make informed financial decisions.

On June 14, 2017, we acquired substantially all of the assets of Deposits Online, LLC, which does business under the name DepositAccounts.com (“DepositAccounts”) for $24.0 million in cash at closing and contingent consideration payments of up to $9.0 million through June 30, 2020. DepositAccounts is a leading consumer-facing media property in the depository industry and is one of the most comprehensive sources of depository deals and analysisadditional information on the ~~Web, covering all major deposit product categories through editorial content, programmatic rate tables and user-generated content.~~equity interest in Stash.

On November 16, 2016, we acquired Iron Horse Holdings, LLC, which does business under the name CompareCards for $80.7 million in cash at closing and contingent consideration payments of up to $22.5 million for each of 2017 and 2018, subject to achieving specific growth targets. CompareCards is a leading online source for side-by-side credit card comparison shopping. CompareCards provides consumers with one centralized location for pertinent credit card information needed to find the best card for their needs.

~~These acquisitions continue our diversification strategy.~~

~~Acquisition of~~ North Carolina Office Properties

~~In December 2016, we completed the acquisition~~Our new corporate office is located on approximately 176,000 square feet of ~~two~~ office ~~buildings~~space in Charlotte, North Carolina ~~for $23.5~~under an approximate 15-year lease that contractually commenced in April 2021.

With our expansion in North Carolina, in December 2016, we received a grant from the state that provides up to $4.9 million in ~~cash. We intend to utilize one or both buildings~~reimbursements over 12 years beginning in ~~the future as our principal executive offices, and any unused space will continue to be occupied by tenants.~~

~~Seasonality~~

~~Revenue~~2017 for investing in our lending business is subject to cyclical and seasonal trends. Home sales (and purchase mortgages) typically rise during the spring and summer months and decline during the fall and winter months, while refinancing and home equity activity is principally driven by mortgage interest rates as well as real estate ~~values.~~

~~We anticipate revenue~~and infrastructure in ~~our newer products~~addition to increasing jobs in North Carolina at specific targeted levels through 2020, and maintaining the jobs thereafter. Additionally, the city of Charlotte and the county of Mecklenburg provided a grant that will be ~~cyclical as well; however,~~paid over five years and is based on a percentage of new property tax we ~~have limited historical data~~pay on the development of a corporate headquarters. In December 2018, we received an additional grant from the state that provides up to ~~predict~~$8.4 million in reimbursements over 12 years beginning in 2020 for increasing jobs in North Carolina at specific targeted levels through 2023, and maintaining the nature and magnitude of this cyclicality. Based on industry data, we anticipate as our personal loan product matures we will experience less consumer demand during the fourth and first quarters of each year. We also anticipate less consumer demand for credit cards in the fourth quarter of each year. Other factors affecting our business include macro factors such as credit availability in the market, interest rates, the strength of the economy and employment.jobs thereafter.

Recent Mortgage Interest Rate Trends

Interest rate and market risks can be substantial in the mortgage lead generation business. Short-term fluctuations in mortgage interest rates primarily affect consumer demand for mortgage refinancings, while long-term fluctuations in mortgage interest rates, coupled with the U.S. real estate market, affect consumer demand for new mortgages. Consumer demand, in turn, affects lender demand for mortgage leads from third-party ~~sources.~~ sources, as well as our own ability to attract online consumers to our website.

Typically, ~~a decline in mortgage~~when interest rates ~~will lead~~decline, we see increased consumer demand for mortgage refinancing, which in turn leads to ~~reduced~~increased traffic to our website and decreased selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically decreases, as there are more consumers in the marketplace seeking ~~financing~~

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refinancings and, accordingly, lenders receive more organic mortgage lead volume. Due to lower lender demand, our revenue earned per consumer typically decreases, but with correspondingly lower selling and marketing costs.

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~~volume.~~ Conversely, ~~an increase in mortgage~~when interest rates ~~will~~increase, we typically ~~lead~~see decreased consumer demand for mortgage refinancing, leading to ~~an increase in~~decreased traffic to our website and higher associated selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically increases, as there are fewer consumers in the marketplace and, accordingly, the supply of organic mortgage lead volume decreases. Due to high lender demand, we typically see an increase in the amount lenders will pay per matched lead, which often leads to higher revenue earned per consumer. However, increases in the amount lenders will pay per matched lead in this situation is limited by the overall cost models of our lenders, and our revenue earned per consumer can be adversely affected by the overall reduced demand for refinancing in a rising rate environment.

We dynamically adjust selling and marketing expenditures in all interest rate environments to optimize our results against these variables.

According to Freddie Mac, 30-year mortgage interest rates ~~have fallen~~generally increased from a monthly average of 2.68% in December 2020 to a monthly average of ~~3.8%~~2.98% in ~~September 2017.~~June 2021. On a quarterly basis, 30-year mortgage interest rates in the ~~third~~second quarter of ~~2017~~2021 averaged ~~3.89%~~3.00%, as compared to ~~3.45% in the third quarter of 2016 and 3.99%~~3.23% in the second quarter of ~~2017.~~2020 and 2.88% in the first quarter of 2021.

Typically, as mortgage interest rates rise, there are fewer consumers in the marketplace seeking refinancings and, accordingly, the mix of mortgage origination dollars ~~moves towards~~will move toward purchase mortgages. According to Mortgage Bankers Association ("MBA") data, total refinance origination dollars ~~remained at 32%~~decreased to 56% of total mortgage origination dollars ~~while purchase~~in the second quarter of 2021 compared to 71% in the first quarter of 2021. In the second quarter of 2021, total refinance origination dollars ~~remained at 68% in~~decreased 24% from the ~~third~~first quarter of ~~2017~~2021 and increased 2% from the second quarter of ~~2017.~~2020. Industry-wide mortgage origination dollars in the second quarter of 2021 decreased 4% from the first quarter of 2021 and increased 13% from the second quarter of 2020.

~~Looking forward,~~In July 2021, the MBA ~~is projecting~~projected 30-year mortgage interest rates to increase ~~slightly through the end of~~during 2021, to an average 3.4% for the year. According to MBA projections, the mix of mortgage origination dollars ~~will~~is expected to move back towards ~~refinance~~purchase mortgages ~~in the fourth quarter of 2017~~ with the refinance share representing ~~36%~~approximately 54% for ~~2017.~~2021.

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The U.S. Real Estate Market

The health of the U.S. real estate market and interest rate levels are the primary drivers of consumer demand for new mortgages. Consumer demand, in turn, affects lender demand for purchase mortgage leads from third-party sources. Typically, a strong real estate market will lead to reduced lender demand for leads, as there are more consumers in the marketplace seeking financing and, accordingly, lenders receive more organic lead volume. Conversely, a weaker real estate market will typically lead to an increase in lender demand, as there are fewer consumers in the marketplace seeking mortgages.

According to Fannie Mae data, existing-home sales decreased 8% in the ~~National Association~~second quarter of ~~Realtors ("NAR"), 2017 started with~~2021 compared to the ~~fastest pace~~first quarter of ~~existing home~~2021, and increased 32% compared to the second quarter of 2020. Fannie Mae predicts an overall increase in existing-home sales of approximately 3% in ~~almost a decade. However, pending home sales declined in August for the fifth time in six months due~~2021 compared to ~~limited supply. The NAR expects inventory to remain low for 2017 and forecasts a decrease of 0.2% in existing home sales from 2016.~~2020.

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Results of Operations for the Three and ~~Nine~~Six Months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020


																								Three Months Ended June 30,								Six Months Ended June 30,
	Three Months Ended September 30,											Nine Months Ended September 30,												2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	2017			2016			$ Change			% Change		2017			2016			$ Change			% Change			(Dollars in thousands)
	(Dollars in thousands)
Mortgage products	$	73,756		$	53,523		$	20,233		38	%	$	208,209		$	164,571		$	43,638		27	%
Non-mortgage products	97,738			41,035			56,703			138	%	248,573			118,990			129,583			109	%
Home																							Home	$	104,861	$	74,123	$	30,738	41	%	$	232,986	$	153,297	$	79,689	52	%
Consumer																							Consumer	75,676		37,118		38,558		104	%	133,583		157,042		(23,459)		(15)	%
Insurance																							Insurance	89,263		72,919		16,344		22	%	175,877		155,656		20,221		13	%
Other																							Other	214		166		48		29	%	318		1,415		(1,097)		(78)	%
Revenue	171,494			94,558			76,936			81	%	456,782			283,561			173,221			61	%	Revenue	270,014		184,326		85,688		46	%	542,764		467,410		75,354		16	%
Costs and expenses:																							Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	4,388			3,392			996			29	%	12,143			10,329			1,814			18	%	Cost of revenue (exclusive of depreciation and amortization shown separately below)	13,934		13,464		470		3	%	27,829		27,716		113		—	%
Selling and marketing expense	118,538			62,819			55,719			89	%	320,930			192,416			128,514			67	%	Selling and marketing expense	185,206		113,921		71,285		63	%	382,668		309,459		73,209		24	%
General and administrative expense	17,920			9,008			8,912			99	%	41,561			26,820			14,741			55	%	General and administrative expense	39,811		28,489		11,322		40	%	74,800		60,571		14,229		23	%
Product development	4,805			3,718			1,087			29	%	12,492			11,384			1,108			10	%	Product development	13,290		10,812		2,478		23	%	25,758		21,775		3,983		18	%
Depreciation	1,798			1,286			512			40	%	5,309			3,458			1,851			54	%	Depreciation	4,443		3,550		893		25	%	8,161		6,928		1,233		18	%
Amortization of intangibles	3,817			166			3,651			2,199	%	9,034			263			8,771			3,335	%	Amortization of intangibles	11,310		13,756		(2,446)		(18)	%	22,622		27,513		(4,891)		(18)	%
Change in fair value of contingent consideration	2,501			—			2,501			N/A		20,640			—			20,640			N/A		Change in fair value of contingent consideration	(8,850)		9,175		(18,025)		(196)	%	(8,053)		1,053		(9,106)		(865)	%
Severance	—			—			—			—	%	404			72			332			461	%	Severance	—		32		(32)		(100)	%	—		190		(190)		(100)	%
Litigation settlements and contingencies	272			19			253			1,332	%	961			109			852			782	%	Litigation settlements and contingencies	322		(1,325)		1,647		124	%	338		(996)		1,334		134	%
Total costs and expenses	154,039			80,408			73,631			92	%	423,474			244,851			178,623			73	%	Total costs and expenses	259,466		191,874		67,592		35	%	534,123		454,209		79,914		18	%
Operating income	17,455			14,150			3,305			23	%	33,308			38,710			(5,402		)	(14	)%
Other income (expense), net:
Operating income (loss)																							Operating income (loss)	10,548		(7,548)		18,096		240	%	8,641		13,201		(4,560)		(35)	%
Other (expense) income, net:																							Other (expense) income, net:
Interest expense, net	(2,804		)	(141		)	2,663			1,889	%	(4,048		)	(424		)	3,624			855	%	Interest expense, net	(9,840)		(4,955)		4,885		99	%	(20,055)		(9,789)		10,266		105	%
Other (expense) income	(228		)	—			228			N/A		(215		)	—			215			N/A
Income before income taxes	14,423			14,009			414			3	%	29,045			38,286			(9,241		)	(24	)%
Income tax expense	(4,292		)	(6,729		)	(2,437		)	(36	)%	(3,109		)	(15,099		)	(11,990		)	(79	)%
Net income from continuing operations	10,131			7,280			2,851			39	%	25,936			23,187			2,749			12	%
Other income																							Other income	—		7		(7)		(100)	%	40,072		7		40,065		n/a
Income (loss) before income taxes																							Income (loss) before income taxes	708		(12,496)		13,204		106	%	28,658		3,419		25,239		738	%
Income tax benefit																							Income tax benefit	9,092		3,880		5,212		134	%	454		6,941		(6,487)		(93)	%
Net income (loss) from continuing operations																							Net income (loss) from continuing operations	9,800		(8,616)		18,416		214	%	29,112		10,360		18,752		181	%
Loss from discontinued operations, net of tax	(1,011		)	(664		)	347			52	%	(2,632		)	(3,017		)	(385		)	(13	)%	Loss from discontinued operations, net of tax	(3,199)		(21,141)		(17,942)		(85)	%	(3,462)		(25,716)		(22,254)		(87)	%
Net income and comprehensive income	$	9,120		$	6,616		$	2,504		38	%	$	23,304		$	20,170		$	3,134		16	%
Net income (loss) and comprehensive income (loss)																							Net income (loss) and comprehensive income (loss)	$	6,601	$	(29,757)	$	36,358	122	%	$	25,650	$	(15,356)	$	41,006	267	%

Revenue

Revenue increased in the ~~third~~second quarter ~~and first nine months~~ of ~~2017~~2021 compared to the ~~third~~second quarter ~~and~~of 2020 due to increases in all our segments. Revenue increased in the first ~~nine~~six months of ~~2016~~2021 compared to the first six months of 2020 due to increases in our ~~non-mortgage products of $56.7 million~~Home and ~~$129.6 million, respectively, and~~Insurance segments, partially offset by decreases in our ~~mortgage products of $20.2 million~~Consumer segment and ~~$43.6 million, respectively.~~Other category.

Our ~~non-mortgage products include~~Consumer segment includes the following ~~non-mortgage lending~~ products: ~~personal loans,~~ credit cards, ~~home equity loans and lines of credit, reverse mortgage loans, auto~~personal loans, small business loans, ~~and~~ student ~~loans. Our non-mortgage products also include~~loans, auto loans, deposit accounts, ~~home improvement referrals~~ and other credit products such as credit repair and debt settlement. Many of our ~~non-mortgage~~Consumer segment products are not individually significant to revenue. ~~The increase in revenue~~Revenue from our ~~non-mortgage products~~Consumer segment increased $38.6 million in the ~~third~~second quarter ~~and first nine months~~ of ~~2017~~2021 from the ~~third~~second quarter ~~and first nine months~~ of ~~2016 is~~2020, or 104%, primarily due to increases in our personal loans, credit cards, ~~home equity,~~ and ~~personal~~small business loans products. Revenue from our Consumer segment decreased $23.5 million in the first six months of 2021 from the first six months of 2020, or 15%, primarily due to decreases in our credit cards and deposits products.

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Revenue from our credit cards product increased ~~$32.8~~$15.2 million to ~~$39.4~~$22.4 million in the ~~third~~second quarter of ~~2017~~2021 from ~~$6.6~~$7.2 million in the ~~third~~second quarter of ~~2016,~~2020, or ~~500%~~212%, primarily due to an increase in the number of approvals and ~~increased $86.6~~an increase in revenue earned per approval. Revenue from our credit cards product decreased $18.7 million to ~~$110.1~~$40.1 million in the first ~~nine~~six months of ~~2017~~2021 from ~~$23.5~~$58.8 million in the first ~~nine~~six months of ~~2016,~~2020, or ~~369%~~32%, primarily due to a decrease in the ~~contribution from~~number of approvals and a decrease in revenue earned per approval.

For the ~~CompareCards acquisition, completed on November 16, 2016.~~

periods presented, no other products in our Consumer segment represented more than 10% of revenue; however, certain other Consumer products experienced notable changes. Revenue from our personal loans product increased ~~$7.8 million to $25.4~~$16.4 million in the ~~third~~second quarter of ~~2017 from $17.6 million in~~2021 compared to the ~~third~~second quarter of ~~2016, or 44%, primarily~~2020, due to ~~increases~~an increase in the number of consumers completing request forms as ~~a result of increases~~well as an increase in ~~lender demand and corresponding increases in selling and marketing efforts.~~revenue earned per consumer. Revenue from our ~~personal~~

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small business loans product increased ~~$11.1~~$7.7 million in the second quarter of 2021 compared to ~~$63.0~~the second quarter of 2020, due to loosening underwriting standards and improved flow of capital, as well as an increase in revenue earned per consumer. Revenue from our deposits product decreased $7.9 million in the first ~~nine~~six months of ~~2017 from $51.9 million in~~2021 compared to the first ~~nine~~six months of ~~2016, or 21%, primarily~~2020, due to ~~increases~~a decrease in the number of consumers completing request forms as a result of increases in lender demand and corresponding increases in selling and marketing efforts, partially offset by decreases in revenue earned per consumer. Certain of our online personal loan lenders experienced well-publicized challenges in 2016, in particular, general unavailability of capital, increased pricing demanded by investors of personal loans, which in some cases led to reductions in marketing spend, and tightening in underwriting standards.

For the periods presented, no other non-mortgage product represented more than 10% of revenue, however certain other non-mortgage products experienced notable increases. Revenue from our home equity product increased by $9.0 million in the third quarter of 2017 compared to the third quarter of 2016 and increased by $20.6 million in the first nine months of 2017 compared to the first nine months of 2016 due to increases in the number of consumers completing request formswell as a ~~result of increases~~decrease in ~~lender coverage and lender demand, corresponding increases in selling and marketing efforts, and increased~~ revenue earned per consumer.

The ~~increase~~ongoing COVID-19 pandemic is anticipated to continue to impact our Consumer product revenues in the near-term.

Our Home segment includes the following products: purchase mortgage, refinance mortgage, home equity loans and lines of credit, reverse mortgage loans, and real estate. Revenue from our Home segment increased $30.7 million in the second quarter of 2021 from the second quarter of 2020, or 41%, primarily due to increases in revenue from our refinance mortgage, ~~products in the third quarter~~purchase mortgage, and ~~first nine months~~home equity loans and lines of ~~2017 compared to the third quarter and first nine months of 2016 is primarily due to an increase in revenue from both our purchase and refinance~~credit products. ~~The revenue~~Revenue from our ~~purchase product~~Home segment increased ~~$10.4 million in the third quarter of 2017 from the third quarter of 2016 and increased $27.5~~$79.7 million in the first ~~nine~~six months of ~~2017~~2021 from the first ~~nine~~six months of ~~2016. The~~2020, or 52%, primarily due to increases in revenue from those same products. Revenue from our refinance mortgage product increased ~~$9.9~~$12.7 million in the ~~third~~second quarter of ~~2017 from~~2021 compared to the ~~third~~second quarter of ~~2016~~2020, and ~~$16.1~~increased $64.7 million in the first ~~nine~~six months of ~~2017 from~~2021 compared to the first ~~nine~~six months of ~~2016. The increase in revenue from our mortgage product is primarily~~2020, due to an increase in revenue earned per ~~consumer. Additionally,~~consumer, partially offset by a decrease in the number of consumers completing request ~~forms~~forms. Revenue from our home equity loans and lines of credit product increased $10.0 million in the second quarter of 2021 compared to the second quarter of 2020, and increased $9.9 million in the first six months of 2021 compared to the first six months of 2020. Revenue from our purchase mortgage product increased $8.2 million in the second quarter of 2021 compared to the second quarter of 2020, and increased $5.5 million in the first six months of 2021 compared to the first six months of 2020. Revenue from our home equity loans and lines of credit product and our purchase mortgage product increased due to a shift in both lender and consumer focus away from refinance products as well as an increase in revenue earned per consumer.

Revenue from our Insurance segment increased $16.3 million to $89.3 million in the second quarter of 2021 from $72.9 million in the second quarter of 2020, or 22%, and increased $20.2 million to $175.9 million in the first six months of 2021 from $155.7 million in the first six months of 2020, or 13%, due to an increase in ~~lender demand and~~the number of consumers seeking insurance coverage, partially offset by a ~~corresponding increase~~decrease in ~~selling and marketing efforts.~~revenue earned per consumer.

Revenue in the Other category decreased $1.1 million in the first six months of 2021 compared to the first six months of 2020, primarily as we ceased reselling online advertising space during the first quarter of 2020.

Cost of revenue

Cost of revenue consists primarily of costs associated with compensation and other employee-related costs (including stock-based compensation) relating to internally-operated customer call centers, third-party customer call center fees, costs for online advertising resold to third parties, credit scoring fees, credit card fees, website network hosting and server fees.

Cost of revenue increased in the ~~third~~second quarter of ~~2017~~2021 from the ~~third~~second quarter of ~~2016,~~2020, primarily due to ~~increases of $0.5 million~~an increase in compensation and benefits of $0.8 million, partially offset by a $0.6 million decrease in credit card fees. Cost of revenue increased slightly in the first six months of 2021 from the first six months of 2020, primarily due to an increase in compensation and benefits of $1.7 million, partially offset by a $1.3 million decrease in credit card fees, as well as a ~~result~~$1.1 million decrease for the cost of ~~increases in headcount.~~resold advertising space.

Cost of revenue as a percentage of revenue decreased ~~from 4% for~~to 5% in the ~~third~~second quarter of ~~2016~~2021 compared to ~~3% for~~7% in the ~~third~~second quarter of ~~2017.~~

~~Cost of revenue increased~~2020, and decreased to 5% in the first ~~nine~~six months of ~~2017 from~~2021 compared to 6% in the first ~~nine~~six months of ~~2016, primarily due to increases~~2020.

Table of ~~$1.4 million in compensation and benefits as a result of increases in headcount.~~Contents

~~Cost of revenue as a percentage of revenue decreased from 4% for the first nine months of 2016 to 3% for the first nine months of 2017.~~

Selling and marketing expense

Selling and marketing expense consists primarily of advertising and promotional expenditures and compensation and other employee-related costs (including stock-based compensation) for personnel engaged in sales or marketing functions. Advertising and promotional expenditures primarily include online marketing, as well as television, print and radio spending. Advertising production costs are expensed in the period the related ad is first run.

~~The increases in selling~~Selling and marketing expense increased in the ~~third~~second quarter and first ~~nine~~six months of ~~2017~~2021 compared to the ~~third~~second quarter and first ~~nine~~six months of ~~2016 were~~2020 primarily due to the increases in advertising and promotional expense ~~of $54.2 million and $126.8 million, respectively, as~~ discussed below.

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Advertising and promotional expense is the largest component of selling and marketing expense, and is comprised of the following:


	Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended June 30,								Six Months Ended June 30,
	2017		2016		$ Change		% Change		2017		2016		$ Change		% Change			2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(Dollars in thousands)																	(Dollars in thousands)
Online	$	98,080	$	48,982	$	49,098	100	%	$	271,531	$	150,075	$	121,456	81	%	Online	$	165,038	$	96,416	$	68,622	71	%	$	341,859	$	269,497	$	72,362	27	%
Broadcast	12,372		8,251		4,121		50	%	29,776		25,888		3,888		15	%	Broadcast	2,649		3,154		(505)		(16)	%	3,816		9,478		(5,662)		(60)	%
Other	1,968		1,003		965		96	%	4,575		3,167		1,408		44	%	Other	3,908		2,259		1,649		73	%	9,623		6,621		3,002		45	%
Total advertising expense	$	112,420	$	58,236	$	54,184	93	%	$	305,882	$	179,130	$	126,752	71	%	Total advertising expense	$	171,595	$	101,829	$	69,766	69	%	$	355,298	$	285,596	$	69,702	24	%

Revenue is primarily driven by ~~lender~~Network Partner demand for our products, which is matched to corresponding consumer ~~loan~~ requests. We adjust our selling and marketing expenditures dynamically in relation to anticipated revenue opportunities in order to ensure sufficient consumer inquiries to profitably meet ~~lender~~such demand. An increase in a product’s revenue is generally met by a corresponding increase in marketing spend, and conversely a decrease in a product’s revenue is generally met by a corresponding decrease in marketing spend. This relationship exists for ~~both mortgage~~our Home, Consumer and ~~non-mortgage products.~~Insurance segments.

We ~~increased~~adjusted our advertising expenditures in the ~~third~~second quarter and first ~~nine~~six months of ~~2017~~2021 compared to the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2020 in ~~order~~response to ~~generate additional consumer inquiries to meet the increased~~changes in Network Partner demand ~~of lenders~~ on our ~~marketplace.~~

marketplace as a result of the ongoing COVID-19 pandemic discussed above. We will continue to adjust selling and marketing expenditures dynamically in relation to this and in response to anticipated revenue opportunities.

General and administrative expense

General and administrative expense consists primarily of compensation and other employee-related costs (including stock-based compensation) for personnel engaged in finance, legal, tax, corporate information technology, human resources and executive management functions, as well as facilities and infrastructure costs and fees for professional services.

General and administrative expense increased in the ~~third~~second quarter of ~~2017 from~~2021 compared to the ~~third~~second quarter of ~~2016,~~2020, primarily due to increases in compensation and benefits, technology expense, and facilities expense of ~~$6.4~~$5.5 million, $1.7 million, and $1.4 million, respectively, as well as a ~~result of increases~~$1.0 million increase in ~~headcount~~losses on asset impairments and long term equity awards granted to the CEO in the third quarter of 2017, which awards have both time and significant performance-based vesting conditions. We recently made additional long-term awards to certain members of our leadership team and expect additional long-term awards to other members of our leadership team in the fourth quarter of 2017 or the first quarter of 2018.disposals. General and administrative expense ~~is expected~~increased in the first six months of 2021 compared to ~~increase in future periods~~the first six months of 2020, primarily due to ~~the non-cash~~increases in compensation and benefits, facilities expense, ~~related to these grants.~~and technology expense of $10.2 million, $2.9 million, and $2.3 million, respectively. This ~~increase~~was partially offset by a decrease in ~~general and administrative expense is expected to result in material reductions in net income from continuing operations in future periods compared to historical periods. The amount and timing~~professional fees of these effects will depend on the nature of the equity awards that the independent Compensation Committee of the Board of Directors determines to grant and the assumptions used to determine associated stock-based compensation expense. For additional information regarding the awards granted in the third quarter of 2017, ~~see~~ ~~Note 8 —Stock-Based Compensation included in Part I, Item 1.~~ ~~Financial Statements. Non-cash compensation expense is excluded from Adjusted EBITDA. See “Adjusted EBITDA” below.~~$1.3 million.

General and administrative expense as a percentage of revenue ~~remained consistent at 10%~~decreased to 15% in the ~~third~~second quarter of ~~2017 and~~2021 compared to 16% in the ~~third~~second quarter of ~~2016.~~

~~General~~2020, and ~~administrative expense~~ increased to 14% in the first ~~nine~~six months of ~~2017 from the first nine months of 2016, primarily due~~2021 compared to ~~increases in compensation and benefits of $10.7 million as a result of increases in headcount and the long term equity awards granted to the CEO in the third quarter of 2017 discussed above.~~

~~General and administrative expense as a percentage of revenue remained consistent at 9%~~13% in the first ~~nine~~six months of ~~2017 and the first nine months of 2016.~~

~~Contingent consideration~~

During the third quarter and first nine months of 2017, we recorded $2.5 million and $20.6 million, respectively, of contingent consideration expense due to an adjustment in the estimated fair value of the earnout payments related to the CompareCards and DepositAccounts acquisitions. The contingent consideration expense for the CompareCards acquisition was $1.9 million and $20.0 million, respectively, in the third quarter and first nine months of 2017, primarily due to an increased probability of achievement

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of certain defined earning targets for CompareCards. The contingent consideration expense for the DepositAccounts acquisition was $0.6 million in both the third quarter and first nine months of 2017 and was primarily due to an increased probability of achievement of certain defined revenue targets for deposits products.2020.

Product development

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

Product development expense increased in the ~~third~~second quarter and first ~~nine~~six months of ~~2017~~2021 compared to the ~~third~~second quarter and first ~~nine~~six months of ~~2016,~~2020 as we continued to invest in internal development of new and enhanced features, functionality and business opportunities that we believe will enable us to better and more fully serve consumers and ~~lenders. Product development expenses are comprised~~Network Partners.

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Depreciation

The increase in depreciation expense in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 was primarily the result of ~~compensation~~depreciation on assets related to our new corporate office, which lease contractually commenced in the second quarter of 2021.

Amortization of intangibles

The decrease in amortization of intangibles in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 was due to certain intangible assets associated with our recent business acquisitions becoming fully amortized.

Contingent consideration

During the second quarter and first six months of 2021, we recorded contingent consideration gains of $8.9 million and $8.1 million, respectively, due to adjustments in the estimated fair value of the remaining earnout payment related to the QuoteWizard acquisition.

During the second quarter and first six months of 2020, we recorded aggregate contingent consideration expense of $9.2 million and $1.1 million, respectively, due to adjustments in the estimated fair value of the earnout payments related to our recent acquisitions. For the second quarter of 2020, the contingent consideration expense for the QuoteWizard, Ovation and SnapCap acquisitions was $8.1 million, $1.0 million and $0.1 million, respectively. For the first six months of 2020, the contingent consideration expense for the Ovation and SnapCap acquisitions was $1.2 million and $0.1 million, respectively, partially offset by a contingent consideration gain for the QuoteWizard acquisition of $0.2 million.

Interest expense

Interest expense increased in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 due to the issuance of $575.0 million of our 0.50% Convertible Senior Notes due July 15, 2025 (the “2025 Notes”) as well as the repurchase of a portion of our existing 0.625% Convertible Senior Notes due June 1, 2022 (the “2022 Notes”) in July 2020. In the second quarter and first six months of 2021, interest expense of $6.7 million and $13.5 million, respectively, was recognized on the 2025 Notes. This increase to interest expense was partially offset by lower interest expense on the 2022 Notes in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 as a result of the July 2020 repurchase of $130.3 million principal amount of the 2022 Notes. See Note 13—Debt for additional information on the issuance of the 2025 Notes and the partial repurchase of the 2022 Notes.

Other income

For the first six months of 2021, other ~~employee-related costs.~~income primarily consists of a $40.1 million gain on our investment in Stash as a result of an adjustment to the fair value based on observable market events. See Note 7—Equity Investment for additional information on the equity interest in Stash.

Income tax expense

For the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~2021, the effective tax rate varied from the federal statutory rate of ~~35% primarily~~21% in part due to a tax benefit of ~~$0.8~~$8.3 million ~~and $8.4 million, respectively,~~ recognized for excess tax benefits ~~due to~~resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU ~~2016-09.~~ ~~See~~ ~~Note 2~~ —~~Significant Accounting Policiesin Part I, Item 1.~~ ~~Financial Statements~~ ~~for additional information.~~2016-09 and the effect of state taxes.

For the ~~third~~second quarter and first six months of ~~2016,~~2020, the effective tax rate varied from the federal statutory rate of ~~35% primarily~~21% in part due to a tax benefit of $0.8 million and $1.8 million, respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state ~~taxes, including~~taxes. The effective tax rate for the first six months of 2020 was also impacted by a tax benefit of $6.1 million for the impact of ~~a reduction in~~ the ~~North Carolina state income tax rates which reduced the value of our deferred tax assets.~~

For the first nine months of 2016, the effective tax rate varied from the federal statutory rate of 35% primarily due to the benefit derived from the federal research tax credit, partially offset by state taxes. The federal research tax credit benefit was the result of a study completed during the second quarter of 2016Coronavirus Aid, Relief, and Economic Security ("CARES") Act. See Note 12—Income Taxes for ~~the open tax years 2011 through 2015, plus an estimate of the benefit from 2016 research activities.~~

~~There have been no changes to our valuation allowance assessment for the third quarter of 2017.~~additional information.

Discontinued operations

~~Losses from~~The results of discontinued operations ~~are attributable to losses associated with~~include the results of the LendingTree Loans business ~~the~~formerly operated by our wholly-owned subsidiary, Home Loan Center, Inc., or HLC. The sale of ~~which~~substantially all of the assets of HLC, including the LendingTree Loans business, was completed on June 6, 2012. ~~Losses~~HLC filed a petition under Chapter 11 of the United States

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Bankruptcy Code on July 21, 2019, which was converted to Chapter 7 of the United States Bankruptcy Code on September 16, 2019.

As a result of the voluntary bankruptcy petition, as of the initial July 21, 2019 bankruptcy petition filing date, HLC and its consolidated subsidiary were deconsolidated from ~~discontinued operations~~LendingTree’s consolidated financial statements. The effect of such deconsolidation was the elimination of the consolidated assets and liabilities of HLC (and its consolidated subsidiary) from LendingTree’s consolidated balance sheets.

Prior to the bankruptcy filing, losses from the LendingTree Loans business were primarily due to litigation settlements and contingencies and legal fees associated with ongoing legal proceedings.

The results of discontinued operations include litigation settlements and contingencies and legal fees associated with ongoing legal proceedings against LendingTree, Inc. or LendingTree, LLC that arose due to the LendingTree Loans business or the HLC bankruptcy filing.

See Note 17—Discontinued Operations to the consolidated financial statements included elsewhere in this report for more information.

Segment Profit


	Three Months Ended June 30,								Six Months Ended June 30,
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
	(Dollars in thousands)
Home	$	39,017	$	38,726	$	291	1	%	$	78,007	$	74,637	$	3,370	5	%
Consumer	33,394		19,402		13,992		72	%	58,001		62,501		(4,500)		(7)	%
Insurance	33,238		30,122		3,116		10	%	66,080		60,655		5,425		9	%
Other	(49)		81		(130)		(160)	%	(141)		(247)		106		43	%
Segment profit	$	105,600	$	88,331	$	17,269	20	%	$	201,947	$	197,546	$	4,401	2	%

Segment profit is our primary segment operating metric. Segment profit is calculated as segment revenue less segment selling and marketing expenses attributed to variable costs paid for advertising, direct marketing and related expenses that are directly attributable to the segments' products. See Note 16—Segment Information in the notes to the consolidated financial statements for additional information on segments and a reconciliation of segment profit to pre-tax income from continuing operations.

Consumer segment profit increased $14.0 million in the second quarter of 2021 from the second quarter of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense. Consumer segment profit decreased $4.5 million in the first six months of 2021 from the first six months of 2020, primarily due to a decrease in revenue, partially offset by a corresponding decrease in selling and marketing expense. We continue to build momentum in the Consumer segment as demand from both consumers and our Network Partners returns. Consumer demand for personal loans began to return as the economy begins to reopen. Lender demand in our personal loans product continues to improve, with more lenders currently on our marketplace than prior to the onset of the COVID-19 pandemic. Credit card issuer budgets continue to increase, with an increasing number of issuers returning to our marketplace and increasing approval rates. The profitability of our credit card product remains constrained as we continue to re-invest incremental revenue into the product to capture wallet share. Our small business loans product continues steady recovery from the impact of the COVID-19 pandemic.

Insurance segment profit increased $3.1 million in the second quarter of 2021 from the second quarter of 2020, and increased $5.4 million in the first six months of 2021 from the first six months of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense. We continue to diversify and increase the durability of the Insurance segment by broadening traffic acquisition sources, expanding our insurance carrier network, and growing into non-automobile categories. During the second quarter of 2021, our publisher platform again delivered record performance, and our inbound channel continued positive momentum. These additional traffic sources enable incremental

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growth while reducing our reliance on paid search marketing, in which we have observed increasing competition in recent months. Additionally, our efforts to scale non-automobile categories continue to deliver returns. We again observed record revenue from the home category in the second quarter of 2021, as we increasingly leverage our presence in the mortgage industry. We continue to make significant investments in our Medicare category, ahead of the annual fourth quarter enrollment season.

Home segment profit remained relatively consistent in the second quarter of 2021 from the second quarter of 2020. Home segment profit increased $3.4 million in the first six months of 2021 from the first six months of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense. Although refinance activity is decelerating from the peak experienced earlier this year, the Home segment continues to perform well as we are an integral part of our Network Partners' marketing model. Demand for our services, and competition on our network, drove a 71% increase in mortgage revenue per lead in the second quarter of 2021 compared to the second quarter of 2020. The Home segment margin increased to 37% of revenue in the second quarter of 2021, compared to 30% in the first quarter of 2021. While there is uncertainty over the current low interest rate environment and corresponding impact to refinance activity, we are confident in our market-leading position and flexible business model.

Adjusted EBITDA

We report Adjusted EBITDA as a supplemental measure to GAAP. This measure is the primary metric by which we evaluate the performance of our businesses, on which our marketing expenditures and internal budgets are based and by which, in most years, management and many employees are compensated. We believe that investors should have access to the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. We provide and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures discussed below.

Definition of Adjusted EBITDA

We report Adjusted EBITDA as net income from continuing operations adjusted to exclude interest, income tax, amortization of intangibles and depreciation, and to further exclude (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) gain/loss on investments, (5) restructuring and severance expenses, ~~(5)~~(6) litigation settlements and contingencies, ~~and legal fees for certain patent litigation, (6)~~(7) acquisitions and dispositions income or expense (including with respect to changes in fair value of contingent consideration), and ~~(7)~~(8) one-time items. Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations of certain expenses, including depreciation, non-cash compensation and acquisition-related accounting. We endeavor to compensate for the limitations of the non-GAAP measures presented by also providing the comparable GAAP measures with equal or greater prominence and descriptions of the reconciling items, including

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quantifying such items, to derive the non-GAAP measures. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

One-Time Items

Adjusted EBITDA is adjusted for one-time items, if applicable. Items are considered one-time in nature if they are non-recurring, infrequent or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. For the periods presented ~~in this report,~~below, there are no adjustments for one-time items.

Non-Cash Expenses that are Excluded from Adjusted EBITDA

Non-cash compensation expense consists principally of expense associated with grants of restricted stock, restricted stock units and stock ~~options.~~options, some of which awards have performance-based vesting conditions. These expenses are not paid in cash, and we include the related shares in our calculations of fully diluted shares outstanding. Upon settlement of restricted stock units, exercise of certain stock options or vesting of restricted stock awards, the awards may be settled, on a net basis, with us remitting the required tax withholding amount from our current funds.

Amortization of intangibles are non-cash expenses relating primarily to intangible assets acquired through acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as purchase agreements, technology and customer relationships, are valued and amortized over their estimated lives.

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The following table is a reconciliation of net income from continuing operations to Adjusted EBITDA (in thousands).


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income (loss) from continuing operations	$	9,800	$	(8,616)	$	29,112	$	10,360
Adjustments to reconcile to Adjusted EBITDA:
Amortization of intangibles	11,310		13,756		22,622		27,513
Depreciation	4,443		3,550		8,161		6,928
Severance	—		32		—		190
Loss on impairments and disposal of assets	1,052		22		1,400		552
Unrealized gain on investments	—		—		(40,072)		—
Non-cash compensation expense	18,294		13,158		34,730		25,075
Change in fair value of contingent consideration	(8,850)		9,175		(8,053)		1,053
Acquisition expense	1,110		20		1,139		2,200
Litigation settlements and contingencies	322		(1,325)		338		(996)
Interest expense, net	9,840		4,955		20,055		9,789
Income tax benefit	(9,092)		(3,880)		(454)		(6,941)
Adjusted EBITDA	$	38,229	$	30,847	$	68,978	$	75,723

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016

Net income from continuing operations $ 10,131
$ 7,280
$ 25,936
$ 23,187
Adjustments to reconcile to Adjusted EBITDA:

Amortization of intangibles 3,817
166
9,034
263
Depreciation 1,798
1,286
5,309
3,458
Severance —
—
404
72
Loss on disposal of assets 364
121
673
388
Non-cash compensation 7,938
2,348
13,068
7,410
Change in fair value of contingent consideration 2,501
—
20,640
—
Acquisition expense 320
362
1,357
499
Litigation settlements and contingencies 272
19
961
109
Interest expense, net 2,804
141
4,048
424
Rental depreciation and amortization of intangibles 486
—
1,011
—
Income tax expense 4,292
6,729
3,109
15,099
Adjusted EBITDA $ 34,723
$ 18,452
$ 85,550
$ 50,909

Financial Position, Liquidity and Capital Resources

General

As of ~~September~~June 30, ~~2017~~,2021, we had ~~$345.2~~$203.2 million of cash and cash equivalents, ~~and $4.1~~compared to $169.9 million of ~~restricted cash and cash equivalents, compared to~~ ~~$91.1 million~~ ~~of cash and cash equivalents and~~ ~~$4.1 million~~ ~~of restricted~~ cash and cash equivalents as of December 31, ~~2016~~.2020.

In ~~May 2017, we issued $300.0 million~~the first quarter of ~~our 0.625% Convertible Senior Notes for net proceeds of $290.8 million. We used approximately $18.1 million of the net proceeds to enter into~~ ~~Convertible Note Hedge and Warrant transactions. For additional information on the Convertible Senior Notes and the Convertible Note Hedge and Warrant transactions,~~ ~~see~~ ~~Note 10—Debt, in the notes to the consolidated financial statements included elsewhere in this report.~~

~~In September 2017,~~2021, we acquired ~~certain assets of SnapCap~~additional equity interest in Stash for ~~$11.9 million in cash at closing and potential future contingent consideration payments of up to $9.0 million through March 31, 2020, subject to achieving specific targets.~~

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~~In June 2017, we acquired the membership interests of MagnifyMoney for $29.6 million cash consideration at the closing of the transaction.~~

In June 2017, we acquired substantially all of the assets of DepositAccounts for $24.0 million in cash at closing and potential future contingent consideration payments of up to $9.0 million through June 30, 2020, subject to achieving specified targets.

In November 2016, we acquired CompareCards for $80.7 million cash at closing and potential future contingent consideration payments of up to $22.5 million for each of 2017 and 2018, subject to achieving specified targets. $1.2 million. See Note ~~5—Business Acquisitions in the notes~~7—Equity Investment to the consolidated financial statements included elsewhere in this report for additional information ~~for these acquisitions.~~on the equity interest in Stash.

We could make an additional potential contingent consideration payment of up to $23.4 million related to the prior acquisition of QuoteWizard.

We expect our cash and cash equivalents and cash flows from operations to be sufficient to fund our operating needs for the next twelve months and beyond. ~~Our revolving credit facility described below is an additional potential source~~We will continue to monitor the impact of ~~liquidity.~~the ongoing COVID-19 pandemic on our liquidity and capital resources. We expect our cashflow from operating activities to be negatively impacted by the economic recession.

Senior Secured Revolving Credit Facility

On ~~October 22, 2015,~~December 10, 2019, we ~~established a $125.0~~entered into an amended and restated $500.0 million five-year ~~Senior Secured Revolving Credit Facility~~senior secured revolving credit facility, which matures on ~~October 22, 2020~~December 10, 2024 (the ~~“Revolving~~“Amended Revolving Credit Facility”). ~~The proceeds of~~Borrowings under the Amended Revolving Credit Facility can be used to finance working capital needs, capital expenditures and general corporate purposes, including to finance permitted acquisitions. In July 2020, we executed a temporary amendment to the Amended Revolving Credit Facility to provide for certain covenant relief, primarily to facilitate the issuance of the 2025 Notes, the repurchase of a portion of the 2022 Notes, and to pay down existing borrowings under the credit facility. The amendment was applicable from the effective date through the fiscal quarter ending June 30, 2021. As a result of the expiration of the temporary amendment, we are currently unable to draw on the Amended Revolving Credit Facility and we are in the process of establishing a new facility during the third quarter of 2021. See Note 13—Debt for additional information.

As of ~~October 26, 2017,~~July 29, 2021, we ~~do not~~ have ~~any borrowings~~ outstanding a $0.2 million letter of credit under the Amended Revolving Credit Facility.

~~For additional information on the Revolving Credit Facility,~~ ~~see~~ ~~Note 10—Debt, in the notes to the consolidated financial statements included elsewhere in this report.~~

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Cash Flows from Continuing Operations

Our cash flows attributable to continuing operations are as follows:


	Nine Months Ended September 30,							Six Months Ended June 30,
	2017			2016				2021		2020
	(in thousands)							(in thousands)
Net cash provided by operating activities	$	65,083		$	38,885		Net cash provided by operating activities	$	54,580	$	87,916
Net cash used in investing activities	(72,320		)	(10,067		)	Net cash used in investing activities	(24,765)		(89,108)
Net cash provided by (used in) financing activities	263,710			(51,648		)
Net cash (used in) provided by financing activities							Net cash (used in) provided by financing activities	(4,970)		45,282

Cash Flows from Operating Activities

Our largest source of cash provided by our operating activities is revenues generated by our ~~mortgage and non-mortgage~~ products. Our primary uses of cash from our operating activities include advertising and promotional payments. In addition, our uses of cash from operating activities include compensation and other employee-related costs, other general corporate expenditures, litigation settlements and contingencies, certain contingent consideration payments, and income taxes.

Net cash provided by operating activities attributable to continuing operations ~~increased~~decreased in the first ~~nine~~six months of ~~2017~~2021 from the first ~~nine~~six months of ~~2016~~2020 primarily due to ~~an increase in revenue, partially offset by an increase in selling and marketing expense. Additionally, there was a net decrease in cash from changes in working capital primarily driven by~~unfavorable changes in accounts receivable, ~~and income taxes,~~ partially offset by favorable changes in accounts payable, accrued expenses and other current ~~liabilities.~~liabilities, and income taxes receivable.

Cash Flows from Investing Activities

Net cash used in investing activities attributable to continuing operations in the first ~~nine~~six months of ~~2017~~2021 of ~~$72.3~~$24.8 million consisted ~~primarily~~ of ~~the acquisition of MagnifyMoney for $29.5 million, the acquisition of DepositAccounts for $25.0 million, the acquisition of SnapCap for $11.9 million and~~ capital expenditures of ~~$5.9~~$23.6 million primarily related to internally developed ~~software.~~software and leasehold improvements for our new principal corporate offices, as well as the purchase of an additional $1.2 million equity interest in Stash, described above.

Net cash used in investing activities attributable to continuing operations in the first ~~nine~~six months of ~~2016~~2020 of ~~$10.1~~$89.1 million consisted ~~primarily~~ of the initial purchase of an $80.0 million equity interest in Stash and capital expenditures of ~~$8.0~~$9.1 million primarily related to internally developed software and the acquisition of an aircraft and $4.5 million for the acquisition of SimpleTuition, partially offset by a $2.5 million decrease in restricted cash due to the release of funds in escrow for the surety bonds due to a reduction in collateral requirements.

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software.

Cash Flows from Financing Activities

Net cash used in financing activities attributable to continuing operations in the first six months of 2021 of $5.0 million consisted primarily of $4.8 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options.

Net cash provided by financing activities attributable to continuing operations in the first ~~nine~~six months of ~~2017~~2020 of ~~$263.7~~$45.3 million consisted primarily of ~~$300.0~~$55.0 million of ~~gross~~net proceeds from ~~the issuance of convertible senior notes and $43.4 million of proceeds from the sale of warrants in connection with the convertible senior notes,~~our Amended Revolving Credit Facility, partially offset by ~~$61.5 million for the payment of convertible note hedge transactions, $9.3 million for the payment of convertible senior note issuance costs and $10.0 million for the repurchase of our stock.~~

Net cash used in financing activities attributable to continuing operations in the first nine months of 2016 of $51.6 million consisted primarily of the repurchase of our stock of $48.5 million and $3.1$6.1 million in withholding taxes paid ~~by us~~ upon surrender of shares to satisfy obligations on equity ~~awards.~~awards, net of proceeds from the exercise of stock options, and a $3.3 million contingent consideration payment for SnapCap.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements other than a letter of credit and our ~~operating lease obligations and~~ funding commitments pursuant to our surety bonds, none of which have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

New Accounting Pronouncements

For information regarding new accounting pronouncements, see Note 2- 2—Significant Accounting Policies, in Part I, Item 1 Financial Statements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Other than our Amended Revolving Credit Facility, ~~which currently has no borrowings outstanding,~~ we do not have any financial instruments that are exposed to significant market risk. We maintain our cash and cash equivalents in bank deposits and short-term, highly liquid money market investments. A hypothetical 100-basis point increase or decrease in market interest rates would not have a material impact on the fair value of our cash equivalents securities, or our earnings on such cash equivalents, but would have an effect on the interest paid on borrowings under the Amended Revolving Credit Facility, if any. As of ~~October 26, 2017,~~July 29, 2021, there were no borrowings under the Amended Revolving Credit Facility.

Fluctuations in interest rates affect consumer demand for new mortgages and the level of refinancing activity which, in turn, affects lender demand for mortgage leads. Typically, ~~a decline in mortgage~~when interest rates ~~will lead~~decline, we see increased consumer demand for mortgage refinancing, which in turn leads to ~~reduced~~increased traffic to our website and decreased selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically decreases, as there are more consumers in the marketplace seeking refinancings and, accordingly, lenders receive more organic lead volume. Due to lower lender demand, our revenue earned per consumer typically decreases but with correspondingly lower selling and marketing costs. Conversely, ~~an increase in mortgage~~when interest rates ~~will~~increase, we typically ~~lead~~see decreased consumer demand for mortgage refinancing, leading to ~~an increase in~~decreased traffic to our website and higher associated selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party ~~leads,~~sources typically increases, as there are fewer consumers in the marketplace and, accordingly, the supply of organic mortgage lead volume decreases. ~~See also the risk factor "Adverse conditions~~Due to high lender demand, we typically see an increase in the ~~primary~~amount lenders will pay per matched lead, which often leads to higher revenue earned per consumer. However, increases in the amount lenders will pay per matched lead in this situation is limited by the overall cost models of our lenders, and ~~secondary mortgage markets, as well as~~our revenue earned per consumer can be adversely affected by the ~~general economy, could materially and adversely affect our business, financial condition and results of operations,"~~overall reduced demand for refinancing in ~~Part I, Item 1A (Risk Factors) in our 2016 Annual Report.~~a rising rate environment.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), management, with the participation of our principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective, as of ~~September~~June 30, ~~2017,~~2021, to reasonably ensure that information required to be disclosed and filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that management will be timely alerted to material information required to be included in our periodic reports filed with the Securities and Exchange Commission.

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Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended ~~September~~June 30, ~~2017~~2021 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, we are party to litigation involving property, contract, intellectual property and a variety of other claims. The amounts that may be recovered in such matters may be subject to insurance coverage. We have provided information about certain legal proceedings in which we are involved in Part I, Item 3. Legal Proceedings of our ~~2016~~2020 Annual Report and updated that information in Note 11—14—Contingencies and Note 17—Discontinued Operations to the consolidated financial statements included elsewhere in this report.

Item 1A. Risk Factors

There have been no material changes to the risk factors included in Part ~~II, Item 1A. Risk Factors of our quarterly report on Form 10-Q for the quarter ended June 30, 2017 and Part~~ I, Item 1A. Risk Factors of our ~~2016~~2020 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

In each of ~~January 2010, May 2014, January 2016~~February 2018 and February ~~2016,~~2019, the board of directors authorized and we announced a stock repurchase program which allowed for the repurchase of up to ~~$10.0 million, $10.0 million, $50.0~~$100.0 million and ~~$40.0~~$150.0 million, respectively, of our common stock. ~~At September 30, 2017, approximately $38.7 million remains authorized for share repurchase under this program.~~ Under this program, we can repurchase stock in the open market or through privately-negotiated transactions. We have used available cash to finance these repurchases. We will determine the timing and amount of any additional repurchases based on our evaluation of market conditions, applicable SEC guidelines and regulations, and other factors. This program may be suspended or discontinued at any time at the discretion of our board of directors. During the quarter ended ~~September~~June 30, ~~2017, 42,153~~2021, no shares of common stock were repurchased under the stock repurchase program. As of ~~October 26, 2017,~~July 23, 2021, approximately ~~$38.7~~$179.7 million remains authorized for share repurchase.

Additionally, the LendingTree ~~Fifth~~Seventh Amended and Restated 2008 Stock ~~and Award Incentive~~ Plan approved by our stockholders on June 9, 2021 allows, and the LendingTree 2017 Inducement Grant Plan ~~allow~~terminated by us in April 2021 allowed, employees to forfeit shares of our common stock to satisfy federal and state withholding obligations upon the exercise of stock options, the settlement of restricted stock unit awards and the vesting of restricted stock awards granted to those individuals under the plans. During the quarter ended ~~September~~June 30, ~~2017, 2,587~~2021, 3,506 shares were purchased related to these obligations under the LendingTree ~~Fifth~~Seventh Amended and Restated 2008 Stock ~~and Award Incentive~~ Plan and no721 shares ~~have yet been~~were purchased related to these obligations under the LendingTree 2017 Inducement Grant Plan. The withholding of those shares does not affect the dollar amount or number of shares that may be purchased under the stock repurchase program described above.

The following table provides information about the ~~company's~~Company's purchases of equity securities during the quarter ended ~~September~~June 30, ~~2017.~~2021.


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
					(in thousands)
4/1/2021 - 4/30/2021	264	$	226.78	—	$	179,673
5/1/2021 - 5/31/2021	347	$	211.68	—	$	179,673
6/1/2021 - 6/30/2021	3,616	$	216.81	—	$	179,673
Total	4,227	$	217.02	—	$	179,673

Period
Total Number of
Shares Purchased ⁽¹⁾

Average Price
Paid per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs ⁽²⁾

Approximate
Dollar Value of Shares
that May Yet be
Purchased Under the
Plans or Programs
(in thousands)
7/1/17 - 7/31/17 243
$ 183.48
—
$ 48,748
8/1/17 - 8/31/17 1,953
$ 229.04
—
$ 48,748
9/1/17 - 9/30/17 42,544
$ 237.31
42,153
$ 38,747
Total 44,740
$ 236.66
42,153
$ 38,747
(1)During April 2021, May 2021 and June 2021, 264 shares, 347 shares and 3,616 shares, respectively (totaling 4,227 shares), were purchased to satisfy federal and state withholding obligations of our employees upon the settlement of restricted stock units and restricted stock awards, all in accordance with our Seventh Amended and Restated 2008 Stock Plan and 2017 Inducement Grant Plan, as described above.


~~(1)~~	During July 2017, August 2017 and September 2017, 243 shares, 1,953 shares and 391 shares, respectively (totaling 2,587 shares), were purchased to satisfy federal and state withholding obligations of our employees upon the settlement of restricted stock unit awards, all in accordance with our Fifth Amended and Restated 2008 Stock and Award Incentive Plan, as described above.


~~(2)~~	~~See the narrative disclosure above the table for further description of our publicly announced stock repurchase program.~~

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(2)See the narrative disclosure above the table for further description of our publicly announced stock repurchase program.

Item 5.Other Information

~~Approved Compensation Arrangement & Employment Amendment~~

On October 22, 2017, the Compensation Committee (“Committee”) of our Board of Directors approved new compensation arrangements in the form of a term sheet (the “Term Sheet”) with Neil Salvage, our President. The Term Sheet contemplates that we will in the near-term enter into a new employment agreement with Mr. Salvage to replace his current letter agreement dated November 28, 2016. Mr. Salvage will continue to serve in his current roles. His new employment agreement will have a four-year term ending October 31, 2021, although employment is “at will” and may be terminated by either us or Mr. Salvage at any time.None.

The Term Sheet provides that Mr. Salvage will receive an annual base salary of $450,000, and he is eligible to receive a target annual incentive of 100% of his base salary. The Term Sheet further provides that Mr. Salvage is eligible to participate in employee benefits programs (including paid time off and participation in the Company’s 401(k) plan). In connection with his new employment arrangement, Mr. Salvage received 25,309 restricted stock units and stock options to purchase 49,821 shares of common stock, each of which vest in four equal installments beginning on October 22, 2018. In addition to continued service over the 4-year vesting period, vesting of the restricted stock unit award is subject to a performance condition as follows: our company must achieve either (a) Adjusted EBITDA of at least $1 million in the first quarter of 2018 or (b) aggregate Adjusted EBITDA for the first half of 2018 in excess of $2 million. These awards are expected to comprise the entirety of Mr. Salvage’s long-term incentive compensation through October 31, 2021. For two years after his employment has terminated, Mr. Salvage will be obligated to comply with non-compete and non-soliciting of employees and customers restrictions. If Mr. Salvage’s employment is terminated by us without cause or if he resigns his employment for good reason, he will be eligible to receive an aggregate cash amount equal to his then-annual base salary paid in installments over a one-year period and he will vest in equity awards scheduled to vest within 9 months of the termination date (subject to Mr. Salvage providing a release of claims and also subject to cessation of cash severance if he secures new employment). If there is a change in control, Mr. Salvage will immediately become fully vested in all his outstanding equity awards. In addition, if there is a change in control and during the 12-month period following such change in control, Mr. Salvage’s employment is terminated by us without cause or by Mr. Salvage for good reason, Mr. Salvage will receive a severance payment equal to two years of base salary.

On October 22, 2017, the Committee amended the terms of J.D. Moriarty’s employment as previously disclosed in Form 8-K filed September 6, 2017, to provide for an anticipated four-year term of employment (although employment is “at will” and may be terminated by either us or Mr. Moriarty at any time). We expect that we will in the near-term enter into a new employment agreement with Mr. Moriarty to reflect these amended terms and to replace his current letter agreement dated March 29, 2017. In connection with this extension, Mr. Moriarty received 5,583 restricted stock units and stock options to purchase 10,416 shares of common stock, each of which vest in a single installment on October 22, 2021. This award and the awards previously granted to Mr. Moriarty are expected to comprise the entirety of Mr. Moriarty’s long-term incentive compensation through August 31, 2021. For two years after his employment has terminated, Mr. Moriarty will be obligated to comply with non-compete and non-soliciting of employees and customers restrictions. If on or after December 3, 2017 Mr. Moriarty’s employment is terminated by us without cause or if he resigns his employment for good reason, he will be eligible to receive an aggregate cash amount equal to his then-annual base salary paid in installments over a one-year period. Upon termination by us without cause or resignation by Mr. Moriarty for good reason, he will also vest in equity awards scheduled to vest within 9 months of the termination date. All such benefits upon termination without cause or resignation for good reason are subject to Mr. Moriarty providing a release of claims and also subject to cessation of cash severance if he secures new employment. If there is a change in control, Mr. Moriarty will immediately become fully vested in all his outstanding equity awards. In addition, if there is a change in control and during the 12-month period following such change in control, Mr. Moriarty’s employment is terminated by us without cause or by Mr. Moriarty for good reason, Mr. Moriarty will receive a severance payment equal to two years of base salary.

~~This disclosure is provided in lieu of disclosure in Item 5.02 of Form 8-K, in accordance with SEC rules.~~

~~Assignment and Assumption of Spinco Agreement~~

~~On October 26, 2017, our board of directors approved an Assignment and Assumption Agreement which permits Liberty Interactive Corporation (f/k/a Liberty Media Corporation) (“Liberty~~”) to assign its rights and obligations under the Spinco Agreement between Liberty and us (“Spinco Agreement”) to General Communication, Inc. (to be renamed GCI Liberty, Inc., “SplitCo”) in connection with a contemplated reorganization transaction between Liberty and SplitCo (the "Liberty Reorganization"). The Liberty Reorganization includes Liberty contributing its subsidiaries holding our common stock, as well as other assets and liabilities of Liberty and its subsidiaries attributed to its Ventures Group, to SplitCo and then splitting SplitCo off to the stockholders of Liberty's Liberty Ventures Series A and Series B common stock. If the Liberty Reorganization is consummated, we expect SplitCo to continue the operations of Liberty with respect to its ownership of our common stock. The Assignment and Assumption Agreement was also approved by a majority of the “Qualified Directors” (as that term is defined in the Spinco Agreement).

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The Assignment and Assumption Agreement also provides that following the Liberty Reorganization, neither Liberty nor its affiliates may acquire beneficial ownership of our equity securities other than the acquisition of less than 1% of our outstanding equity securities through the acquisition of or investments in third parties holding such equity securities. SplitCo will be subject to the present restrictions in the Spinco Agreement limiting the beneficial ownership of it and its affiliates to 34.9% of our voting power.

The Assignment and Assumption Agreement also modifies certain of the limited circumstances in which Liberty and its affiliates (or following the Liberty Reorganization, SplitCo and its affiliates) would have limited relief from the standstill restrictions under the Spinco Agreement. The Spinco Agreement provides that in the event a third party discloses beneficial ownership of our common stock exceeding 20% and our board of directors does not within 10 business days of such announcement take certain defensive actions, Liberty and its affiliates (or following the Liberty Reorganization, SplitCo and its affiliates) are relieved of certain standstill obligations to the extent reasonably necessary to permit Liberty (or following the Liberty Reorganization SplitCo) to commence and consummate an offer to acquire all of the outstanding equity securities of our company. The Assignment and Assumption Agreement provides that the percentage threshold of ownership triggering this limited relief from standstill obligations will be 30% solely with respect to ownership by Douglas R. Lebda, his immediate family members acquiring securities directly or indirectly from Mr. Lebda, his estate and certain family-controlled entities (collectively, the “Lebda Group”). Further, the 30% threshold for the Lebda Group will be calculated on the basis of outstanding shares held by the Lebda Group and will not include securities that the Lebda Group may acquire upon the conversion, exercise, redemption or exchange of warrants, options or other convertible securities. The foregoing modification will not be applicable to the extent that it is publicly disclosed that any member of the Lebda Group has formed or become a member of a “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act) with any person not a member of the Lebda Group.

~~For further discussion of the Spinco Agreement, please see our definitive proxy statement filed with the SEC on April 28, 2017.~~

As of June 6, 2017, Liberty beneficially owned 27.0% of our common stock and as of April 21, 2017, Douglas R. Lebda beneficially owned 20.8% of our common stock. Liberty has (and following consummation of the Liberty Reorganization, SplitCo will have) the right to designate two directors of our board in accordance with the Spinco Agreement.

~~This disclosure is provided in lieu of disclosure in Item 1.01 of Form 8-K, in accordance with SEC rules.~~

~~Table of Contents~~

Item 6. Exhibits

Exhibit

Description

Location

3.1

Amended and Restated Certificate of Incorporation of LendingTree, Inc.

Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed August 25, 2008

3.2

~~Third~~Fourth Amended and Restated By-laws of LendingTree, Inc.

Exhibit ~~3.2~~3.1 to the Registrant's Current Report on Form 8-K filed ~~December 31, 2014~~November 15, 2017

10.1

~~Amendment to Employment Agreement~~Memorandum on compensation changes for Trent Ziegler, dated ~~August 30, 2017, between Gabriel Dalporto and LendingTree, Inc.~~May 12, 2021

†

~~10.2~~31.1

~~Offer Letter and updated Term Sheet, between John D. Moriarty and LendingTree, LLC~~

†

~~10.3~~

~~Employment Agreement, dated September 20, 2017, between Douglas R. Lebda and LendingTree, Inc. and LendingTree, LLC~~

†

~~31.1~~

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

†

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

†

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

††

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

††

101.INS

XBRL Instance Document— The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

†††

101.SCH

XBRL Taxonomy Extension Schema Document

†††

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

†††

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

†††

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

†††

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

†††

104

Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101)

†††

† Filed ~~herewith~~herewith.

†† Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

††† Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: ~~October 26, 2017~~July 29, 2021



			LENDINGTREE, INC.

			By:			/s/ ~~J.D. MORIARTY~~TRENT ZIEGLER
						~~J.D. Moriarty~~Trent Ziegler
						Chief Financial Officer
						(principal financial officer and duly authorized officer)


		Page Number
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3130
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4041
Item 4.	Controls and Procedures	4041

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 5.	Other Information	43
Item 6.	Exhibits	4544



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(in thousands, except per share amounts)
Revenue	$	171,494		$	94,558		$	456,782		$	283,561
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	4,388			3,392			12,143			10,329
Selling and marketing expense	118,538			62,819			320,930			192,416
General and administrative expense	17,920			9,008			41,561			26,820
Product development	4,805			3,718			12,492			11,384
Depreciation	1,798			1,286			5,309			3,458
Amortization of intangibles	3,817			166			9,034			263
Change in fair value of contingent consideration	2,501			—			20,640			—
Severance	—			—			404			72
Litigation settlements and contingencies	272			19			961			109
Total costs and expenses	154,039			80,408			423,474			244,851
Operating income	17,455			14,150			33,308			38,710
Other income (expense), net:
Interest expense, net	(2,804		)	(141		)	(4,048		)	(424		)
Other (expense) income	(228		)	—			(215		)	—
Income before income taxes	14,423			14,009			29,045			38,286
Income tax expense	(4,292		)	(6,729		)	(3,109		)	(15,099		)
Net income from continuing operations	10,131			7,280			25,936			23,187
Loss from discontinued operations, net of tax	(1,011		)	(664		)	(2,632		)	(3,017		)
Net income and comprehensive income	$	9,120		$	6,616		$	23,304		$	20,170

Weighted average shares outstanding:
Basic	11,999			11,754			11,931			11,827
Diluted	13,774			12,742			13,625			12,782
Income per share from continuing operations:
Basic	$	0.84		$	0.62		$	2.17		$	1.96
Diluted	$	0.74		$	0.57		$	1.90		$	1.81
Loss per share from discontinued operations:
Basic	$	(0.08	)	$	(0.06	)	$	(0.22	)	$	(0.26	)
Diluted	$	(0.07	)	$	(0.05	)	$	(0.19	)	$	(0.24	)
Net income per share:
Basic	$	0.76		$	0.56		$	1.95		$	1.71
Diluted	$	0.66		$	0.52		$	1.71		$	1.58



	September 30, 2017		December 31, 2016
Cash in escrow from sale of LendingTree Loans ^(a)	$	4,033	$	4,032
Other	54		57
Total restricted cash and cash equivalents	$	4,087	$	4,089



	Goodwill		Accumulated Impairment Loss			Net Goodwill
Balance at December 31, 2016	$	539,545	$	(483,088	)	$	56,457
Acquisition of DepositAccounts	19,389		—			19,389
Acquisition of MagnifyMoney	23,784		—			23,784
Acquisition of SnapCap	13,928		—			13,928
Balance at September 30, 2017	$	596,646	$	(483,088	)	$	113,558



	Amortization Expense
Remainder of current year	$	4,345
Year ending December 31, 2018	16,228
Year ending December 31, 2019	15,973
Year ending December 31, 2020	13,948
Year ending December 31, 2021	5,743
Thereafter	18,886
Total intangible assets with definite lives, net	$	75,123



	Fair Value
Accounts receivable	$	3,538
Total intangible assets with definite lives, net	55,400
Goodwill	52,450
Accounts payable and accrued liabilities	(7,638		)
Total purchase price	$	103,750



	Fair Value
Intangible assets	$	9,600
Goodwill	19,389
Total purchase price	$	28,989



	Fair Value		Weighted Average Amortization Life
Technology	$	8,600	5 years
Customer lists	600		8 years
Trade name and trademarks	400		4 years
Total intangible assets	$	9,600	5.2 years



	Fair Value
Net working capital	$	921
Intangible assets	9,700
Goodwill	23,784
Deferred tax liabilities	(4,176		)
Noncontrolling interest	(637		)
Total purchase price	$	29,592



	Preliminary Fair Value
Net working capital and other assets	$	42
Fixed assets	146
Intangible assets	4,100
Goodwill	13,928
Total preliminary purchase price	$	18,216



	September 30, 2017		December 31, 2016
Accrued litigation liabilities	$	588	$	736
Accrued advertising expense	44,698		26,976
Accrued compensation and benefits	5,905		5,626
Accrued professional fees	1,003		1,411
Customer deposits and escrows	5,522		5,041
Other	11,028		9,613
Total accrued expenses and other current liabilities	$	68,744	$	49,403



	Restricted Stock
	Number of Shares		Weighted Average Grant Date Fair Value
			(per share)
Nonvested at January 1, 2017	14,464		$	25.14
Granted	—		—
Vested	(14,464	)	25.14
Forfeited	—		—
Nonvested at September 30, 2017	—		$	—



	Contingent Consideration
Balance at December 31, 2016	$	23,100
Transfers into Level 3	—
Transfers out of Level 3	—
Total net (gains) losses included in earnings (realized and unrealized)	20,640
Purchases, sales and settlements:
Additions	11,318
Payments	(1,000		)
Balance at September 30, 2017	$	54,058



	Number of Loans		Original Issue Balance
	(in thousands)		(in billions)
Loans sold by HLC	234		$	38.9
Subsequent settlements	(172	)	(28.8		)
Remaining unsettled balance as of September 30, 2017	62		$	10.1



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
					(in thousands)
7/1/17 - 7/31/17	243	$	183.48	—	$	48,748
8/1/17 - 8/31/17	1,953	$	229.04	—	$	48,748
9/1/17 - 9/30/17	42,544	$	237.31	42,153	$	38,747
Total	44,740	$	236.66	42,153	$	38,747