EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contacts: Keith Hall Brian Regan Deborah Roth
Senior Vice President Vice President of Senior Director,
and CFO Finance Corporate Communications
(704) 944-8580 (704) 944-8531 (704) 944-8571
khall@lendingtree.com bregan@lendingtree.com droth@lendingtree.com
LendingTree Reports Earnings Per Share of $0.12 for
Third Quarter 2002
o FOR THE FIRST TIME SINCE INCEPTION, COMPANY REPORTS POSITIVE EARNINGS
PER SHARE (EPS). DILUTED EPS OF $0.12 IS FAVORABLE TO PREVIOUSLY
REVISED GUIDANCE AND TO THE PRIOR QUARTER BY $0.06 AND $0.17 PER SHARE,
RESPECTIVELY.
o NET INCOME AVAILABLE TO COMMON SHAREHOLDERS OF $3.2 MILLION IS GREATER
THAN THE PREVIOUS QUARTER AND THE THIRD QUARTER OF 2001 BY $4.3 MILLION
AND $6.9 MILLION, RESPECTIVELY.
o RECORD THIRD QUARTER REVENUE OF $30.9 MILLION INCREASES 26% FROM
PREVIOUS QUARTER AND 80% OVER THE SAME QUARTER OF 2001.
o VALUE OF CLOSED LOANS FACILITATED BY THE LENDINGTREE EXCHANGE IS A
RECORD $5.8 BILLION, AN INCREASE OF 33% OVER THE PREVIOUS QUARTER,
BRINGING THE YEAR-TO-DATE VALUE OF LOANS CLOSED TO $14.0 BILLION.
o COMPANY REVISES UPWARD ITS FOURTH QUARTER 2002 AND FULL YEAR 2003
GUIDANCE, PROJECTING FULL YEAR DILUTED EPS OF $0.07 IN 2002 AND $0.40
IN 2003.
CHARLOTTE, N.C., OCTOBER 22, 2002 -- LendingTree, Inc. (NASDAQ: TREE), the
leading online lending exchange, today announced financial results for its third
quarter ended September 30, 2002, posting its first ever positive earnings per
share (EPS). During the quarter, the Company earned $0.12 per diluted share,
favorable to its previously improved guidance by $0.06 per share. The Company
also reported another record quarter for revenue, transaction volume, and
closings for both its lending and realty services exchanges, and revised its
financial guidance upward for the remainder of 2002 and 2003.
For the quarter, the Company earned revenue of $30.9 million, which was $6.5
million, or 26%, more than the second quarter of 2002 and $13.7 million, or 80%,
higher than the third quarter of 2001. Net income available to common
shareholders for the third quarter was $3.2 million, or $0.12 per diluted share,
in accordance with generally accepted accounting principles (GAAP). The third
quarter profit was $4.3 million favorable to the previous quarter's loss and was
$6.9 million favorable to the same quarter in 2001.
The closing rates for the Company's lending exchange in the third quarter
improved for each loan product versus the second quarter, resulting in a record
average close rate of 16.1% in the third quarter, versus 14.0% in the second
quarter and 11.9% in the same quarter last year. During the quarter, the Company
facilitated $5.8 billion in closed loans, an increase of 33% over the second
quarter and 77% more than the amount closed during the same quarter last year.
The LendingTree exchange has now facilitated $14.0 billion in closed loans
through the first nine months in 2002.
Doug Lebda, founder and CEO, stated, "Our third quarter financial results
represent a major milestone in our Company's history. Our scaleable business
model continues to thrive from increased consumer loan and real estate demand
and, equally important, from the expanded capacity of our lending exchange. Our
efforts to add lenders and improve automation, along with a number of other new
initiatives, have resulted in record capacity levels. As the leading online
lending exchange, we now have 189 participating lenders, representing an
increase of nearly 50% over last year. Our strong brand awareness, coupled with
the low interest rate environment, once again attracted a record number of
consumers to our lending exchange in the third quarter. Unlike previous
refinance markets, we were able to facilitate a greater number of mortgage
refinancing requests this quarter due to our expanded capacity. Moreover, higher
capacity has benefited all loan products, with home equity, auto, and personal
transmitted loan requests each rising by at least 18% over the previous
quarter."
Lebda continued, "While our management team and our employees are certainly
pleased with our accomplishments to date, we are even more excited about further
potential growth. In spite of our progress since inception, we estimate our
market share to be less than 1% of the total consumer lending market in the
United States. Due to our brand strength, continued consumer adoption of online
lending, the favorable trend of repeat customers, and the opportunity to expand
into new channels, we believe we are well positioned to capture greater market
share. We believe these investments will continue to deliver positive returns in
the years ahead."
KEITH HALL, SENIOR VICE PRESIDENT AND CFO, STATED, "SCALABILITY IS FUNDAMENTAL
TO THE SUCCESS OF AN EXCHANGE BUSINESS MODEL. AS AN EXCHANGE, WE HAVE BEEN ABLE
TO FOCUS ON SCALEABLE TECHNOLOGY AND OPERATIONAL EFFICIENCY, WHILE AVOIDING
UNNECESSARY PAPERWORK AND CONSUMER CREDIT RISK. AS A RESULT, OUR LENDING
EXCHANGE BUSINESS CONTINUES TO SHOW IMPROVEMENTS IN OUR CORE OPERATING METRICS
ACROSS ALL PRODUCTS, WHILE KEEPING TOTAL OPERATING COSTS STEADY. FOR INSTANCE,
OUR SG&A EXPENSE HAS NOT INCREASED PROPORTIONATELY WITH OUR REVENUE, AS THE
RATIO OF THE THIRD QUARTER'S SG&A EXPENSE-TO-REVENUE DROPPED TO 25%, DOWN FROM
34% IN THE PREVIOUS QUARTER AND 31% IN THE SAME QUARTER LAST YEAR. GROSS MARGIN
FOR THE COMPANY IN THE THIRD QUARTER NEARLY REACHED 85%. DUE TO OUR IMPROVING
GROSS MARGIN, TRANSMIT RATES, AND CLOSE RATES, THE TOTAL CONTRIBUTION MARGIN PER
TRANSMITTED LOAN REQUEST REACHED A RECORD LEVEL OF $24.48, IMPROVING 9% OVER THE
PREVIOUS QUARTER AND 137% OVER THE THIRD QUARTER OF 2001."
Hall continued, "At the end of the third quarter, LendingTree had $13.7 million
in total cash, and we did not have any balances outstanding under our available
credit facilities. During the quarter, we terminated our $2.5 million line of
credit with Freddie Mac, as we believed there was little likelihood of utilizing
the line based on our revised favorable outlook. Based on our current cash
position and expectations for continued positive operating results, we remain
confident that we will have more than adequate cash to fund our operating needs
for the foreseeable future."
BUSINESS OUTLOOK
Hall added, "We remain confident with our business outlook. Consequently, we are
increasing our guidance for fourth quarter revenue by $4.3 million and fourth
quarter EPS by $0.07, as we
2
now expect to earn $0.10 per share. This brings our annual guidance for 2002 up
to $106.0 million in revenue and $0.07 in EPS."
"We are also revising guidance for 2003, reflecting the continued strength in
our core operating metrics, somewhat offset by the anticipated return of the
mortgage refinance market to more normal levels. Our 2003 revenue guidance has
been revised upward by $5.0 million to $131.0 million. This increase will add
$0.07 per share to full year earnings, now expected to be $0.40 per diluted
share, up 21% from our previous guidance."
THE FOLLOWING INFORMATION IS BASED ON CURRENT EXPECTATIONS. ACTUAL RESULTS MAY
DIFFER MATERIALLY. THESE STATEMENTS ARE FORWARD-LOOKING AND DO NOT REFLECT THE
POTENTIAL IMPACT OF EVENTS THAT MAY OCCUR AFTER THE DATE OF THIS RELEASE,
INCLUDING THE RISKS DESCRIBED BELOW UNDER THE CAPTION "DISCLOSURE REGARDING
FORWARD-LOOKING STATEMENTS."
(all figures in millions, except %, per share and per transmit data)
2002 ACTUAL GUIDANCE 2002 FULL YEAR
--------------------------------------- ------- ---------------
P&L DATA Q1 Q2 Q3 Q4 ESTIMATES
--------- ------- ------- ------- ------- ---------------
Revenue
LOAN EXCHANGE $ 18.3 $ 20.5 $ 27.5 $ 26.0 $ 92.3
REALTY EXCHANGE $ 1.3 $ 2.7 $ 2.9 $ 2.5 $ 9.4
LEND-X TECHNOLOGY $ 1.6 $ 1.3 $ 0.5 $ 0.8 $ 4.3
------- ------- ------- ------- -------
Total Revenue $ 21.3 $ 24.5 $ 30.9 $ 29.3 $ 106.0
Gross Margin $ 18.0 $ 20.7 $ 26.2 $ 24.7 $ 89.6
Gross Margin % 84.8% 84.4% 84.6% 84.3% 84.5%
Total Operating Expense $ 18.8(1) $ 21.3 $ 22.4 $ 21.6 $ 84.1
------- ------- ------- ------- -------
Interest Income $ 0.0 $ 0.2 $ 0.0 $ 0.0 $ 0.2
------- ------- ------- ------- -------
Net (Loss)/Income ($ 0.7)(1) $ (0.4) $ 3.8 $ 3.1 $ 5.8
======= ======= ======= ======= =======
Dividends and Accretion on
Preferred Stock $ 2.1 $ 0.7 $ 0.6 $ 0.6 $ 4.0
------- ------- ------- ------- -------
Net (Loss)/Income
(Attributable)/Available to
Common Shareholders ($ 2.8)(1) ($ 1.1) $ 3.2 $ 2.5 $ 1.7
======= ======= ======= ======= =======
EPS - Diluted ($ 0.15) ($ 0.05) $ 0.12 $ 0.10 $ 0.07
======= ======= ======= ======= =======
Weighted Average Common Shares- 19.4 20.8 22.2 22.2 21.2
Basic
Weighted Average Common Shares - N/A N/A 32.2 32.5 24.8
Diluted (2,3)
3
(1) Includes one-time credit for a revision to an estimate of approximately
$0.6 million related to incentive compensation. Excluding this positive
adjustment, cash operating expense for the quarter was $17.2 million, net
loss was $1.3 million, net loss attributable to common shareholders was
$3.4 million, and net loss per basic share was $0.18.
(2) For the quarter ended September 30, 2002, diluted weighted average common
shares outstanding include 10.0 million weighted average potential common
shares. Potential common shares consist of 6.55 million shares issuable
upon the assumed conversion of convertible preferred stock and 3.45 million
net shares issuable from options and warrants under the treasury stock
method.
(3) As of September 30, 2002, the Company has 22.3 million common shares issued
and outstanding, 6.1 million options and warrants outstanding, and 6.0
million shares of preferred stock outstanding, which were convertible into
6.6 million shares of common stock.
2002 ACTUAL GUIDANCE 2002
--------------------------------------- --------- ---------
KEY METRICS Q1 Q2 Q3 Q4 FULL YEAR
----------- --------- --------- --------- --------- ---------
Volume Transmitted Loan Requests 382 367 555 475 1,779
(000's)
Variable Marketing Expense ($ in $ 9.0 $ 10.3 $ 11.1 $ 11.0 $ 41.4
millions)
PER TRANSMIT METRICS:
Revenue $ 47.93 $ 55.89 $ 49.48 $ 54.74 $ 51.87
Variable Marketing Exp. $ 23.49 $ 28.17 $ 20.05 $ 23.16 $ 23.29
Cost of Revenue $ 5.21 $ 5.29 $ 4.95 $ 6.57 $ 5.51
--------- --------- --------- --------- ---------
Total Contribution Margin $ 19.23 $ 22.43 $ 24.48 $ 25.01 $ 23.07
========= ========= ========= ========= =========
4
(all figures in millions, except %, per share and per transmit data)
2003 GUIDANCE
P&L DATA Q1 Q2 Q3 Q4 FULL YEAR
--------- ------- ------- ------- ------- ----------
Revenue
LOAN EXCHANGE $ 27.9 $ 28.9 $ 29.9 $ 28.9 $ 115.6
REALTY EXCHANGE $ 2.0 $ 2.9 $ 4.2 $ 4.3 $ 13.4
LEND-X TECHNOLOGY $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 2.0
------- ------- ------- ------- -------
Total Revenue $ 30.4 $ 32.3 $ 34.6 $ 33.7 $ 131.0
Gross Margin $ 25.2 $ 26.9 $ 28.9 $ 28.2 $ 109.2
Gross Margin % 82.9% 83.3% 83.5% 83.7% 83.4%
Total Operating Expense $ 23.0 $ 24.0 $ 25.1 $ 23.8 $ 95.9
Interest Income $ 0.04 $ 0.05 $ 0.05 $ 0.06 $ 0.2
------- ------- ------- ------- -------
Net Income $ 2.2 $ 3.0 $ 3.9 $ 4.5 $ 13.5
======= ======= ======= ======= =======
Dividends and Accretion on
Preferred Stock $ 0.6 $ 0.6 $ 0.6 $ 0.6 $ 2.5
------- ------- ------- ------- -------
Net Income Available to Common
Shareholders $ 1.6 $ 2.3 $ 3.2 $ 3.8 $ 11.0
======= ======= ======= ======= =======
EPS - Diluted $ 0.07 $ 0.09 $ 0.11 $ 0.13 $ 0.40
======= ======= ======= ======= =======
Weighted Average Common Shares- 22.3 22.3 22.3 22.3 22.3
Basic
Weighted Average Common Shares - 33.3 33.8 34.3 35.0 34.1
Diluted
5
2003 GUIDANCE
KEY METRICS Q1 Q2 Q3 Q4 FULL YEAR
----------- --------- --------- --------- --------- ---------
Volume Transmitted Loan Requests 475 485 510 470 1,940
(000's)
Variable Marketing Expense ($ in $ 12.5 $ 13.3 $ 14.0 $ 13.0 $ 52.8
millions)
PER TRANSMIT METRICS:
Revenue $ 58.74 $ 59.59 $ 58.63 $ 61.49 $ 59.59
Variable Marketing Exp $ 26.32 $ 27.42 $ 27.45 $ 27.66 $ 27.22
Cost of Revenue $ 8.22 $ 7.75 $ 6.45 $ 6.15 $ 7.14
--------- --------- --------- --------- ---------
Total Contribution Margin $ 24.20 $ 24.42 $ 24.73 $ 27.68 $ 25.24
========= ========= ========= ========= =========
THE ABOVE INFORMATION IS BASED ON CURRENT EXPECTATIONS. ACTUAL RESULTS MAY
DIFFER MATERIALLY. THESE STATEMENTS ARE FORWARD-LOOKING AND DO NOT REFLECT THE
POTENTIAL IMPACT OF EVENTS THAT MAY OCCUR AFTER THE DATE OF THIS RELEASE,
INCLUDING THE RISKS DESCRIBED BELOW UNDER THE CAPTION "DISCLOSURE REGARDING
FORWARD-LOOKING STATEMENTS."
CONFERENCE CALL INFORMATION: LENDINGTREE HAS SCHEDULED A CONFERENCE CALL TO
DISCUSS THE COMPANY'S FINANCIAL RESULTS FOR THE THIRD QUARTER OF 2002 ON
WEDNESDAY, OCTOBER 23RD AT 8:30 A.M. EST. TO LISTEN TO THE CONFERENCE CALL,
PLEASE DIAL (888) 799-0558. A REPLAY OF THE CALL WILL BE AVAILABLE STARTING TWO
HOURS AFTER THE COMPLETION OF THE CALL UNTIL NOVEMBER 6, 2002. THE DIAL-IN
NUMBER FOR THE REPLAY WILL BE 800-642-1687, CONFERENCE ID # 6119489. THE
CONFERENCE CALL WILL ALSO BE AVAILABLE VIA WEBCAST AT WWW.LENDINGTREE.COM.
ABOUT LENDINGTREE, INC.
Founded in 1996, LendingTree (NASDAQ: TREE) is the leading online lending
Exchange that connects consumers, Lenders, Realtors(R), and related service
providers. The LendingTree Exchange is made up of more than 180 banks, lenders,
and brokers (Lenders) and has facilitated nearly $32 billion in closed loans
since inception. More than 7.5 million consumers have accessed the LendingTree
Exchange through the Company's site at www.lendingtree.com and through online
and offline partners. Loans available via the LendingTree Exchange include home
mortgage, home equity, automobile, personal, debt consolidation, and credit
cards. LendingTree is the No. 1 brand in the online lending market for
consumers, with 67 percent national awareness. The LendingTree Lend-X technology
has been cited as 'the platform of choice'(a) for online lending and has been
adopted by industry leaders to power their online lending initiatives. The
LendingTree Realty Services offering connects consumers to a nationwide network
of approximately 6,500 realtors. The Company's services and products are
specifically designed to empower consumers, Lenders, and related service
providers throughout the lending process, delivering convenience, choice, and
excellent value.
(A) RESUSCITATING MORTGAGE LENDING. FORRESTER RESEARCH, MARCH 2001
6
Disclosure Regarding Forward-Looking Statements
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
"SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS AND INFORMATION REGARDING:
OUR GUIDANCE REGARDING OUR PROJECTED FINANCIAL AND OPERATING RESULTS THROUGH THE
END OF 2003; OUR PROSPECTS TO GROW, CAPTURE GREATER MARKET SHARE, AND DELIVER
POSITIVE RETURNS IN THE YEARS AHEAD; AND OUR BELIEF THAT OUR CURRENT CASH
BALANCE AND PROJECTED POSITIVE RESULTS FROM OPERATIONS WILL ADEQUATELY FUND OUR
CASH NEEDS FOR THE FORESEEABLE FUTURE. THESE STATEMENTS ARE BASED ON
MANAGEMENT'S CURRENT EXPECTATIONS OR BELIEFS AND ARE SUBJECT TO A NUMBER OF
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE SET FORTH IN THE FORWARD LOOKING STATEMENTS. THE COMPANY'S ACTUAL
RESULTS MIGHT DIFFER MATERIALLY FROM THOSE STATED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS DUE TO RISKS AND UNCERTAINTIES ASSOCIATED WITH THE
COMPANY'S BUSINESS, WHICH INCLUDE, BUT ARE NOT LIMITED TO: VARIATIONS IN
CONSUMER DEMAND OR ACCEPTANCE; THE WILLINGNESS OF LENDING INSTITUTIONS TO OFFER
THEIR PRODUCTS OVER THE INTERNET; FURTHER CHANGES IN THE COMPANY'S RELATIONSHIPS
WITH EXISTING LENDERS, COMPANIES, AND/OR STRATEGIC PARTNERS; THE COMPANY'S
ABILITY TO ATTRACT AND INTEGRATE NEW LENDING COMPANIES AND STRATEGIC PARTNERS;
IMPLEMENTATION OF COMPETING INTERNET STRATEGIES BY EXISTING AND POTENTIAL
LENDING PARTICIPANTS; IMPLEMENTATION AND ACCEPTANCE OF NEW PRODUCT OR SERVICE
OFFERINGS; CONSUMER LENDING INDUSTRY REGULATION; COMPETITION IN ALL ASPECTS OF
THE COMPANY'S BUSINESS; FLUCTUATIONS IN OPERATING RESULTS; OR OTHER UNFORESEEN
FACTORS. THE FORWARD-LOOKING STATEMENTS SHOULD BE CONSIDERED IN THE CONTEXT OF
THESE AND OTHER RISK FACTORS DISCLOSED IN THE COMPANY'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION.
7
LENDINGTREE, INC.
OPERATING STATISTICS BY PRODUCT
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
LENDINGTREE EXCHANGE
---------------------------------------------------------------------------------------------
LENDING
HOME CREDIT EXCHANGE REALTY
MORTGAGE EQUITY AUTO CARD PERSONAL SUB-TOTAL SERVICES TOTAL
-------- -------- -------- -------- -------- -------- -------- --------
VOLUME
LOAN/REAL ESTATE REQUESTS
TRANSMITTED:
NUMBER 300,498 90,039 105,988 40,860 18,010 555,395 15,182 570,577
VOLUME OF REQUESTS
(IN $ MILLIONS) $ 50,776 $ 4,187 $ 1,762 $ 204 $ 166 $ 57,095 $ 3,534 $ 60,628
TRANSACTIONS CLOSED IN
THE QUARTER:
NUMBER 20,737 19,788 12,608 33,266(1) 2,876 89,275 1,321 90,596
VOLUME OF TRANSACTIONS CLOSED
(IN $ MILLIONS) $ 4,197 $ 1,129 $ 228 $ 166(1) $ 32 $ 5,753 $ 307 $ 6,061
CONVERSION RATES
TRANSMIT RATE 82.0% 85.0% 63.2% 71.0% 26.3% 62.0% 62.0%
STATIC POOL CLOSE RATE
(QUARTERLY AVERAGE)(2) 9.5% 25.9% 20.2% 12.3%(3) 37.7% 16.1% 5.6%(6) 16.1%
REVENUE (IN $000'S)
EXCHANGE REVENUE $ 16,082 $ 7,773 $ 1,423 $ 494(1) $ 311 $ 26,952(4) $ 482 $ 27,434
AFFINITY PARTNER REVENUE 528 528 2,430 2,958
LEND-X TECHNOLOGY REVENUE 549
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL REVENUE $ 16,609 $ 7,773 $ 1,423 $ 494 $ 311 $ 27,480 $ 2,912 $ 30,941
AVERAGE REVENUE PER TRANSMIT $ 55.27 $ 86.33 $ 13.43 $ 12.10 $ 17.25 $ 49.48 $ 191.81 $ 53.27
OTHER DATA
NUMBER OF LENDERS/REALTY
AGENCIES 131 62 13 5 8 189(5) 647 836
-------- --------
- ------------------------------------------------
(1) INCLUDES CREDIT CARD CROSS-SELL ACTIVITY.
(2) THE STATIC POOL CLOSE RATE INCORPORATES THE AVERAGE TIME LAG BETWEEN THE
SUBMISSION OF A LOAN REQUEST (A "QF") AND THE CLOSURE OF A LOAN. IT
REPRESENTS THE CLOSURE RATE OF APPROVED QFS FROM A STATIC POOL OF REQUESTS
SUBMITTED IN THE MOST RECENT MONTH WITH A COMPLETE CLOSURE CYCLE. A STATIC
POOL IS CONSIDERED TO HAVE A COMPLETE CLOSURE CYCLE AFTER 120 DAYS FROM THE
MONTH IN WHICH A MORTGAGE QF WAS SUBMITTED, 90 DAYS AFTER A HOME EQUITY QF
WAS SUBMITTED, 60 DAYS AFTER AN AUTO OR PERSONAL QF WAS SUBMITTED, AND LESS
THAN 30 DAYS AFTER A CREDIT CARD QF WAS SUBMITTED.
(3) THE CLOSE RATE FOR CREDIT CARDS REPRESENTS THE PERCENTAGE OF CARDS
TRANSMITTED VIA THE NETWORK THAT RESULTED IN CARD ISSUANCES IN THE THIRD
QUARTER (EXCLUDING CREDIT CARD CROSS-SELL ACTIVITY).
(4) TOTAL LENDING EXCHANGE REVENUE DOES NOT ADD ACROSS AS THE TOTAL INCLUDES
SET-UP FEES, ADAPTIVE MARKETING FEES AND REALTY SERVICES REVENUE.
(5) NUMBER OF LENDERS DOES NOT ADD ACROSS BECAUSE A LENDER CAN OFFER MULTIPLE
LOAN PRODUCTS. THE TOTAL LENDER NUMBER IS THE DISCRETE NUMBER OF LENDINGTREE
EXCHANGE PARTICIPANTS.
(6) THE STATIC POOL CLOSING CYCLE FOR A REAL ESTATE REFERRAL IS 180 DAYS FROM
THE MONTH IN WHICH A REAL ESTATE REFERRAL WAS SUBMITTED.
8
LENDINGTREE, INC.
Operating Statistics by Marketing Channel
For the Quarter Ended September 30, 2002
CROSS-SELL/
LT.COM LEND-X/B2B AFFILIATES OTHER TOTAL
-------- ------- ------- ----------- --------
REVENUE (IN $000'S)
LENDING EXCHANGE REVENUE $ 20,396 $ 2,877 $ 3,041 $1,165(1) $ 27,480
REALTY SERVICES REVENUE 2,912 2,912
LEND-X TECHNOLOGY REVENUE 549 549
-------- ------- ------- ------ --------
TOTAL REVENUE $ 20,396 $ 6,338 $ 3,041 $1,165 $ 30,941
MARKETING & ADVERTISING
VARIABLE MARKETING & ADVERTISING COSTS (IN $000'S)(2) $ 8,401 $ 796(3) $ 1,941 $ 0 $ 11,138
VOLUME
LOAN REQUESTS TRANSMITTED 364,821 92,852(3) 97,722 0 555,395
LENDING EXCHANGE PER TRANSMIT METRICS
REVENUE $ 55.91 $ 30.98(3) $ 31.12 $ 2.10 $ 49.48
VARIABLE MARKETING & ADVERTISING COSTS 23.03 8.57(3) 19.87 0.00 20.05
-------- ------- ------- ------ --------
VARIABLE MARKETING CONTRIBUTION MARGIN $ 32.88 $ 22.41 $ 11.26 $ 2.10 $ 29.42
(1) INCLUDES CREDIT CARD CROSS-SELL FEES, SET-UP FEES, AND ADAPTIVE MARKETING
FEES.
(2) VARIABLE MARKETING & ADVERTISING INCLUDES WORKING MEDIA ADVERTISING,
AFFILIATE NETWORK COSTS, AND LEND-X NETWORK COSTS.
(3) VARIABLE MARKETING COSTS, LOAN REQUESTS TRANSMITTED AND AVERAGE EXCHANGE
REVENUE PER TRANSMIT EXCLUDES LEND-X REVENUE DERIVED FROM AFFINITY
PARTNERS.
9
LENDINGTREE, INC.
Consolidated Statements of Operations
(unaudited)
FOR THE THREE MONTHS FOR THE NINE MONTHS
Ended September 30, Ended September 30,
------------------------ ------------------------
2002 2001 2002 2001
-------- -------- -------- --------
(in thousands, (in thousands,
except per share data) except per share data)
Revenue:
Exchange $ 30,392 $ 15,243 $ 73,159 $ 40,397
Lend-X technology 549 1,960 3,517 4,871
-------- -------- -------- --------
Total revenue 30,941 17,203 76,676 45,268
-------- -------- -------- --------
Cost of revenue:
Exchange 4,478 3,033 10,923 9,314
Lend-X technology 275 277 877 1,075
-------- -------- -------- --------
Total cost of revenue 4,753 3,310 11,800 10,389
Gross profit:
Exchange 25,914 12,210 62,236 31,083
Lend-X technology 274 1,683 2,640 3,796
-------- -------- -------- --------
Total gross profit 26,188 13,893 64,876 34,879
Operating expenses:
Product development 817 1,137 2,378 3,386
Marketing and advertising 13,813 9,973 36,681 29,447
Sales, general and administrative 7,772 5,362 23,393 25,927
-------- -------- -------- --------
Total operating expenses 22,402 16,472 62,452 58,760
-------- -------- -------- --------
Income (loss) from operations 3,786 (2,579) 2,424 (23,881)
Loss on impaired investments -- -- -- (350)
Interest and other non-operating income 136 176 559 522
Interest expense, financing and other charges (93) (590) (310) (718)
-------- -------- -------- --------
Net income (loss) 3,829 (2,993) 2,673 (24,427)
-------- -------- -------- --------
Accretion of mandatorily redeemable convertible preferred stock (165) (155) (509) (361)
Dividends on mandatorily redeemable convertible preferred stock (459) (577) (2,936) (1,538)
-------- -------- -------- --------
Net income (loss) available to common shareholders $ 3,205 $ (3,725) $ (772) $(26,326)
======== ======== ======== ========
Net income (loss) per share:
Basic $ 0.14 $ (0.20) $ (0.04) $ (1.37)
======== ======== ======== ========
Diluted $ 0.12 $ (0.20) $ (0.04) $ (1.37)
======== ======== ======== ========
Weighted average shares - basic 22,202 18,976 20,803 19,190
======== ======== ======== ========
Weighted average shares - diluted 32,203 18,976 20,803 19,190
======== ======== ======== ========
10
LENDINGTREE, INC.
Consolidated Balance Sheets
(unaudited)
SEPTEMBER 30, DECEMBER 31,
2002 2001
------------- ------------
($ in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 4,093 $ 3,400
Restricted cash 9,586 2,764
--------- ---------
Total cash and cash equivalents and restricted cash 13,679 6,164
Accounts receivable, net of allowance for doubtful accounts 18,150 11,438
Prepaid expenses and other current assets 1,553 1,174
--------- ---------
Total current assets 33,382 18,776
Equipment, furniture and leasehold improvements, net 1,888 2,016
Software, net 1,219 2,854
Intangible assets, net 1,916 3,667
Other assets 272 618
--------- ---------
Total assets $ 38,677 $ 27,931
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 5,456 $ 4,508
Deferred revenue 1,285 2,013
Accrued incentive and other compensation 4,104 5,627
Accrued professional services and other fees 216 444
Accrued consumer promotional costs 1,144 1,709
Accrued other expenses 2,346 1,774
Current portion capital lease obligations 381 743
--------- ---------
Total current liabilities 14,932 16,818
Deposits by subtenants 122 145
Capital lease obligations 19 291
Commitments and contingencies
Mandatorily redeemable securities
Series A convertible preferred stock, $.01 par value, 8% cumulative,
6,885,715 shares authorized, 6,038,940 and 6,885,715 shares
issued and outstanding at September 30, 2002 and December 31, 2001,
respectively 21,685 23,878
Shareholders' equity (deficit):
Common stock, $.01 par value, 100,000,000 shares authorized, 22,265,655
and 19,907,034 shares issued at September 30, 2002
and December 31, 2001, respectively 227 199
Treasury stock (392,590 shares at September 30, 2002 and
661,996 shares at December 31, 2001, at cost) (2,494) (4,170)
Additional paid-in-capital 131,769 121,675
Accumulated deficit (124,391) (127,064)
Deferred compensation (851) (1,477)
Notes receivable from officers (2,341) (2,364)
--------- ---------
Total shareholders' equity (deficit) 1,919 (13,201)
--------- ---------
Total liabilities and shareholders' equity (deficit) $ 38,677 $ 27,931
========= =========
11