LendingTree Reports Fourth Quarter 2019 Results

CHARLOTTE, N.C., Feb. 25, 2020 /PRNewswire/ -- LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation's leading online financial services marketplace, today announced results for the quarter ended December 31, 2019.

"The fourth quarter capped off another remarkable year at LendingTree," said Doug Lebda, Chairman and CEO. "Our expansion into insurance has been incredibly successful, and we have continued to drive market share gains across a number of other categories. Strategically, our evolution into a market-leading financial wellness platform is well under way, and we look forward to accelerating those efforts in 2020 as we scale the prominence of My LendingTree and optimize the consumer value proposition across our portfolio of offerings."

J.D. Moriarty, CFO added "We're thrilled with all that we accomplished in 2019, and the trends across many of our businesses remain strong as we execute against our strategic plan for 2020. We're increasingly looking for new ways to delight and engage the consumer, and the year is off to an excellent start."

Fourth Quarter 2019 Business Highlights

    --  Insurance revenue of $70.9 million grew 37% over fourth quarter 2018 on
        a pro forma basis and translated into Insurance segment profit of $28.0
        million.
    --  Home segment profit of $26.9 million grew 25% over fourth quarter 2018.
        --  Within Home, mortgage products revenue grew 16% over the prior year
            period.
    --  Consumer segment revenue of $113.4 million grew 15% over fourth quarter
        2018, driven by strong revenue growth in credit card and small business.
        --  Within Consumer, credit card revenue of $45.9 million grew 20%
            year-over-year.
        --  Personal loans revenue of $35.2 million grew 5% year-over-year.
        --  Small business revenue grew 61% year-over-year.
    --  More than 14.3 million consumers have now signed up for My LendingTree.
        Revenue contribution from My LendingTree of $20.1 million was up 29%
        year-over-year.  Average monthly active users grew 27% over the fourth
        quarter 2018.


                                                                                                               
          
      LendingTree Selected Financial Metrics


                                                                                                              
          
      (In millions, except per share amounts)




                                                                     
          
             Three Months Ended                       Y/Y                                                   Three Months Ended              Q/Q
                                                                               December 31,                                                                            September 30,



                                                                     2019                                2018                     % Change                                            2019                  % Change





            
              Total revenue                                     $
           
              255.2                                         $
            
              202.7                    26                                  $
         
            310.6         (18)


                                                                                                                                                                                         %                                                                 %





            Income (loss) before income taxes                                        $
            4.5                                                    $
            (1.6)                        
            %                 26.4                       (83)
                                                                                                                                                                                                                                                     %



            Income tax (expense) benefit                           (3.1)                                       1.9                                                      
            %                            (1.9)                           63
                                                                                                                                                                                                                                               %




            
              Net income from continuing operations               $
           
              1.5                                           $
            
              0.3                   400                                   $
         
            24.5         (94)


                                                                                                                                                                                         %                                                                 %



            
              Net income from continuing operations           1                                                        %                                                                       8
                                                                        %                                                                                                                               %
    % of revenue





            
              Income per share from continuing operations



            Basic                                                                   $
            0.11                                                     $
            0.02                   450                                           $
          1.90         (94)
                                                                                                                                                                                         %                                                                 %



            Diluted                                                                 $
            0.10                                                     $
            0.02                   400                                           $
          1.67         (94)
                                                                                                                                                                                         %                                                                 %





            
              Variable marketing margin



            Total revenue                                                          $
            255.2                                                    $
            202.7                    26                                          $
          310.6         (18)
                                                                                                                                                                                         %                                                                 %



            Variable marketing expense (1) (2)                                   $
            (161.4)                                                 $
            (124.1)                   30                                        $
          (195.0)        (17)
                                                                                                                                                                                         %                                                                 %




            
              Variable marketing margin (2)                      $
           
              93.8                                          $
            
              78.6                    19                                  $
         
            115.6         (19)


                                                                                                                                                                                         %                                                                 %


                                                                       37                                         39                                                                                     37
                                                                        %                                         %                                                                                     %
    Variable marketing margin % of revenue 
              (2)





            
              Adjusted EBITDA (2)                                $
           
              45.9                                          $
            
              39.4                    17                                   $
         
            63.0         (27)


                                                                                                                                                                                         %                                                                 %



            
              Adjusted EBITDA % of revenue (2)               18                                         19                                                                                     20
                                                                        %                                         %                                                                                     %





            
              Adjusted net income (2)                            $
           
              16.3                                          $
            
              16.7                   (2)                                  $
         
            32.9         (50)


                                                                                                                                                                                         %                                                                 %





            
              Adjusted net income per share (2)                  $
           
              1.12                                          $
            
              1.22                   (8)                                  $
         
            2.25         (50)


                                                                                                                                                                                         %                                                                 %




     (1) 
              Represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related
           expenses. Also includes the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties. Excludes
           overhead, fixed costs and personnel-related expenses.



     (2) 
              Variable marketing expense, variable marketing margin, variable marketing margin % of revenue, adjusted EBITDA, adjusted
           EBITDA % of revenue, adjusted net income and adjusted net income per share are non-GAAP measures. Please see "LendingTree's
           Reconciliation of Non-GAAP Measures to GAAP" and "LendingTree's Principles of Financial Reporting" below for more information.


                                                                                                         
       
           LendingTree Segment Results


                                                                                                           
       
                (In millions)




                                                                              Three Months Ended                Y/Y                                                     Three Months Ended          Q/Q
                                                                     December 31,                                                                       September 30,



                                                            2019                                 2018              % Change                                           2019                 % Change



       
                
                  Home (1)

    ---


       Revenue                                                            $
              65.5                                                $
          63.3                    3                                  $
        77.3    (15)
                                                                                                                                                                         %
                                                                                                                                                                                                                           %



       Segment profit                                                     $
              26.9                                                $
          21.6                   25                                  $
        28.1     (4)
                                                                                                                                                                         %
                                                                                                                                                                                                                           %



       
                Segment profit % of revenue              41                                      34
                                                                                                                                                                                        %
                                                               %                                      %                                                                                36





       
                
                  Consumer (2)

    ---


       Revenue                                                           $
              113.4                                                $
          98.2                   15                                 $
        151.9    (25)
                                                                                                                                                                         %
                                                                                                                                                                                                                           %



       Segment profit                                                     $
              43.3                                                $
          47.8                  (9)                                 $
        65.2    (34)

                                                                                                                                                                         %                                                 %



       
                Segment profit % of revenue              38                                      49
                                                                                                                                                                                        %
                                                               %                                      %                                                                                43





       
                
                  Insurance (3)

    ---


       Revenue                                                            $
              70.9                                                $
          31.3                  127                                  $
        74.8     (5)

                                                                                                                                                                         %                                                 %



       Segment profit                                                     $
              28.0                                                $
          11.3                  148                                  $
        30.0     (7)

                                                                                                                                                                         %                                                 %



       
                Segment profit % of revenue              39                                      36
                                                                                                                                                                                        %
                                                               %                                      %                                                                                40





       
                
                  Other Category (4)

    ---


       Revenue                                                             $
              5.4                                                 $
          9.9                 (45)                                  $
        6.6    (18)

                                                                                                                                                                         %                                                 %



       (Loss) Profit                                                     $
              (0.1)                                                $
          0.8                        
              %                   $
        0.4           
     %




                                                                  26           (18)


                                                                                                                                                                         %

       
                Total revenue                               $
          
                255.2                                  $
              
            202.7                                                 $
     
          310.6       %




                                                                  20           (21)


                                                                                                                                                                         %

       
                Total segment profit                         $
          
                98.1                                   $
              
            81.5                                                 $
     
          123.7       %



            Brand marketing expense (5)                                  $
              (4.2)                                              $
          (3.0)                  40                                 $
        (8.1)   (48)
                                                                                                                                                                         %
                                                                                                                                                                                                                           %



                                                                  19           (19)


                                                                                                                                                                         %

       
                Variable marketing margin                    $
          
                93.8                                   $
              
            78.6                                                 $
     
          115.6       %



       
                Variable marketing margin % of revenue   37                                      39
                                                                                                                                                                                        %
                                                               %                                      %                                                                                37




     (1) 
              The Home segment includes the following products: purchase mortgage, refinance mortgage, home equity loans and lines of credit,
           reverse mortgage loans, and real estate.



     (2) 
              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.



     (3) 
              The Insurance segment consists of insurance quote products.



     (4) 
              The Other category includes revenue from the resale of online advertising space to third parties and revenue from home improvement
           referrals, and the related variable marketing and advertising expenses.



     (5) 
              Brand marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising,
           direct marketing and related expenses that are not assignable to the segments' products. This measure excludes overhead, fixed costs
           and personnel-related expenses.

Business Outlook - 2020

LendingTree is providing revenue, variable marketing margin and adjusted EBITDA guidance for the first quarter of 2020 and maintaining guidance for full year 2020, as follows:

For first quarter 2020:

    --  Revenue is expected in the range of $296 - $306 million.
    --  Variable marketing margin is expected in the range of $97 - $104
        million.
    --  Adjusted EBITDA is expected in the range of $43 - $46 million.

For full year 2020:

    --  Revenue is expected in the range of $1,250 - $1,300 million,
        representing growth of 13% - 17% over full-year 2019.
    --  Variable marketing margin is expected in the range of $450 - $470
        million.
    --  Adjusted EBITDA is expected in the range of $225 - $235 million, up 14%
        - 19% over full-year 2019.

LendingTree is not able to provide a reconciliation of projected variable marketing margin or adjusted EBITDA to the most directly comparable expected GAAP results due to the unknown effect, timing and potential significance of the effects of legal matters, tax considerations, and income and expense from changes in fair value of contingent consideration from acquisitions. Expenses associated with legal matters, tax consequences, and income and expense from changes in fair value of contingent consideration from acquisitions have in the past, and may in the future, significantly affect GAAP results in a particular period.

Quarterly Conference Call

A conference call to discuss LendingTree's fourth quarter 2019 financial results will be webcast live today, February 25, 2020 at 9:00 AM Eastern Time (ET). The live audiocast is open to the public and will be available on LendingTree's investor relations website at http://investors.lendingtree.com/. The call may also be accessed toll-free via phone at (877) 606-1416. Callers outside the United States and Canada may dial (707) 287-9313. Following completion of the call, a recorded replay of the webcast will be available on LendingTree's investor relations website until 12:00 PM ET on Wednesday, March 04, 2020. To listen to the telephone replay, call toll-free (855) 859-2056 with passcode #6823567. Callers outside the United States and Canada may dial (404) 537-3406 with passcode #6823567.


                                                                                           
             
                LENDINGTREE, INC. AND SUBSIDIARIES
                                                                                     
             CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                                                                                           
                (Unaudited)




                                                                                                               Three Months Ended                                                            Twelve Months Ended
                                                                                                      December 31,                                                                   December 31,


                                                                                     2019                                         2018                      2019                                            2018

                                                                                                                                                                                                          ---

                                                                                                    
              
                
                  (in thousands, except per share amounts)



              
                Revenue                                                       $
             
                255,187                                         $
              
                202,672               $
       
              1,106,603  $
     
            764,865



              Costs and expenses:



              Cost of revenue (exclusive of depreciation and amortization shown   16,728                                                   13,822                                                       68,379                      36,399
    separately below) (1)



              Selling and marketing expense (1)                                  167,842                                                  125,901                                                      735,180                     500,291



              General and administrative expense (1)                              27,456                                                   30,666                                                      116,847                     101,219



              Product development (1)                                              9,412                                                    8,123                                                       39,953                      26,958



              Depreciation                                                         3,261                                                    2,186                                                       10,998                       7,385



              Amortization of intangibles                                         13,756                                                    9,840                                                       55,241                      23,468



              Change in fair value of contingent consideration                     7,181                                                    9,591                                                       28,402                      10,788



              Severance                                                              390                                                       21                                                        1,026                       2,352



              Litigation settlements and contingencies                               140                                                       94                                                        (151)                      (186)




              
                Total costs and expenses                              246,166                                                  200,244                                                    1,055,875                     708,674

    ---


              
                Operating income                                        9,021                                                    2,428                                                       50,728                      56,191



              Other expense, net:



              Interest expense, net                                              (4,863)                                                 (4,132)                                                    (20,271)                   (12,437)



              Other income (expense)                                                 381                                                       96                                                          524                        (10)

    ---


              
                Income (Loss) before income taxes                       4,539                                                  (1,608)                                                      30,981                      43,744



              Income tax (expense) benefit                                       (3,073)                                                   1,859                                                        8,479                      65,575

    ---


              
                Net income from continuing operations                   1,466                                                      251                                                       39,460                     109,319



              Income (Loss) from discontinued operations, net of tax                 392                                                  (3,551)                                                    (21,632)                   (12,820)

    ---


              
                Net income (loss) and comprehensive income (loss)               $
             
                1,858                                         $
              
                (3,300)                 $
       
              17,828   $
     
            96,499

    ---




              
                Weighted average shares outstanding:



              Basic                                                               12,921                                                   12,700                                                       12,834                      12,504



              Diluted                                                             14,580                                                   13,622                                                       14,619                      14,097



              
                Income per share from continuing operations:



              Basic                                                                                     $
              0.11                                                         $
              0.02                          $
            3.07         $
          8.74



              Diluted                                                                                   $
              0.10                                                         $
              0.02                          $
            2.70         $
          7.75



              
                Income (Loss) per share from discontinued operations:



              Basic                                                                                     $
              0.03                                                       $
              (0.28)                       $
            (1.69)      $
          (1.03)



              Diluted                                                                                   $
              0.03                                                       $
              (0.26)                       $
            (1.48)      $
          (0.91)



              
                Net income (loss) per share:



              Basic                                                                                     $
              0.14                                                       $
              (0.26)                         $
            1.39         $
          7.72



              Diluted                                                                                   $
              0.13                                                       $
              (0.24)                         $
            1.22         $
          6.85

    ---




              (1) Amounts include non-cash compensation, as follows:



              Cost of revenue                                                                            $
              197                                                          $
              118                           $
            755          $
          378



              Selling and marketing expense                                          918                                                    (943)                                                       5,785                       3,568



              General and administrative expense                                   8,643                                                    8,708                                                       39,177                      34,325



              Product development                                                  1,577                                                    2,098                                                        6,450                       6,094


                                                                                                           
      
      
        LENDINGTREE, INC. AND SUBSIDIARIES
                                                                                                             
      
      CONSOLIDATED BALANCE SHEETS
                                                                                                                 
      (Unaudited)




                                                                                                                                                         December 31,                                                December 31,
                                                                                                                                                                 2019                                                         2018

                                                                                                                                                                                                                              ---

                                                                                                                                                                                     (in thousands, except par value
                                                                                                                                                                         and share amounts)



              
                ASSETS:



              Cash and cash equivalents                                                                                                                                    $
              60,243                                                    $
     105,102



              Restricted cash and cash equivalents                                                                                                                96                                                                      56



              Accounts receivable, net                                                                                                                       113,487                                                                  91,072



              Prepaid and other current assets                                                                                                                15,516                                                                  16,428



              Assets held for sale                                                                                                                                 -                                                                 21,328



              Current assets of discontinued operations                                                                                                           84                                                                     185

    ---


              
                Total current assets                                                                                                              189,426                                                                 234,171



              Property and equipment, net                                                                                                                     31,363                                                                  23,175



              Goodwill                                                                                                                                       420,139                                                                 348,347



              Intangible assets, net                                                                                                                         181,580                                                                 205,699



              Deferred income tax assets                                                                                                                      87,664                                                                  79,289



              Other non-current assets                                                                                                                        29,849                                                                   2,168



              Non-current assets of discontinued operations                                                                                                    7,948                                                                   3,266



              
                Total assets                                                                                                                              $
      
                947,969                                                $
     
       896,115

    ---




              
                LIABILITIES:



              Revolving credit facility                                                                                                                                    $
              75,000                                                    $
     125,000



              Accounts payable, trade                                                                                                                          2,873                                                                  15,074



              Accrued expenses and other current liabilities                                                                                                 112,755                                                                  93,190



              Current contingent consideration                                                                                                                 9,028                                                                  11,080



              Current liabilities of discontinued operations                                                                                                  31,050                                                                  17,609

    ---


              
                Total current liabilities                                                                                                         230,706                                                                 261,953



              Long-term debt                                                                                                                                 264,391                                                                 250,943



              Non-current contingent consideration                                                                                                            24,436                                                                  27,757



              Deferred income tax liabilities                                                                                                                      -                                                                    894



              Other non-current liabilities                                                                                                                   26,110                                                                   8,360



              
                Total liabilities                                                                                                                 545,643                                                                 549,907

    ---




              
                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; 15,676,819 and 15,428,351 shares                                                        157                                                                     154
    issued, respectively, and 13,035,501 and 12,809,764 shares outstanding, respectively



              Additional paid-in capital                                                                                                                   1,177,984                                                               1,134,227



              Accumulated deficit                                                                                                                          (592,654)                                                              (610,482)



              Treasury stock; 2,641,318 and 2,618,587 shares, respectively                                                                                 (183,161)                                                              (177,691)



              
                Total shareholders' equity                                                                                                        402,326                                                                 346,208

    ---


              
                Total liabilities and shareholders' equity                                                                                                $
      
                947,969                                                $
     
       896,115

    ---


                                                                                                                                
       
            LENDINGTREE, INC. AND SUBSIDIARIES
                                                                                                                                  
       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                      
                (Unaudited)




                                                                                                                                                                                             
     
               Year Ended December 31,


                                                                                                                                                                                     2019           2018        2017

                                                                                                                                                                                                               ---

                                                                                                                                                                                                                       (in thousands)



              Cash flows from operating activities attributable to continuing operations:



              Net income and comprehensive income                                                                                                                                        $
     
       17,828                             $
      
        96,499   $
      
      15,578



              Less: Loss from discontinued operations, net of tax                                                                                                                 21,632                    12,820                            3,840

    ---


              Income from continuing operations                                                                                                                                   39,460                   109,319                           19,418



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



              (Gain) Loss on impairments and disposal of fixed assets                                                                                                              (695)                    2,210                              840



              Amortization of intangibles                                                                                                                                         55,241                    23,468                           12,992



              Depreciation                                                                                                                                                        10,998                     7,385                            7,085



              Rental amortization of intangibles and depreciation                                                                                                                      -                      630                            1,474



              Non-cash compensation expense                                                                                                                                       52,167                    44,365                           23,361



              Deferred income taxes                                                                                                                                              (8,555)                 (63,901)                         (6,370)



              Change in fair value of contingent consideration                                                                                                                    28,402                    10,788                           23,931



              Bad debt expense                                                                                                                                                     1,697                       880                              195



              Amortization of debt issuance costs                                                                                                                                  1,974                     1,776                            1,032



              Write-off of previously-capitalized debt issuance costs                                                                                                                333                                                        90



              Amortization of convertible debt discount                                                                                                                           12,016                    11,397                            6,385



              ROU asset amortization, offset by change in operating lease liabilities                                                                                                213



              Changes in current assets and liabilities:



              Accounts receivable                                                                                                                                               (22,457)                 (16,820)                        (11,381)



              Prepaid and other current assets                                                                                                                                   (3,258)                  (2,985)                         (5,358)



              Accounts payable, accrued expenses and other current liabilities                                                                                                   (2,322)                   14,270                           31,108



              Current contingent consideration                                                                                                                                  (12,500)                 (21,912)



              Income taxes receivable                                                                                                                                              4,548                     3,669                          (1,104)



              Other, net                                                                                                                                                            (88)                    (591)                           (160)

    ---


              
                Net cash provided by operating activities attributable to continuing operations                                                                       157,174                   123,948                          103,538

    ---


              Cash flows from investing activities attributable to continuing operations:



              Capital expenditures                                                                                                                                              (20,041)                 (14,907)                         (8,040)



              Proceeds from the sale of fixed assets                                                                                                                              24,077



              Acquisition of intangible assets                                                                                                                                         -                                                      (5)



              Acquisition of ValuePenguin, net of cash acquired                                                                                                                (105,578)



              Acquisition of QuoteWizard, net of cash acquired                                                                                                                       482                 (297,072)



              Acquisition of Student Loan Hero, net of cash acquired                                                                                                                   -                 (59,483)



              Acquisition of Ovation, net of cash acquired                                                                                                                             -                 (11,566)



              Acquisition of SnapCap                                                                                                                                                   -                     (10)                        (11,886)



              Acquisition of DepositAccounts                                                                                                                                           -                                                 (25,000)



              Acquisition of MagnifyMoney, net of cash acquired                                                                                                                        -                                                 (29,504)



              
                Net cash used in investing activities attributable to continuing operations                                                                         (101,060)                (383,038)                         (74,435)

    ---


              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                                                             (8,406)                    2,217                            1,602
    stock options



              Contingent consideration payments                                                                                                                                 (21,275)                 (27,588)



              Net (repayment of) proceeds from revolving credit facility                                                                                                        (50,000)                  125,000



              Acquisition of noncontrolling interest                                                                                                                                   -                    (499)



              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 debt issuance costs                                                                                                                                     (2,518)                    (583)                        (10,486)



              Purchase of treasury stock                                                                                                                                         (5,470)                 (93,704)                        (19,901)



              Other financing activities                                                                                                                                             (9)




              
                Net cash (used in) provided by financing activities attributable to continuing operations                                                            (87,678)                    4,843                          253,125

    ---


              
                Total cash (used in) provided by continuing operations                                                                                               (31,564)                (254,247)                          282,228

    ---


              Discontinued operations:



              Net cash used in operating activities attributable to discontinued operations                                                                                     (13,255)                 (13,236)                         (4,807)

    ---


              
                Total cash used in discontinued operations                                                                                                           (13,255)                 (13,236)                         (4,807)

    ---


              
                Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents                                                  (44,819)                (267,483)                          277,421



              Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period                                                                    105,158                   372,641                           95,220

    ---


              
                Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period                                                                     $
     
       60,339                            $
      
        105,158  $
      
      372,641

    ---




              
                Non-cash investing activities:



              Capital additions from tenant improvement allowance                                                                                                                  1,111



              
                Supplemental cash flow information:



              Interest paid                                                                                                                                                        7,005                     3,593                            1,327



              Income tax payments                                                                                                                                                     25                       541                           20,359



              Income tax refunds                                                                                                                                                   4,743                     5,678                              133

LENDINGTREE'S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Variable Marketing Expense

Below is a reconciliation of selling and marketing expense to variable marketing expense. See "Lending Tree's Principles of Financial Reporting" for further discussion of the Company's use of this non-GAAP measure.


                                                                           
            
           Three Months Ended                                                                       Twelve Months Ended


                                                         December 31,        September 30,                     December 31,                      December 31,    December 31,
                                                                 2019                  2019                              2018                               2019             2018



                                                                                                            
             
           
       (in thousands)



       
                Selling and marketing expense                    $
     
             167,842                                      $
              
              200,818                    $
           
                125,901               $
     
     735,180 $
     
     500,291

    ---


       Non-variable selling and marketing expense (1)       (11,036)                                              (11,580)                           (6,985)                                        (47,000)    (30,343)



       Cost of advertising re-sold to third parties (2)        4,557                                                  5,809                              5,184                                           22,755        8,812

    ---


       
                Variable marketing expense                       $
     
             161,363                                      $
              
              195,047                    $
           
                124,100               $
     
     710,935 $
     
     478,760

    ---




     (1) 
              Represents the portion of selling and marketing expense not attributable to variable costs paid for advertising, direct
           marketing and related expenses. Includes overhead, fixed costs and personnel-related expenses.



     (2) 
              Represents the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties. Excludes
           overhead, fixed costs, and personnel-related expenses.

LENDINGTREE'S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Variable Marketing Margin

Below is a reconciliation of net income from continuing operations to variable marketing margin and net income from continuing operations % of revenue to variable marketing margin % of revenue. See "LendingTree's Principles of Financial Reporting" for further discussion of the Company's use of these non-GAAP measures.


                                                                                           
            
           Three Months Ended                                                                                  Twelve Months Ended


                                                                        December 31,         September 30,                      December 31,                             December 31,    December 31,
                                                                                2019                   2019                               2018                                      2019             2018



                                                                                                                   
              
                
       (in thousands, except percentages)



       
                Net income from continuing operations                            $
      
              1,466                                             $
              
                24,463                       $
             
                251               $
      
      39,460 $
     
     109,319

    ---




       
                Net income from continuing operations % of revenue            1                                                        8                                              %                                           4          14
                                                                                   %                                                       %                                                                                         %          %





       Adjustments to reconcile to variable marketing margin:



       Cost of revenue                                                       16,728                                                   17,671                                    13,822                                            68,379      36,399



       Cost of advertising re-sold to third parties (1)                     (4,557)                                                 (5,809)                                  (5,184)                                         (22,755)    (8,812)



       Non-variable selling and marketing expense (2)                        11,036                                                   11,580                                     6,985                                            47,000      30,343



       General and administrative expense                                    27,456                                                   30,323                                    30,666                                           116,847     101,219



       Product development                                                    9,412                                                   10,200                                     8,123                                            39,953      26,958



       Depreciation                                                           3,261                                                    2,696                                     2,186                                            10,998       7,385



       Amortization of intangibles                                           13,756                                                   13,778                                     9,840                                            55,241      23,468



       Change in fair value of contingent consideration                       7,181                                                    3,839                                     9,591                                            28,402      10,788



       Severance                                                                390                                                      179                                        21                                             1,026       2,352



       Litigation settlements and contingencies                                 140                                                     (92)                                       94                                             (151)      (186)



       Interest expense, net                                                  4,863                                                    4,845                                     4,132                                            20,271      12,437



       Other (income) expense                                                 (381)                                                     (4)                                     (96)                                            (524)         10



       Income tax (benefit) expense                                           3,073                                                    1,889                                   (1,859)                                          (8,479)   (65,575)




       
                Variable marketing margin                                       $
      
              93,824                                            $
              
                115,558                    $
             
                78,572              $
      
      395,668 $
     
     286,105

    ---


       
                Variable marketing margin % of revenue                       37                                                       37                                        39                                                36          37
                                                                          
            %                                                       %                               
            %                                                %          %




     (1) 
              Represents the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties. Excludes overhead, fixed costs,
           and personnel-related expenses.



     (2) 
              Represents the portion of selling and marketing expense not attributable to variable costs paid for advertising, direct marketing and
           related expenses. Includes overhead, fixed costs and personnel-related expenses.

LENDINGTREE'S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Adjusted EBITDA

Below is a reconciliation of net income from continuing operations to adjusted EBITDA and net income from continuing operations % of revenue to adjusted EBITDA % of revenue. See "LendingTree's Principles of Financial Reporting" for further discussion of the Company's use of these non-GAAP measures.


                                                                                           
            
           Three Months Ended                                                                                  Twelve Months Ended


                                                                        December 31,         September 30,                     December 31,                              December 31,    December 31,
                                                                                2019                   2019                              2018                                       2019             2018



                                                                                                                  
              
               
        (in thousands, except percentages)



       
                Net income from continuing operations                            $
      
              1,466                                             $
              
                24,463                       $
             
                251              $
      
      39,460 $
     
     109,319

    ---


       
                Net income from continuing operations % of revenue            1                                                       8                                               %                                           4         14
                                                                                   %                                                      %                                                                                          %         %



       Adjustments to reconcile to adjusted EBITDA:



       Amortization of intangibles                                           13,756                                                  13,778                                      9,840                                            55,241     23,468



       Depreciation                                                           3,261                                                   2,696                                      2,186                                            10,998      7,385



       Severance                                                                390                                                     179                                         21                                             1,026      2,352



       Loss (gain) on impairments and disposal of assets                        424                                                     609                                        224                                             (945)     2,210



       Non-cash compensation                                                 11,335                                                  10,797                                      9,981                                            52,167     44,365



       Change in fair value of contingent consideration                       7,181                                                   3,839                                      9,591                                            28,402     10,788



       Acquisition expense                                                       14                                                      18                                      4,851                                               211      6,303



       Litigation settlements and contingencies                                 140                                                    (92)                                        94                                             (151)     (186)



       Interest expense, net                                                  4,863                                                   4,845                                      4,132                                            20,271     12,437



       Rental depreciation and amortization of intangibles                                                                                                                        76                                                         630



       Income tax (benefit) expense                                           3,073                                                   1,889                                    (1,859)                                          (8,479)  (65,575)

    ---


       
                Adjusted EBITDA                                                 $
      
              45,903                                             $
              
                63,021                    $
             
                39,388             $
      
      198,201 $
     
     153,496

    ---


       
                Adjusted EBITDA % of revenue                                 18                                                      20                                         19                                                18         20
                                                                          
            %                                             
            %                                
            %                                                %         %

LENDINGTREE'S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Adjusted Net Income

Below is a reconciliation of net income from continuing operations to adjusted net income and net income per diluted share from continuing operations to adjusted net income per share. See "LendingTree's Principles of Financial Reporting" for further discussion of the Company's use of these non-GAAP measures.


                                                                                             
            
           Three Months Ended                                                                                      Twelve Months Ended


                                                                         December 31,          September 30,                     December 31,                                  December 31,    December 31,
                                                                                 2019                    2019                              2018                                           2019             2018



                                                                                                                
              
               
            (in thousands, except per share amounts)



              
                Net income from continuing operations                      $
       
              1,466                                                 $
              
                24,463                       $
              
                251               $
       
       39,460 $
        
        109,319

    ---


              Adjustments to reconcile to adjusted net income:



              Non-cash compensation                                           11,335                                                   10,797                                          9,981                                             52,167       44,365



              Loss (gain) on impairments and disposal of assets                  424                                                      609                                            224                                              (945)       2,210



              Acquisition expense                                                 14                                                       18                                          4,851                                                211        6,303



              Change in fair value of contingent consideration                 7,181                                                    3,839                                          9,591                                             28,402       10,788



              Severance                                                          390                                                      179                                             21                                              1,026        2,352



              Litigation settlements and contingencies                           140                                                     (92)                                            94                                              (151)       (186)



              Income tax benefit from adjusted items                         (4,087)                                                 (4,132)                                       (5,917)                                          (20,694)    (17,208)



              Excess tax benefit from stock-based compensation                 (516)                                                 (2,816)                                       (2,417)                                          (17,058)    (77,608)




              
                Adjusted net income                                       $
       
              16,347                                                 $
              
                32,865                    $
              
                16,679               $
       
       82,418  $
        
        80,335

    ---




              
                Net income per diluted share from continuing                $
       
              0.10                                                   $
              
                1.67                      $
              
                0.02                 $
       
       2.70    $
        
        7.75
    operations

    ---


              Adjustments to reconcile net income from continuing               1.02                                                     0.58                                           1.20                                               2.94       (2.05)
    operations to adjusted net income



              
                Adjusted net income per share                               $
       
              1.12                                                   $
              
                2.25                      $
              
                1.22                 $
       
       5.64    $
        
        5.70

    ---




              
                Weighted average diluted shares outstanding        14,580                                                   14,632                                         13,622                                             14,619       14,097

LENDINGTREE'S PRINCIPLES OF FINANCIAL REPORTING

LendingTree reports the following non-GAAP measures as supplemental to GAAP:

    --  Variable marketing margin, including variable marketing expense
    --  Variable marketing margin % of revenue
    --  Earnings Before Interest, Taxes, Depreciation and Amortization, as
        adjusted for certain items discussed below ("Adjusted EBITDA")
    --  Adjusted EBITDA % of revenue
    --  Adjusted net income
    --  Adjusted net income per share

Variable marketing margin is a measure of the efficiency of the Company's operating model, measuring revenue after subtracting variable marketing and advertising costs that directly influence revenue. The Company's operating model is highly sensitive to the amount and efficiency of variable marketing expenditures, and the Company's proprietary systems are able to make rapidly changing decisions concerning the deployment of variable marketing expenditures (primarily but not exclusively online and mobile advertising placement) based on proprietary and sophisticated analytics. Variable marketing margin and variable marketing margin % of revenue are primary metrics by which the Company measures the effectiveness of its marketing efforts.

Adjusted EBITDA and adjusted EBITDA % of revenue are primary metrics by which LendingTree evaluates the operating performance of its businesses, on which its marketing expenditures and internal budgets are based and, in the case of adjusted EBITDA, by which management and many employees are compensated.

Adjusted net income and adjusted net income per share supplement GAAP income from continuing operations and GAAP income per diluted share from continuing operations by enabling investors to make period to period comparisons of those components of the nearest comparable GAAP measures that management believes better reflect the underlying financial performance of the Company's business operations during particular financial reporting periods. Adjusted net income and adjusted net income per share exclude certain amounts, such as non-cash compensation, non-cash asset impairment charges, gain/loss on disposal of assets, severance, litigation settlements and contingencies, acquisition and disposition income or expenses including with respect to changes in fair value of contingent consideration, one-time items which are recognized and recorded under GAAP in particular periods but which might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded, the effects to income taxes of the aforementioned adjustments and any excess tax benefit or expense associated with stock-based compensation recorded in net income in conjunction with FASB pronouncement ASU 2016-09. LendingTree believes that adjusted net income and adjusted net income per share are useful financial indicators that provide a different view of the financial performance of the Company than adjusted EBITDA (the primary metric by which LendingTree evaluates the operating performance of its businesses) and the GAAP measures of net income from continuing operations and GAAP income per diluted share from continuing operations.

These non-GAAP measures 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. LendingTree provides and encourages investors to examine the reconciling adjustments between the GAAP and non-GAAP measures set forth above.

Definition of LendingTree's Non-GAAP Measures

Variable marketing margin is defined as revenue less variable marketing expense. Variable marketing expense is defined as the expense attributable to variable costs paid for advertising, direct marketing and related expenses, including the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties, and excluding overhead, fixed costs and personnel-related expenses. The majority of these variable advertising costs are expressly intended to drive traffic to our websites and these variable advertising costs are included in selling and marketing expense on the company's consolidated statements of operations and consolidated income. When advertising inventory is re-sold to third parties, the proceeds of such transactions are included in revenue for the purposes of calculating variable marketing margin, and the costs of such re-sold advertising are included in cost of revenue in the company's consolidated statements of operations and consolidated income and are included in variable marketing expense for purposes of calculating variable marketing margin.

EBITDA is defined as net income from continuing operations excluding interest, income taxes, amortization of intangibles and depreciation.

Adjusted EBITDA is defined as EBITDA excluding (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) restructuring and severance expenses, (5) litigation settlements and contingencies, (6) acquisitions and dispositions income or expense (including with respect to changes in fair value of contingent consideration), and (7) one-time items.

Adjusted net income is defined as net income (loss) from continuing operations excluding (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) restructuring and severance expenses, (5) litigation settlements and contingencies, (6) acquisitions and dispositions income or expense (including with respect to changes in fair value of contingent consideration), (7) one-time items, (8) the effects to income taxes of the aforementioned adjustments, and (9) any excess tax benefit or expense associated with stock-based compensation recorded in net income in conjunction with FASB pronouncement ASU 2016-09.

Adjusted net income per share is defined as adjusted net income divided by the adjusted weighted average diluted shares outstanding. For periods which the Company reports GAAP loss from continuing operations, the effects of potentially dilutive securities are excluded from the calculation of net loss per diluted share from continuing operations because their inclusion would have been anti-dilutive. In periods where the Company reports GAAP loss from continuing operations but reports positive non-GAAP adjusted net income, the effects of potentially dilutive securities are included in the denominator for calculating adjusted net income per share.

LendingTree endeavors to compensate for the limitations of these non-GAAP measures by also providing the comparable GAAP measures with equal or greater prominence and descriptions of the reconciling items, including 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 and adjusted net income are 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, there are no adjustments for one-time items.

Non-Cash Expenses That Are Excluded From LendingTree's Adjusted EBITDA and Adjusted Net Income

Non-cash compensation expense consists principally of expense associated with the grants of restricted stock, restricted stock units and stock options. These expenses are not paid in cash and LendingTree includes the related shares in its 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 LendingTree remitting the required tax withholding amounts from its current funds. Cash expenditures for employer payroll taxes on non-cash compensation are included within adjusted EBITDA and adjusted net income.

Amortization of intangibles are non-cash expenses relating primarily to 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. Amortization of intangibles are only excluded from adjusted EBITDA.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

The matters contained in the discussion above may be considered to be "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. Those statements include statements regarding the intent, belief or current expectations or anticipations of LendingTree and members of our management team. Factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following: adverse conditions in the primary and secondary mortgage markets and in the economy, particularly interest rates; default rates on loans, particularly unsecured loans; demand by investors for unsecured personal loans; the effect of such demand on interest rates for personal loans and consumer demand for personal loans; seasonality of results; potential liabilities to secondary market purchasers; changes in the Company's relationships with network partners, including dependence on certain key network partners; breaches of network security or the misappropriation or misuse of personal consumer information; failure to provide competitive service; failure to maintain brand recognition; ability to attract and retain consumers in a cost-effective manner; the effects of potential acquisitions of other businesses, including the ability to integrate them successfully with LendingTree's existing operations; accounting rules related to contingent consideration and excess tax benefits or expenses on stock-based compensation that could materially affect earnings in future periods; ability to develop new products and services and enhance existing ones; competition; allegations of failure to comply with existing or changing laws, rules or regulations, or to obtain and maintain required licenses; failure of network partners or other affiliated parties to comply with regulatory requirements; failure to maintain the integrity of systems and infrastructure; liabilities as a result of privacy regulations; failure to adequately protect intellectual property rights or allegations of infringement of intellectual property rights; and changes in management. These and additional factors to be considered are set forth under "Risk Factors" in our Annual Report on Form 10-K for the period ended December 31, 2018, in our Quarterly Report on Form 10-Q for the period ended September 30, 2019, and in our other filings with the Securities and Exchange Commission. LendingTree undertakes 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.

About LendingTree, Inc.

LendingTree, Inc. is the parent of LendingTree, LLC and several companies owned by LendingTree, LLC (collectively, "LendingTree" or the "Company").

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

LendingTree, Inc. is headquartered in Charlotte, NC. For more information, please visit www.lendingtree.com.

Investor Relations Contact:
Trent Ziegler
trent.ziegler@lendingtree.com
704-943-8294

Media Contact:
Megan Greuling
megan.greuling@lendingtree.com
704-943-8208

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SOURCE LendingTree, Inc.