Delaware | 001-34063 | 26-2414818 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) |
11115 Rushmore Drive, Charlotte, NC | 28277 | |
(Address of principal executive offices) | (Zip Code) |
Exhibit No. | Exhibit Description | |
99.1 |
Date: April 26, 2018 | ||
LENDINGTREE, INC. | ||
By: | /s/ J.D. Moriarty | |
J.D. Moriarty | ||
Chief Financial Officer |
• | Record Consolidated Revenue of $181.0 million; up 37% over 1Q 2017 |
• | Revenue from Mortgage products of $73.5 million; up 17% over 1Q 2017 |
• | Record Revenue from Non-mortgage products of $107.6 million; up 55% over 1Q 2017 |
• | GAAP Net Income from Continuing Operations of $35.9 million or $2.41 per diluted share |
• | Record Variable Marketing Margin of $63.0 million; up 45% over 1Q 2017 |
• | Adjusted EBITDA of $31.7 million; up 33% over 1Q 2017 |
• | Adjusted Net Income per share of $1.10; up 29% over 1Q 2017 |
• | Revenue from mortgage products of $73.5 million represents an increase of 17% over first quarter 2017 driven by strong growth in both purchase and refinance revenues at 13% and 18%, respectively. According to Mortgage Bankers Association, originations industry-wide were projected down 4% in the comparable period. |
• | Record revenue from non-mortgage products of $107.6 million in the first quarter represents an increase of 55% over the first quarter 2017. |
• | Revenue from our credit card offerings continued its momentum, growing to $46.1 million in 1Q, up 36% over the first quarter 2017. |
• | Personal loans revenue of $26.0 million grew 53% over first quarter 2017. |
• | Home equity revenue continued to climb, growing 81% over first quarter 2017. |
• | More than 8.0 million consumers have now signed up for free credit scores and savings alerts through My LendingTree. Revenue contribution from MyLendingTree grew 76% in the first quarter compared to the prior year period as new features, such as Credit Analyzer and free credit monitoring, are driving increased engagement. |
LendingTree Selected Financial Metrics | |||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||
Q/Q | Y/Y | ||||||||||||||||||
1Q 2018 | 4Q 2017 | % Change | 1Q 2017 | % Change | |||||||||||||||
Revenue by Product | |||||||||||||||||||
Mortgage Products (1) | $ | 73.5 | $ | 67.7 | 9 | % | $ | 62.9 | 17 | % | |||||||||
Non-Mortgage Products (2) | 107.6 | 93.3 | 15 | % | 69.6 | 55 | % | ||||||||||||
Total Revenue | $ | 181.0 | $ | 161.0 | 12 | % | $ | 132.5 | 37 | % | |||||||||
Non-Mortgage % of Total | 59 | % | 58 | % | 53 | % | |||||||||||||
Income (Loss) Before Income Taxes | $ | 12.4 | $ | (3.3 | ) | N/A | $ | 6.7 | 85 | % | |||||||||
Income Tax (Expense) Benefit | $ | 23.5 | $ | (3.2 | ) | N/A | $ | 1.1 | N/A | ||||||||||
Net Income (Loss) from Continuing Operations | $ | 35.9 | $ | (6.5 | ) | N/A | $ | 7.8 | 360 | % | |||||||||
Net Income (Loss) from Cont. Ops. % of Revenue | 20 | % | (4 | )% | 6 | % | |||||||||||||
Net Income (Loss) per Share from Cont. Ops. | |||||||||||||||||||
Basic | $ | 2.97 | $ | (0.54 | ) | N/A | $ | 0.66 | 350 | % | |||||||||
Diluted | $ | 2.41 | $ | (0.54 | ) | N/A | $ | 0.58 | 316 | % | |||||||||
Selling and Marketing Expense | |||||||||||||||||||
Variable Selling & Marketing Expense (3) | $ | 118.0 | $ | 104.9 | 12 | % | $ | 89.0 | 33 | % | |||||||||
Non-variable Selling & Marketing | 8.0 | 7.0 | 14 | % | 4.3 | 86 | % | ||||||||||||
Selling and Marketing Expense | $ | 126.0 | $ | 111.9 | 13 | % | $ | 93.3 | 35 | % | |||||||||
Variable Marketing Margin (4) | $ | 63.0 | $ | 56.1 | 12 | % | $ | 43.5 | 45 | % | |||||||||
Variable Marketing Margin % of Revenue | 35 | % | 35 | % | 33 | % | |||||||||||||
Adjusted EBITDA (4) | $ | 31.7 | $ | 29.6 | 7 | % | $ | 23.8 | 33 | % | |||||||||
Adjusted EBITDA % of Revenue (4) | 18 | % | 18 | % | 18 | % | |||||||||||||
Adjusted Net Income (4) | $ | 16.2 | $ | 11.9 | 36 | % | $ | 11.5 | 41 | % | |||||||||
Adjusted Net Income per Share (4) | $ | 1.10 | $ | 0.84 | 31 | % | $ | 0.85 | 29 | % | |||||||||
(1) | Includes the purchase mortgage and refinance mortgage products. |
(2) | Includes the home equity, reverse mortgage, personal loan, credit card, small business loan, student loan, auto loan, home services, insurance, deposit and personal credit products. |
(3) | Defined as the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related expenses, which excludes overhead, fixed costs and personnel-related expenses. |
(4) | 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. |
• | Record consolidated revenue of $181.0 million represents an increase of $48.5 million, or 37%, over revenue in the first quarter 2017. |
• | GAAP net income from continuing operations of $35.9 million, or $2.41 per diluted share, was impacted by a $27.2 million tax benefit relating to employee exercising of stock options and vesting of restricted stock. |
• | Record Variable Marketing Margin of $63.0 million represents an increase of $19.5 million, or 45%, over first quarter 2017. |
• | Adjusted EBITDA of $31.7 million increased $7.9 million, or 33%, over first quarter 2017. Included in this number is $2.3 million of unusually high expense related to payroll taxes owed upon the exercise of employee stock options and vesting of restricted stock units. |
• | Adjusted Net Income per share of $1.10 represents growth of 29% over first quarter 2017. |
• | During the quarter, the company repurchased 30 thousand shares of its stock at a weighted-average price per share of $362 for aggregate consideration of $11.0 million. As of March 31, 2018, the company had $116.7 million in repurchase authorization remaining. |
• | Revenue is anticipated to be in the range of $193 - $200 million, representing growth of 26% - 31% over second quarter 2017. |
• | Variable Marketing Margin is anticipated to be $65 - $69 million, representing growth of 35% - 43%. |
• | Adjusted EBITDA is anticipated to be in the range of $34 - $36 million, up 26% - 33% over second quarter 2017. Second quarter Adjusted EBITDA guidance reflects an estimated $2 - $3 million of expense related to payroll taxes owed upon the exercise of employee stock options and vesting of restricted stock units. |
• | Revenue of $770 - $790 million. |
• | Variable Marketing Margin of $270 - $280 million. |
• | Adjusted EBITDA in the range of $145 - $150 million. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(in thousands, except per share amounts) | |||||||
Revenue | $ | 181,035 | $ | 132,515 | |||
Costs and expenses: | |||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) (1) | 5,696 | 3,591 | |||||
Selling and marketing expense (1) | 126,044 | 93,251 | |||||
General and administrative expense (1) | 22,814 | 11,547 | |||||
Product development (1) | 6,260 | 3,623 | |||||
Depreciation | 1,671 | 1,703 | |||||
Amortization of intangibles | 3,963 | 2,609 | |||||
Change in fair value of contingent consideration | (741 | ) | 8,746 | ||||
Severance | — | 157 | |||||
Litigation settlements and contingencies | (22 | ) | 404 | ||||
Total costs and expenses | 165,685 | 125,631 | |||||
Operating income | 15,350 | 6,884 | |||||
Other (expense) income, net: | |||||||
Interest expense, net | (2,988 | ) | (165 | ) | |||
Other income | 34 | — | |||||
Income before income taxes | 12,396 | 6,719 | |||||
Income tax benefit | 23,461 | 1,079 | |||||
Net income from continuing operations | 35,857 | 7,798 | |||||
Loss from discontinued operations, net of tax | (4,333 | ) | (932 | ) | |||
Net income and comprehensive income | $ | 31,524 | $ | 6,866 | |||
Weighted average shares outstanding: | |||||||
Basic | 12,090 | 11,827 | |||||
Diluted | 14,848 | 13,477 | |||||
Income per share from continuing operations: | |||||||
Basic | $ | 2.97 | $ | 0.66 | |||
Diluted | $ | 2.41 | $ | 0.58 | |||
Loss per share from discontinued operations: | |||||||
Basic | $ | (0.36 | ) | $ | (0.08 | ) | |
Diluted | $ | (0.29 | ) | $ | (0.07 | ) | |
Net income per share: | |||||||
Basic | $ | 2.61 | $ | 0.58 | |||
Diluted | $ | 2.12 | $ | 0.51 | |||
(1) Amounts include non-cash compensation, as follows: | |||||||
Cost of revenue | $ | 58 | $ | 43 | |||
Selling and marketing expense | 1,501 | 485 | |||||
General and administrative expense | 8,739 | 1,219 | |||||
Product development | 811 | 483 |
March 31, 2018 | December 31, 2017 | ||||||
(in thousands, except par value and share amounts) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 346,470 | $ | 368,550 | |||
Restricted cash and cash equivalents | 4,084 | 4,091 | |||||
Accounts receivable, net | 64,769 | 53,444 | |||||
Prepaid and other current assets | 13,551 | 11,881 | |||||
Current assets of discontinued operations | 175 | 75 | |||||
Total current assets | 429,049 | 438,041 | |||||
Property and equipment, net | 37,560 | 36,431 | |||||
Goodwill | 113,368 | 113,368 | |||||
Intangible assets, net | 77,035 | 81,125 | |||||
Deferred income tax assets | 45,406 | 20,156 | |||||
Other non-current assets | 1,933 | 1,910 | |||||
Non-current assets of discontinued operations | 2,428 | 2,428 | |||||
Total assets | $ | 706,779 | $ | 693,459 | |||
LIABILITIES: | |||||||
Accounts payable, trade | $ | 4,726 | $ | 9,250 | |||
Accrued expenses and other current liabilities | 78,150 | 77,183 | |||||
Current contingent consideration | 28,357 | 46,576 | |||||
Current liabilities of discontinued operations | 17,449 | 14,507 | |||||
Total current liabilities | 128,682 | 147,516 | |||||
Long-term debt | 241,332 | 238,199 | |||||
Non-current contingent consideration | 5,251 | 11,273 | |||||
Other non-current liabilities | 1,611 | 1,597 | |||||
Total liabilities | 376,876 | 398,585 | |||||
Commitments and contingencies | |||||||
SHAREHOLDERS' EQUITY: | |||||||
Preferred stock $.01 par value; 5,000,000 shares authorized; none issued or outstanding | — | — | |||||
Common stock $.01 par value; 50,000,000 shares authorized; 14,691,595 and 14,218,572 shares issued, respectively, and 12,422,041 and 11,979,434 shares outstanding, respectively | 147 | 142 | |||||
Additional paid-in capital | 1,100,743 | 1,087,582 | |||||
Accumulated deficit | (675,457 | ) | (708,354 | ) | |||
Treasury stock; 2,269,554 and 2,239,138 shares, respectively | (96,085 | ) | (85,085 | ) | |||
Noncontrolling interest | 555 | 589 | |||||
Total shareholders' equity | 329,903 | 294,874 | |||||
Total liabilities and shareholders' equity | $ | 706,779 | $ | 693,459 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Cash flows from operating activities attributable to continuing operations: | |||||||
Net income and comprehensive income | $ | 31,524 | $ | 6,866 | |||
Less: Loss from discontinued operations, net of tax | 4,333 | 932 | |||||
Income from continuing operations | 35,857 | 7,798 | |||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable to continuing operations: | |||||||
Loss on disposal of fixed assets | 92 | 273 | |||||
Amortization of intangibles | 3,963 | 2,609 | |||||
Depreciation | 1,671 | 1,703 | |||||
Rental amortization of intangibles and depreciation | 202 | 262 | |||||
Non-cash compensation expense | 11,109 | 2,230 | |||||
Deferred income taxes | (25,781 | ) | (3,307 | ) | |||
Change in fair value of contingent consideration | (741 | ) | 8,746 | ||||
Bad debt expense | 56 | 157 | |||||
Amortization of debt issuance costs | 434 | 61 | |||||
Amortization of convertible debt discount | 2,799 | — | |||||
Changes in current assets and liabilities: | |||||||
Accounts receivable | (11,381 | ) | (11,132 | ) | |||
Prepaid and other current assets | (515 | ) | (269 | ) | |||
Accounts payable, accrued expenses and other current liabilities | (2,024 | ) | 6,086 | ||||
Income taxes receivable | 2,092 | 2,143 | |||||
Other, net | (158 | ) | (176 | ) | |||
Net cash provided by operating activities attributable to continuing operations | 17,675 | 17,184 | |||||
Cash flows from investing activities attributable to continuing operations: | |||||||
Capital expenditures | (3,456 | ) | (1,896 | ) | |||
Acquisition of SnapCap | (10 | ) | — | ||||
Other investing activities | (34 | ) | — | ||||
Net cash used in investing activities attributable to continuing operations | (3,500 | ) | (1,896 | ) | |||
Cash flows from financing activities attributable to continuing operations: | |||||||
Proceeds from exercise of stock options, net of payments related to net-share settlement of stock-based compensation | 2,057 | (95 | ) | ||||
Contingent consideration payments | (23,500 | ) | — | ||||
Payment of debt issuance costs | (76 | ) | — | ||||
Purchase of treasury stock | (12,099 | ) | — | ||||
Net cash used in financing activities attributable to continuing operations | (33,618 | ) | (95 | ) | |||
Total cash (used in) provided by continuing operations | (19,443 | ) | 15,193 | ||||
Discontinued operations: | |||||||
Net cash used in operating activities attributable to discontinued operations | (2,644 | ) | (891 | ) | |||
Total cash used in discontinued operations | (2,644 | ) | (891 | ) | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents | (22,087 | ) | 14,302 | ||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 372,641 | 95,220 | |||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 350,554 | $ | 109,522 |
Three Months Ended | |||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||
Net income (loss) from continuing operations | $ | 35,857 | $ | (6,518 | ) | $ | 7,798 | ||
Net income from continuing operations % of revenue | 20 | % | (4 | )% | 6 | % | |||
Adjustments to reconcile to Variable Marketing Margin: | |||||||||
Cost of revenue | 5,696 | 5,080 | 3,591 | ||||||
Non-variable selling and marketing expense (1) | 8,016 | 6,953 | 4,249 | ||||||
General and administrative expense | 22,814 | 29,980 | 11,547 | ||||||
Product development | 6,260 | 5,433 | 3,623 | ||||||
Depreciation | 1,671 | 1,776 | 1,703 | ||||||
Amortization of intangibles | 3,963 | 3,958 | 2,609 | ||||||
Change in fair value of contingent consideration | (741 | ) | 3,291 | 8,746 | |||||
Severance | — | — | 157 | ||||||
Litigation settlements and contingencies (2) | (22 | ) | (243 | ) | 404 | ||||
Interest expense, net | 2,988 | 2,980 | 165 | ||||||
Other expense (income) | (34 | ) | 181 | — | |||||
Income tax expense (benefit) | (23,461 | ) | 3,182 | (1,079 | ) | ||||
Variable Marketing Margin | $ | 63,007 | $ | 56,053 | $ | 43,513 | |||
Variable Marketing Margin % of revenue | 35 | % | 35 | % | 33 | % |
(1 | ) | Defined as 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 | ) | Includes legal fees for certain patent litigation. |
Three Months Ended | |||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||
Net income (loss) from continuing operations | $ | 35,857 | $ | (6,518 | ) | $ | 7,798 | ||
Net income (loss) from continuing operations % of revenue | 20 | % | (4 | )% | 6 | % | |||
Adjustments to reconcile to Adjusted EBITDA: | |||||||||
Non-cash compensation | 11,109 | 10,293 | 2,230 | ||||||
Loss on disposal of assets | 92 | 166 | 273 | ||||||
Acquisition expense | 62 | 238 | 549 | ||||||
Change in fair value of contingent consideration | (741 | ) | 3,291 | 8,746 | |||||
Severance | — | — | 157 | ||||||
Litigation settlements and contingencies (1) | (22 | ) | (243 | ) | 404 | ||||
Contribution to LendingTree Foundation | — | 10,000 | — | ||||||
Depreciation | 1,671 | 1,776 | 1,703 | ||||||
Amortization of intangibles | 3,963 | 3,958 | 2,609 | ||||||
Rental depreciation and amortization of intangibles | 202 | 464 | 262 | ||||||
Interest expense, net | 2,988 | 2,980 | 165 | ||||||
Income tax (benefit) expense | (23,461 | ) | 3,182 | (1,079 | ) | ||||
Adjusted EBITDA | $ | 31,720 | $ | 29,587 | $ | 23,817 | |||
Adjusted EBITDA % of revenue | 18 | % | 18 | % | 18 | % |
(1) | Includes legal fees for certain patent litigation. |
Three Months Ended | |||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||
Net income (loss) from continuing operations | $ | 35,857 | $ | (6,518 | ) | $ | 7,798 | ||
Adjustments to reconcile to Adjusted Net Income: | |||||||||
Non-cash compensation | 11,109 | 10,293 | 2,230 | ||||||
Loss on disposal of assets | 92 | 166 | 273 | ||||||
Acquisition expense | 62 | 238 | 549 | ||||||
Change in fair value of contingent consideration | (741 | ) | 3,291 | 8,746 | |||||
Severance | — | — | 157 | ||||||
Litigation settlements and contingencies (1) | (22 | ) | (243 | ) | 404 | ||||
Contribution to LendingTree Foundation | — | 10,000 | — | ||||||
Income tax benefit from adjusted items | (2,892 | ) | (9,836 | ) | (4,942 | ) | |||
Impact of Tax Cuts and Jobs Act | — | 9,062 | — | ||||||
Excess tax benefit from stock-based compensation | (27,203 | ) | (4,512 | ) | (3,762 | ) | |||
Adjusted net income | $ | 16,262 | $ | 11,941 | $ | 11,453 | |||
Net income (loss) per diluted share from continuing operations | $ | 2.41 | $ | (0.54 | ) | $ | 0.58 | ||
Adjustments to reconcile net income (loss) from continuing operations to Adjusted Net Income | (1.31 | ) | 1.54 | 0.27 | |||||
Adjustments to reconcile effect of dilutive securities | — | (0.16 | ) | — | |||||
Adjusted net income per share | $ | 1.10 | $ | 0.84 | $ | 0.85 | |||
Adjusted weighted average diluted shares outstanding | 14,848 | 14,282 | 13,477 | ||||||
Effect of dilutive securities | — | 2,296 | — | ||||||
Weighted average diluted shares outstanding | 14,848 | 11,986 | 13,477 | ||||||
Effect of dilutive securities | 2,758 | — | 1,650 | ||||||
Weighted average basic shares outstanding | 12,090 | 11,986 | 11,827 |
(1 | ) | Includes legal fees for certain patent litigation. |
• | Variable Marketing Margin |
• | 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 |
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