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: November 1, 2018 | ||
LENDINGTREE, INC. | ||
By: | /s/ J.D. Moriarty | |
J.D. Moriarty | ||
Chief Financial Officer |
• | Record Consolidated Revenue of $197.1 million; up 15% over 3Q 2017 |
• | GAAP Net Income from Continuing Operations of $28.4 million or $2.05 per diluted share |
• | Record Variable Marketing Margin of $76.8 million; up 30% over 3Q 2017 |
• | Record Adjusted EBITDA of $45.3 million; up 31% over 3Q 2017 |
• | Adjusted Net Income per share of $1.92; up 64% over 3Q 2017 |
• | Record revenue from non-mortgage products of $141.8 million in the third quarter represents an increase of 45% over the third quarter 2017. |
• | Record personal loans revenue of $38.6 million grew 52% over third quarter 2017. |
• | Revenue from our credit card offerings grew to $42.7 million, up 8% over the third quarter 2017 and up 10% sequentially. |
• | Several other non-mortgage categories experienced year-over-year revenue growth of more than 100%, including student loans, small business loans, and deposits. |
• | Mortgage revenue of $55.3 million declined 25% compared to the third quarter 2017, driven by a decline in refinance revenue. |
• | More than 9.6 million consumers have now signed up for My LendingTree. Revenue contribution from My LendingTree grew 68% in the third quarter compared to the prior year period. |
LendingTree Selected Financial Metrics | |||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||
Q/Q | Y/Y | ||||||||||||||||||
3Q 2018 | 2Q 2018 | % Change | 3Q 2017 | % Change | |||||||||||||||
Revenue | |||||||||||||||||||
Mortgage Products (1) | $ | 55.3 | $ | 66.9 | (17 | )% | $ | 73.8 | (25 | )% | |||||||||
Non-Mortgage Products (2) | 141.8 | 117.2 | 21 | % | 97.7 | 45 | % | ||||||||||||
Total Revenue | $ | 197.1 | $ | 184.1 | 7 | % | $ | 171.5 | 15 | % | |||||||||
Non-Mortgage % of Total | 72 | % | 64 | % | 57 | % | |||||||||||||
Income Before Income Taxes | $ | 17.8 | $ | 15.1 | 18 | % | $ | 14.4 | 24 | % | |||||||||
Income Tax Benefit (Expense) | $ | 10.5 | $ | 29.7 | (65 | )% | $ | (4.3 | ) | N/A | |||||||||
Net Income from Continuing Operations | $ | 28.4 | $ | 44.8 | (37 | )% | $ | 10.1 | 181 | % | |||||||||
Net Income from Cont. Ops. % of Revenue | 14 | % | 24 | % | 6 | % | |||||||||||||
Net Income per Share from Cont. Ops. | |||||||||||||||||||
Basic | $ | 2.22 | $ | 3.61 | (39 | )% | $ | 0.84 | 164 | % | |||||||||
Diluted | $ | 2.05 | $ | 3.17 | (35 | )% | $ | 0.74 | 177 | % | |||||||||
Variable Marketing Margin | |||||||||||||||||||
Total Revenue | $ | 197.1 | $ | 184.1 | 7 | % | $ | 171.5 | 15 | % | |||||||||
Variable Marketing Expense (3) (4) | $ | (120.3 | ) | $ | (116.4 | ) | 3 | % | $ | (112.4 | ) | 7 | % | ||||||
Variable Marketing Margin (4) | $ | 76.8 | $ | 67.7 | 13 | % | $ | 59.1 | 30 | % | |||||||||
Variable Marketing Margin % of Revenue | 39 | % | 37 | % | 34 | % | |||||||||||||
Adjusted EBITDA (4) | $ | 45.3 | $ | 37.1 | 22 | % | $ | 34.7 | 31 | % | |||||||||
Adjusted EBITDA % of Revenue (4) | 23 | % | 20 | % | 20 | % | |||||||||||||
Adjusted Net Income (4) | $ | 26.6 | $ | 20.8 | 28 | % | $ | 16.1 | 65 | % | |||||||||
Adjusted Net Income per Share (4) | $ | 1.92 | $ | 1.47 | 31 | % | $ | 1.17 | 64 | % | |||||||||
(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) | 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. |
(4) | 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. |
• | Record consolidated revenue of $197.1 million represents an increase of 15% over revenue in the third quarter 2017. |
• | GAAP net income from continuing operations of $28.4 million, or $2.05 per diluted share. |
• | Record Variable Marketing Margin of $76.8 million represents 39% of revenue and grew 30% over third quarter 2017. |
• | Record Adjusted EBITDA of $45.3 million increased 31% over third quarter 2017. |
• | Adjusted Net Income per share of $1.92 represents growth of 64% over third quarter 2017. |
• | During the quarter, the company repurchased 49 thousand shares of its stock at a weighted-average price per share of $230 for aggregate consideration of $11.2 million. As of September 30, 2018, the company had approximately $70.6 million in repurchase authorization remaining. |
• | Revenue is now anticipated to be in the range of $765 - $775 million, up from prior range of $745 - $765 million. |
• | Variable Marketing Margin is expected in the range of $283 - $288 million, up from prior range of $275 - $285. |
• | Adjusted EBITDA is now anticipated in the range of $152 - $155 million, up from prior range of $148 - $152 million, and representing growth of 32% - 35% over 2017. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Revenue | $ | 197,057 | $ | 171,494 | $ | 562,193 | $ | 456,782 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) (1) | 10,838 | 4,388 | 22,577 | 12,143 | |||||||||||
Selling and marketing expense (1) | 124,400 | 118,538 | 374,390 | 320,930 | |||||||||||
General and administrative expense (1) | 22,980 | 17,920 | 70,553 | 41,561 | |||||||||||
Product development (1) | 6,608 | 4,805 | 18,835 | 12,492 | |||||||||||
Depreciation | 1,895 | 1,798 | 5,199 | 5,309 | |||||||||||
Amortization of intangibles | 5,701 | 3,817 | 13,628 | 9,034 | |||||||||||
Change in fair value of contingent consideration | 2,105 | 2,501 | 1,197 | 20,640 | |||||||||||
Severance | 2,328 | — | 2,331 | 404 | |||||||||||
Litigation settlements and contingencies | (88 | ) | 272 | (280 | ) | 961 | |||||||||
Total costs and expenses | 176,767 | 154,039 | 508,430 | 423,474 | |||||||||||
Operating income | 20,290 | 17,455 | 53,763 | 33,308 | |||||||||||
Other expense, net: | |||||||||||||||
Interest expense, net | (2,393 | ) | (2,804 | ) | (8,305 | ) | (4,048 | ) | |||||||
Other expense | (69 | ) | (228 | ) | (106 | ) | (215 | ) | |||||||
Income before income taxes | 17,828 | 14,423 | 45,352 | 29,045 | |||||||||||
Income tax benefit (expense) | 10,534 | (4,292 | ) | 63,716 | (3,109 | ) | |||||||||
Net income from continuing operations | 28,362 | 10,131 | 109,068 | 25,936 | |||||||||||
Loss from discontinued operations, net of tax | (2,634 | ) | (1,011 | ) | (9,269 | ) | (2,632 | ) | |||||||
Net income and comprehensive income | $ | 25,728 | $ | 9,120 | $ | 99,799 | $ | 23,304 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 12,799 | 11,999 | 12,437 | 11,931 | |||||||||||
Diluted | 13,850 | 13,774 | 14,299 | 13,625 | |||||||||||
Income per share from continuing operations: | |||||||||||||||
Basic | $ | 2.22 | $ | 0.84 | $ | 8.77 | $ | 2.17 | |||||||
Diluted | $ | 2.05 | $ | 0.74 | $ | 7.63 | $ | 1.90 | |||||||
Loss per share from discontinued operations: | |||||||||||||||
Basic | $ | (0.21 | ) | $ | (0.08 | ) | $ | (0.75 | ) | $ | (0.22 | ) | |||
Diluted | $ | (0.19 | ) | $ | (0.07 | ) | $ | (0.65 | ) | $ | (0.19 | ) | |||
Net income per share: | |||||||||||||||
Basic | $ | 2.01 | $ | 0.76 | $ | 8.02 | $ | 1.95 | |||||||
Diluted | $ | 1.86 | $ | 0.66 | $ | 6.98 | $ | 1.71 | |||||||
(1) Amounts include non-cash compensation, as follows: | |||||||||||||||
Cost of revenue | $ | 123 | $ | 41 | $ | 260 | $ | 129 | |||||||
Selling and marketing expense | 1,577 | 1,366 | 4,511 | 2,543 | |||||||||||
General and administrative expense | 8,388 | 5,864 | 25,617 | 8,684 | |||||||||||
Product development | 2,009 | 667 | 3,996 | 1,712 |
September 30, 2018 | December 31, 2017 | ||||||
(in thousands, except par value and share amounts) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 265,194 | $ | 368,550 | |||
Restricted cash and cash equivalents | 47 | 4,091 | |||||
Accounts receivable, net | 79,444 | 53,444 | |||||
Prepaid and other current assets | 16,411 | 11,881 | |||||
Current assets of discontinued operations | 175 | 75 | |||||
Total current assets | 361,271 | 438,041 | |||||
Property and equipment, net | 40,448 | 36,431 | |||||
Goodwill | 166,330 | 113,368 | |||||
Intangible assets, net | 95,970 | 81,125 | |||||
Deferred income tax assets | 75,484 | 20,156 | |||||
Other non-current assets | 1,708 | 1,910 | |||||
Non-current assets of discontinued operations | 2,428 | 2,428 | |||||
Total assets | $ | 743,639 | $ | 693,459 | |||
LIABILITIES: | |||||||
Accounts payable, trade | $ | 13,355 | $ | 9,250 | |||
Accrued expenses and other current liabilities | 68,711 | 77,183 | |||||
Current contingent consideration | 7,327 | 46,576 | |||||
Current liabilities of discontinued operations | 18,988 | 14,507 | |||||
Total current liabilities | 108,381 | 147,516 | |||||
Long-term debt | 247,696 | 238,199 | |||||
Non-current contingent consideration | 9,019 | 11,273 | |||||
Other non-current liabilities | 2,077 | 1,597 | |||||
Total liabilities | 367,173 | 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; 15,390,409 and 14,218,572 shares issued, respectively, and 12,945,961 and 11,979,434 shares outstanding, respectively | 154 | 142 | |||||
Additional paid-in capital | 1,125,185 | 1,087,582 | |||||
Accumulated deficit | (607,182 | ) | (708,354 | ) | |||
Treasury stock; 2,444,448 and 2,239,138 shares, respectively | (142,268 | ) | (85,085 | ) | |||
Noncontrolling interest | 577 | 589 | |||||
Total shareholders' equity | 376,466 | 294,874 | |||||
Total liabilities and shareholders' equity | $ | 743,639 | $ | 693,459 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Cash flows from operating activities attributable to continuing operations: | |||||||
Net income and comprehensive income | $ | 99,799 | $ | 23,304 | |||
Less: Loss from discontinued operations, net of tax | 9,269 | 2,632 | |||||
Income from continuing operations | 109,068 | 25,936 | |||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable to continuing operations: | |||||||
Loss on impairments and disposal of assets | 1,986 | 673 | |||||
Amortization of intangibles | 13,628 | 9,034 | |||||
Depreciation | 5,199 | 5,309 | |||||
Rental amortization of intangibles and depreciation | 554 | 1,011 | |||||
Non-cash compensation expense | 34,384 | 13,068 | |||||
Deferred income taxes | (64,435 | ) | (5,571 | ) | |||
Change in fair value of contingent consideration | 1,197 | 20,640 | |||||
Bad debt expense | 922 | 401 | |||||
Amortization of debt issuance costs | 1,308 | 622 | |||||
Amortization of convertible debt discount | 8,497 | 3,635 | |||||
Changes in current assets and liabilities: | |||||||
Accounts receivable | (23,387 | ) | (22,271 | ) | |||
Prepaid and other current assets | (2,970 | ) | (5,070 | ) | |||
Accounts payable, accrued expenses and other current liabilities | (7,910 | ) | 19,361 | ||||
Current contingent consideration | (21,900 | ) | — | ||||
Income taxes receivable | 4,223 | (1,399 | ) | ||||
Other, net | (137 | ) | (296 | ) | |||
Net cash provided by operating activities attributable to continuing operations | 60,227 | 65,083 | |||||
Cash flows from investing activities attributable to continuing operations: | |||||||
Capital expenditures | (10,640 | ) | (5,925 | ) | |||
Acquisition of Student Loan Hero, net of cash acquired | (57,448 | ) | — | ||||
Acquisition of Ovation, net of cash acquired | (11,683 | ) | — | ||||
Acquisition of SnapCap | (10 | ) | (11,886 | ) | |||
Acquisition of DepositAccounts | — | (25,000 | ) | ||||
Acquisition of MagnifyMoney, net of cash acquired | — | (29,511 | ) | ||||
Other investing activities | (12 | ) | — | ||||
Net cash used in investing activities attributable to continuing operations | (79,793 | ) | (72,322 | ) | |||
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 | 3,236 | 1,065 | |||||
Contingent consideration payments | (26,600 | ) | — | ||||
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 | (100 | ) | (9,264 | ) | |||
Purchase of treasury stock | (57,018 | ) | (10,001 | ) |
Net cash (used in) provided by financing activities attributable to continuing operations | (80,482 | ) | 263,710 | ||||
Total cash (used in) provided by continuing operations | (100,048 | ) | 256,471 | ||||
Discontinued operations: | |||||||
Net cash used in operating activities attributable to discontinued operations | (7,352 | ) | (2,365 | ) | |||
Total cash used in discontinued operations | (7,352 | ) | (2,365 | ) | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents | (107,400 | ) | 254,106 | ||||
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 | $ | 265,241 | $ | 349,326 |
Three Months Ended | |||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | |||||||
Selling and marketing expense | $ | 124,400 | $ | 123,946 | $ | 118,538 | |||
Non-variable selling and marketing expense (1) | (7,770 | ) | (7,571 | ) | (6,118 | ) | |||
Cost of advertising re-sold to third parties (2) | 3,628 | — | — | ||||||
Variable Marketing Expense | $ | 120,258 | $ | 116,375 | $ | 112,420 |
(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. |
Three Months Ended | |||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | |||||||
Net income from continuing operations | $ | 28,362 | $ | 44,849 | $ | 10,131 | |||
Net income from continuing operations % of revenue | 14 | % | 24 | % | 6 | % | |||
Adjustments to reconcile to Variable Marketing Margin: | |||||||||
Cost of revenue | 10,838 | 6,043 | 4,388 | ||||||
Cost of advertising re-sold to third parties (1) | (3,628 | ) | — | — | |||||
Non-variable selling and marketing expense (2) | 7,770 | 7,571 | 6,118 | ||||||
General and administrative expense | 22,980 | 24,759 | 17,920 | ||||||
Product development | 6,608 | 5,967 | 4,805 | ||||||
Depreciation | 1,895 | 1,633 | 1,798 | ||||||
Amortization of intangibles | 5,701 | 3,964 | 3,817 | ||||||
Change in fair value of contingent consideration | 2,105 | (167 | ) | 2,501 | |||||
Severance | 2,328 | 3 | — | ||||||
Litigation settlements and contingencies (3) | (88 | ) | (170 | ) | 272 | ||||
Interest expense, net | 2,393 | 2,924 | 2,804 | ||||||
Other expense | 69 | 71 | 228 | ||||||
Income tax (benefit) expense | (10,534 | ) | (29,721 | ) | 4,292 | ||||
Variable Marketing Margin | $ | 76,799 | $ | 67,726 | $ | 59,074 | |||
Variable Marketing Margin % of revenue | 39 | % | 37 | % | 34 | % |
(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. |
(3 | ) | Includes legal fees for certain patent litigation. |
Three Months Ended | |||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | |||||||
Net income from continuing operations | $ | 28,362 | $ | 44,849 | $ | 10,131 | |||
Net income from continuing operations % of revenue | 14 | % | 24 | % | 6 | % | |||
Adjustments to reconcile to Adjusted EBITDA: | |||||||||
Amortization of intangibles | 5,701 | 3,964 | 3,817 | ||||||
Depreciation | 1,895 | 1,633 | 1,798 | ||||||
Severance | 2,328 | 3 | — | ||||||
Loss on impairments and disposal of assets | 97 | 1,797 | 364 | ||||||
Non-cash compensation | 12,097 | 11,178 | 7,938 | ||||||
Change in fair value of contingent consideration | 2,105 | (167 | ) | 2,501 | |||||
Acquisition expense | 765 | 625 | 320 | ||||||
Litigation settlements and contingencies (1) | (88 | ) | (170 | ) | 272 | ||||
Interest expense, net | 2,393 | 2,924 | 2,804 | ||||||
Rental depreciation and amortization of intangibles | 158 | 194 | 486 | ||||||
Income tax (benefit) expense | (10,534 | ) | (29,721 | ) | 4,292 | ||||
Adjusted EBITDA | $ | 45,279 | $ | 37,109 | $ | 34,723 | |||
Adjusted EBITDA % of revenue | 23 | % | 20 | % | 20 | % |
(1) | Includes legal fees for certain patent litigation. |
Three Months Ended | |||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | |||||||
Net income from continuing operations | $ | 28,362 | $ | 44,849 | $ | 10,131 | |||
Adjustments to reconcile to Adjusted Net Income: | |||||||||
Non-cash compensation | 12,097 | 11,178 | 7,938 | ||||||
Loss on impairments and disposal of assets | 97 | 1,797 | 364 | ||||||
Acquisition expense | 765 | 625 | 320 | ||||||
Change in fair value of contingent consideration | 2,105 | (167 | ) | 2,501 | |||||
Severance | 2,328 | 3 | — | ||||||
Litigation settlements and contingencies (1) | (88 | ) | (170 | ) | 272 | ||||
Income tax benefit from adjusted items | (4,760 | ) | (3,639 | ) | (4,581 | ) | |||
Excess tax benefit from stock-based compensation | (14,321 | ) | (33,667 | ) | (811 | ) | |||
Adjusted net income | $ | 26,585 | $ | 20,809 | $ | 16,134 | |||
Net income per diluted share from continuing operations | $ | 2.05 | $ | 3.17 | $ | 0.74 | |||
Adjustments to reconcile net income from continuing operations to Adjusted Net Income | (0.13 | ) | (1.70 | ) | 0.43 | ||||
Adjusted net income per share | $ | 1.92 | $ | 1.47 | $ | 1.17 | |||
Weighted average diluted shares outstanding | 13,850 | 14,147 | 13,774 |
(1 | ) | Includes legal fees for certain patent litigation. |
• | 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 |
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