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) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.01 par value per share | TREE | Nasdaq Stock Market |
Exhibit No. | Exhibit Description | |
99.1 |
Date: July 25, 2019 | ||
LENDINGTREE, INC. | ||
By: | /s/ J.D. Moriarty | |
J.D. Moriarty | ||
Chief Financial Officer |
• | Record Consolidated Revenue of $278.4 million; up 51%% over 2Q 2018 |
• | GAAP Net Income from Continuing Operations of $13.0 million or $0.87 per diluted share |
• | Record Variable Marketing Margin of $93.8 million; up 39% over 2Q 2018 |
• | Record Adjusted EBITDA of $46.3 million; up 25% over 2Q 2018 |
• | Adjusted Net Income per share of $1.18 |
• | Insurance revenue of $71.9 million, representing growth of 73% over second quarter 2018 on a pro forma basis. |
• | Credit card revenue of $56.0 million grew 45% over second quarter 2018. |
• | Mortgage revenue of $54.6 million resumed sequential growth, increasing 19% compared to the preceding quarter. |
• | Revenue from personal loans of $41.1 million grew 14% over second quarter 2018. |
• | 12.4 million consumers have now signed up for My LendingTree. The revenue contribution from My LendingTree grew to more than $20 million and the platform accounted for more than 21% of all addressable LendingTree leads. |
LendingTree Selected Financial Metrics | |||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||
Y/Y | Q/Q | ||||||||||||||||||
2Q 2019 | 2Q 2018 | % Change | 1Q 2019 | % Change | |||||||||||||||
Revenue | |||||||||||||||||||
Mortgage Products (1) | $ | 54.6 | $ | 66.9 | (18 | )% | $ | 46.0 | 19 | % | |||||||||
Non-Mortgage Products (2) | 223.8 | 117.2 | 91 | % | 216.4 | 3 | % | ||||||||||||
Total Revenue | $ | 278.4 | $ | 184.1 | 51 | % | $ | 262.4 | 6 | % | |||||||||
Non-Mortgage % of Total | 80 | % | 64 | % | 82 | % | |||||||||||||
Income (Loss) Before Income Taxes | $ | 7.3 | $ | 15.1 | (52 | )% | $ | (7.2 | ) | NA | |||||||||
Income Tax Benefit | $ | 5.7 | $ | 29.7 | (81 | )% | $ | 7.8 | (27 | )% | |||||||||
Net Income from Continuing Operations | $ | 13.0 | $ | 44.8 | (71 | )% | $ | 0.6 | 2067 | % | |||||||||
Net Income from Cont. Ops. % of Revenue | 5 | % | 24 | % | — | % | |||||||||||||
Net Income per Share from Cont. Ops. | |||||||||||||||||||
Basic | $ | 1.01 | $ | 3.61 | (72 | )% | $ | 0.04 | 2425 | % | |||||||||
Diluted | $ | 0.87 | $ | 3.17 | (73 | )% | $ | 0.04 | 2075 | % | |||||||||
Variable Marketing Margin | |||||||||||||||||||
Total Revenue | $ | 278.4 | $ | 184.1 | 51 | % | $ | 262.4 | 6 | % | |||||||||
Variable Marketing Expense (3) (4) | $ | (184.6 | ) | $ | (116.4 | ) | 59 | % | $ | (169.9 | ) | 9 | % | ||||||
Variable Marketing Margin (4) | $ | 93.8 | $ | 67.7 | 39 | % | $ | 92.5 | 1 | % | |||||||||
Variable Marketing Margin % of Revenue | 34 | % | 37 | % | 35 | % | |||||||||||||
Adjusted EBITDA (4) | $ | 46.3 | $ | 37.1 | 25 | % | $ | 43.0 | 8 | % | |||||||||
Adjusted EBITDA % of Revenue (4) | 17 | % | 20 | % | 16 | % | |||||||||||||
Adjusted Net Income (4) | $ | 17.6 | $ | 20.8 | (15 | )% | $ | 15.6 | 13 | % | |||||||||
Adjusted Net Income per Share (4) | $ | 1.18 | $ | 1.47 | (20 | )% | $ | 1.10 | 7 | % | |||||||||
(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 and income from the re-sale of advertising to third parties. |
(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 $278.4 million represents an increase of 51% over revenue in the second quarter 2018. |
• | GAAP net income from continuing operations of $13.0 million, or $0.87 per diluted share. |
• | Record Variable Marketing Margin of $93.8 million represented grew 39% over second quarter 2018. |
• | Record Adjusted EBITDA of $46.3 million increased 25% over second quarter 2018. |
• | Adjusted Net Income per share of $1.18. |
• | After borrowing an initial total of $215 million against our revolving credit facility to fund acquisitions, we have since re-payed $115 million, bringing total revolving debt down to $100 million as of July 24, 2019. |
• | Revenue is anticipated to be in the range of $290 - $300 million. |
• | Variable Marketing Margin is expected in the range of $104 - $109 million. |
• | Adjusted EBITDA is anticipated in the range of $55 - $60 million. |
• | Revenue is now anticipated to be in the range of $1,080 - $1,100 million, up from prior range of $1,060 - $1,090 million. |
• | Variable Marketing Margin is expected in the range of $390 - $405 million, compared to prior range of $400 - $415 million. |
• | Adjusted EBITDA is anticipated in the range of $195 - $205 million, compared to prior range of $210 - $220 million. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Revenue | $ | 278,421 | $ | 184,101 | $ | 540,811 | $ | 365,136 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) (1) | 16,310 | 6,043 | 33,980 | 11,739 | |||||||||||
Selling and marketing expense (1) | 191,629 | 123,946 | 366,520 | 249,990 | |||||||||||
General and administrative expense (1) | 27,951 | 24,759 | 59,068 | 47,573 | |||||||||||
Product development (1) | 10,175 | 5,967 | 20,341 | 12,227 | |||||||||||
Depreciation | 2,559 | 1,633 | 5,041 | 3,304 | |||||||||||
Amortization of intangibles | 14,280 | 3,964 | 27,707 | 7,927 | |||||||||||
Change in fair value of contingent consideration | 2,790 | (167 | ) | 17,382 | (908 | ) | |||||||||
Severance | 403 | 3 | 457 | 3 | |||||||||||
Litigation settlements and contingencies | 8 | (170 | ) | (199 | ) | (192 | ) | ||||||||
Total costs and expenses | 266,105 | 165,978 | 530,297 | 331,663 | |||||||||||
Operating income | 12,316 | 18,123 | 10,514 | 33,473 | |||||||||||
Other (expense) income, net: | |||||||||||||||
Interest expense, net | (5,095 | ) | (2,924 | ) | (10,563 | ) | (5,912 | ) | |||||||
Other income (expense) | 71 | (71 | ) | 139 | (37 | ) | |||||||||
Income before income taxes | 7,292 | 15,128 | 90 | 27,524 | |||||||||||
Income tax benefit | 5,689 | 29,721 | 13,441 | 53,182 | |||||||||||
Net income from continuing operations | 12,981 | 44,849 | 13,531 | 80,706 | |||||||||||
Loss from discontinued operations, net of tax | (763 | ) | (2,302 | ) | (1,825 | ) | (6,635 | ) | |||||||
Net income and comprehensive income | $ | 12,218 | $ | 42,547 | $ | 11,706 | $ | 74,071 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 12,805 | 12,416 | 12,762 | 12,254 | |||||||||||
Diluted | 14,908 | 14,147 | 14,622 | 14,527 | |||||||||||
Income per share from continuing operations: | |||||||||||||||
Basic | $ | 1.01 | $ | 3.61 | $ | 1.06 | $ | 6.59 | |||||||
Diluted | $ | 0.87 | $ | 3.17 | $ | 0.93 | $ | 5.56 | |||||||
Loss per share from discontinued operations: | |||||||||||||||
Basic | $ | (0.06 | ) | $ | (0.19 | ) | $ | (0.14 | ) | $ | (0.54 | ) | |||
Diluted | $ | (0.05 | ) | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.46 | ) | |||
Net income per share: | |||||||||||||||
Basic | $ | 0.95 | $ | 3.43 | $ | 0.92 | $ | 6.04 | |||||||
Diluted | $ | 0.82 | $ | 3.01 | $ | 0.80 | $ | 5.10 | |||||||
(1) Amounts include non-cash compensation, as follows: | |||||||||||||||
Cost of revenue | $ | 197 | $ | 79 | $ | 350 | $ | 137 | |||||||
Selling and marketing expense | 2,283 | 1,433 | 4,032 | 2,934 | |||||||||||
General and administrative expense | 11,686 | 8,490 | 21,907 | 17,229 | |||||||||||
Product development | 1,816 | 1,176 | 3,746 | 1,987 |
June 30, 2019 | December 31, 2018 | ||||||
(in thousands, except par value and share amounts) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 51,332 | $ | 105,102 | |||
Restricted cash and cash equivalents | 58 | 56 | |||||
Accounts receivable, net | 139,778 | 91,072 | |||||
Prepaid and other current assets | 12,440 | 16,428 | |||||
Assets held for sale | — | 21,328 | |||||
Current assets of discontinued operations | 2,227 | 185 | |||||
Total current assets | 205,835 | 234,171 | |||||
Property and equipment, net | 28,874 | 23,175 | |||||
Goodwill | 419,984 | 348,347 | |||||
Intangible assets, net | 209,592 | 205,699 | |||||
Deferred income tax assets | 93,014 | 79,289 | |||||
Other non-current assets | 20,033 | 2,168 | |||||
Non-current assets of discontinued operations | 3,266 | 3,266 | |||||
Total assets | $ | 980,598 | $ | 896,115 | |||
LIABILITIES: | |||||||
Revolving credit facility | $ | 115,000 | $ | 125,000 | |||
Accounts payable, trade | 17,447 | 15,074 | |||||
Accrued expenses and other current liabilities | 130,323 | 93,190 | |||||
Current contingent consideration | 29,548 | 11,080 | |||||
Current liabilities of discontinued operations | 15,809 | 17,609 | |||||
Total current liabilities | 308,127 | 261,953 | |||||
Long-term debt | 257,582 | 250,943 | |||||
Non-current contingent consideration | 20,671 | 27,757 | |||||
Deferred income tax liabilities | 711 | 894 | |||||
Other non-current liabilities | 19,620 | 8,360 | |||||
Total liabilities | 606,711 | 549,907 | |||||
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; 15,603,806 and 15,428,351 shares issued, respectively, and 12,967,718 and 12,809,764 shares outstanding, respectively | 156 | 154 | |||||
Additional paid-in capital | 1,154,174 | 1,134,227 | |||||
Accumulated deficit | (598,776 | ) | (610,482 | ) | |||
Treasury stock; 2,636,088 and 2,618,587 shares, respectively | (181,667 | ) | (177,691 | ) | |||
Total shareholders' equity | 373,887 | 346,208 | |||||
Total liabilities and shareholders' equity | $ | 980,598 | $ | 896,115 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Cash flows from operating activities attributable to continuing operations: | |||||||
Net income and comprehensive income | $ | 11,706 | $ | 74,071 | |||
Less: Loss from discontinued operations, net of tax | 1,825 | 6,635 | |||||
Income from continuing operations | 13,531 | 80,706 | |||||
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 assets | (1,729 | ) | 1,889 | ||||
Amortization of intangibles | 27,707 | 7,927 | |||||
Depreciation | 5,041 | 3,304 | |||||
Rental amortization of intangibles and depreciation | — | 396 | |||||
Non-cash compensation expense | 30,035 | 22,287 | |||||
Deferred income taxes | (13,624 | ) | (56,197 | ) | |||
Change in fair value of contingent consideration | 17,382 | (908 | ) | ||||
Bad debt expense | 1,282 | 513 | |||||
Amortization of debt issuance costs | 970 | 865 | |||||
Amortization of convertible debt discount | 5,929 | 5,623 | |||||
Changes in current assets and liabilities: | |||||||
Accounts receivable | (48,396 | ) | (26,841 | ) | |||
Prepaid and other current assets | (190 | ) | (787 | ) | |||
Accounts payable, accrued expenses and other current liabilities | 28,192 | (3,970 | ) | ||||
Current contingent consideration | (3,000 | ) | (21,900 | ) | |||
Income taxes receivable | 4,388 | 2,522 | |||||
Other, net | 357 | (165 | ) | ||||
Net cash provided by operating activities attributable to continuing operations | 67,875 | 15,264 | |||||
Cash flows from investing activities attributable to continuing operations: | |||||||
Capital expenditures | (9,769 | ) | (6,747 | ) | |||
Proceeds from sale of fixed assets | 24,062 | — | |||||
Acquisition of ValuePenguin, net of cash acquired | (105,578 | ) | — | ||||
Acquisition of QuoteWizard, net of cash acquired | 447 | — | |||||
Acquisition of Ovation, net of cash acquired | — | (11,683 | ) | ||||
Acquisition of SnapCap | — | (10 | ) | ||||
Other investing activities | — | (1 | ) | ||||
Net cash used in investing activities attributable to continuing operations | (90,838 | ) | (18,441 | ) | |||
Cash flows from financing activities attributable to continuing operations: | |||||||
Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options | (7,646 | ) | 895 | ||||
Contingent consideration payments | (3,000 | ) | (25,600 | ) | |||
Net repayment of revolving credit facility | (10,000 | ) | — | ||||
Payment of debt issuance costs | (31 | ) | (84 | ) | |||
Purchase of treasury stock | (3,976 | ) | (47,101 | ) | |||
Net cash used in financing activities attributable to continuing operations | (24,653 | ) | (71,890 | ) | |||
Total cash used in continuing operations | (47,616 | ) | (75,067 | ) |
Discontinued operations: | |||||||
Net cash used in operating activities attributable to discontinued operations | (6,152 | ) | (4,224 | ) | |||
Total cash used in discontinued operations | (6,152 | ) | (4,224 | ) | |||
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents | (53,768 | ) | (79,291 | ) | |||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 105,158 | 372,641 | |||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 51,390 | $ | 293,350 |
Three Months Ended | |||||||||
June 30, 2019 | March 31, 2019 | June 30, 2018 | |||||||
(in thousands) | |||||||||
Selling and marketing expense | $ | 191,629 | $ | 174,891 | $ | 123,946 | |||
Non-variable selling and marketing expense (1) | (12,079 | ) | (12,305 | ) | (7,571 | ) | |||
Cost of advertising re-sold to third parties (2) | 5,053 | 7,336 | — | ||||||
Variable Marketing Expense | $ | 184,603 | $ | 169,922 | $ | 116,375 |
(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 | |||||||||
June 30, 2019 | March 31, 2019 | June 30, 2018 | |||||||
(in thousands) | |||||||||
Net income from continuing operations | $ | 12,981 | $ | 550 | $ | 44,849 | |||
Net income from continuing operations % of revenue | 5 | % | — | % | 24 | % | |||
Adjustments to reconcile to Variable Marketing Margin: | |||||||||
Cost of revenue | 16,310 | 17,670 | 6,043 | ||||||
Cost of advertising re-sold to third parties (1) | (5,053 | ) | (7,336 | ) | — | ||||
Non-variable selling and marketing expense (2) | 12,079 | 12,305 | 7,571 | ||||||
General and administrative expense | 27,951 | 31,117 | 24,759 | ||||||
Product development | 10,175 | 10,166 | 5,967 | ||||||
Depreciation | 2,559 | 2,482 | 1,633 | ||||||
Amortization of intangibles | 14,280 | 13,427 | 3,964 | ||||||
Change in fair value of contingent consideration | 2,790 | 14,592 | (167 | ) | |||||
Severance | 403 | 54 | 3 | ||||||
Litigation settlements and contingencies | 8 | (207 | ) | (170 | ) | ||||
Interest expense, net | 5,095 | 5,468 | 2,924 | ||||||
Other (income) expense | (71 | ) | (68 | ) | 71 | ||||
Income tax benefit | (5,689 | ) | (7,752 | ) | (29,721 | ) | |||
Variable Marketing Margin | $ | 93,818 | $ | 92,468 | $ | 67,726 | |||
Variable Marketing Margin % of revenue | 34 | % | 35 | % | 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. |
Three Months Ended | |||||||||
June 30, 2019 | March 31, 2019 | June 30, 2018 | |||||||
(in thousands) | |||||||||
Net income from continuing operations | $ | 12,981 | $ | 550 | $ | 44,849 | |||
Net income from continuing operations % of revenue | 5 | % | — | % | 24 | % | |||
Adjustments to reconcile to Adjusted EBITDA: | |||||||||
Amortization of intangibles | 14,280 | 13,427 | 3,964 | ||||||
Depreciation | 2,559 | 2,482 | 1,633 | ||||||
Severance | 403 | 54 | 3 | ||||||
(Gain) loss on impairments and disposal of assets | (2,196 | ) | 218 | 1,797 | |||||
Non-cash compensation expense | 15,982 | 14,053 | 11,178 | ||||||
Change in fair value of contingent consideration | 2,790 | 14,592 | (167 | ) | |||||
Acquisition expense | 60 | 119 | 625 | ||||||
Litigation settlements and contingencies | 8 | (207 | ) | (170 | ) | ||||
Interest expense, net | 5,095 | 5,468 | 2,924 | ||||||
Rental amortization of intangibles and depreciation | — | — | 194 | ||||||
Income tax benefit | (5,689 | ) | (7,752 | ) | (29,721 | ) | |||
Adjusted EBITDA | $ | 46,273 | $ | 43,004 | $ | 37,109 | |||
Adjusted EBITDA % of revenue | 17 | % | 16 | % | 20 | % |
Three Months Ended | |||||||||
June 30, 2019 | March 31, 2019 | June 30, 2018 | |||||||
(in thousands, except per share amounts) | |||||||||
Net income from continuing operations | $ | 12,981 | $ | 550 | $ | 44,849 | |||
Adjustments to reconcile to Adjusted Net Income: | |||||||||
Non-cash compensation | 15,982 | 14,053 | 11,178 | ||||||
(Gain) loss on impairments and disposal of assets | (2,196 | ) | 218 | 1,797 | |||||
Acquisition expense | 60 | 119 | 625 | ||||||
Change in fair value of contingent consideration | 2,790 | 14,592 | (167 | ) | |||||
Severance | 403 | 54 | 3 | ||||||
Litigation settlements and contingencies | 8 | (207 | ) | (170 | ) | ||||
Income tax benefit from adjusted items | (4,663 | ) | (7,811 | ) | (3,639 | ) | |||
Excess tax benefit from stock-based compensation | (7,723 | ) | (6,003 | ) | (33,667 | ) | |||
Adjusted net income | $ | 17,642 | $ | 15,565 | $ | 20,809 | |||
Net income per diluted share from continuing operations | $ | 0.87 | $ | 0.04 | $ | 3.17 | |||
Adjustments to reconcile net income from continuing operations to Adjusted Net Income | 0.31 | 1.06 | (1.70 | ) | |||||
Adjusted net income per share | $ | 1.18 | $ | 1.10 | $ | 1.47 | |||
Weighted average diluted shares outstanding | 14,908 | 14,186 | 14,147 |
• | 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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