CHARLOTTE, N.C., April 27, 2017 /PRNewswire/
-- LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation's leading online loan marketplace, today
announced results for the quarter ended March 31, 2017.
"LendingTree's record first quarter results were, once again, a testament to our company's ability to achieve our short-term
goals, focus on our longer-term strategic priorities, and continue to diversify our business," said Doug
Lebda, Chairman and Chief Executive Officer. "Our success in the first quarter provides a fantastic start to the year and
gives us even more confidence in LendingTree's ability to grow despite changing and dynamic consumer credit markets."
Gabe Dalporto, Chief Financial Officer added, "Growth in our mortgage business was particularly
impressive, increasing 14% year-over-year while the broader industry contracted 6% according to a survey of industry
estimates. As we've previously said it would, lender demand for our services accelerated as industry volumes have tightened
up, and the quarter's results prove out this thesis. Our performance in mortgage coupled with sustained growth in our
non-mortgage offerings, particularly credit cards and home equity, gives us the confidence to increase our outlook for the
year."
First Quarter 2017 Business Highlights
- Total loan requests in the quarter of 4.8 million grew 49% compared to first quarter 2016
- Record revenue from mortgage products of $62.9 million represents an increase of 14% over
first quarter 2016 primarily driven by growth in purchase revenue, although refinance revenue also increased.
- Record revenue from non-mortgage products of $69.6 million in the first quarter represents an
increase of 75% over the first quarter 2016 and comprised 53% of total revenue. Notably, this quarter marks the first
period where non-mortgage revenue exceeded that of mortgage, evidencing the continued momentum of our diversification
strategy.
- Revenue from our credit card offerings grew to $33.8 million, an increase of 269% compared to
first quarter 2016, or 37% on a proforma basis.
- Home equity revenue grew 118% over first quarter 2016 and marked its ninth consecutive quarter of sequential growth.
- Nearly 4.9 million consumers have now signed up for free credit scores and savings alerts through My LendingTree, and
revenue contribution from MyLendingTree grew 28% in the first quarter compared to the prior year period.
LendingTree Selected Financial Metrics
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q/Q
|
|
|
|
|
Y/Y
|
|
|
1Q 2017
|
|
4Q 2016
|
|
% Change
|
|
|
1Q 2016
|
|
% Change
|
|
Revenue by Product
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Products (1)
|
$
|
62.9
|
|
|
$
|
55.4
|
|
|
14
|
%
|
|
|
$
|
55.0
|
|
|
14
|
%
|
|
Non-Mortgage Products (2)
|
69.6
|
|
|
45.4
|
|
|
53
|
%
|
|
|
39.7
|
|
|
75
|
%
|
|
Total Revenue
|
$
|
132.5
|
|
|
$
|
100.8
|
|
|
31
|
%
|
|
|
$
|
94.7
|
|
|
40
|
%
|
|
Non-Mortgage % of Total
|
53
|
%
|
|
45
|
%
|
|
|
|
|
42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes
|
$
|
6.7
|
|
|
$
|
13.3
|
|
|
(50)%
|
|
|
|
$
|
11.7
|
|
|
(43)
|
%
|
|
Income Tax (Expense) Benefit
|
$
|
1.1
|
|
|
$
|
(5.3)
|
|
|
|
|
|
$
|
(4.8)
|
|
|
|
|
Net Income from Continuing Operations
|
$
|
7.8
|
|
|
$
|
8.0
|
|
|
(3)
|
%
|
|
|
$
|
6.9
|
|
|
13
|
%
|
|
Net Income from Cont. Ops. % of Revenue
|
6
|
%
|
|
8
|
%
|
|
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per Share from Cont. Ops.
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.66
|
|
|
$
|
0.68
|
|
|
(3)
|
%
|
|
|
$
|
0.58
|
|
|
14
|
%
|
|
Diluted
|
$
|
0.58
|
|
|
$
|
0.63
|
|
|
(8)
|
%
|
|
|
$
|
0.54
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and Marketing Expense
|
|
|
|
|
|
|
|
|
|
|
|
Variable Selling & Marketing Expense (3)
|
$
|
89.0
|
|
|
$
|
64.1
|
|
|
39
|
%
|
|
|
$
|
60.6
|
|
|
47
|
%
|
|
Non-variable Selling & Marketing
|
4.3
|
|
|
4.6
|
|
|
(7)
|
%
|
|
|
4.5
|
|
|
(4)
|
%
|
|
Selling and Marketing Expense
|
$
|
93.3
|
|
|
$
|
68.7
|
|
|
36
|
%
|
|
|
$
|
65.1
|
|
|
43
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Marketing Margin (4)
|
$
|
43.5
|
|
|
$
|
36.8
|
|
|
18
|
%
|
|
|
$
|
34.1
|
|
|
28
|
%
|
|
Variable Marketing Margin % of Revenue
|
33
|
%
|
|
36
|
%
|
|
|
|
|
36
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (4)
|
$
|
23.8
|
|
|
$
|
18.9
|
|
|
26
|
%
|
|
|
$
|
15.8
|
|
|
51
|
%
|
|
Adjusted EBITDA % of Revenue (4)
|
18
|
%
|
|
19
|
%
|
|
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income (4)
|
$
|
11.5
|
|
|
$
|
9.8
|
|
|
17
|
%
|
|
|
$
|
8.6
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per Share (4)
|
$
|
0.85
|
|
|
$
|
0.77
|
|
|
10
|
%
|
|
|
$
|
0.67
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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. Note that the definition of Adjusted Net Income has been modified to exclude tax effects of other
modifications and earnings or losses associated with new accounting rules around the treatment of excess tax benefits or
expenses related to stock-based compensation. Please see "LendingTree's Reconciliation of Non-GAAP Measures to
GAAP" and "LendingTree's Principles of Financial Reporting" below for more information.
|
First Quarter 2017 Financial Highlights
- Record consolidated revenue of $132.5 million represents an increase of $37.8 million, or 40%, over revenue in the first quarter 2016.
- GAAP net income from continuing operations of $7.8 million, or $0.58 per diluted share. GAAP net income from continuing operations in 1Q 2017 was impacted by a
$8.7 million charge ($5.2 million net of tax) due to an increase in
the fair value of contingent consideration associated with the CompareCards acquisition, reflecting the strong performance of
that business and the higher probability of earn-out payout. Partially offsetting that charge was the recognition of a
$3.8 million excess tax benefit related to stock-based compensation under the new accounting
rules of ASU 2016-09. This new accounting pronouncement also modifies the calculation of diluted share count resulting in
increased diluted shares outstanding.
- Record Variable Marketing Margin of $43.5 million represents an increase of $9.4 million, or 28%, over first quarter 2016.
- Record Adjusted EBITDA of $23.8 million increased $8.0 million,
or 51%, over first quarter 2016.
- Adjusted Net Income per share of $0.85 represents growth of 27% over first quarter 2016.
Note that the definition of Adjusted Net Income per share has been modified to exclude tax
effects of other modifications and earnings or losses associated with new accounting rules around the treatment of taxes related
to stock-based compensation. Prior period presentation of Adjusted Net Income and Adjusted Net Income per share have been
revised to reflect the modified definition. Please see "LendingTree's Principles of Financial Reporting" for a further
explanation of this modification and "LendingTree's Reconciliation of Non-GAAP Measures to GAAP" for reconciliation of these
measures to Net Income from continuing operations and Net income per diluted share from continuing operations for the trailing
five quarters.
Business Outlook - 2017
LendingTree is providing Revenue, Variable Marketing Margin and Adjusted EBITDA guidance for second quarter 2017 and updating
full-year 2017 guidance, as follows:
For second quarter 2017:
- Revenue is anticipated to be $133 - $137 million, or 41% - 45% over second quarter 2016.
- Variable Marketing Margin is anticipated to be in the range of $43 - $46 million.
- Adjusted EBITDA is anticipated to be in the range of $23.5 - $25.0 million, implying
year-over-year growth of 41% - 50%.
For full-year 2017:
- Revenue is anticipated to be in the range of $535 - $545 million, representing growth of 39%
- 42% over full-year 2016 and an increase from prior guidance of $500 - $520 million.
- Variable Marketing Margin is anticipated to be $180 - $185 million compared to prior guidance
of $175 - $185 million.
- Adjusted EBITDA is anticipated to be in the range of $95 - $99 million, up 36% - 42% over
full-year 2016 and an increase from prior guidance of $93 - $97 million.
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, contingent consideration and income taxes. These expenses or benefits 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 first quarter 2017 financial results will be webcast live today, April 27, 2017 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 Thursday, May 4, 2017. To listen to the telephone replay, call toll-free (855) 859-2056 with passcode #8126962.
Callers outside the United States and Canada may dial (404)
537-3406 with passcode #8126962.
LENDINGTREE, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
|
(in thousands, except per share
amounts)
|
Revenue
|
$
|
132,515
|
|
|
$
|
94,713
|
|
Costs and expenses:
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization)
(1)
|
3,591
|
|
|
3,473
|
|
Selling and marketing expense (1)
|
93,251
|
|
|
65,059
|
|
General and administrative expense (1)
|
11,547
|
|
|
9,259
|
|
Product development (1)
|
3,623
|
|
|
3,885
|
|
Depreciation
|
1,703
|
|
|
998
|
|
Amortization of intangibles
|
2,609
|
|
|
25
|
|
Change in fair value of contingent consideration
|
8,746
|
|
|
—
|
|
Severance
|
157
|
|
|
—
|
|
Litigation settlements and contingencies
|
404
|
|
|
169
|
|
Total costs and expenses
|
125,631
|
|
|
82,868
|
|
Operating income
|
6,884
|
|
|
11,845
|
|
Other income (expense), net:
|
|
|
|
Interest expense
|
(165)
|
|
|
(142)
|
|
Income before income taxes
|
6,719
|
|
|
11,703
|
|
Income tax benefit (expense)
|
1,079
|
|
|
(4,798)
|
|
Net income from continuing operations
|
7,798
|
|
|
6,905
|
|
Loss from discontinued operations, net of tax
|
(932)
|
|
|
(1,203)
|
|
Net income and comprehensive income
|
$
|
6,866
|
|
|
$
|
5,702
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
Basic
|
11,827
|
|
|
11,931
|
|
Diluted
|
13,477
|
|
|
12,873
|
|
Income per share from continuing operations:
|
|
|
|
Basic
|
$
|
0.66
|
|
|
$
|
0.58
|
|
Diluted
|
$
|
0.58
|
|
|
$
|
0.54
|
|
Loss per share from discontinued operations:
|
|
|
|
Basic
|
$
|
(0.08)
|
|
|
$
|
(0.10)
|
|
Diluted
|
$
|
(0.07)
|
|
|
$
|
(0.09)
|
|
Net income per share:
|
|
|
|
Basic
|
$
|
0.58
|
|
|
$
|
0.48
|
|
Diluted
|
$
|
0.51
|
|
|
$
|
0.44
|
|
(1) Amounts include non-cash compensation, as follows:
|
|
|
|
Cost of revenue
|
$
|
43
|
|
|
$
|
41
|
|
Selling and marketing expense
|
485
|
|
|
726
|
|
General and administrative expense
|
1,219
|
|
|
1,310
|
|
Product development
|
483
|
|
|
556
|
|
LENDINGTREE, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
|
March 31,
2017
|
|
December 31,
2016
|
|
(in thousands, except par value and share amounts)
|
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$
|
105,442
|
|
|
$
|
91,131
|
|
Restricted cash and cash equivalents
|
4,080
|
|
|
4,089
|
|
Accounts receivable, net
|
52,414
|
|
|
41,382
|
|
Prepaid and other current assets
|
4,177
|
|
|
4,021
|
|
Total current assets
|
166,113
|
|
|
140,623
|
|
Property and equipment, net
|
35,205
|
|
|
35,462
|
|
Goodwill
|
56,457
|
|
|
56,457
|
|
Intangible assets, net
|
68,889
|
|
|
71,684
|
|
Deferred income tax assets
|
18,901
|
|
|
14,610
|
|
Other non-current assets
|
865
|
|
|
810
|
|
Non-current assets of discontinued operations
|
3,781
|
|
|
3,781
|
|
Total assets
|
$
|
350,211
|
|
|
$
|
323,427
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
Accounts payable, trade
|
$
|
4,307
|
|
|
$
|
5,593
|
|
Accrued expenses and other current liabilities
|
58,264
|
|
|
49,403
|
|
Current contingent consideration
|
19,399
|
|
|
—
|
|
Current liabilities of discontinued operations
|
12,255
|
|
|
11,711
|
|
Total current liabilities
|
94,225
|
|
|
66,707
|
|
Non-current contingent consideration
|
12,947
|
|
|
23,600
|
|
Other non-current liabilities
|
1,617
|
|
|
1,685
|
|
Total liabilities
|
108,789
|
|
|
91,992
|
|
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; 14,067,306 and
13,955,378 shares issued, respectively, and 11,903,561 and 11,791,633 shares outstanding, respectively
|
141
|
|
|
140
|
|
Additional paid-in capital
|
1,022,432
|
|
|
1,018,010
|
|
Accumulated deficit
|
(717,066)
|
|
|
(722,630)
|
|
Treasury stock 2,163,745 and 2,163,745 shares, respectively
|
(64,085)
|
|
|
(64,085)
|
|
Total shareholders' equity
|
241,422
|
|
|
231,435
|
|
Total liabilities and shareholders' equity
|
$
|
350,211
|
|
|
$
|
323,427
|
|
LENDINGTREE'S RECONCILIATION OF NON-GAAP MEASURES TO GAAP
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
|
|
March 31,
2017
|
December 31,
2016
|
March 31,
2016
|
|
|
|
|
Net income from continuing operations
|
$
|
7,798
|
|
$
|
8,021
|
|
$
|
6,905
|
|
Net income from continuing operations % of revenue
|
6
|
%
|
8
|
%
|
7
|
%
|
|
|
|
|
Adjustments to reconcile to Variable Marketing Margin:
|
|
|
|
Cost of revenue
|
3,591
|
|
3,435
|
|
3,473
|
|
Non-variable selling and marketing expense (1)
|
4,249
|
|
4,593
|
|
4,478
|
|
General and administrative expense
|
11,547
|
|
10,407
|
|
9,259
|
|
Product development
|
3,623
|
|
2,377
|
|
3,885
|
|
Depreciation
|
1,703
|
|
1,486
|
|
998
|
|
Amortization of intangibles
|
2,609
|
|
980
|
|
25
|
|
Change in fair value of contingent consideration
|
8,746
|
|
—
|
|
—
|
|
Severance
|
157
|
|
50
|
|
—
|
|
Litigation settlements and contingencies (2)
|
404
|
|
20
|
|
169
|
|
Interest expense, net
|
165
|
|
137
|
|
142
|
|
Other income
|
—
|
|
(23)
|
|
—
|
|
Income tax (benefit) expense
|
(1,079)
|
|
5,267
|
|
4,798
|
|
Variable Marketing Margin
|
$
|
43,513
|
|
$
|
36,750
|
|
$
|
34,132
|
|
Variable Marketing Margin % of revenue
|
33
|
%
|
36
|
%
|
36
|
%
|
|
(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.
|
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
|
|
March 31,
2017
|
December 31,
2016
|
March 31,
2016
|
|
|
|
|
Net income from continuing operations
|
$
|
7,798
|
|
$
|
8,021
|
|
$
|
6,905
|
|
Net income from continuing operations % of revenue
|
6
|
%
|
8
|
%
|
7
|
%
|
Adjustments to reconcile to Adjusted EBITDA:
|
|
|
|
Non-cash compensation
|
2,230
|
|
2,237
|
|
2,633
|
|
Loss on disposal of assets
|
273
|
|
253
|
|
127
|
|
Acquisition expense
|
549
|
|
459
|
|
—
|
|
Change in fair value of contingent consideration
|
8,746
|
|
—
|
|
—
|
|
Severance
|
157
|
|
50
|
|
—
|
|
Litigation settlements and contingencies (1)
|
404
|
|
20
|
|
169
|
|
Depreciation
|
1,703
|
|
1,486
|
|
998
|
|
Amortization of intangibles
|
2,609
|
|
980
|
|
25
|
|
Rental depreciation and amortization of intangibles
|
262
|
|
—
|
|
—
|
|
Interest expense, net
|
165
|
|
137
|
|
142
|
|
Income tax (benefit) expense
|
(1,079)
|
|
5,267
|
|
4,798
|
|
Adjusted EBITDA
|
$
|
23,817
|
|
$
|
18,910
|
|
$
|
15,797
|
|
Adjusted EBITDA % of revenue
|
18
|
%
|
19
|
%
|
17
|
%
|
|
|
|
|
(1) Includes legal fees for certain patent
litigation.
|
|
|
|
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
|
|
March 31,
2017
|
December 31,
2016
|
September 30,
2016
|
June 30,
2016
|
March 31,
2016
|
|
|
|
|
|
|
Net income from continuing operations
|
$
|
7,798
|
|
$
|
8,021
|
|
$
|
7,280
|
|
$
|
9,002
|
|
$
|
6,905
|
|
Adjustments to reconcile to Adjusted Net Income:
|
|
|
|
|
|
Non-cash compensation
|
2,230
|
|
2,237
|
|
2,348
|
|
2,429
|
|
2,633
|
|
Loss on disposal of assets
|
273
|
|
253
|
|
121
|
|
140
|
|
127
|
|
Acquisition expense
|
549
|
|
459
|
|
362
|
|
137
|
|
—
|
|
Change in fair value of contingent consideration
|
8,746
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Severance
|
157
|
|
50
|
|
—
|
|
72
|
|
—
|
|
Litigation settlements and contingencies (1)
|
404
|
|
20
|
|
19
|
|
(79)
|
|
169
|
|
Income tax benefit from adjusted items
|
(4,942)
|
|
(1,216)
|
|
(1,047)
|
|
(1,149)
|
|
(1,185)
|
|
Excess tax benefit from stock-based compensation
|
(3,762)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted net income (2)
|
$
|
11,453
|
|
$
|
9,824
|
|
$
|
9,083
|
|
$
|
10,552
|
|
$
|
8,649
|
|
|
|
|
|
|
|
Net income per diluted share from continuing operations
|
$
|
0.58
|
|
$
|
0.63
|
|
$
|
0.57
|
|
$
|
0.71
|
|
$
|
0.54
|
|
Adjustments to reconcile net income from continuing operations to Adjusted
Net Income
|
0.27
|
|
0.14
|
|
0.14
|
|
0.12
|
|
0.13
|
|
Adjusted Net Income per share (2)
|
$
|
0.85
|
|
$
|
0.77
|
|
$
|
0.71
|
|
$
|
0.83
|
|
$
|
0.67
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding
|
13,477
|
|
12,749
|
|
12,742
|
|
12,730
|
|
12,873
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes legal fees for certain patent
litigation.
|
(2) The definition of Adjusted Net Income has
been modified as discussed in "LendingTree's Principles of Financial Reporting" below. Adjusted Net Income and
Adjusted Net Income per share results for prior periods have been revised to reflect the new
definition.
|
LENDINGTREE'S PRINCIPLES OF FINANCIAL REPORTING
LendingTree reports the following non-GAAP measures as supplemental to GAAP:
- 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
Variable Marketing Margin is a measure of the operating efficiency of the Company's operating model, measuring revenue after
subtracting variable marketing 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 measure 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, contingencies and legal fees for certain patent litigation, 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 (loss) 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 the portion of selling & marketing expense attributable to variable
costs paid for advertising, direct marketing and related expenses, which excludes overhead, fixed costs and personnel-related
expenses.
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) severance expenses, (5) litigation settlements, contingencies and legal fees for certain
patent litigation, (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) severance expenses, (5) litigation settlements,
contingencies and legal fees for certain patent litigation, (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. The adjustments described in clauses (8) and (9) are being
implemented for the first time in the first quarter 2017 and all prior period presentation of Adjusted Net Income and Adjusted
Net Income per share have been revised to reflect these adjustments. LendingTree believes these additional adjustments are
appropriate in order to more adequately reflect core business earnings and separate out volatility associated with taxes on
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. In cases where the Company reported GAAP losses 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 such instances where the Company reports GAAP net 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.
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
lenders, including dependence on certain key network lenders; 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 lenders 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, 2016 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. (NASDAQ: TREE) operates the nation's leading online loan marketplace and provides consumers with an array of
online tools and information to help them find the best loans for their needs. LendingTree's online marketplace connects
consumers with multiple lenders that compete for their business, empowering consumers as they comparison-shop across a full suite
of loans and credit-based offerings. Since its inception, LendingTree has facilitated more than 65 million loan
requests. LendingTree provides access to its network of over 450 lenders offering home loans, home equity loans/lines of
credit, reverse mortgages, personal loans, auto loans, small business loans, credit cards, student loans and more.
LendingTree, Inc. is headquartered in Charlotte, NC and maintains operations solely in
the United States. For more information, please visit www.lendingtree.com .
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lendingtree-reports-record-1q-2017-results-increasing-full-year-2017-guidance-300446977.html
SOURCE LendingTree, Inc.