SEC Filing | LendingTree, Inc.

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tree-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-34063

LendingTree, Inc.

(Exact name of Registrant as specified in its charter)


Delaware						26-2414818
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1415 Vantage Park Dr., Suite 700, Charlotte, North Carolina 28203

(Address of principal executive offices)(Zip Code)

(704) 541-5351

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

TREE

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 22, 2021, there were 13,335,464 shares of the registrant's common stock, par value $.01 per share, outstanding, excluding treasury shares.

TABLE OF CONTENTS


		Page Number
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 5.	Other Information	46
Item 6.	Exhibits	47

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands, except per share amounts)
Revenue	$	297,450	$	220,251	$	840,214	$	687,661
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	15,020		13,220		42,849		40,936
Selling and marketing expense	206,475		154,670		589,143		464,129
General and administrative expense	40,126		33,705		114,926		94,276
Product development	13,384		11,477		39,142		33,252
Depreciation	4,808		3,535		12,969		10,463
Amortization of intangibles	10,345		13,090		32,967		40,603
Change in fair value of contingent consideration	(196)		6,658		(8,249)		7,711
Severance	47		—		47		190
Litigation settlements and contingencies	22		13		360		(983)
Total costs and expenses	290,031		236,368		824,154		690,577
Operating income (loss)	7,419		(16,117)		16,060		(2,916)
Other (expense) income, net:
Interest expense, net	(11,826)		(16,617)		(31,881)		(26,406)
Other income	—		—		40,072		7
(Loss) income before income taxes	(4,407)		(32,734)		24,251		(29,315)
Income tax benefit	1		7,925		455		14,866
Net (loss) income from continuing operations	(4,406)		(24,809)		24,706		(14,449)
(Loss) income from discontinued operations, net of tax	(54)		166		(3,516)		(25,550)
Net (loss) income and comprehensive (loss) income	$	(4,460)	$	(24,643)	$	21,190	$	(39,999)

Weighted average shares outstanding:
Basic	13,268		13,033		13,194		12,992
Diluted	13,268		13,033		13,797		12,992
(Loss) income per share from continuing operations:
Basic	$	(0.33)	$	(1.90)	$	1.87	$	(1.11)
Diluted	$	(0.33)	$	(1.90)	$	1.79	$	(1.11)
(Loss) income per share from discontinued operations:
Basic	$	—	$	0.01	$	(0.27)	$	(1.97)
Diluted	$	—	$	0.01	$	(0.25)	$	(1.97)
Net (loss) income per share:
Basic	$	(0.34)	$	(1.89)	$	1.61	$	(3.08)
Diluted	$	(0.34)	$	(1.89)	$	1.54	$	(3.08)

The accompanying notes to consolidated financial statements are an integral part of these statements.

Table of Contents

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2021		December 31, 2020
	(in thousands, except par value and share amounts)
ASSETS:
Cash and cash equivalents	$	215,277	$	169,932
Restricted cash and cash equivalents	108		117
Accounts receivable (net of allowance of $1,506 and $1,402, respectively)	131,705		89,841
Prepaid and other current assets	25,348		27,949
Current assets of discontinued operations	—		8,570
Total current assets	372,438		296,409
Property and equipment (net of accumulated depreciation of $25,962 and $20,238, respectively)	74,929		62,381
Operating lease right-of-use assets	79,355		84,109
Goodwill	420,139		420,139
Intangible assets, net	95,534		128,502
Deferred income tax assets	96,679		96,224
Equity investment	121,253		80,000
Other non-current assets	7,109		5,334
Non-current assets of discontinued operations	17,093		15,892
Total assets	$	1,284,529	$	1,188,990

LIABILITIES:
Current portion of long-term debt	$	163,856	$	—
Accounts payable, trade	4,198		10,111
Accrued expenses and other current liabilities	114,664		101,196

Current liabilities of discontinued operations	13		536
Total current liabilities	282,731		111,843
Long-term debt	471,991		611,412
Operating lease liabilities	98,314		92,363
Non-current contingent consideration	—		8,249

Other non-current liabilities	411		362
Total liabilities	853,447		824,229
Commitments and contingencies (Note 14)
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; 15,969,376 and 15,766,193 shares issued, respectively, and 13,328,058 and 13,124,875 shares outstanding, respectively	160		158
Additional paid-in capital	1,233,802		1,188,673
Accumulated deficit	(619,719)		(640,909)
Treasury stock; 2,641,318 shares	(183,161)		(183,161)
Total shareholders' equity	431,082		364,761
Total liabilities and shareholders' equity	$	1,284,529	$	1,188,990

The accompanying notes to consolidated financial statements are an integral part of these statements.

Table of Contents

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


			Common Stock							Treasury Stock
	Total		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Number of Shares	Amount
	(in thousands)
Balance as of December 31, 2020	$	364,761	15,766	$	158	$	1,188,673	$	(640,909)	2,641	$	(183,161)
Net income and comprehensive income	19,049		—	—		—		19,049		—	—
Non-cash compensation	16,436		—	—		16,436		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(4,801)		31	—		(4,801)		—		—	—
Other	(2)		—	—		(2)		—		—	—
Balance as of March 31, 2021	$	395,443	15,797	$	158	$	1,200,306	$	(621,860)	2,641	$	(183,161)
Net income and comprehensive income	6,601		—	—		—		6,601		—	—
Non-cash compensation	18,294		—	—		18,294		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	30		159	2		28		—		—	—

Balance as of June 30, 2021	$	420,368	15,956	$	160	$	1,218,628	$	(615,259)	2,641	$	(183,161)
Net loss and comprehensive loss	(4,460)		—	—		—		(4,460)		—	—
Non-cash compensation	17,074		—	—		17,074		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(1,894)		13	—		(1,894)		—		—	—
Other	(6)		—	—		(6)		—		—	—
Balance as of September 30, 2021	$	431,082	15,969	$	160	$	1,233,802	$	(619,719)	2,641	$	(183,161)

Table of Contents


			Common Stock							Treasury Stock
	Total		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Number of Shares	Amount
	(in thousands)
Balance as of December 31, 2019	$	402,326	15,677	$	157	$	1,177,984	$	(592,654)	2,641	$	(183,161)
Net income and comprehensive income	14,401		—	—		—		14,401		—	—
Non-cash compensation	11,917		—	—		11,917		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(5,087)		27	—		(5,087)		—		—	—
Other	—		—	—		(1)		1		—	—
Balance as of March 31, 2020	$	423,557	15,704	$	157	$	1,184,813	$	(578,252)	2,641	$	(183,161)
Net loss and comprehensive loss	(29,757)		—	—		—		(29,757)		—	—
Non-cash compensation	13,158		—	—		13,158		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(981)		27	—		(981)		—		—	—

Balance as of June 30, 2020	$	405,977	15,731	$	157	$	1,196,990	$	(608,009)	2,641	$	(183,161)
Net loss and comprehensive loss	(24,643)		—	—		—		(24,643)		—	—
Non-cash compensation	14,161		—	—		14,161		—		—	—

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	4,646		28	1		4,645		—		—	—
Issuance of 0.50% Convertible Senior Notes, net	116,300		—	—		116,300		—		—	—
Repurchase of 0.625% Convertible Senior Notes, net	(107,882)		—	—		(107,882)		—		—	—
Convertible note hedge transactions	(14,379)		—	—		(14,379)		—		—	—
Warrant transactions	(33,171)		—	—		(33,171)		—		—	—

Balance as of September 30, 2020	$	361,009	15,759	$	158	$	1,176,664	$	(632,652)	2,641	$	(183,161)

The accompanying notes to consolidated financial statements are an integral part of these statements.

Table of Contents

LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
	(in thousands)
Cash flows from operating activities attributable to continuing operations:
Net income (loss) and comprehensive income (loss)	$	21,190	$	(39,999)
Less: Loss from discontinued operations, net of tax	3,516		25,550
Income (loss) from continuing operations	24,706		(14,449)
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities attributable to continuing operations:
Loss on impairments and disposal of assets	2,651		686
Amortization of intangibles	32,967		40,603
Depreciation	12,969		10,463
Non-cash compensation expense	51,804		39,236
Deferred income taxes	(455)		(15,489)
Change in fair value of contingent consideration	(8,249)		7,711
Unrealized gain on investments	(40,072)		—
Bad debt expense	1,823		1,314
Amortization of debt issuance costs	3,756		2,241
Write-off of previously-capitalized debt issuance costs	1,066		—
Amortization of debt discount	22,297		12,429
Loss on extinguishment of debt	—		7,768
Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities	13,015		2,490
Changes in current assets and liabilities:
Accounts receivable	(43,688)		15,541
Prepaid and other current assets	(2,762)		(335)
Accounts payable, accrued expenses and other current liabilities	7,537		(9,733)
Current contingent consideration	—		(2,670)
Income taxes receivable	10,322		65
Other, net	(794)		(1,655)
Net cash provided by operating activities attributable to continuing operations	88,893		96,216
Cash flows from investing activities attributable to continuing operations:
Capital expenditures	(30,515)		(20,386)

Equity investment	(1,180)		(80,000)


Net cash used in investing activities attributable to continuing operations	(31,695)		(100,386)
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	(6,666)		(1,421)
Proceeds from the issuance of 0.50% Convertible Senior Notes	—		575,000
Repurchase of 0.625% Convertible Senior Notes	—		(233,862)
Payment for convertible note hedge on the 0.50% Convertible Senior Notes	—		(124,200)
Termination of convertible note hedge on the 0.625% Convertible Senior Notes	—		109,881
Proceeds from the sale of warrants related to the 0.50% Convertible Senior Notes	—		61,180
Termination of warrants related to the 0.625% Convertible Senior Notes	—		(94,292)
Net repayment of revolving credit facility	—		(75,000)
Payment of debt issuance costs	(5,995)		(16,398)
Payment of original issue discount on undrawn term loan	(2,500)		—
Contingent consideration payments	—		(3,330)

Other financing activities	(31)		(183)
Net cash (used in) provided by financing activities attributable to continuing operations	(15,192)		197,375
Total cash provided by continuing operations	42,006		193,205
Discontinued operations:
Net cash provided by (used in) operating activities attributable to discontinued operations	3,330		(66,171)
Total cash provided by (used in) discontinued operations	3,330		(66,171)
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents	45,336		127,034
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	170,049		60,339
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	215,385	$	187,373

The accompanying notes to consolidated financial statements are an integral part of these statements.

Table of Contents

LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—ORGANIZATION

Company Overview

LendingTree, Inc. is the parent of LT Intermediate Company, LLC, which holds all of the outstanding ownership interests of LendingTree, LLC, and LendingTree, LLC owns several companies (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, 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.

The consolidated financial statements include the accounts of LendingTree and all its wholly-owned entities, except Home Loan Center, Inc. ("HLC") subsequent to its bankruptcy filing on July 21, 2019 which resulted in the Company's loss of a controlling interest in HLC under applicable accounting standards. The HLC Bankruptcy case was closed on July 14, 2021. See Note 17—Discontinued Operations for additional information. Intercompany transactions and accounts have been eliminated.

Discontinued Operations

The LendingTree Loans business, which consisted of originating various consumer mortgage loans through HLC (the "LendingTree Loans Business"), is presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements of operations and comprehensive income and consolidated cash flows for all periods presented. The notes accompanying these consolidated financial statements reflect the Company's continuing operations and, unless otherwise noted, exclude information related to the discontinued operations. See Note 17—Discontinued Operations for additional information.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In the opinion of management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company's financial position for the periods presented. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021, or any other period. The accompanying consolidated balance sheet as of December 31, 2020 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2020 (the "2020 Annual Report"). The accompanying consolidated financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in the 2020 Annual Report.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

Management is required to make certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Significant estimates underlying the accompanying consolidated financial statements, including discontinued operations, include: the recoverability of long-lived assets, goodwill and intangible assets; the determination of income taxes payable and deferred income taxes, including related valuation allowances; fair value of assets acquired in a business combination; contingent consideration related to business combinations; litigation accruals; HLC ownership related claims; contract assets; various other allowances, reserves and accruals; assumptions related to the determination of stock-based compensation; and the determination of right-of-use assets and lease liabilities.

The Company considered the impact of the COVID-19 pandemic on the assumptions and estimates used when preparing its financial statements including, but not limited to, the allowance for doubtful accounts, valuation allowances, contract asset and contingent consideration. These assumptions and estimates may change as new events occur and additional information is obtained. If economic conditions caused by the COVID-19 pandemic do not recover as currently estimated by management, such future changes may have an adverse impact on the Company's results of operations, financial position and liquidity.

Certain Risks and Concentrations

LendingTree's business is subject to certain risks and concentrations including dependence on third-party technology providers, exposure to risks associated with online commerce security and credit card fraud.

Financial instruments, which potentially subject the Company to concentration of credit risk at September 30, 2021, consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation insurance limits, but are maintained with quality financial institutions of high credit. The Company requires certain Network Partners to maintain security deposits with the Company, which in the event of non-payment, would be applied against any accounts receivable outstanding.

Due to the nature of the mortgage lending industry, interest rate fluctuations may negatively impact future revenue from the Company's marketplace.

Lenders and lead purchasers participating on the Company's marketplace can offer their products directly to consumers through brokers, mass marketing campaigns or through other traditional methods of credit distribution. These lenders and lead purchasers can also offer their products online, either directly to prospective borrowers, through one or more online competitors, or both. If a significant number of potential consumers are able to obtain loans and other products from Network Partners without utilizing the Company's services, the Company's ability to generate revenue may be limited. Because the Company does not have exclusive relationships with the Network Partners whose loans and other financial products are offered on its online marketplace, consumers may obtain offers from these Network Partners without using its service.

Other than a support services office in India, the Company's operations are geographically limited to and dependent upon the economic condition of the United States.

Litigation Settlements and Contingencies

Litigation settlements and contingencies consists of expenses related to actual or anticipated litigation settlements.

Recently Adopted Accounting Pronouncements

In May 2021, the FASB issued ASU 2021-04 to clarify and reduce diversity in accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The amendments clarify that a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be accounted for as an exchange of the original instrument for a new instrument. This ASU is effective for annual and interim reporting periods beginning after December 15, 2021. Early adoption is permitted, including adoption in interim periods. The amendments should be applied prospectively to modifications or exchanges occurring on or after the date of adoption. The Company adopted ASU 2021-04 in the second quarter of 2021.

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes, and clarifies certain aspects of the current guidance to improve consistency among reporting entities. This ASU is effective for annual and interim reporting periods beginning after December 15, 2020. Early adoption was permitted, including adoption in interim periods. Entities electing early adoption were required to adopt all amendments in the same period. Most amendments require prospective application while others are to be applied on a retrospective basis for all

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company adopted ASU 2019-12 in the first quarter of 2021. The amendments applicable to the Company required prospective application, and do not have material impacts to its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible instruments, amends the derivatives scope exception guidance for contracts in an entity’s own equity, and amends the related earnings-per-share guidance. This ASU is effective for annual and interim reporting periods beginning after December 15, 2021. Early adoption is permitted for fiscal years beginning after December 15, 2020, including adoption in interim periods. An entity should adopt the guidance as of the beginning of its annual fiscal year. An entity may adopt the amendments through either a modified retrospective method of transition or a fully retrospective method of transition. The Company expects the amendments to impact its convertible senior notes and warrants issued and is evaluating the impact this ASU will have on its consolidated financial statements.

NOTE 3—REVENUE

Revenue is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Home	$	112,422	$	78,859	$	345,408	$	232,156
Credit cards	26,914		6,656		66,975		65,436
Personal loans	33,803		12,505		73,879		52,841
Other Consumer	39,294		29,216		92,740		87,142
Total Consumer	100,011		48,377		233,594		205,419
Insurance	84,837		92,500		260,714		248,156
Other	180		515		498		1,930
Total revenue	$	297,450	$	220,251	$	840,214	$	687,661

The Company derives its revenue primarily from match fees and closing fees. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied and promised services have transferred to the customer. The Company's services are generally transferred to the customer at a point in time.

Revenue from Home products is primarily generated from upfront match fees paid by mortgage Network Partners that receive a loan request, and in some cases upfront fees for clicks or call transfers. Match fees and upfront fees for clicks and call transfers are earned through the delivery of loan requests that originated through the Company's websites or affiliates. The Company recognizes revenue at the time a loan request is delivered to the customer, provided that no significant obligations remain. The Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the performance obligation to deliver a loan request to the customer.

Revenue from Consumer products is generated by match and other upfront fees for clicks or call transfers, as well as from closing fees, approval fees and upfront service and subscription fees. Closing fees are derived from lenders on certain auto loans, business loans, personal loans and student loans when the lender funds a loan with the consumer. Approval fees are derived from credit card issuers when the credit card consumer receives card approval from the credit card issuer. Upfront service fees and subscription fees are derived from consumers in the Company's credit services product. Upfront fees paid by consumers are recognized as revenue over the estimated time the consumer will remain a customer and receive services. Subscription fees are recognized over the period a consumer is receiving services.

The Company recognizes revenue on closing fees and approval fees at the point when a loan request or a credit card consumer is delivered to the customer. The Company's contractual right to closing fees and approval fees is not contemporaneous with the satisfaction of the performance obligation to deliver a loan request or a credit card consumer to the customer. As such, the Company records a contract asset at each reporting period-end related to the estimated variable

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

consideration on closing fees and approval fees for which the Company has satisfied the related performance obligation but are still pending the loan closing or credit card approval before the Company has a contractual right to payment. This estimate is based on the Company's historical closing rates and historical time between when a consumer request for a loan or credit card is delivered to the lender or card issuer and when the loan is closed by the lender or approved by the card issuer.

Revenue from the Company's Insurance products is primarily generated from upfront match fees and upfront fees for website clicks or fees for calls. Match fees and upfront fees for clicks and call transfers are earned through the delivery of consumer requests that originated through the Company's websites or affiliates. The Company recognizes revenue at the time a consumer request is delivered to the customer, provided that no significant obligations remain. The Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the performance obligation to deliver a consumer request to the customer.

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration in the Company's Consumer business was $7.9 million and $6.4 million at September 30, 2021 and December 31, 2020, respectively.

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers in the Company's Consumer business was $1.0 million and $0.7 million at September 30, 2021 and December 31, 2020, respectively. During the first nine months of 2021, the Company recognized revenue of $0.7 million that was included in the contract liability balance at December 31, 2020. During the first nine months of 2020, the Company recognized revenue of $0.6 million that was included in the contract liability balance at December 31, 2019.

Revenue recognized in any reporting period includes estimated variable consideration for which the Company has satisfied the related performance obligations but are still pending the occurrence or non-occurrence of a future event outside the Company's control (such as lenders providing loans to consumers or credit card approvals of consumers) before the Company has a contractual right to payment. The Company recognized increases to such revenue from prior periods of $0.4 million and $0.6 million in the third quarters of 2021 and 2020, respectively.

NOTE 4—CASH AND RESTRICTED CASH

Total cash, cash equivalents, restricted cash and restricted cash equivalents consist of the following (in thousands):


	September 30, 2021		December 31, 2020
Cash and cash equivalents	$	215,277	$	169,932
Restricted cash and cash equivalents	108		117
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	215,385	$	170,049

NOTE 5—ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts.

The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time accounts receivable are past due, previous loss history, current and expected economic conditions and the specific customer's current and expected ability to pay its obligation. Accounts receivable are considered past due when they are outstanding longer than the contractual payment terms. Accounts receivable are written off when management deems them uncollectible.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of the beginning and ending balances of the allowance for doubtful accounts is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance, beginning of the period	$	1,473	$	1,756	$	1,402	$	1,466
Charges to earnings	678		365		1,823		1,314
Write-off of uncollectible accounts receivable	(645)		(483)		(1,724)		(1,152)
Recoveries collected	—		—		5		10
Balance, end of the period	$	1,506	$	1,638	$	1,506	$	1,638

NOTE 6—GOODWILL AND INTANGIBLE ASSETS

The balance of goodwill, net and intangible assets, net is as follows (in thousands):


	September 30, 2021		December 31, 2020
Goodwill	$	903,227	$	903,227
Accumulated impairment losses	(483,088)		(483,088)
Net goodwill	$	420,139	$	420,139

Intangible assets with indefinite lives	$	10,142	$	10,142
Intangible assets with definite lives, net	85,392		118,360
Total intangible assets, net	$	95,534	$	128,502

Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill at each of September 30, 2021 and December 31, 2020 consists of $59.3 million associated with the Home segment, $166.1 million associated with the Consumer segment, and $194.7 million associated with the Insurance segment.

Intangible assets with indefinite lives relate to the Company's trademarks.

Intangible Assets with Definite Lives

Intangible assets with definite lives relate to the following (in thousands):


	Cost		Accumulated Amortization		Net
Technology	$	87,700	$	(64,069)	$	23,631
Customer lists	77,300		(23,141)		54,159
Trademarks and tradenames	16,000		(11,326)		4,674
Website content	27,100		(24,172)		2,928
Balance at September 30, 2021	$	208,100	$	(122,708)	$	85,392


	Cost		Accumulated Amortization		Net
Technology	$	87,700	$	(48,166)	$	39,534
Customer lists	77,300		(18,560)		58,740
Trademarks and tradenames	17,200		(9,947)		7,253
Website content	43,200		(30,367)		12,833
Balance at December 31, 2020	$	225,400	$	(107,040)	$	118,360

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of September 30, 2021, future amortization is estimated to be as follows (in thousands):


	Amortization Expense
Remainder of current year	$	9,770
Year ending December 31, 2022	25,256
Year ending December 31, 2023	8,602
Year ending December 31, 2024	6,747
Year ending December 31, 2025	6,259
Thereafter	28,758
Total intangible assets with definite lives, net	$	85,392

NOTE 7—EQUITY INVESTMENT

On February 28, 2020, the Company acquired an equity interest in Stash Financial, Inc. (“Stash”) for $80.0 million. On January 6, 2021, the Company acquired additional equity interest for $1.2 million. Stash is a consumer investing and banking platform. Stash brings together banking, investing, and financial services education into one seamless experience offering a full suite of personal investment accounts, traditional and Roth IRAs, custodial investment accounts, and banking services, including checking accounts and debit cards with a Stock-Back® rewards program.

The Stash equity securities do not have a readily determinable fair value and, upon acquisition, the Company elected the measurement alternative to value its securities. The Stash equity securities will be carried at cost and subsequently marked to market upon observable market events with any gains or losses recorded to the consolidated statement of operations and comprehensive income. During the first nine months of 2021, the Company recorded a gain on the investment in Stash of $40.1 million as a result of an adjustment to the fair value of the Stash equity securities based on observable market events, which is included within other income on the consolidated statement of operations and comprehensive income. As of September 30, 2021, there have been no impairments to the acquisition cost of the Stash equity securities.

See Note 18—Subsequent Event for additional information.

NOTE 8—BUSINESS ACQUISITIONS

Changes in Contingent Consideration

In 2018, the Company acquired all of the outstanding equity interests of QuoteWizard.com, LLC (“QuoteWizard”) and Ovation Credit Services, Inc. (“Ovation”). During 2020, the Company made the final earnout payment related to the achievement of certain defined operating metrics for Ovation.

In 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”). During 2020, the Company made the final earnout payments related to the achievement of certain defined earnings targets for SnapCap.

The Company could make an earnout payment ranging from zero to $23.4 million based on the achievement of certain defined performance targets for QuoteWizard during the final earnout period ending October 31, 2021. As of September 30, 2021, this remaining earnout payment is not expected to be made and no liability has been recorded in the accompanying consolidated balance sheet. See Note 15—Fair Value Measurements for additional information.

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in the fair value of contingent consideration is summarized as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
QuoteWizard	$	(196)	$	6,568	$	(8,249)	$	6,364
Ovation	—		90		—		1,270
SnapCap	—		—		—		77
Total changes in fair value of contingent consideration	$	(196)	$	6,658	$	(8,249)	$	7,711

Any differences in the actual contingent consideration payments will be recorded in operating income in the consolidated statements of operations and comprehensive income.

NOTE 9—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):


	September 30, 2021		December 31, 2020
Accrued advertising expense	$	64,932	$	54,045
Accrued compensation and benefits	14,951		14,081
Accrued professional fees	3,727		1,869
Customer deposits and escrows	7,401		8,153
Contribution to LendingTree Foundation	3,333		3,333
Current lease liabilities	8,579		5,375
Other	11,741		14,340
Total accrued expenses and other current liabilities	$	114,664	$	101,196

NOTE 10—SHAREHOLDERS' EQUITY

Basic and diluted income per share was determined based on the following share data (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Weighted average basic common shares	13,268	13,033	13,194	12,992
Effect of stock options	—	—	452	—
Effect of dilutive share awards	—	—	96	—
Effect of Convertible Senior Notes and warrants	—	—	55	—
Weighted average diluted common shares	13,268	13,033	13,797	12,992

For the third quarter of 2021, as well as the third quarter and first nine months of 2020, the Company had losses from continuing operations and, as a result, no potentially dilutive securities were included in the denominator for computing diluted loss per share, because the impact would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding was used to compute loss per share. Approximately 0.4 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the third quarter of 2021 because their inclusion would have been anti-dilutive. Approximately 1.3