SEC Filing | LendingTree, Inc.

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tree-20220630

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 June 30, 2022


☐			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 July 21, 2022, there were 12,785,991 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	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 5.	Other Information	43
Item 6.	Exhibits	44

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands, except per share amounts)
Revenue	$	261,923	$	270,014	$	545,101	$	542,764
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	14,574		13,934		30,135		27,829
Selling and marketing expense	184,537		185,206		388,694		382,668
General and administrative expense	40,289		39,811		76,262		74,800
Product development	14,318		13,290		28,370		25,758
Depreciation	4,896		4,443		9,750		8,161
Amortization of intangibles	7,075		11,310		14,992		22,622
Change in fair value of contingent consideration	—		(8,850)		—		(8,053)
Restructuring and severance	135		—		3,760		—
Litigation settlements and contingencies	(7)		322		(34)		338
Total costs and expenses	265,817		259,466		551,929		534,123
Operating (loss) income	(3,894)		10,548		(6,828)		8,641
Other (expense) income, net:
Interest expense, net	(6,765)		(9,840)		(14,270)		(20,055)
Other income	284		—		283		40,072
(Loss) income before income taxes	(10,375)		708		(20,815)		28,658
Income tax benefit	2,337		9,092		1,954		454
Net (loss) income from continuing operations	(8,038)		9,800		(18,861)		29,112
Loss from discontinued operations, net of tax	—		(3,199)		(3)		(3,462)
Net (loss) income and comprehensive (loss) income	$	(8,038)	$	6,601	$	(18,864)	$	25,650

Weighted average shares outstanding:
Basic	12,723		13,243		12,812		13,157
Diluted	12,723		13,719		12,812		13,913
(Loss) income per share from continuing operations:
Basic	$	(0.63)	$	0.74	$	(1.47)	$	2.21
Diluted	$	(0.63)	$	0.71	$	(1.47)	$	2.09
Loss per share from discontinued operations:
Basic	$	—	$	(0.24)	$	—	$	(0.26)
Diluted	$	—	$	(0.23)	$	—	$	(0.25)
Net (loss) income per share:
Basic	$	(0.63)	$	0.50	$	(1.47)	$	1.95
Diluted	$	(0.63)	$	0.48	$	(1.47)	$	1.84

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)


	June 30, 2022		December 31, 2021
	(in thousands, except par value and share amounts)
ASSETS:
Cash and cash equivalents	$	279,108	$	251,231
Restricted cash and cash equivalents	125		111
Accounts receivable (net of allowance of $2,300 and $1,456, respectively)	115,441		97,658
Prepaid and other current assets	27,419		25,379

Total current assets	422,093		374,379
Property and equipment (net of accumulated depreciation of $30,274 and $28,315, respectively)	68,315		72,477
Operating lease right-of-use assets	71,336		77,346
Goodwill	420,139		420,139
Intangible assets, net	70,772		85,763
Deferred income tax assets	130,174		87,581
Equity investment	174,580		158,140
Other non-current assets	6,693		6,942
Non-current assets of discontinued operations	—		16,589
Total assets	$	1,364,102	$	1,299,356

LIABILITIES:
Current portion of long-term debt	$	2,491	$	166,008
Accounts payable, trade	7,850		1,692
Accrued expenses and other current liabilities	94,925		106,731

Current liabilities of discontinued operations	—		1
Total current liabilities	105,266		274,432
Long-term debt	813,252		478,151
Operating lease liabilities	92,557		96,165

Deferred income tax liabilities	2,265		2,265
Other non-current liabilities	276		351
Total liabilities	1,013,616		851,364
Commitments and contingencies (Note 13)
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; 16,140,889 and 16,070,720 shares issued, respectively, and 12,785,423 and 13,095,149 shares outstanding, respectively	161		161
Additional paid-in capital	1,162,714		1,242,794
Accumulated deficit	(546,211)		(571,794)
Treasury stock; 3,355,466 and 2,975,571 shares, respectively	(266,178)		(223,169)
Total shareholders' equity	350,486		447,992
Total liabilities and shareholders' equity	$	1,364,102	$	1,299,356

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

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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, 2021	$	447,992	16,071	$	161	$	1,242,794	$	(571,794)	2,976	$	(223,169)
Net income and comprehensive income	(10,826)		—	—		—		(10,826)		—	—
Non-cash compensation	15,080		—	—		15,080		—		—	—
Purchase of treasury stock	(43,009)		—	—		—		—		379	(43,009)
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(3,086)		49	—		(3,086)		—		—	—
Cumulative effect adjustment due to ASU 2020-06	(65,303)		—	—		(109,750)		44,447		—	—

Balance as of March 31, 2022	$	340,848	16,120	$	161	$	1,145,038	$	(538,173)	3,355	$	(266,178)
Net loss and comprehensive loss	(8,038)		—	—		—		(8,038)		—	—
Non-cash compensation	17,335		—	—		17,335		—		—	—

Issuance of common stock for stock options, employee stock purchase plan, restricted stock awards and restricted stock units, net of withholding taxes	341		21	—		341		—		—	—
Other	—		—	—		—		—		—	—
Balance as of June 30, 2022	$	350,486	16,141	$	161	$	1,162,714	$	(546,211)	3,355	$	(266,178)


			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)

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

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LENDINGTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2022		2021
	(in thousands)
Cash flows from operating activities attributable to continuing operations:
Net (loss) income and comprehensive (loss) income	$	(18,864)	$	25,650
Less: Loss from discontinued operations, net of tax	3		3,462
Net (loss) income from continuing operations	(18,861)		29,112
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities attributable to continuing operations:
Loss on impairments and disposal of assets	3,427		1,400
Amortization of intangibles	14,992		22,622
Depreciation	9,750		8,161
Non-cash compensation expense	32,415		34,730
Deferred income taxes	(2,026)		(455)
Change in fair value of contingent consideration	—		(8,053)
Gain on investments	—		(40,072)
Bad debt expense	2,029		1,145
Amortization of debt issuance costs	4,454		2,547

Amortization of debt discount	1,475		14,670

Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities	(333)		11,079
Changes in current assets and liabilities:
Accounts receivable	(19,812)		(35,381)
Prepaid and other current assets	(5,593)		(680)
Accounts payable, accrued expenses and other current liabilities	(5,223)		3,845

Income taxes receivable	(293)		10,322
Other, net	(302)		(412)
Net cash provided by operating activities attributable to continuing operations	16,099		54,580
Cash flows from investing activities attributable to continuing operations:
Capital expenditures	(6,346)		(23,585)

Equity investment	(16,440)		(1,180)


Net cash used in investing activities attributable to continuing operations	(22,786)		(24,765)
Cash flows from financing activities attributable to continuing operations:
Proceeds from term loan	250,000		—
Repayment of 0.625% Convertible Senior Notes	(169,659)		—
Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options	(2,745)		(4,771)
Purchase of treasury stock	(43,009)		—







Payment of debt issuance costs	(3)		(168)

Other financing activities	—		(31)
Net cash provided by (used in) financing activities attributable to continuing operations	34,584		(4,970)
Total cash provided by continuing operations	27,897		24,845
Discontinued operations:
Net cash (used in) provided by operating activities attributable to discontinued operations	(6)		8,353
Total cash (used in) provided by discontinued operations	(6)		8,353
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents	27,891		33,198
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	251,342		170,049
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	279,233	$	203,247

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

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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 and lines of credit, reverse mortgage loans, auto loans, credit cards, deposit accounts, personal loans, student loans, small business loans, insurance quotes, sales of insurance policies 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. Intercompany transactions and accounts have been eliminated. The HLC Bankruptcy case was closed on July 14, 2021. The HLC entity was legally dissolved in the first quarter of 2022. See Note 16—Discontinued Operations for additional information.

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 statements of 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 16—Discontinued Operations for additional information.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021, 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 six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or any other period. The accompanying consolidated balance sheet as of December 31, 2021 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2021 (the “2021 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 2021 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; 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 June 30, 2022, 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 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. Under the new guidance, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. Additionally, the new guidance requires the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share. This ASU is effective for annual and interim reporting periods beginning after December 15, 2021, with early adoption permitted for periods beginning after December 15, 2020. An entity may adopt the amendments through either a modified retrospective method of transition or a fully retrospective method of transition.

The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective transition approach and recognized the cumulative effect of initially applying ASU 2020-06 as a $44.4 million adjustment to the opening balance of accumulated deficit, comprised of $60.8 million for the interest adjustment, net of $16.4 million for the related tax impacts. The recombination of the equity conversion component of our convertible debt remaining outstanding caused a reduction in

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

additional paid-in capital and an increase in deferred income tax assets. The removal of the remaining debt discounts recorded for this previous separation had the effect of increasing our net debt balance. ASU 2020-06 also requires the dilutive impact of convertible debt instruments to utilize the if-converted method when calculating diluted earnings per share and the result is more dilutive. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. See Note 12—Debt for further information.

The cumulative effect of the changes made to the consolidated January 1, 2022 balance sheet for the adoption of ASU 2020-06 were as follows (in thousands):


	December 31, 2021		Adjustments due to ASU 2020-06		January 1, 2022
Assets:
Deferred income tax assets	$	87,581	$	23,979	$	111,560

Liabilities:
Current portion of long-term debt	$	166,008	$	3,213	$	169,221
Long-term debt	478,151		86,069		564,220

Shareholders' equity:
Additional paid-in capital	$	1,242,794	$	(109,750)	$	1,133,044
Accumulated deficit	(571,794)		44,447		(527,347)

The adoption of ASU 2020-06 did not impact our cash flows or compliance with debt covenants.

Recently Issued Accounting Pronouncements

The Company has considered the applicability of recently issued accounting pronouncements by the Financial Accounting Standards Board and have determined that they are not applicable or are not expected to have a material impact on our consolidated financial statements.

NOTE 3—REVENUE

Revenue is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Home	$	73,938	$	104,861	$	175,882	$	232,986
Credit cards	27,306		22,424		57,128		40,061
Personal loans	42,298		25,208		77,508		40,076
Other Consumer	36,540		28,044		72,576		53,446
Total Consumer	106,144		75,676		207,212		133,583
Insurance	81,756		89,263		161,794		175,877
Other	85		214		213		318
Total revenue	$	261,923	$	270,014	$	545,101	$	542,764

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

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LENDINGTREE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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 was $11.7 million and $9.1 million at June 30, 2022 and December 31, 2021, respectively.

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers was $0.9 million and $0.8 million at June 30, 2022 and December 31, 2021, respectively. During the second quarter and first six months of 2022, the Company recognized revenue of $0.1 million and $0.8 million, respectively, that was included in the contract liability balance at December 31, 2021. During the second quarter and first six months of 2021, the Company recognized revenue of $0.1 million and $0.7 million, respectively, that was included in the contract liability balance at December 31, 2020.

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. This increase was not material in the second quarter of 2022, and was $0.1 million in the second quarter of 2021.

NOTE 4—CASH AND RESTRICTED CASH

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


	June 30, 2022		December 31, 2021
Cash and cash equivalents	$	279,108	$	251,231
Restricted cash and cash equivalents	125		111
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	279,233	$	251,342

NOTE 5—ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

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LENDINGTREE, INC. AND SUBSIDIARIES

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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.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Balance, beginning of the period	$	1,803	$	1,429	$	1,456	$	1,402
Charges to earnings	1,179		629		2,029		1,145
Write-off of uncollectible accounts receivable	(682)		(585)		(1,185)		(1,079)
Recoveries collected	—		—		—		5
Balance, end of the period	$	2,300	$	1,473	$	2,300	$	1,473

NOTE 6—GOODWILL AND INTANGIBLE ASSETS

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


	June 30, 2022		December 31, 2021
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	60,630		75,621
Total intangible assets, net	$	70,772	$	85,763

Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill at each of June 30, 2022 and December 31, 2021 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.

At June 30, 2022, the Company assessed the qualitative factors in its impairment testing of goodwill and determined that the effects of the challenging interest rate environment, consumer price inflation, and the decline in the Company's market capitalization required a quantitative impairment test be performed. The quantitative goodwill impairment test found that the fair value of each reporting unit exceeded its carrying amount, indicating no goodwill impairment. The Company will monitor the recovery of the Insurance reporting unit. The property and casualty auto industry is experiencing challenges caused by inflation, supply chain challenges, and rising severity and frequency of claims. Changes in the timing of the recovery compared to current expectations could cause an impairment to the Insurance reporting unit.

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

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Intangible Assets with Definite Lives

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


	Cost		Accumulated Amortization		Net
Technology	$	83,500	$	(75,187)	$	8,313
Customer lists	77,300		(27,721)		49,579
Trademarks and tradenames	11,700		(8,962)		2,738

Balance at June 30, 2022	$	172,500	$	(111,870)	$	60,630


	Cost		Accumulated Amortization		Net
Technology	$	87,700	$	(69,369)	$	18,331
Customer lists	77,300		(24,668)		52,632
Trademarks and tradenames	11,700		(7,767)		3,933
Website content	26,100		(25,375)		725
Balance at December 31, 2021	$	202,800	$	(127,179)	$	75,621

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of June 30, 2022, future amortization is estimated to be as follows (in thousands):


	Amortization Expense
Remainder of current year	$	10,264
Year ending December 31, 2023	8,602
Year ending December 31, 2024	6,747
Year ending December 31, 2025	6,259
Year ending December 31, 2026	5,504
Thereafter	23,254
Total intangible assets with definite lives, net	$	60,630

NOTE 7—EQUITY INVESTMENT

In January 2022, the Company acquired an equity interest in EarnUp Inc. (“EarnUp”) for $15.0 million. The company is a consumer-first mortgage payment platform that intelligently automates loan payment scheduling and helps consumers better manage their money and improve their financial well-being.

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. On October 18, 2021, the Company entered into a stock transfer agreement with third parties to sell a portion of its Stash equity securities for $46.3 million. The Company sold $35.3 million in October and closed on an additional $11.0 million in November 2021. The Company recorded a realized gain of $27.9 million based on the sale of Stash equity securities under the stock transfer agreement, which is included within other income on the consolidated statement of operations and comprehensive income. 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 equity securities do not have a readily determinable fair value and, upon acquisition, the Company elected the measurement alternative to value its securities. The equity securities will be carried at cost less impairment, if any, and subsequently measured to fair value upon observable price changes in an orderly transaction for the identical or similar investments with any gains or losses recorded to the consolidated statement of operations and comprehensive income. In 2021, the Company recorded a net unrealized gain on the investment in Stash of $95.4 million as a result of an adjustment to the fair value of the Stash equity securities based on observable price changes, which is included within other income on the consolidated statement of operations and comprehensive income.

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As of June 30, 2022, there have been no impairments to the acquisition cost of the equity securities.

NOTE 8—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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


	June 30, 2022		December 31, 2021
Accrued advertising expense	$	57,532	$	59,150
Accrued compensation and benefits	11,361		16,330
Accrued professional fees	1,367		1,887
Customer deposits and escrows	7,338		7,546
Contribution to LendingTree Foundation	—		3,333
Current lease liabilities	8,758		8,595
Other	8,569		9,890
Total accrued expenses and other current liabilities	$	94,925	$	106,731

NOTE 9—SHAREHOLDERS' EQUITY

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


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted average basic common shares	12,723	13,243	12,812	13,157
Effect of stock options	—	394	—	523
Effect of dilutive share awards	—	72	—	103
Effect of Convertible Senior Notes and warrants	—	10	—	130
Weighted average diluted common shares	12,723	13,719	12,812	13,913

For the second quarter and first six months of 2022, 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 0.2 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the second quarter and first six months of 2022 because their inclusion would have been anti-dilutive. For the second quarter of 2022, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 1.0 million shares of common stock and 0.5 million restricted stock units. For the first six months of 2022, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 1.0 million shares of common stock and 0.4 million restricted stock units.

For the second quarter of 2021, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 0.9 million shares of common stock and 0.2 million restricted stock units. For the first six months of 2021, the weighted average shares that were anti-dilutive included options to purchase 0.4 million shares of common stock.

The convertible notes and the warrants issued by the Company could be converted into the Company’s common stock, subject to certain contingencies. See Note 12—Debt for additional information. On January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method. Following the adoption, the if-converted method is used for diluted net income per share calculation of our convertible notes. Prior to the adoption of ASU 2020-06 the dilutive impact of the convertible notes was calculated using the treasury stock method. See Note 2—Significant Accounting Policies for additional information.

Approximately 2.1 million shares related to the potentially dilutive shares of the Company's common stock associated with the 0.50% Convertible Senior Notes due July 15, 2025 and the 0.625% Convertible Senior Notes due June 1, 2022 were

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

excluded from the calculation of diluted loss per share for the second quarter and first six months of 2022 because their inclusion would have been anti-dilutive. Shares of the Company's stock associated with the warrants issued by the Company in 2017 and 2020 were excluded from the calculation of diluted loss per share for the second quarter and first six months of 2022 and 2021 as they were anti-dilutive since the strike price of the warrants was greater than the average market price of the Company's common stock during the relevant periods.

Shares of the Company's common stock associated with the 0.50% Convertible Senior Notes due July 15, 2025 were excluded from the calculation of diluted income per share for the second quarter and first six months of 2021 as they were anti-dilutive since the conversion price of the notes was greater than the average market price of the Company's common stock during the relevant periods.

The employee stock purchase plan did not have a material impact to the calculation of diluted shares.

Common Stock Repurchases

In each of February 2018 and February 2019, the board of directors authorized and the Company announced the repurchase of up to $100.0 million and $150.0 million, respectively, of LendingTree's common stock. During the six months ended June 30, 2022, the Company purchased 379,895 shares of its common stock pursuant to this stock repurchase program. At June 30, 2022, approximately $96.7 million of the previous authorizations to repurchase common stock remain available.

NOTE 10—STOCK-BASED COMPENSATION

Non-cash compensation related to equity awards is included in the following line items in the accompanying consolidated statements of operations and comprehensive income (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of revenue	$	442	$	463	$	835	$	860
Selling and marketing expense	2,285		1,976		4,324		3,778
General and administrative expense	11,873		13,254		21,473		25,425
Product development	2,735		2,601		4,700		4,667
Restructuring and severance	—		—		1,083		—
Total non-cash compensation	$	17,335	$	18,294	$	32,415	$	34,730

Stock Options

A summary of changes in outstanding stock options is as follows:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value(a)
		(per option)		(in years)	(in thousands)
Options outstanding at January 1, 2022	676,293	$	169.71
Granted (b)	154,664	104.63
Exercised	—	—
Forfeited	(10,233)	258.14
Expired	(1,327)	281.86
Options outstanding at June 30, 2022	819,397	156.14		5.73	$	4,612
Options exercisable at June 30, 2022	494,026	$	127.28	3.62	$	4,612

(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $43.82 on the last trading day of the quarter ended June 30, 2022 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the

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