CHARLOTTE, N.C., Oct. 27, 2016 /PRNewswire/ --
- Revenue of $94.6 million; up 36%
over third quarter 2015
- Net Income from Continuing Operations of $7.3 million; down 1% over third quarter 2015 on
higher tax provision
- Record Variable Marketing Margin of $36.3 million; up 49% over third quarter
2015
- Record Adjusted EBITDA of $18.5
million; up 68% over third quarter 2015
- Net Income per Diluted Share from Continuing Operations of
$0.57
- Adjusted Net Income per Share of $0.80
- Record revenue from non-mortgage products of $41.0 million, up 60% over third quarter
2015
LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com,
the nation's leading online loan marketplace, today announced
results for the quarter ended September 30,
2016.
"The third quarter's results once again demonstrate our ability
to perform through varying market environments," said Doug Lebda, founder, Chairman and CEO. "We
delivered our fifth consecutive quarter of record adjusted EBITDA
and set a new record for non-mortgage revenue thanks to growth in
several categories. And in a quarter where mortgage interest
rates hovered near historic lows and mortgage lenders reduced
demand, we optimized our business to expand margins and grow
profits. Delivering record profitability along with
year-over-year revenue growth across all lending categories further
solidifies LendingTree's position as a leader in the industry's
online transformation."
Third Quarter 2016 Business Highlights
- Total loan requests in the quarter grew to 4.2 million, up 68%
over third quarter 2015.
- Record revenue from non-mortgage products of $41.0 million represents an increase of 60% over
third quarter 2015.
- Revenue from all lending categories grew compared to the prior
year period.
- Revenue from small business loans grew more than 200% compared
to the third quarter 2015 and 61% sequentially. Since inception,
LendingTree has facilitated nearly $200
million in small business loans.
- Personal loans revenue returned to sequential growth matching
results from a record first quarter 2016.
- Enrollment growth in My LendingTree continued, as more than 3.7
million consumers have now joined the My LendingTree
personalization platform.
LendingTree
Selected Financial Metrics
|
(In millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q/Q
|
|
|
|
|
Y/Y
|
|
|
Q3
2016
|
|
Q2
2016
|
|
%
Change
|
|
|
Q3
2015
|
|
%
Change
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Products
(1)
|
$
|
53.5
|
|
|
$
|
56.0
|
|
|
(4)
|
%
|
|
|
$
|
44.2
|
|
|
21
|
%
|
|
Non-Mortgage Products
(2)
|
41.0
|
|
|
38.3
|
|
|
7
|
%
|
|
|
25.6
|
|
|
60
|
%
|
|
Total
Revenue
|
$
|
94.6
|
|
|
$
|
94.3
|
|
|
—
|
%
|
|
|
$
|
69.8
|
|
|
36
|
%
|
|
Non-Mortgage % of
Total
|
43
|
%
|
|
41
|
%
|
|
|
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
$
|
14.0
|
|
|
$
|
12.6
|
|
|
11
|
%
|
|
|
$
|
7.8
|
|
|
79
|
%
|
|
Income Tax
Expense
|
$
|
(6.7)
|
|
|
$
|
(3.6)
|
|
|
86
|
%
|
|
|
$
|
(0.4)
|
|
|
1575
|
%
|
|
Net Income from
Continuing Operations
|
$
|
7.3
|
|
|
$
|
9.0
|
|
|
(19)
|
%
|
|
|
$
|
7.4
|
|
|
(1)
|
%
|
|
Net Income from
Cont. Ops. % of Revenue
|
8
|
%
|
|
10
|
%
|
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per
Share from Cont. Ops.
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.62
|
|
|
$
|
0.76
|
|
|
(18)
|
%
|
|
|
$
|
0.65
|
|
|
(5)
|
%
|
|
Diluted
|
$
|
0.57
|
|
|
$
|
0.71
|
|
|
(20)
|
%
|
|
|
$
|
0.59
|
|
|
(3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
Marketing Expense
|
|
|
|
|
|
|
|
|
|
|
|
Variable Selling
& Marketing Expense (3)
|
$
|
58.2
|
|
|
$
|
60.3
|
|
|
(3)
|
%
|
|
|
$
|
45.5
|
|
|
28
|
%
|
|
Non-variable Selling
& Marketing Expense
|
4.6
|
|
|
4.2
|
|
|
10
|
%
|
|
|
3.4
|
|
|
35
|
%
|
|
Selling and
Marketing Expense
|
$
|
62.8
|
|
|
$
|
64.5
|
|
|
(3)
|
%
|
|
|
$
|
48.9
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Marketing
Margin (4)
|
$
|
36.3
|
|
|
$
|
34.0
|
|
|
7
|
%
|
|
|
$
|
24.3
|
|
|
49
|
%
|
|
Variable Marketing
Margin % of Revenue (4)
|
38
|
%
|
|
36
|
%
|
|
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(4)
|
$
|
18.5
|
|
|
$
|
16.7
|
|
|
11
|
%
|
|
|
$
|
11.0
|
|
|
68
|
%
|
|
Adjusted EBITDA %
of Revenue (4)
|
20
|
%
|
|
18
|
%
|
|
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income (4)
|
$
|
10.1
|
|
|
$
|
11.7
|
|
|
(14)
|
%
|
|
|
$
|
9.8
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income per Share (4)
|
$
|
0.80
|
|
|
$
|
0.92
|
|
|
(13)
|
%
|
|
|
$
|
0.79
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. Please see
"LendingTree's Reconciliation of Non-GAAP Measures to GAAP" and
"LendingTree's Principles of Financial Reporting" below for more
information.
|
Third Quarter 2016 Financial Highlights
- Consolidated revenue of $94.6
million represents an increase of $24.8 million, or 36%, over revenue in the third
quarter 2015.
- Net Income from Continuing Operations of $7.3 million was down 1% over third quarter 2015
primarily due to an increase in income tax expense to $6.7 million from $0.4
million. During the third quarter 2016, the company recorded
a one-time incremental charge of $1.1
million to reduce the value of its deferred tax assets due
to a reduction in North Carolina state
income tax rates.
- Record Variable Marketing Margin of $36.3 million represents an increase of
$12.0 million, or 49%, over third
quarter 2015. At 38% of revenue, Variable Marketing Margin as a
percent of revenue improved 240 basis points from the prior
quarter.
- Record Adjusted EBITDA of $18.5
million increased $7.5
million, or 68%, over third quarter 2015. Adjusted EBITDA as
percent of revenue improved to 20% from 16% in the third quarter
2015.
- Income per diluted share from continuing operations of
$0.57 was down 3% over third quarter
2015, also primarily due to the increased tax provision.
- Adjusted Net Income per share of $0.80, representing growth of 1% year over year.
Both GAAP and Adjusted Net Income per share reflect the full
$6.7 million income tax expense
recorded during the period in accordance with GAAP.
- During the third quarter 2016, the company repurchased 3.6
thousand shares of its stock at a weighted-average price per share
of $93.59 for aggregate consideration
of $0.3 million. As of September 30, 2016, the company has $48.7 million in repurchase authorization
remaining and an unrestricted cash balance of $176.9 million.
Business Outlook - 2016
LendingTree is updating Revenue, Variable Marketing Margin, and
Adjusted EBITDA guidance for full-year 2016, as follows:
For full-year 2016:
- Revenue is now anticipated to be in the range of $370 - $375 million, or 46% - 47% over full-year
2015, a reduction of 3% at the midpoint from previous guidance of
$380 - $390 million
- Adjusting for revised revenue guidance, couple with margin
improvements year-to-date, Variable Marketing Margin is now
anticipated to be $134 - $137
million, or 41% - 44% over full-year 2015.
- Adjusted EBITDA is expected to remain in the range of
$64 - $66 million, or 57% - 62% over
to full-year 2015.
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 and tax
considerations. Expenses associated with legal matters and
tax consequences 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 third quarter 2016
financial results will be webcast live today, October 27, 2016 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, November 3, 2016. To listen to the
telephone replay, call toll-free (855) 859-2056 with passcode
#98635345. Callers outside the United
States and Canada may dial
(404) 537-3406 with passcode #98635345.
LENDINGTREE, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(in thousands, except per share
amounts)
|
Revenue
|
$
|
94,558
|
|
|
$
|
69,804
|
|
|
$
|
283,561
|
|
|
$
|
175,875
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation shown separately below)
|
3,392
|
|
|
2,436
|
|
|
10,329
|
|
|
6,402
|
|
Selling and marketing
expense
|
62,819
|
|
|
48,901
|
|
|
192,416
|
|
|
118,615
|
|
General and
administrative expense
|
9,008
|
|
|
7,069
|
|
|
26,820
|
|
|
21,336
|
|
Product
development
|
3,718
|
|
|
2,675
|
|
|
11,384
|
|
|
7,238
|
|
Depreciation
|
1,286
|
|
|
764
|
|
|
3,458
|
|
|
2,135
|
|
Amortization of
intangibles
|
166
|
|
|
25
|
|
|
263
|
|
|
124
|
|
Restructuring and
severance
|
—
|
|
|
28
|
|
|
72
|
|
|
422
|
|
Litigation
settlements and contingencies
|
19
|
|
|
133
|
|
|
109
|
|
|
(663)
|
|
Total costs and
expenses
|
80,408
|
|
|
62,031
|
|
|
244,851
|
|
|
155,609
|
|
Operating
income
|
14,150
|
|
|
7,773
|
|
|
38,710
|
|
|
20,266
|
|
Other income
(expense), net:
|
|
|
|
|
|
|
|
Interest
expense
|
(141)
|
|
|
(1)
|
|
|
(424)
|
|
|
(63)
|
|
Income before
income taxes
|
14,009
|
|
|
7,772
|
|
|
38,286
|
|
|
20,203
|
|
Income tax
expense
|
(6,729)
|
|
|
(389)
|
|
|
(15,099)
|
|
|
(968)
|
|
Net income from
continuing operations
|
7,280
|
|
|
7,383
|
|
|
23,187
|
|
|
19,235
|
|
Loss from
discontinued operations
|
(664)
|
|
|
(1,295)
|
|
|
(3,017)
|
|
|
(3,238)
|
|
Net income and
comprehensive income
|
$
|
6,616
|
|
|
$
|
6,088
|
|
|
$
|
20,170
|
|
|
$
|
15,997
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
11,754
|
|
|
11,445
|
|
|
11,827
|
|
|
11,378
|
|
Diluted
|
12,742
|
|
|
12,489
|
|
|
12,782
|
|
|
12,379
|
|
Income per share
from continuing operations:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.62
|
|
|
$
|
0.65
|
|
|
$
|
1.96
|
|
|
$
|
1.69
|
|
Diluted
|
$
|
0.57
|
|
|
$
|
0.59
|
|
|
$
|
1.81
|
|
|
$
|
1.55
|
|
Loss per share from
discontinued operations:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.06)
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.26)
|
|
|
$
|
(0.28)
|
|
Diluted
|
$
|
(0.05)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.24)
|
|
|
$
|
(0.26)
|
|
Net income per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.56
|
|
|
$
|
0.53
|
|
|
$
|
1.71
|
|
|
$
|
1.41
|
|
Diluted
|
$
|
0.52
|
|
|
$
|
0.49
|
|
|
$
|
1.58
|
|
|
$
|
1.29
|
|
Amounts include
non-cash compensation, as follows:
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
29
|
|
|
$
|
24
|
|
|
$
|
99
|
|
|
$
|
68
|
|
Selling and marketing
expense
|
737
|
|
|
425
|
|
|
2,118
|
|
|
1,080
|
|
General and
administrative expense
|
1,072
|
|
|
1,178
|
|
|
3,511
|
|
|
3,909
|
|
Product
development
|
510
|
|
|
351
|
|
|
1,682
|
|
|
1,176
|
|
LENDINGTREE, INC. AND
SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
(in thousands, except par value
and share amounts)
|
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
176,925
|
|
|
$
|
206,975
|
|
Restricted cash and
cash equivalents
|
4,091
|
|
|
6,541
|
|
Accounts receivable,
net
|
38,185
|
|
|
29,873
|
|
Prepaid and other
current assets
|
3,925
|
|
|
2,085
|
|
Current assets of
discontinued operations
|
—
|
|
|
110
|
|
Total current
assets
|
223,126
|
|
|
245,584
|
|
Property and
equipment, net
|
13,399
|
|
|
9,415
|
|
Goodwill
|
4,007
|
|
|
3,632
|
|
Intangible assets,
net
|
15,229
|
|
|
10,992
|
|
Deferred income tax
assets
|
16,341
|
|
|
20,977
|
|
Other non-current
assets
|
855
|
|
|
1,039
|
|
Non-current assets of
discontinued operations
|
4,142
|
|
|
4,142
|
|
Total
assets
|
$
|
277,099
|
|
|
$
|
295,781
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
Accounts payable,
trade
|
$
|
2,815
|
|
|
$
|
5,741
|
|
Accrued expenses and
other current liabilities
|
37,719
|
|
|
34,885
|
|
Current liabilities
of discontinued operations
|
11,978
|
|
|
13,401
|
|
Total current
liabilities
|
52,512
|
|
|
54,027
|
|
Other non-current
liabilities
|
1,753
|
|
|
586
|
|
Non-current
liabilities of discontinued operations
|
27
|
|
|
26
|
|
Total
liabilities
|
54,292
|
|
|
54,639
|
|
Commitments and
contingencies
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Preferred stock $.01
par value; 5,000,000 shares authorized; none issued or
outstanding
|
—
|
|
|
—
|
|
Common stock $.01 par
value; 50,000,000 shares authorized; 13,953,351 and
13,865,620 shares issued, respectively, and 11,789,606 and
12,392,093 shares
outstanding, respectively
|
140
|
|
|
139
|
|
Additional paid-in
capital
|
1,016,706
|
|
|
1,006,688
|
|
Accumulated
deficit
|
(729,954)
|
|
|
(750,124)
|
|
Treasury stock
2,163,745 and 1,473,527 shares, respectively
|
(64,085)
|
|
|
(15,561)
|
|
Total
shareholders' equity
|
222,807
|
|
|
241,142
|
|
Total liabilities
and shareholders' equity
|
$
|
277,099
|
|
|
$
|
295,781
|
|
LENDINGTREE'S
RECONCILIATION OF NON-GAAP MEASURES TO GAAP
|
|
Below is a
reconciliation of Variable Marketing Margin to net income from
continuing operations and Variable Marketing Margin % of revenue to
net income from continuing operations % 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
|
|
September 30,
2016
|
June 30,
2016
|
September 30,
2015
|
|
|
|
|
Variable Marketing
Margin
|
$
|
36,322
|
|
$
|
33,977
|
|
$
|
24,319
|
|
Variable Marketing
Margin % of revenue
|
38
|
%
|
36
|
%
|
35
|
%
|
|
|
|
|
Adjustments to
reconcile to net income from continuing operations:
|
|
|
|
Cost of
revenue
|
(3,392)
|
|
(3,464)
|
|
(2,436)
|
|
Non-variable selling
and marketing expense (1)
|
(4,583)
|
|
(4,225)
|
|
(3,416)
|
|
General and
administrative expense
|
(9,008)
|
|
(8,553)
|
|
(7,069)
|
|
Product
development
|
(3,718)
|
|
(3,781)
|
|
(2,675)
|
|
Depreciation
|
(1,286)
|
|
(1,174)
|
|
(764)
|
|
Amortization of
intangibles
|
(166)
|
|
(72)
|
|
(25)
|
|
Restructuring and
severance
|
—
|
|
(72)
|
|
(28)
|
|
Litigation
settlements and contingencies
|
(19)
|
|
79
|
|
(133)
|
|
Interest
expense
|
(141)
|
|
(141)
|
|
(1)
|
|
Income tax
expense
|
(6,729)
|
|
(3,572)
|
|
(389)
|
|
Net income from
continuing operations
|
$
|
7,280
|
|
$
|
9,002
|
|
$
|
7,383
|
|
Net income from
continuing operations % of revenue
|
8
|
%
|
10
|
%
|
11
|
%
|
|
|
(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.
|
Below is a
reconciliation of Adjusted EBITDA and Adjusted Net Income to net
income from continuing operations, Adjusted EBITDA % of revenue to
net income from continuing operations % of revenue and Adjusted Net
Income per share to net income per diluted share from continuing
operations. See "LendingTree's Principles of Financial
Reporting" for further discussion of the Company's use of these
non-GAAP measures.
|
|
|
Three Months
Ended
|
|
September 30,
2016
|
June 30,
2016
|
September 30,
2015
|
|
|
|
|
Adjusted
EBITDA
|
$
|
18,452
|
|
$
|
16,660
|
|
$
|
10,999
|
|
Adjusted EBITDA %
of revenue
|
20
|
%
|
18
|
%
|
16
|
%
|
Adjustments to
reconcile to net income from continuing operations:
|
|
|
|
Depreciation
|
(1,286)
|
|
(1,174)
|
|
(764)
|
|
Amortization of
intangibles
|
(166)
|
|
(72)
|
|
(25)
|
|
Interest
expense
|
(141)
|
|
(141)
|
|
(1)
|
|
Income tax
expense
|
(6,729)
|
|
(3,572)
|
|
(389)
|
|
Adjusted net
income
|
10,130
|
|
11,701
|
|
9,820
|
|
|
|
|
|
Non-cash
compensation
|
(2,348)
|
|
(2,429)
|
|
(1,978)
|
|
Loss on disposal of
assets
|
(121)
|
|
(140)
|
|
(64)
|
|
Acquisition
expense
|
(362)
|
|
(137)
|
|
(234)
|
|
Restructuring and
severance
|
—
|
|
(72)
|
|
(28)
|
|
Litigation
settlements and contingencies (1)
|
(19)
|
|
79
|
|
(133)
|
|
Net income from
continuing operations
|
$
|
7,280
|
|
$
|
9,002
|
|
$
|
7,383
|
|
Net income from
continuing operations % of revenue
|
8
|
%
|
10
|
%
|
11
|
%
|
|
|
|
|
Adjusted net
income per share
|
$
|
0.80
|
|
$
|
0.92
|
|
$
|
0.79
|
|
Adjustments to
reconcile adjusted net income to net income from continuing
operations
|
$
|
(0.23)
|
|
$
|
(0.21)
|
|
$
|
(0.20)
|
|
Adjustments to
reconcile effect of dilutive securities
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Net income per
diluted share from continuing operations
|
$
|
0.57
|
|
$
|
0.71
|
|
$
|
0.59
|
|
|
|
|
|
Adjusted weighted
average diluted shares outstanding
|
12,742
|
|
12,730
|
|
12,489
|
|
Effect of dilutive
securities
|
—
|
|
—
|
|
—
|
|
Weighted average
diluted shares outstanding
|
12,742
|
|
12,730
|
|
12,489
|
|
Effect of dilutive
securities
|
988
|
|
935
|
|
1,044
|
|
Weighted average
basic shares outstanding
|
11,754
|
|
11,795
|
|
11,445
|
|
|
(1)
Includes legal fees for certain patent
litigation.
|
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. LendingTree believes
that investors should have access to the same set of tools that it
uses in analyzing its results. 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.
Adjusted net income and Adjusted Net Income per share supplement
GAAP income from continuing operations and GAAP income (loss) per
diluted share 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, restructuring and severance, litigation
settlements, contingencies and legal fees for certain patent
litigation, and acquisition expenses, 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.
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 operating income or loss (which excludes
interest expense and taxes) excluding amortization of intangibles
and depreciation.
Adjusted EBITDA is defined as EBITDA excluding (1) non-cash
compensation expense, (2) gain/loss on disposal of assets, (3)
restructuring and severance expenses, (4) litigation settlements,
contingencies and legal fees for certain patent litigation, (5)
adjustments for acquisitions or dispositions, and (6) one-time
items.
Adjusted net income is defined as net income (loss) from
continuing operations excluding (1) non-cash compensation expense,
(2) gain/loss on disposal of assets, (3) restructuring and
severance expenses, (4) litigation settlements, contingencies and
legal fees for certain patent litigation, (5) adjustments for
acquisitions or dispositions, and (6) one-time items.
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; 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, 2015,
in our quarterly report on Form 10-Q for the period ended
June 30, 2016 and in our other
filings with the Securities and Exchange Commission. We undertake
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 55 million loan
requests. LendingTree provides access to its network of over
400 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.
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SOURCE LendingTree, Inc.