CHARLOTTE, N.C., July 16, 2020 /PRNewswire/ -- LendingTree, Inc.
(NASDAQ: TREE), the nation's leading online financial services
marketplace, today provided a business update regarding
better-than-expected second quarter 2020 financial results.
Q2 2020 Preliminary Results
- Revenue is now anticipated in the range of $182 - $186 million
vs prior range of $160 - $175 million.
- GAAP net loss from continuing operations is anticipated to be
($10) - ($8)
million.
- Variable marketing margin is now anticipated to be $79 - $83 million
vs prior range of $65 - $75 million.
- Adjusted EBITDA is now anticipated to be $28 - $32 million
vs prior range of $12 - $18 million.
"Due to the magnitude of outperformance relative to our prior
outlook for the second quarter, we are providing a preliminary
update for investors," said Doug
Lebda, Chairman and CEO. "I continue to be incredibly
proud of how our company has navigated this challenging environment
and our financial performance is a testament to the team's hard
work and the strategic moves we've made over the last several
years. While some of our businesses remain challenged
as a result of the economic environment, others are performing
exceedingly well and enabling us to remain strategically focused on
investing in both sides of our marketplace to drive market share
gains."
J.D. Moriarty, CFO, added, "We're thrilled to announce such a
positive outcome on the quarter in light of the many challenges
we're all facing. Across our three reportable segments, much
of the strength was driven by our Home segment where low interest
rates have driven robust consumer interest in refinancing and
product innovation has enabled us to retain greater capacity with
our lenders than we've historically seen. The Insurance
segment performed largely as anticipated, recovering from traffic
challenges early in the quarter and gaining momentum as we head
into the second half. And our Consumer segment remains
challenged as unsecured credit remains tight with limited
visibility into the true health of consumer balance sheets and
small businesses continuing to struggle. We intend to discuss
the quarter's performance in greater detail and issue guidance for
the third quarter when we formally release earnings in a few
weeks."
LENDINGTREE'S RECONCILIATION OF NON-GAAP
MEASURES TO GAAP
Variable Marketing Expense
Below is a reconciliation of selling and marketing expense to
variable marketing expense. See "Lending Tree's Principles of
Financial Reporting" for further discussion of the Company's use of
this non-GAAP measure.
|
Preliminary
Quarter Ended
June 30, 2020
|
|
Low
|
High
|
|
(in
millions)
|
Selling and
marketing expense
|
$
|
116
|
|
$
|
114
|
|
Non-variable selling
and marketing expense (1)
|
(12)
|
|
(12)
|
|
Variable marketing
expense
|
$
|
104
|
|
$
|
102
|
|
|
|
|
(1)
|
|
Represents the
portion of selling and marketing expense not attributable to
variable costs paid for advertising, direct marketing and related
expenses. Includes overhead, fixed costs and personnel-related
expenses.
|
LENDINGTREE'S RECONCILIATION OF NON-GAAP
MEASURES TO GAAP
Variable Marketing Margin
Below is a reconciliation of net income from continuing
operations to variable marketing margin. See "LendingTree's
Principles of Financial Reporting" for further discussion of the
Company's use of these non-GAAP measures.
|
Preliminary
Quarter Ended
June 30, 2020
|
|
Low
|
High
|
|
(in
millions)
|
Net income from
continuing operations
|
$
|
(10)
|
|
$
|
(8)
|
|
|
|
|
Adjustments to
reconcile to variable marketing margin:
|
|
|
Cost of
revenue
|
13
|
|
13
|
|
Non-variable selling
and marketing expense (2)
|
12
|
|
12
|
|
General and
administrative expense
|
28
|
|
28
|
|
Product
development
|
11
|
|
11
|
|
Depreciation
|
3
|
|
3
|
|
Amortization of
intangibles
|
14
|
|
14
|
|
Change in fair value
of contingent consideration
|
9
|
|
9
|
|
Severance
|
—
|
|
—
|
|
Litigation
settlements and contingencies
|
(1)
|
|
(1)
|
|
Interest expense,
net
|
5
|
|
5
|
|
Other (income)
expense
|
—
|
|
—
|
|
Income tax (benefit)
expense
|
(5)
|
|
(3)
|
|
Variable marketing
margin
|
$
|
79
|
|
$
|
83
|
|
|
|
|
(1)
|
|
Represents the
portion of selling and marketing expense not attributable to
variable costs paid for advertising, direct marketing and related
expenses. Includes overhead, fixed costs and personnel-related
expenses.
|
LENDINGTREE'S RECONCILIATION OF NON-GAAP
MEASURES TO GAAP
Adjusted EBITDA
Below is a reconciliation of net income from continuing
operations to adjusted EBITDA. See "LendingTree's Principles of
Financial Reporting" for further discussion of the Company's use of
these non-GAAP measures.
|
Preliminary
Quarter Ended
June 30, 2020
|
|
Low
|
High
|
|
(in
millions)
|
Net income from
continuing operations
|
$
|
(10)
|
|
$
|
(8)
|
|
Adjustments to
reconcile to adjusted EBITDA:
|
|
|
Amortization of
intangibles
|
14
|
|
14
|
|
Depreciation
|
3
|
|
3
|
|
Non-cash
compensation
|
13
|
|
13
|
|
Change in fair value
of contingent consideration
|
9
|
|
9
|
|
Litigation
settlements and contingencies
|
(1)
|
|
(1)
|
|
Interest expense,
net
|
5
|
|
5
|
|
Income tax (benefit)
expense
|
(5)
|
|
(3)
|
|
Adjusted
EBITDA
|
$
|
28
|
|
$
|
32
|
|
LendingTree's Principles of Financial Reporting
LendingTree reports Variable Marketing Margin and Earnings
Before Interest, Taxes, Depreciation and Amortization, as adjusted
for certain items discussed below ("Adjusted EBITDA") as non-GAAP
measures supplemental to GAAP.
Variable Marketing Margin is defined as revenue less Variable
Marketing Expense. Variable Marketing Expense is defined as the
expense attributable to variable costs paid for advertising, direct
marketing and related expenses, including the portion of cost of
revenue attributable to costs paid for advertising re-sold to third
parties, and excluding overhead, fixed costs and personnel-related
expenses. The majority of these variable advertising costs are
expressly intended to drive traffic to our websites and these
variable advertising costs are included in selling and marketing
expense on the company's consolidated statements of operations and
consolidated income. When advertising inventory is re-sold to third
parties, the proceeds of such transactions are included in revenue
for the purposes of calculating Variable Marketing Margin, and the
costs of such re-sold advertising are included in cost of revenue
in the Company's consolidated statements of operations and
consolidated income and are included in Variable Marketing Expense
for purposes of calculating Variable Marketing Margin. 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 is a primary metric by which the Company
measures the effectiveness of its marketing efforts.
EBITDA is defined as net income from continuing operations
excluding interest, income taxes, amortization of intangibles and
depreciation. Adjusted EBITDA is defined as EBITDA excluding (1)
non-cash compensation expense, (2) non-cash impairment charges, (3)
gain/loss on disposal of assets, (4) restructuring and severance
expenses, (5) and litigation settlements and contingencies, (6)
acquisitions and dispositions income or expense (including with
respect to changes in fair value of contingent consideration), and
(7) one-time items. Adjusted EBITDA is a primary metric by
which LendingTree evaluates the operating performance of
its businesses, on which its marketing expenditures and internal
budgets are based and by which management and many employees are
compensated.
The most directly comparable GAAP measure for both Variable
Marketing Margin and Adjusted EBITDA is net income from continuing
operations.
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. However, 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, tax considerations,
and income and expense from changes in fair value of contingent
consideration from acquisitions. Expenses associated with
legal matters, tax consequences, and income and expense from
changes in fair value of contingent consideration from acquisitions
have in the past, and may in the future, significantly affect GAAP
results in a particular period. These non-GAAP measures may not be
comparable to similarly titled measures used by other
companies.
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 including, among other things, the preliminary
statements in this press release regarding results that LendingTree
expects to announce following the completion of its quarter-end
review process, as well as statements about our future operational
and financial performance. Factors currently known to management
that could cause actual results to differ materially from those in
forward-looking statements include the following: uncertainty
regarding the duration and scope of the coronavirus referred to as
COVID-19 pandemic; actions governments and businesses take in
response to the pandemic, including actions that could affect
levels of advertising activity; the impact of the pandemic and
actions taken in response to the pandemic on national and regional
economies and economic activity; the pace of recovery when the
COVID-19 pandemic subsides; adverse conditions in the primary and
secondary mortgage markets and in the economy, particularly
interest rates; default rates on loans, particularly unsecured
loans; demand by investors for unsecured personal loans; the effect
of such demand on interest rates for personal loans and consumer
demand for personal loans; seasonality of results; potential
liabilities to secondary market purchasers; changes in the
Company's relationships with network lenders, including dependence
on certain key network lenders; breaches of network security or the
misappropriation or misuse of personal consumer information;
failure to provide competitive service; failure to maintain brand
recognition; ability to attract and retain consumers in a
cost-effective manner; the effects of potential acquisitions of
other businesses, including the ability to integrate them
successfully with LendingTree's existing operations; accounting
rules related to contingent consideration and excess tax benefits
or expenses on stock-based compensation that could materially
affect earnings in future periods; ability to develop new products
and services and enhance existing ones; competition; allegations of
failure to comply with existing or changing laws, rules or
regulations, or to obtain and maintain required licenses; failure
of network lenders or other affiliated parties to comply with
regulatory requirements; failure to maintain the integrity of
systems and infrastructure; liabilities as a result of privacy
regulations; failure to adequately protect intellectual property
rights or allegations of infringement of intellectual property
rights; and changes in management. These and additional factors to
be considered are set forth under "Risk Factors" in our Annual
Report on Form 10-K for the period ended December 31, 2019, in our Form 10-Q for the
period ended March 31, 2020, and in
our other filings with the Securities and Exchange Commission.
LendingTree undertakes no obligation to update or revise
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating
results or expectations.
About LendingTree, Inc.
LendingTree (NASDAQ: TREE) is the nation's leading online
marketplace that connects consumers with the choices they need to
be confident in their financial decisions. LendingTree empowers
consumers to shop for financial services the same way they would
shop for airline tickets or hotel stays, by comparing multiple
offers from a nationwide network of over 500 partners in one simple
search and choosing the option that best fits their financial
needs. Services include mortgage loans, mortgage refinances, auto
loans, personal loans, business loans, student refinances, credit
cards, insurance and more. Through the My
LendingTree platform, consumers receive free credit scores,
credit monitoring and recommendations to improve credit health. My
LendingTree proactively compares consumers' credit accounts against
offers on our network and notifies consumers when there is an
opportunity to save money. In short, LendingTree's purpose is to
help simplify financial decisions for life's meaningful moments
through choice, education and support.
LendingTree, Inc. is headquartered in Charlotte, NC.
For more information, please visit www.lendingtree.com
Investor Relations Contact:
Trent Ziegler
trent.ziegler@lendingtree.com
704-943-8294
Media Contact:
Megan
Greuling
megan.greuling@lendingtree.com
704-943-8208
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SOURCE LendingTree, Inc.