LendingTree, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This filing reports annual results; the supplied text does not provide a clear standalone fourth-quarter financial summary. LendingTree operates an online marketplace connecting consumers with financial-services and insurance providers, organized into Home, Consumer and Insurance segments.
Financial performance and position
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $985.0 million | $1,098.5 million | Down 10% |
| Operating income (loss) | $(32.8) million | $8.0 million | Declined $40.8 million |
| Net income (loss) from continuing operations | $(187.9) million | $73.1 million | Declined $261.1 million |
| Adjusted EBITDA | $84.5 million | $134.7 million | Down 37% |
| Operating cash flow, continuing operations | $43.0 million | $131.3 million | Down $88.3 million |
| Cash and cash equivalents at year-end | $298.8 million | $251.2 million | Up $47.6 million |
Revenue by segment was Home $289.4 million (down 34%), Consumer $396.1 million (up 20%), and Insurance $299.1 million (down 8%). Segment profit was $103.1 million for Home, $174.6 million for Consumer, and $91.8 million for Insurance. Corresponding segment margins were 36%, 44%, and 31%; Insurance margin declined from 35%.
Mortgage revenue fell 52% to $179.4 million, principally as sharply higher rates reduced refinancing demand. Home equity revenue rose 69% to $105.8 million. Personal-loan revenue increased 31% to $144.1 million; credit-card revenue rose 7% to $100.2 million.
The company reported total debt of approximately $816.0 million on the balance sheet, including $2.5 million current and $813.5 million long-term, versus $644.2 million at year-end 2021. The balance included $248.8 million outstanding under the term loan and $567.3 million net carrying value of the 2025 convertible notes. Cash less balance-sheet debt was approximately $517 million. Current assets were $414.0 million and current liabilities $82.5 million. Management said cash and operating cash flows should fund operating needs for the next twelve months and beyond; the revolving facility had $199.8 million of remaining capacity as of February 27, 2023.
Material changes and unusual items
- Home and Insurance declines outweighed Consumer growth. Mortgage rates averaged 5.33% in 2022 versus 2.96% in 2021; year-end 30-year rates were 6.36%.
- The net loss included a $133.0 million income-tax expense, principally a $139.4 million charge to establish a full valuation allowance against net deferred tax assets. The company reported an effective tax rate of negative 242.2%.
- FY2021 other income included $123.3 million of investment gains, including realized and unrealized gains related to Stash. This made the year-over-year net-income comparison less representative of underlying operations.
- In 2022, LendingTree borrowed $250 million under its term loan, used approximately $170 million to settle its maturing 2022 convertible notes, repurchased $43.0 million of stock, and invested $15.0 million in EarnUp.
- Workforce reductions affected approximately 150 employees across three rounds; related expense was $4.4 million. A Consumer-segment asset group, with $5.7 million of assets and $2.9 million of liabilities, was classified as held for sale for an expected 2023 sale.
Outlook, commentary and risks
The filing does not provide formal company-wide numeric guidance. Management expects a sustained period of lower mortgage refinancing demand, is prioritizing purchase-lead conversion, and expects home equity to provide most Home-segment revenue in 2023. It also described the Insurance recovery as slower than expected, with carrier demand volatile. The filing cites Mortgage Bankers Association projections—not company guidance—including a 5.2% average 30-year mortgage rate and a 24% refinance share of mortgage originations for 2023.
Key risks include sensitivity to interest rates, housing and consumer-credit conditions; insurer and lender partner budgets and conversion expectations; dependence on online advertising and search traffic; competition; cybersecurity, privacy and regulatory compliance; and execution of technology changes. The company had $420.1 million of goodwill and reported no impairment after 2022 tests, but said deterioration or slower recovery in Insurance or Mortgage could lead to impairment. It reported $0.1 million of continuing-operations litigation accruals at year-end; the filing describes legacy HLC-related litigation and settlements in discontinued operations. The 2025 notes and secured credit facility also create refinancing, interest-cost and covenant risks. The company reported compliance with credit covenants at year-end.
PwC issued unqualified opinions on the financial statements and internal control over financial reporting; its report identified the interim Insurance goodwill impairment assessment as a critical audit matter.
Important facts for investors to verify
- Whether Consumer growth can offset continued weakness in mortgage and insurance partner demand, and whether purchase and home-equity conversion improve.
- The drivers and potential reversibility of the full deferred-tax-asset valuation allowance, including evidence needed to recognize tax benefits.
- Debt service costs and liquidity under the term loan, including its reported 8.14% rate at December 31, 2022, and the terms and maturity of the 2025 convertible notes.
- Whether Insurance and Mortgage operating recoveries support goodwill carrying values, particularly the $194.7 million Insurance reporting-unit goodwill balance.
- The outcome and financial exposure, if any, from litigation, regulatory matters, the planned asset sale and other contingencies; the filing does not quantify a clear possible loss range for all matters.