LendingTree, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report; the supplied filing does not provide a clear Q4-only financial summary. LendingTree operates an online marketplace that matches consumers seeking financial products and insurance with a network of more than 500 partners.
Key financial results
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $1,098.5 million | $910.0 million | +21% |
| Operating income (loss) | $8.0 million | ($6.6 million) | Turned positive |
| Net income (loss) from continuing operations | $73.1 million | ($22.6 million) | Turned positive |
| Net income (loss), including discontinued operations | $69.1 million | ($48.3 million) | Turned positive |
| Adjusted EBITDA (non-GAAP) | $134.7 million | $123.7 million | +9% |
| Cash from continuing operating activities | $131.3 million | $111.3 million | +18% |
Reported operating margin was approximately 0.7% of revenue; Adjusted EBITDA margin was approximately 12.3%. Adjusted EBITDA is a company-defined non-GAAP measure and excludes, among other items, stock compensation, interest, taxes, amortization and investment gains.
Segments
| Segment | FY2021 revenue | Change vs. FY2020 | FY2021 segment profit |
|---|---|---|---|
| Home | $441.7 million | +38% | $153.4 million (+16%) |
| Consumer | $329.9 million | +30% | $143.5 million (+34%) |
| Insurance | $326.2 million | -2% | $113.5 million (-13%) |
Home revenue benefited from refinance, purchase and home-equity products. Consumer growth was led by personal loans, small-business loans and credit cards. Insurance revenue and profit declined as property and casualty carriers cut marketing budgets amid higher loss ratios.
Liquidity, debt and capital
- Cash and cash equivalents were $251.2 million at year-end, up from $169.9 million.
- Debt carrying value was $644.2 million: $166.0 million current and $478.2 million long-term. This principally comprised $169.7 million principal of 0.625% convertible notes due June 2022 and $575.0 million principal of 0.50% convertible notes due July 2025; carrying values reflect discounts and issuance costs.
- A new credit facility provides a $200 million revolving facility and a $250 million delayed-draw term loan facility. There were no borrowings at December 31, 2021; the filing reports a $0.2 million letter of credit outstanding as of February 28, 2022. The term-loan proceeds could be used to settle the 2022 Notes. The company said it was covenant-compliant at year-end.
- The company repurchased 334,253 shares for $40.0 million in 2021. It reported $139.7 million authorized for future repurchases at year-end. It has no current intention to pay cash dividends.
Material changes and unusual items
- Revenue rose 21% year over year, but remained below FY2019 revenue of $1,106.6 million. Insurance and Consumer mix differed substantially from 2019.
- Selling and marketing expense increased 25% to $774.0 million, including advertising expense of $716.6 million, up 26%. Management adjusts marketing spending in response to partner demand and revenue opportunities.
- Other income was $123.3 million, largely reflecting $95.4 million of unrealized gains on the Stash investment and a $27.9 million realized gain from selling part of that investment. These gains materially increased GAAP income; they are excluded from Adjusted EBITDA.
- Interest expense rose to $46.9 million from $36.3 million. The 2021 result also included an $8.2 million gain from remeasuring acquisition contingent consideration, versus $5.3 million of expense in 2020.
- Discontinued operations generated a $4.0 million loss in 2021, versus a $25.7 million loss in 2020, primarily associated with legacy LendingTree Loans/HLC litigation and bankruptcy matters. The HLC Chapter 7 case closed in July 2021.
- The auditor issued an unqualified opinion on the financial statements and internal controls. Valuation of the Stash equity investment was identified as a critical audit matter due to judgment in selecting observable market evidence.
Outlook, commentary and risks
- Management stated that the three segments had generally recovered from COVID-19 impacts, while noting that the pandemic’s future effects remained uncertain. Consumer had been the most affected by contraction in unsecured credit and capital availability.
- Management expected personal-loan and small-business growth to continue in 2022; credit-card margins were still below pre-pandemic levels. For Insurance, management expected a return toward a normalized operating environment by mid-2022, but described carrier-market conditions as fluid. These are management comments, not consolidated financial guidance.
- Management cited higher mortgage rates, lower refinance volumes, housing inventory and affordability constraints, and partner demand as important Home-market drivers. The filing reports a company-cited MBA projection of 4.0% average 30-year mortgage rates and a 33% refinance share for 2022; these are third-party industry forecasts, not LendingTree guidance.
- Principal risks include sensitivity to mortgage rates and economic conditions; partner concentration and partner financial health; performance-marketing and search-engine dependence; competition; the ability to maintain lead quality and conversion; insurance carrier budget changes; regulation, licensing, privacy and cybersecurity; litigation; and reliance on key employees and technology systems.
- The company’s $169.7 million principal of 2022 Notes was due June 1, 2022. Conversions or repurchases could require cash; the filing discusses the term-loan facility as a potential funding source. Investors should verify subsequent repayment, refinancing and facility drawdown disclosures.
- The company held a $158.1 million Stash investment at year-end, valued using observable market events rather than a readily determinable quoted fair value. Valuation changes may cause material earnings volatility.
Most important facts for investors to verify
- Whether core operating performance supports GAAP profitability apart from the $123.3 million of other income and Stash-related gains.
- Whether segment profit, revenue per consumer and marketing efficiency remain resilient as mortgage rates, lender demand and insurance carrier budgets change.
- The subsequent outcome for the 2022 Notes, including any cash repayment, refinancing or term-loan borrowing, and the resulting debt, interest cost and liquidity.
- The basis and sensitivity of the Stash valuation, and whether any subsequent transaction or market event supports the year-end carrying value.
- Updates on legal contingencies, regulatory compliance, cybersecurity and partner concentration; the filing says no partner exceeded 10% of FY2021 revenue, after one insurer represented 15% in 2020.