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Table of Contents

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, 2021
or

☐ | 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 23, 2021, there were 13,315,038 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 | 30
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

2

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,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (in thousands, except per share amounts)
Revenue | $ | 270,014 |  |  | $ | 184,326 |  |  | $ | 542,764 |  |  | $ | 467,410 |
Costs and expenses: |  |  |  |  |  |  |
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 13,934 |  |  | 13,464 |  |  | 27,829 |  |  | 27,716 |
Selling and marketing expense | 185,206 |  |  | 113,921 |  |  | 382,668 |  |  | 309,459 |
General and administrative expense | 39,811 |  |  | 28,489 |  |  | 74,800 |  |  | 60,571 |
Product development | 13,290 |  |  | 10,812 |  |  | 25,758 |  |  | 21,775 |
Depreciation | 4,443 |  |  | 3,550 |  |  | 8,161 |  |  | 6,928 |
Amortization of intangibles | 11,310 |  |  | 13,756 |  |  | 22,622 |  |  | 27,513 |
Change in fair value of contingent consideration | (8,850) |  |  | 9,175 |  |  | (8,053) |  |  | 1,053 |
Severance | — |  |  | 32 |  |  | — |  |  | 190 |
Litigation settlements and contingencies | 322 |  |  | (1,325) |  |  | 338 |  |  | (996) |
Total costs and expenses | 259,466 |  |  | 191,874 |  |  | 534,123 |  |  | 454,209 |
Operating income (loss) | 10,548 |  |  | (7,548) |  |  | 8,641 |  |  | 13,201 |
Other (expense) income, net: |  |  |  |  |  |  |
Interest expense, net | (9,840) |  |  | (4,955) |  |  | (20,055) |  |  | (9,789) |
Other income | — |  |  | 7 |  |  | 40,072 |  |  | 7 |
Income (loss) before income taxes | 708 |  |  | (12,496) |  |  | 28,658 |  |  | 3,419 |
Income tax benefit | 9,092 |  |  | 3,880 |  |  | 454 |  |  | 6,941 |
Net income (loss) from continuing operations | 9,800 |  |  | (8,616) |  |  | 29,112 |  |  | 10,360 |
Loss from discontinued operations, net of tax | (3,199) |  |  | (21,141) |  |  | (3,462) |  |  | (25,716) |
Net income (loss) and comprehensive income (loss) | $ | 6,601 |  |  | $ | (29,757) |  |  | $ | 25,650 |  |  | $ | (15,356) |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic | 13,243 |  |  | 12,984 |  |  | 13,157 |  |  | 12,971 |
Diluted | 13,719 |  |  | 12,984 |  |  | 13,913 |  |  | 13,954 |
Income (loss) per share from continuing operations: |  |  |  |  |  |  |
Basic | $ | 0.74 |  |  | $ | (0.66) |  |  | $ | 2.21 |  |  | $ | 0.80 |
Diluted | $ | 0.71 |  |  | $ | (0.66) |  |  | $ | 2.09 |  |  | $ | 0.74 |
Loss per share from discontinued operations: |  |  |  |  |  |  |
Basic | $ | (0.24) |  |  | $ | (1.63) |  |  | $ | (0.26) |  |  | $ | (1.98) |
Diluted | $ | (0.23) |  |  | $ | (1.63) |  |  | $ | (0.25) |  |  | $ | (1.84) |
Net income (loss) per share: |  |  |  |  |  |  |
Basic | $ | 0.50 |  |  | $ | (2.29) |  |  | $ | 1.95 |  |  | $ | (1.18) |
Diluted | $ | 0.48 |  |  | $ | (2.29) |  |  | $ | 1.84 |  |  | $ | (1.10) |

The accompanying notes to consolidated financial statements are an integral part of these statements.
3

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LENDINGTREE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

| June 30, 2021 |  | December 31, 2020
| (in thousands, except par value and share amounts)
ASSETS: |  |  |
Cash and cash equivalents | $ | 203,164 |  |  | $ | 169,932 |
Restricted cash and cash equivalents | 83 |  |  | 117 |
Accounts receivable (net of allowance of $1,473 and $1,402, respectively) | 124,076 |  |  | 89,841 |
Prepaid and other current assets | 18,211 |  |  | 27,949 |
Current assets of discontinued operations | — |  |  | 8,570 |
Total current assets | 345,534 |  |  | 296,409 |
Property and equipment (net of accumulated depreciation of $23,696 and $20,238, respectively) | 74,701 |  |  | 62,381 |
Operating lease right-of-use assets | 79,967 |  |  | 84,109 |
Goodwill | 420,139 |  |  | 420,139 |
Intangible assets, net | 105,880 |  |  | 128,502 |
Deferred income tax assets | 96,679 |  |  | 96,224 |
Equity investment | 121,253 |  |  | 80,000 |
Other non-current assets | 5,440 |  |  | 5,334 |
Non-current assets of discontinued operations | 17,044 |  |  | 15,892 |
Total assets | $ | 1,266,637 |  |  | $ | 1,188,990 |
LIABILITIES: |  |  |
Current portion of long-term debt | $ | 161,723 |  |  | $ | — |
Accounts payable, trade | 6,623 |  |  | 10,111 |
Accrued expenses and other current liabilities | 106,376 |  |  | 101,196 |
Current contingent consideration | 196 |  |  | — |
Current liabilities of discontinued operations | 4,933 |  |  | 536 |
Total current liabilities | 279,851 |  |  | 111,843 |
Long-term debt | 465,876 |  |  | 611,412 |
Operating lease liabilities | 100,153 |  |  | 92,363 |
Non-current contingent consideration | — |  |  | 8,249 |
Other non-current liabilities | 389 |  |  | 362 |
Total liabilities | 846,269 |  |  | 824,229 |
Commitments and contingencies (Note 14) |  |  |
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; 15,955,742 and 15,766,193 shares issued, respectively, and 13,314,424 and 13,124,875 shares outstanding, respectively | 160 |  |  | 158 |
Additional paid-in capital | 1,218,628 |  |  | 1,188,673 |
Accumulated deficit | (615,259) |  |  | (640,909) |
Treasury stock; 2,641,318 shares | (183,161) |  |  | (183,161) |
Total shareholders' equity | 420,368 |  |  | 364,761 |
Total liabilities and shareholders' equity | $ | 1,266,637 |  |  | $ | 1,188,990 |

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, 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) |

|  |  | 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, 2019 | $ | 402,326 |  |  | 15,677 |  |  | $ | 157 |  |  | $ | 1,177,984 |  |  | $ | (592,654) |  |  | 2,641 |  |  | $ | (183,161) |
Net income and comprehensive income | 14,401 |  |  | — |  |  | — |  |  | — |  |  | 14,401 |  |  | — |  |  | — |
Non-cash compensation | 11,917 |  |  | — |  |  | — |  |  | 11,917 |  |  | — |  |  | — |  |  | — |
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes | (5,087) |  |  | 27 |  |  | — |  |  | (5,087) |  |  | — |  |  | — |  |  | — |
Other | — |  |  | — |  |  | — |  |  | (1) |  |  | 1 |  |  | — |  |  | — |
Balance as of March 31, 2020 | $ | 423,557 |  |  | 15,704 |  | $ | 157 |  |  | $ | 1,184,813 |  |  | $ | (578,252) |  |  | 2,641 |  | $ | (183,161) |
Net loss and comprehensive loss | (29,757) |  |  | — |  |  | — |  |  | — |  |  | (29,757) |  |  | — |  |  | — |
Non-cash compensation | 13,158 |  |  | — |  |  | — |  |  | 13,158 |  |  | — |  |  | — |  |  | — |
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes | (981) |  |  | 27 |  |  | — |  |  | (981) |  |  | — |  |  | — |  |  | — |
Balance as of June 30, 2020 | $ | 405,977 |  |  | 15,731 |  |  | $ | 157 |  |  | $ | 1,196,990 |  |  | $ | (608,009) |  |  | 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,
| 2021 |  | 2020
| (in thousands)
Cash flows from operating activities attributable to continuing operations: |  |  |
Net income (loss) and comprehensive income (loss) | $ | 25,650 |  |  | $ | (15,356) |
Less: Loss from discontinued operations, net of tax | 3,462 |  |  | 25,716 |
Income from continuing operations | 29,112 |  |  | 10,360 |
Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable to continuing operations: |  |  |
Loss on impairments and disposal of assets | 1,400 |  |  | 552 |
Amortization of intangibles | 22,622 |  |  | 27,513 |
Depreciation | 8,161 |  |  | 6,928 |
Non-cash compensation expense | 34,730 |  |  | 25,075 |
Deferred income taxes | (455) |  |  | (7,000) |
Change in fair value of contingent consideration | (8,053) |  |  | 1,053 |
Unrealized gain on investments | (40,072) |  |  | — |
Bad debt expense | 1,145 |  |  | 949 |
Amortization of debt issuance costs | 2,547 |  |  | 1,158 |
Amortization of convertible debt discount | 14,670 |  |  | 6,250 |
Reduction in carrying amount of ROU asset, offset by change in operating lease liabilities | 11,079 |  |  | 1,956 |
Changes in current assets and liabilities: |  |  |
Accounts receivable | (35,381) |  |  | 35,501 |
Prepaid and other current assets | (680) |  |  | 1,369 |
Accounts payable, accrued expenses and other current liabilities | 3,845 |  |  | (19,134) |
Current contingent consideration | — |  |  | (2,670) |
Income taxes receivable | 10,322 |  |  | 63 |
Other, net | (412) |  |  | (2,007) |
Net cash provided by operating activities attributable to continuing operations | 54,580 |  |  | 87,916 |
Cash flows from investing activities attributable to continuing operations: |  |  |
Capital expenditures | (23,585) |  |  | (9,108) |
Equity investment | (1,180) |  |  | (80,000) |
Net cash used in investing activities attributable to continuing operations | (24,765) |  |  | (89,108) |
Cash flows from financing activities attributable to continuing operations: |  |  |
Payments related to net-share settlement of stock-based compensation, net of proceeds from exercise of stock options | (4,771) |  |  | (6,068) |
Net proceeds from revolving credit facility | — |  |  | 55,000 |
Payment of debt issuance costs | (168) |  |  | (306) |
Contingent consideration payments | — |  |  | (3,330) |
Other financing activities | (31) |  |  | (14) |
Net cash (used in) provided by financing activities attributable to continuing operations | (4,970) |  |  | 45,282 |
Total cash provided by continuing operations | 24,845 |  |  | 44,090 |
Discontinued operations: |  |  |
Net cash provided by (used in) operating activities attributable to discontinued operations | 8,353 |  |  | (2,571) |
Total cash provided by (used in) discontinued operations | 8,353 |  |  | (2,571) |
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents | 33,198 |  |  | 41,519 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 170,049 |  |  | 60,339 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 203,247 |  |  | $ | 101,858 |

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 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. The HLC Bankruptcy case was closed on July 14, 2021. See Note 17—Discontinued Operations for additional information. Intercompany transactions and accounts have been eliminated.
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 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 17—Discontinued Operations for additional information.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020, 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, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021, or any other period. The accompanying consolidated balance sheet as of December 31, 2020 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2020 (the "2020 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 2020 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; HLC ownership related claims; 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, 2021, 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 May 2021, the FASB issued ASU 2021-04 to clarify and reduce diversity in accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The amendments clarify that a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange should be accounted for as an exchange of the original instrument for a new instrument. This ASU is effective for annual and interim reporting periods beginning after December 15, 2021. Early adoption is permitted, including adoption in interim periods. An entity should adopt the guidance as of the beginning of its annual fiscal year. The amendments should be applied prospectively to modifications or exchanges occurring on or after the date of adoption. The Company adopted ASU 2021-04 in the second quarter of 2021.
In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes, and clarifies certain aspects of the current guidance to improve consistency among reporting entities. This ASU is effective for annual and interim reporting periods beginning after December 15, 2020. Early adoption was permitted, including adoption in interim periods. Entities electing early adoption were required to adopt all amendments in the same period. Most amendments require prospective application while others are to be applied on a retrospective basis for all
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LENDINGTREE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company adopted ASU 2019-12 in the first quarter of 2021. The amendments applicable to the Company required prospective application, and do not have material impacts to its consolidated financial statements.
Recently Issued 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. This ASU is effective for annual and interim reporting periods beginning after December 15, 2021. Early adoption is permitted for fiscal years beginning after December 15, 2020, including adoption in interim periods. An entity should adopt the guidance as of the beginning of its annual fiscal year. An entity may adopt the amendments through either a modified retrospective method of transition or a fully retrospective method of transition. The Company expects the amendments to impact its convertible senior notes and warrants issued and is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.
NOTE 3—REVENUE
Revenue is as follows (in thousands):

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Home | $ | 104,861 |  |  | $ | 74,123 |  |  | $ | 232,986 |  |  | $ | 153,297 |
Credit cards | 22,424 |  |  | 7,194 |  |  | 40,061 |  |  | 58,780 |
Personal loans | 25,208 |  |  | 8,827 |  |  | 40,076 |  |  | 40,336 |
Other Consumer | 28,044 |  |  | 21,097 |  |  | 53,446 |  |  | 57,926 |
Total Consumer | 75,676 |  |  | 37,118 |  |  | 133,583 |  |  | 157,042 |
Insurance | 89,263 |  |  | 72,919 |  |  | 175,877 |  |  | 155,656 |
Other | 214 |  |  | 166 |  |  | 318 |  |  | 1,415 |
Total revenue | $ | 270,014 |  |  | $ | 184,326 |  |  | $ | 542,764 |  |  | $ | 467,410 |

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 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
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LENDINGTREE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 in the Company's Consumer business was $7.3 million and $6.4 million at June 30, 2021 and December 31, 2020, respectively.
The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers in the Company's Consumer business was $1.1 million and $0.7 million at June 30, 2021 and December 31, 2020, respectively. 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. During the second quarter and first six months of 2020, the Company recognized revenue of $0.1 million and $0.6 million, respectively, that was included in the contract liability balance at December 31, 2019.
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 of $0.1 million and $0.3 million in the second quarters of 2021 and 2020, respectively.
NOTE 4—CASH AND RESTRICTED CASH
Total cash, cash equivalents, restricted cash and restricted cash equivalents consist of the following (in thousands):

| June 30, 2021 |  | December 31, 2020
Cash and cash equivalents | $ | 203,164 |  |  | $ | 169,932 |
Restricted cash and cash equivalents | 83 |  |  | 117 |
Total cash, cash equivalents, restricted cash and restricted cash equivalents | $ | 203,247 |  |  | $ | 170,049 |

NOTE 5—ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts.
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.
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LENDINGTREE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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,
| 2021 |  | 2020 |  | 2021 |  | 2020
Balance, beginning of the period | $ | 1,429 |  |  | $ | 2,021 |  |  | $ | 1,402 |  |  | $ | 1,466 |
Charges to earnings | 629 |  |  | 69 |  |  | 1,145 |  |  | 949 |
Write-off of uncollectible accounts receivable | (585) |  |  | (337) |  |  | (1,079) |  |  | (669) |
Recoveries collected | — |  |  | 3 |  |  | 5 |  |  | 10 |
Balance, end of the period | $ | 1,473 |  |  | $ | 1,756 |  |  | $ | 1,473 |  |  | $ | 1,756 |

NOTE 6—GOODWILL AND INTANGIBLE ASSETS
The balance of goodwill, net and intangible assets, net is as follows (in thousands):

| June 30, 2021 |  | December 31, 2020
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 | 95,738 |  |  | 118,360 |
Total intangible assets, net | $ | 105,880 |  |  | $ | 128,502 |

Goodwill and Indefinite-Lived Intangible Assets
The Company's goodwill at each of June 30, 2021 and December 31, 2020 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.
Intangible assets with indefinite lives relate to the Company's trademarks.
Intangible Assets with Definite Lives
Intangible assets with definite lives relate to the following (in thousands):

| Cost |  | Accumulated Amortization |  | Net
Technology | $ | 87,700 |  |  | $ | (58,768) |  |  | $ | 28,932 |
Customer lists | 77,300 |  |  | (21,614) |  |  | 55,686 |
Trademarks and tradenames | 17,000 |  |  | (11,513) |  |  | 5,487 |
Website content | 43,200 |  |  | (37,567) |  |  | 5,633 |
Balance at June 30, 2021 | $ | 225,200 |  |  | $ | (129,462) |  |  | $ | 95,738 |

| Cost |  | Accumulated Amortization |  | Net
Technology | $ | 87,700 |  |  | $ | (48,166) |  |  | $ | 39,534 |
Customer lists | 77,300 |  |  | (18,560) |  |  | 58,740 |
Trademarks and tradenames | 17,200 |  |  | (9,947) |  |  | 7,253 |
Website content | 43,200 |  |  | (30,367) |  |  | 12,833 |
Balance at December 31, 2020 | $ | 225,400 |  |  | $ | (107,040) |  |  | $ | 118,360 |

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LENDINGTREE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of June 30, 2021, future amortization is estimated to be as follows (in thousands):

| Amortization Expense
Remainder of current year | $ | 20,116 |
Year ending December 31, 2022 | 25,256 |
Year ending December 31, 2023 | 8,602 |
Year ending December 31, 2024 | 6,747 |
Year ending December 31, 2025 | 6,259 |
Thereafter | 28,758 |
Total intangible assets with definite lives, net | $ | 95,738 |

NOTE 7—EQUITY INVESTMENT
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. 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 Stash equity securities do not have a readily determinable fair value and, upon acquisition, the Company elected the measurement alternative to value its securities. The Stash equity securities will be carried at cost and subsequently marked to market upon observable market events with any gains or losses recorded to the consolidated statement of operations and comprehensive income. During the first six months of 2021, the Company recorded a gain on the investment in Stash of $40.1 million as a result of an adjustment to the fair value of the Stash equity securities based on observable market events, which is included within other income on the consolidated statement of operations and comprehensive income. As of June 30, 2021, there have been no impairments to the acquisition cost of the Stash equity securities.
NOTE 8—BUSINESS ACQUISITIONS
Changes in Contingent Consideration
In 2018, the Company acquired all of the outstanding equity interests of QuoteWizard.com, LLC (“QuoteWizard”) and Ovation Credit Services, Inc. (“Ovation”). During 2020, the Company made the final earnout payment related to the achievement of certain defined operating metrics for Ovation.
In 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”). During 2020, the Company made the final earnout payments related to the achievement of certain defined earnings targets for SnapCap.
The Company will make an earnout payment ranging from zero to $23.4 million based on the achievement of certain defined performance targets for QuoteWizard.
Changes in the fair value of contingent consideration is summarized as follows (in thousands):

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
QuoteWizard | $ | (8,850) |  |  | $ | 8,058 |  |  | $ | (8,053) |  |  | $ | (204) |
Ovation | — |  |  | 1,039 |  |  | — |  |  | 1,180 |
SnapCap | — |  |  | 78 |  |  | — |  |  | 77 |
Total changes in fair value of contingent consideration | $ | (8,850) |  |  | $ | 9,175 |  |  | $ | (8,053) |  |  | $ | 1,053 |

As of June 30, 2021, the estimated fair value of the contingent consideration for the QuoteWizard acquisition totaled $0.2 million, which is included in current contingent consideration in the accompanying consolidated balance sheet. The
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estimated fair value of the contingent consideration payments is determined using an option pricing model. The estimated value of the contingent consideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable.
Any differences in the actual contingent consideration payments will be recorded in operating income in the consolidated statements of operations and comprehensive income.
NOTE 9—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following (in thousands):

| June 30, 2021 |  | December 31, 2020
Accrued advertising expense | $ | 62,840 |  |  | $ | 54,045 |
Accrued compensation and benefits | 10,632 |  |  | 14,081 |
Accrued professional fees | 3,278 |  |  | 1,869 |
Customer deposits and escrows | 7,467 |  |  | 8,153 |
Contribution to LendingTree Foundation | 3,333 |  |  | 3,333 |
Current lease liabilities | 5,286 |  |  | 5,375 |
Other | 13,540 |  |  | 14,340 |
Total accrued expenses and other current liabilities | $ | 106,376 |  |  | $ | 101,196 |

NOTE 10—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,
| 2021 |  | 2020 |  | 2021 |  | 2020
Weighted average basic common shares | 13,243 |  |  | 12,984 |  |  | 13,157 |  |  | 12,971 |
Effect of stock options | 394 |  |  | — |  |  | 523 |  |  | 592 |
Effect of dilutive share awards | 72 |  |  | — |  |  | 103 |  |  | 91 |
Effect of Convertible Senior Notes and warrants | 10 |  |  | — |  |  | 130 |  |  | 300 |
Weighted average diluted common shares | 13,719 |  |  | 12,984 |  |  | 13,913 |  |  | 13,954 |

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.
For the second quarter of 2020, the Company had a loss 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 0.8 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the second quarter of 2020, because their inclusion would have been anti-dilutive. For the second quarter of 2020, the weighted average shares that were anti-dilutive included options to purchase 0.7 million shares of common stock and 0.1 million restricted stock units. For the first six months of 2020, the weighted average shares that were anti-dilutive included options to purchase 0.2 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 13—Debt for additional information. 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. Shares of the Company's common stock associated with the warrants were excluded from the calculation of diluted income per share for the
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second quarter and first six months of 2021 and the first six months of 2020 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.
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. There were no repurchases of the Company's common stock during the first six months of 2021 and 2020. At June 30, 2021, approximately $179.7 million of the previous authorizations to repurchase common stock remain available.
NOTE 11—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,
| 2021 |  | 2020 |  | 2021 |  | 2020
Cost of revenue | $ | 463 |  |  | $ | 333 |  |  | $ | 860 |  |  | $ | 575 |
Selling and marketing expense | 1,976 |  |  | 1,597 |  |  | 3,778 |  |  | 2,753 |
General and administrative expense | 13,254 |  |  | 9,729 |  |  | 25,425 |  |  | 18,852 |
Product development | 2,601 |  |  | 1,499 |  |  | 4,667 |  |  | 2,895 |
Total non-cash compensation | $ | 18,294 |  |  | $ | 13,158 |  |  | $ | 34,730 |  |  | $ | 25,075 |

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, 2021 | 924,710 |  |  | $ | 111.82 |  |  |  |  |
Granted (b) | 69,258 |  |  | 243.71 |  |  |  |  |
Exercised | (156,113) |  |  | 7.17 |  |  |  |  |
Forfeited | (4,727) |  |  | 263.72 |  |  |  |  |
Expired | (35) |  |  | 371.25 |  |  |  |  |
Options outstanding at June 30, 2021 | 833,093 |  |  | 141.52 |  |  | 5.20 |  | $ | 82,110 |
Options exercisable at June 30, 2021 | 543,666 |  |  | $ | 71.06 |  |  | 3.20 |  | $ | 82,039 |

(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $211.88 on the last trading day of the quarter ended June 30, 2021 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 option holder exercised these options on June 30, 2021. The intrinsic value changes based on the market value of the Company's common stock.
(b)During the six months ended June 30, 2021, the Company granted stock options to certain employees and members of the board of directors with a weighted average grant date fair value per share of $130.25, calculated using the Black-Scholes option pricing model, which vesting periods include (a) immediate vesting on grant date (b) earlier of one year from grant date and the Company's annual meeting of stockholders for 2022 and (c) three years from grant date.
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For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions. The weighted average assumptions used are as follows:

Expected term (1) | 5.00 - 6.00 years
Expected dividend (2) | — |
Expected volatility (3) | 53 - 59%
Risk-free interest rate (4) | 0.59 - 1.07%

(1)The expected term of stock options granted was calculated using the "Simplified Method," which utilizes the midpoint between the weighted average time of vesting and the end of the contractual term. This method was utilized for the stock options due to a lack of historical exercise behavior by the Company's employees.
(2)For all stock options granted in 2021, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.
(3)The expected volatility rate is based on the historical volatility of the Company's common stock.
(4)The risk-free interest rate is specific to the date of grant. The risk-free interest rate is based on U.S. Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date.
Stock Options with Market Conditions
A summary of changes in outstanding stock options with market conditions at target is as follows:

| Number of Options with Market Conditions |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value(a)
|  |  | (per option) |  | (in years) |  | (in thousands)
Options outstanding at January 1, 2021 | 700,209 |  |  | $ | 236.01 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | — |  |  | — |  |  |  |  |
Forfeited | — |  |  | — |  |  |  |  |
Expired | — |  |  | — |  |  |  |  |
Options outstanding at June 30, 2021 | 700,209 |  |  | 236.01 |  |  | 7.25 |  | $ | 11,308 |
Options exercisable at June 30, 2021 | — |  |  | $ | — |  |  | 0.00 |  | $ | — |

(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $211.88 on the last trading day of the quarter ended June 30, 2021 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 option holder exercised these options on June 30, 2021. The intrinsic value changes based on the market value of the Company's common stock.
A maximum of 1,169,349 shares may be earned for achieving superior performance up to 167% of the target number of shares. As of June 30, 2021, performance-based nonqualified stock options with a market condition of 481,669 had been earned, which have a vest date of September 30, 2022.
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Restricted Stock Units
A summary of changes in outstanding nonvested restricted stock units ("RSUs") is as follows:

| RSUs
| Number of Units |  | Weighted Average Grant Date Fair Value
|  |  | (per unit)
Nonvested at January 1, 2021 | 194,686 |  |  | $ | 289.82 |
Granted | 149,259 |  |  | 245.00 |
Vested | (54,644) |  |  | 290.38 |
Forfeited | (20,735) |  |  | 269.88 |
Nonvested at June 30, 2021 | 268,566 |  |  | $ | 266.34 |

Restricted Stock Units with Performance Conditions
A summary of changes in outstanding nonvested RSUs with performance conditions is as follows:

| RSUs with Performance Conditions
| Number of Units |  | Weighted Average Grant Date Fair Value
|  |  | (per unit)
Nonvested at January 1, 2021 | 6,328 |  |  | $ | 223.90 |
Granted | — |  |  | — |
Vested | — |  |  | — |
Forfeited | — |  |  | — |
Nonvested at June 30, 2021 | 6,328 |  |  | $ | 223.90 |

Restricted Stock Awards with Performance Conditions
A summary of changes in outstanding nonvested restricted stock awards ("RSAs") with performance conditions is as follows:

| RSAs with Performance Conditions
| Number of Awards |  | Weighted Average Grant Date Fair Value
|  |  | (per unit)
Nonvested at January 1, 2021 | 23,804 |  |  | $ | 340.25 |
Granted | — |  |  | — |
Vested | (11,902) |  |  | 340.25 |
Forfeited | — |  |  | — |
Nonvested at June 30, 2021 | 11,902 |  |  | $ | 340.25 |

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Restricted Stock Awards with Market Conditions
A summary of changes in outstanding nonvested RSAs with market conditions at target is as follows:

| RSAs with Market Conditions
| Number of Awards |  | Weighted Average Grant Date Fair Value
|  |  | (per unit)
Nonvested at January 1, 2021 | 26,674 |  |  | $ | 340.25 |
Granted | — |  |  | — |
Vested | — |  |  | — |
Forfeited | — |  |  | — |
Nonvested at June 30, 2021 | 26,674 |  |  | $ | 340.25 |

A maximum of 44,545 shares may be earned for achieving superior performance up to 167% of the target number of shares. As of June 30, 2021, performance-based restricted stock awards with a market condition of 29,601 had been earned, which have a vest date of September 30, 2022.
NOTE 12—INCOME TAXES

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (in thousands, except percentages)
Income tax benefit | $ | 9,092 |  |  | $ | 3,880 |  |  | $ | 454 |  |  | $ | 6,941 |
Effective tax rate | (1,284.2) | % |  | 31.0 | % |  | (1.6) | % |  | (203.0) | %

For the second quarter and first six months of 2021, the effective tax rate varied from the federal statutory rate of 21% in part due to a tax benefit of $8.3 million recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.
For the second quarter and first six months of 2020, the effective tax rate varied from the federal statutory rate of 21% in part due to a tax benefit of $0.8 million and $1.8 million, respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes. The effective tax rate for the first six months of 2020 was also impacted by a tax benefit of $6.1 million for the impact of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, as described below.
On March 27, 2020, President Trump signed into law the CARES Act. This legislation is an economic relief package in response to the public health and economic impacts of COVID-19 and includes various provisions that impact the Company, including, but not limited to, modifications for net operating losses, accelerated timeframe for refunds associated with prior minimum taxes and modifications of the limitation on business interest.
The Company revalued deferred tax assets related to net operating losses in light of the changes in the CARES Act and recorded a net tax benefit of $6.1 million during the first six months of 2020. These deferred tax assets are being revalued, as they have been carried back to 2016 and 2017, which are tax periods prior to the Tax Cuts and Jobs Act ("TCJA") when the federal statutory tax rate was 35% versus the 21% federal statutory tax rate in effect after the enactment of the TCJA.
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| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
| (in thousands)
Income tax benefit (expense) - excluding excess tax benefit on stock compensation and CARES Act | $ | 831 |  |  | $ | 3,127 |  |  | $ | (7,839) |  |  | $ | (970) |
Excess tax benefit on stock compensation | 8,261 |  |  | 753 |  |  | 8,293 |  |  | 1,807 |
Income tax benefit from CARES Act | — |  |  | — |  |  | — |  |  | 6,104 |
Income tax benefit | $ | 9,092 |  |  | $ | 3,880 |  |  | $ | 454 |  |  | $ | 6,941 |

NOTE 13—DEBT
Convertible Senior Notes
2025 Notes
On July 24, 2020, the Company issued $575.0 million aggregate principal amount of its 0.50% Convertible Senior Notes due July 15, 2025 (the “2025 Notes”) in a private placement. The issuance included $75.0 million aggregate principal amount of 2025 Notes under a 13-day purchase option which was exercised in full. The 2025 Notes bear interest at a rate of 0.50% per year, payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2021. The 2025 Notes will mature on July 15, 2025, unless earlier repurchased, redeemed or converted.
The initial conversion rate of the 2025 Notes is 2.1683 shares of the Company's common stock per $1,000 principal amount of 2025 Notes (which is equivalent to an initial conversion price of approximately $461.19 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change prior to the maturity of the 2025 Notes or if the Company issues a notice of redemption for the 2025 Notes, the Company will, in certain circumstances, increase the conversion rate by a specified number of additional shares for a holder that elects to convert the 2025 Notes in connection with such make-whole fundamental change or to convert its 2025 Notes called for redemption, as the case may be. Upon conversion, the 2025 Notes will settle for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option. It is the intent of the Company to settle the principal amount of the 2025 Notes in cash and any conversion premium in shares of its common stock.
The 2025 Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the senior secured revolving credit facility, described below, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
Prior to the close of business on the business day immediately preceding March 13, 2025, the 2025 Notes will be convertible at the option of the holders thereof only under the following circumstances:
•during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•during the five business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price (as defined in the 2025 Notes) per $1,000 principal amount of 2025 Notes for such trading day was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;
•if the Company calls such 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called for redemption; or
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•upon the occurrence of specified corporate events including but not limited to a fundamental change.
Holders of the 2025 Notes were not entitled to convert the 2025 Notes during the calendar quarter ended June 30, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on March 31, 2021, was not greater than or equal to 130% of the conversion price of the 2025 Notes on each applicable trading day. Holders of the 2025 Notes are not entitled to convert the 2025 Notes during the calendar quarter ended September 30, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on June 30, 2021, was not greater than or equal to 130% of the conversion price of the 2025 Notes on each applicable trading day.
On or after March 13, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2025 Notes, holders of the 2025 Notes may convert all or a portion of their 2025 Notes regardless of the foregoing conditions.
The Company may not redeem the 2025 Notes prior to July 20, 2023. On or after July 20, 2023 and before the 41 st scheduled trading day immediately before the maturity date, the Company may redeem for cash all or a portion of the 2025 Notes, at its option, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period (and including the last trading day of such period) ending on, and including the last trading day immediately preceding the date of notice of redemption is greater than or equal to 130% of the conversion price on each applicable trading day. The redemption price will be equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes.
Upon the occurrence of a fundamental change prior to the maturity date of the 2025 Notes, holders of the 2025 Notes may require the Company to repurchase all or a portion of the 2025 Notes for cash at a price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
If the market price per share of the common stock, as measured under the terms of the 2025 Notes, exceeds the conversion price of the 2025 Notes, the 2025 Notes could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the principal amount of the 2025 Notes and any conversion premium in cash.
The initial measurement of convertible debt instruments that may be settled in cash is separated into a debt and an equity component whereby the debt component is based on the fair value of a similar instrument that does not contain an equity conversion option. The separate components of debt and equity of the Company’s 2025 Notes were determined using an interest rate of 5.30%, which reflects the nonconvertible debt borrowing rate of the Company at the date of issuance. As a result, the initial components of debt and equity were $455.6 million and $119.4 million, respectively. Financing costs related to the issuance of the 2025 Notes were approximately $15.1 million, of which $12.0 million were allocated to the liability component and are being amortized to interest expense over the term of the debt and $3.1 million were allocated to the equity component.
In the first six months of 2021, the Company recorded interest expense on the 2025 Notes of $13.5 million which consisted of $1.4 million associated with the 0.50% coupon rate, $11.0 million associated with the accretion of the debt discount, and $1.1 million associated with the amortization of the debt issuance costs. The debt discount is being amortized over the term of the debt.
As of June 30, 2021, the fair value of the 2025 Notes is estimated to be approximately $520.4 million using the Level 1 observable input of the last quoted market price on June 30, 2021.
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A summary of the gross carrying amount, unamortized debt cost, debt issuance costs and net carrying value of the liability component of the 2025 Notes, all of which is recorded as a non-current liability in the June 30, 2021 consolidated balance sheet, are as follows (in thousands):

| June 30, 2021 |  | December 31, 2020
Gross carrying amount | $ | 575,000 |  |  | $ | 575,000 |
Unamortized debt discount | 99,166 |  |  | 110,110 |
Debt issuance costs | 9,958 |  |  | 11,056 |
Net carrying amount | $ | 465,876 |  |  | $ | 453,834 |

2022 Notes
On May 31, 2017, the Company issued $300.0 million aggregate principal amount of its 0.625% Convertible Senior Notes due June 1, 2022 (the “2022 Notes”) in a private placement. The 2022 Notes bear interest at a rate of 0.625% per year, payable semi-annually on June 1 and December 1 of each year, beginning on December 1, 2017. The 2022 Notes will mature on June 1, 2022, unless earlier repurchased or converted.
The initial conversion rate of the 2022 Notes is 4.8163 shares of the Company's common stock per $1,000 principal amount of 2022 Notes (which is equivalent to an initial conversion price of approximately $207.63 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change prior to the maturity of the 2022 Notes, the Company will, in certain circumstances, increase the conversion rate by a specified number of additional shares for a holder that elects to convert the 2022 Notes in connection with such make-whole fundamental change. Upon conversion, the 2022 Notes will settle for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option. It is the intent of the Company to settle the principal amount of the 2022 Notes in cash and any conversion premium in shares of its common stock.
The 2022 Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2022 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the senior secured revolving credit facility, described below, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
Prior to the close of business on the business day immediately preceding February 1, 2022, the 2022 Notes will be convertible at the option of the holders thereof only under the following circumstances:
•during any calendar quarter commencing after the calendar quarter ending on September 30, 2017 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•during the five business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price (as defined in the 2022 Notes) per $1,000 principal amount of 2022 Notes for such trading day was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; or
•upon the occurrence of specified corporate events including but not limited to a fundamental change.
Holders of the 2022 Notes were not entitled to convert the 2022 Notes during the calendar quarter ended June 30, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on March 31, 2021, was not greater than or equal to 130% of the conversion price of the 2022 Notes on each applicable trading day. Holders of the 2022 Notes are not entitled to convert the 2022 Notes during the calendar quarter ended September 30, 2021 as the last reported sale price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on June 30, 2021, was not greater than or equal to 130% of the conversion price of the 2022 Notes on each applicable trading day.
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On or after February 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2022 Notes, holders of the 2022 Notes may convert all or a portion of their 2022 Notes regardless of the foregoing conditions.
The Company may not redeem the 2022 Notes prior to the maturity date and no sinking fund is provided for the 2022 Notes. Upon the occurrence of a fundamental change prior to the maturity date of the 2022 Notes, holders of the 2022 Notes may require the Company to repurchase all or a portion of the 2022 Notes for cash at a price equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
If the market price per share of the common stock, as measured under the terms of the 2022 Notes, exceeds the conversion price of the 2022 Notes, the 2022 Notes could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the principal amount of the 2022 Notes and any conversion premium in cash.
The separate components of debt and equity of the Company’s 2022 Notes were determined using an interest rate of 5.36%, which reflects the nonconvertible debt borrowing rate of the Company at the date of issuance. As a result, the initial components of debt and equity were $238.4 million and $61.6 million, respectively. Financing costs related to the issuance of the 2022 Notes were approximately $9.3 million, of which $7.4 million were allocated to the liability component and are being amortized to interest expense over the term of the debt and $1.9 million were allocated to the equity component.
On July 24, 2020, the Company used approximately $234.0 million of the net proceeds from the issuance of the 2025 Notes to repurchase approximately $130.3 million principal amount of the 2022 Notes, including the payment of accrued and unpaid interest of approximately $0.1 million, through separate transactions with certain holders of the 2022 Notes. Of the consideration paid, $126.0 million was allocated to the extinguishment of the liability component of the notes, while the remaining $107.9 million was allocated to the reacquisition of the equity component and recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity. The Company recognized a loss on debt extinguishment of $7.8 million in the third quarter of 2020.
In the first six months of 2021, the Company recorded interest expense on the 2022 Notes of $4.7 million which consisted of $0.5 million associated with the 0.625% coupon rate, $3.8 million associated with the accretion of the debt discount, and $0.4 million associated with the amortization of the debt issuance costs. In the first six months of 2020, the Company recorded interest expense on the 2022 Notes of $7.9 million which consisted of $0.9 million associated with the 0.625% coupon rate, $6.3 million associated with the accretion of the debt discount, and $0.7 million associated with the amortization of the debt issuance costs. The debt discount is being amortized over the term of the debt.
As of June 30, 2021, the fair value of the 2022 Notes is estimated to be approximately $208.7 million using the Level 1 observable input of the last quoted market price on June 30, 2021.
A summary of the gross carrying amount, unamortized debt cost, debt issuance costs and net carrying value of the liability component of the 2022 Notes, all of which is recorded as a current liability in the June 30, 2021 consolidated balance sheet, are as follows (in thousands):

| June 30, 2021 |  | December 31, 2020
Gross carrying amount | $ | 169,659 |  |  | $ | 169,690 |
Unamortized debt discount | 7,086 |  |  | 10,815 |
Debt issuance costs | 850 |  |  | 1,297 |
Net carrying amount | $ | 161,723 |  |  | $ | 157,578 |

Convertible Note Hedge and Warrant Transactions
2020 Hedge and Warrants
On July 24, 2020, in connection with the issuance of the 2025 Notes, the Company entered into Convertible Note Hedge (the “2020 Hedge”) and warrant transactions with respect to the Company’s common stock. The Company used approximately $63.0 million of the net proceeds from the 2025 Notes to pay for the cost of the 2020 Hedge, after such cost was partially offset by the proceeds from the warrant transactions.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On July 24, 2020, the Company paid $124.2 million to the counterparties for the 2020 Hedge transactions. The 2020 Hedge transactions cover 1.2 million shares of the Company’s common stock, the same number of shares initially underlying the 2025 Notes, and are exercisable upon any conversion of the 2025 Notes. The 2020 Hedge transactions are expected generally to reduce the potential dilution to the Company's common stock upon conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2025 Notes, as the case may be, in the event that the market price per share of common stock, as measured under the terms of the 2020 Hedge transactions, is greater than the strike price of the 2020 Hedge transactions, which initially corresponds to the initial conversion price of the 2025 Notes, or approximately $461.19 per share of common stock. The 2020 Hedge transactions will expire upon the maturity of the Notes.
On July 24, 2020, the Company sold to the counterparties, warrants (the “2020 Warrants”) to acquire 1.2 million shares of the Company's common stock at an initial strike price of $709.52 per share, which represents a premium of 100% over the last reported sale price of the common stock of $354.76 on July 21, 2020. On July 24, 2020, the Company received aggregate proceeds of approximately $61.2 million from the sale of the 2020 Warrants. If the market price per share of the common stock, as measured under the terms of the 2020 Warrants, exceeds the strike price of the 2020 Warrants, the 2020 Warrants could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the 2020 Warrants in cash.
The 2020 Hedge and 2020 Warrants transactions are indexed to, and potentially settled in, the Company's common stock and the net cost of $63.0 million has been recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity.
2017 Hedge and Warrants
On May 31, 2017, in connection with the issuance of the 2022 Notes, the Company entered into Convertible Note Hedge (the “2017 Hedge”) and warrant transactions with respect to the Company’s common stock. The Company used approximately $18.1 million of the net proceeds from the 2022 Notes to pay for the cost of the 2017 Hedge, after such cost was partially offset by the proceeds from the warrant transactions.
On May 31, 2017, the Company paid $61.5 million to the counterparties for the 2017 Hedge transactions. The 2017 Hedge transactions initially covered 1.4 million shares of the Company’s common stock, the same number of shares initially underlying the 2022 Notes, and are exercisable upon any conversion of the 2022 Notes. The 2017 Hedge transactions are expected generally to reduce the potential dilution to the Company's common stock upon conversion of the 2022 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2022 Notes, as the case may be, in the event that the market price per share of common stock, as measured under the terms of the 2017 Hedge transactions, is greater than the strike price of the 2017 Hedge transactions, which initially corresponds to the initial conversion price of the 2022 Notes, or approximately $207.63 per share of common stock. The 2017 Hedge transactions will expire upon the maturity of the Notes.
On May 31, 2017, the Company sold to the counterparties, warrants (the “2017 Warrants”) to acquire 1.4 million shares of the Company's common stock at an initial strike price of $266.39 per share, which represents a premium of 70% over the last reported sale price of the common stock of $156.70 on May 24, 2017. On May 31, 2017, the Company received aggregate proceeds of approximately $43.4 million from the sale of the 2017 Warrants. If the market price per share of the common stock, as measured under the terms of the 2017 Warrants, exceeds the strike price of the 2017 Warrants, the 2017 Warrants could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the 2017 Warrants in cash.
The 2017 Hedge and 2017 Warrants transactions are indexed to, and potentially settled in, the Company's common stock and the net cost of $18.1 million was recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity.
To the extent of the repurchases of the 2022 Notes noted above, the Company entered into agreements with the counterparties for the 2017 Hedge and 2017 Warrants transactions to terminate a portion of these call spread transactions effective July 24, 2020 in notional amounts corresponding to the principal amount of the 2022 Notes repurchased. Subsequent to such termination, the outstanding portion of the 2017 Hedge covers 0.8 million shares of the Company's common stock and 2017 Warrants to acquire 0.8 million shares of the Company's common stock remain outstanding. The Company received $109.9 million and paid $94.3 million as a result of terminating such portions of the 2017 Hedge and 2017 Warrants, respectively. The net $15.6 million has been recorded as an increase to additional paid-in capital in the consolidated statement of shareholders’ equity.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Senior Secured Revolving Credit Facility
On December 10, 2019, the Company's wholly-owned subsidiary, LendingTree, LLC, entered into an amended and restated $500.0 million five-year senior secured revolving credit facility (the "Amended Revolving Credit Facility") which amended and restated the Company's previous $350.0 million five-year senior secured revolving credit facility (the “2017 Revolving Credit Facility”). The Amended Revolving Credit Facility matures on December 10, 2024. Borrowings under the Amended Revolving Credit Facility can be used to finance working capital needs, capital expenditures and general corporate purposes, including to finance permitted acquisitions. As of June 30, 2021 and December 31, 2020, the Company had no borrowings outstanding under the Amended Revolving Credit Facility.
Up to $10.0 million of the Amended Revolving Credit Facility will be available for short-term loans, referred to as swingline loans. Under certain conditions, the Company will be permitted to add one or more term loans and/or increase revolving commitments under the Amended Revolving Credit Facility by an additional amount equal to the greater of $185.0 million or 100% of Consolidated EBITDA as defined, or a greater amount provided that a total consolidated senior secured debt to EBITDA ratio does not exceed 2.50 to 1.00. Additionally, up to $10.0 million of the Amended Revolving Credit Facility will be available for the issuance of letters of credit. At each of June 30, 2021 and December 31, 2020, the Company had outstanding one letter of credit issued in the amount of $0.2 million.
The Company’s borrowings under the Amended Revolving Credit Facility bear interest at annual rates that, at the Company’s option, will be either:
•a base rate generally defined as the sum of (i) the greater of (a) the prime rate of Truist Bank, (b) the federal funds effective rate plus 0.5% and (c) the LIBO rate (defined below) on a daily basis applicable for an interest period of one month plus 1.0% and (ii) an applicable percentage of 0.25% to 1.0% based on a total consolidated debt to EBITDA ratio; or
•a LIBO rate generally defined as the sum of (i) the rate for Eurodollar deposits in the applicable currency and (ii) an applicable percentage of 1.25% to 2.0% based on a total consolidated debt to EBITDA ratio.
All swingline loans bear interest at the base rate defined above. Interest on the Company’s borrowings are payable quarterly in arrears for base rate loans and on the last day of each interest rate period (but not less often than three months) for LIBO rate loans.
The Amended Revolving Credit Facility contains a restrictive financial covenant, which initially limits the total consolidated debt to EBITDA ratio to 4.5, with step downs to 4.0 over time, except that this may increase by 0.5 for the four fiscal quarters following a material acquisition. In addition, the Amended Revolving Credit Facility contains customary affirmative and negative covenants in addition to events of default for a transaction of this type that, among other things, restrict additional indebtedness, liens, mergers or certain fundamental changes, asset dispositions, dividends, stock repurchases and other restricted payments, transactions with affiliates, sale-leaseback transactions, hedging transactions, loans and investments and other matters customarily restricted in such agreements.
On July 21, 2020, the Company executed a temporary amendment to its Amended Revolving Credit Facility to provide for certain covenant relief, primarily to facilitate the issuance of the 2025 Notes, the repurchase of a portion of the 2022 Notes, and to pay down existing borrowings under the credit facility.
The amendment amends the existing credit agreement to, among other things: (i) temporarily replace the total consolidated debt to EBITDA ratio covenant with a consolidated liquidity covenant requiring the Company to maintain unrestricted cash and cash equivalents in the United States plus amounts available and permitted to be drawn under the Amended Revolving Credit Facility to be no less than $200.0 million; (ii) impose additional limitations on certain restricted payments during such temporary period; and (iii) increase the applicable margins to (x) 2.25% for loans based on the LIBO rate and (y) 1.25% for loans based on the base rate, subject to a 0.75% floor, and unused commitment fees to 0.50% under the Amended Revolving Credit Facility during the temporary period. These amendments were applicable from the effective date through the fiscal quarter ending June 30, 2021.
The Company was in compliance with all covenants at June 30, 2021.
The Amended Revolving Credit Facility requires LendingTree, LLC to pledge as collateral, subject to certain customary exclusions, substantially all of its assets, including 100% of its equity in all of its domestic subsidiaries and 66% of the voting
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
equity, and 100% of the non-voting equity, in all of its material foreign subsidiaries (of which there are currently none). The obligations under this facility are unconditionally guaranteed on a senior basis by LendingTree, Inc. and material domestic subsidiaries of LendingTree, LLC, which guaranties are secured by a pledge as collateral, subject to certain customary exclusions, of 100% of each such guarantor's assets, including 100% of each such guarantor’s equity in all of its domestic subsidiaries and 66% of the voting equity, and 100% of the non-voting equity, in all of its material foreign subsidiaries (of which there are currently none).
Except as noted in the covenant relief discussion above, the Company is required to pay an unused commitment fee quarterly in arrears on the difference between committed amounts and amounts actually borrowed under the Amended Revolving Credit Facility equal to an applicable percentage of 0.25% to 0.45% per annum based on a total consolidated debt to EBITDA ratio. The Company is required to pay a letter of credit participation fee and a letter of credit fronting fee quarterly in arrears. The letter of credit participation fee is based upon the aggregate face amount of outstanding letters of credit at an applicable percentage of 1.25% to 2.0% based on a total consolidated debt to EBITDA ratio. The letter of credit fronting fee is 0.125% per annum on the face amount of each letter of credit.
In addition to the remaining unamortized debt issuance costs associated with the original revolving credit facility and the Revolving Credit Facility, debt issuance costs of $2.8 million related to the Amended Revolving Credit Facility entered into on December 10, 2019 are being amortized to interest expense over the life of the Amended Revolving Credit Facility. Debt issuance costs of $1.1 million related to the July 21, 2020 temporary amendment were amortized to interest expense through June 30, 2021. Unamortized debt issuance costs are included in prepaid and other current assets and other non-current assets in the Company's consolidated balance sheet.
In the first six months of 2021, the Company recorded interest expense related to the Amended Revolving Credit Facility of $2.3 million which consisted of $1.3 million in unused commitment fees and $1.0 million associated with the amortization of the debt issuance costs. In the first six months of 2020, the Company recorded interest expense related to the Amended Revolving Credit Facility of $2.1 million which consisted of $1.1 million associated with borrowings bearing interest at the LIBO rate, $0.5 million in unused commitment fees, and $0.5 million associated with the amortization of the debt issuance costs.
NOTE 14—CONTINGENCIES
Overview
LendingTree is involved in legal proceedings on an ongoing basis. In assessing the materiality of a legal proceeding, the Company evaluates, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require it to change its business practices in a manner that could have a material and adverse impact on the Company's business. With respect to the matters disclosed in this Note 14, unless otherwise indicated, the Company is unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies.
As of June 30, 2021, the Company had litigation settlement accruals of $1.0 million and $4.9 million in continuing operations and discontinued operations, respectively. As of December 31, 2020, the Company had litigation settlement accruals of $0.1 million and $0.5 million in continuing operations and discontinued operations, respectively. The litigation settlement accruals relate to litigation matters that were either settled or a firm offer for settlement was extended, thereby establishing an accrual amount that is both probable and reasonably estimable. See Note 17—Discontinued Operations for additional information.
NOTE 15—FAIR VALUE MEASUREMENTS
Other than the convertible notes and warrants, as well as the equity interest in Stash, the carrying amounts of the Company's financial instruments are equal to fair value at June 30, 2021. See Note 13—Debt for additional information on the convertible notes and warrants, and see Note 7—Equity Investment for additional information on the equity interest in Stash.
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LENDINGTREE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Contingent consideration payments related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. The changes in the fair value of the Company's Level 3 liabilities are as follows (in thousands):

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Contingent consideration, beginning of period | $ | 9,046 |  |  | $ | 22,342 |  |  | $ | 8,249 |  |  | $ | 33,464 |
Transfers into Level 3 | — |  |  | — |  |  | — |  |  | — |
Transfers out of Level 3 | — |  |  | — |  |  | — |  |  | — |
Total net losses (gains) included in earnings (realized and unrealized) | (8,850) |  |  | 9,175 |  |  | (8,053) |  |  | 1,053 |
Purchases, sales and settlements: |  |  |  |  |  |  |
Additions | — |  |  | — |  |  | — |  |  | — |
Payments | — |  |  | (3,000) |  |  | — |  |  | (6,000) |
Contingent consideration, end of period | $ | 196 |  |  | $ | 28,517 |  |  | $ | 196 |  |  | $ | 28,517 |

The contingent consideration liability at June 30, 2021 is the estimated fair value of the remaining earnout payment for the QuoteWizard acquisition. The Company will make an earnout payment ranging from zero to $23.4 million based on the achievement of certain defined performance targets for QuoteWizard. See Note 8—Business Acquisitions for additional information.
The significant unobservable inputs used to calculate the fair value of the contingent consideration for QuoteWizard are the operating results growth rate and the discount rate. Actual results will differ from the projected results and could have a significant impact on the estimated fair value of the contingent consideration. Additionally, as the liability is stated at present value, the passage of time alone will increase the estimated fair value of the liability each reporting period. Any changes in fair value will be recorded in operating income in the consolidated statements of operations and comprehensive income.
The following table provides quantitative information about Level 3 fair value measurements.

| Fair Value at June 30, 2021 | Valuation Technique | Unobservable Input | Range (Weighted Average)(a)
| (in thousands) |  |  |
Contingent consideration | $ | 196 |  | Option pricing model | Operating results growth rate | (21.4) | %
|  |  | Discount rate | 3.1 | %

(a) Discount rates are weighted by the relative undiscounted value of expected earnout payments. Other unobservable inputs are weighted by the relative maximum potential earnout payments.
NOTE 16—SEGMENT INFORMATION
The Company manages its business and reports its financial results through the following three operating and reportable segments: Home, Consumer and Insurance. Characteristics which were relied upon in making the determination of the reportable segments include the nature of the products, the organization's internal structure, and the information that is regularly reviewed by the chief operating decision maker for the purpose of assessing performance and allocating resources.
The Home segment includes the following products: purchase mortgage, refinance mortgage, home equity loans and lines of credit, reverse mortgage loans, and real estate. The Consumer segment includes the following products: credit cards, personal loans, small business loans, student loans, auto loans, deposit accounts, and other credit products such as credit repair and debt settlement. The Insurance segment consists of insurance quote products. Revenue from the resale of online advertising space to third parties in the first six months of 2020 is included within the Other category. The Company ceased reselling online advertising space during the first quarter of 2020.
The following tables are a reconciliation of segment profit, which is the Company's primary segment profitability measure, to income before income taxes and discontinued operations. Segment cost of revenue and marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing and related
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
expenses, that are directly attributable to the segments' products. This measure excludes overhead, fixed costs and personnel-related expenses. For the Other category, segment cost of revenue and marketing expense in the first six months of 2020 also includes the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties.

| Three Months Ended June 30, 2021
| Home | Consumer | Insurance | Other | Total
| (in thousands)
Revenue | $ | 104,861 |  | $ | 75,676 |  | $ | 89,263 |  | $ | 214 |  | $ | 270,014 |
Segment marketing expense | 65,844 |  | 42,282 |  | 56,025 |  | 263 |  | 164,414 |
Segment profit (loss) | 39,017 |  | 33,394 |  | 33,238 |  | (49) |  | 105,600 |
Cost of revenue |  |  |  |  | 13,934 |
Brand and other marketing expense |  |  |  |  | 20,792 |
General and administrative expense |  |  |  |  | 39,811 |
Product development |  |  |  |  | 13,290 |
Depreciation |  |  |  |  | 4,443 |
Amortization of intangibles |  |  |  |  | 11,310 |
Change in fair value of contingent consideration |  |  |  |  | (8,850) |
Litigation settlements and contingencies |  |  |  |  | 322 |
Operating income |  |  |  |  | 10,548 |
Interest expense, net |  |  |  |  | (9,840) |
Income before income taxes and discontinued operations |  |  |  |  | $ | 708 |

| Three Months Ended June 30, 2020
| Home | Consumer | Insurance | Other | Total
| (in thousands)
Revenue | $ | 74,123 |  | $ | 37,118 |  | $ | 72,919 |  | $ | 166 |  | $ | 184,326 |
Segment marketing expense | 35,397 |  | 17,716 |  | 42,797 |  | 85 |  | 95,995 |
Segment profit (loss) | 38,726 |  | 19,402 |  | 30,122 |  | 81 |  | 88,331 |
Cost of revenue |  |  |  |  | 13,464 |
Brand and other marketing expense |  |  |  |  | 17,926 |
General and administrative expense |  |  |  |  | 28,489 |
Product development |  |  |  |  | 10,812 |
Depreciation |  |  |  |  | 3,550 |
Amortization of intangibles |  |  |  |  | 13,756 |
Change in fair value of contingent consideration |  |  |  |  | 9,175 |
Severance |  |  |  |  | 32 |
Litigation settlements and contingencies |  |  |  |  | (1,325) |
Operating loss |  |  |  |  | (7,548) |
Interest expense, net |  |  |  |  | (4,955) |
Other income |  |  |  |  | 7 |
Loss before income taxes and discontinued operations |  |  |  |  | $ | (12,496) |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

| Six Months Ended June 30, 2021
| Home | Consumer | Insurance | Other | Total
| (in thousands)
Revenue | $ | 232,986 |  | $ | 133,583 |  | $ | 175,877 |  | $ | 318 |  | $ | 542,764 |
Segment marketing expense | 154,979 |  | 75,582 |  | 109,797 |  | 459 |  | 340,817 |
Segment profit (loss) | 78,007 |  | 58,001 |  | 66,080 |  | (141) |  | 201,947 |
Cost of revenue |  |  |  |  | 27,829 |
Brand and other marketing expense |  |  |  |  | 41,851 |
General and administrative expense |  |  |  |  | 74,800 |
Product development |  |  |  |  | 25,758 |
Depreciation |  |  |  |  | 8,161 |
Amortization of intangibles |  |  |  |  | 22,622 |
Change in fair value of contingent consideration |  |  |  |  | (8,053) |
Litigation settlements and contingencies |  |  |  |  | 338 |
Operating income |  |  |  |  | 8,641 |
Interest expense, net |  |  |  |  | (20,055) |
Other income |  |  |  |  | 40,072 |
Income before income taxes and discontinued operations |  |  |  |  | $ | 28,658 |

| Six Months Ended June 30, 2020
| Home | Consumer | Insurance | Other | Total
| (in thousands)
Revenue | $ | 153,297 |  | $ | 157,042 |  | $ | 155,656 |  | $ | 1,415 |  | $ | 467,410 |
Segment cost of revenue and marketing expense | 78,660 |  | 94,541 |  | 95,001 |  | 1,662 |  | 269,864 |
Segment profit (loss) | 74,637 |  | 62,501 |  | 60,655 |  | (247) |  | 197,546 |
Cost of revenue (exclusive of cost of advertising re-sold to third parties included above) |  |  |  |  | 26,630 |
Brand and other marketing expense |  |  |  |  | 40,681 |
General and administrative expense |  |  |  |  | 60,571 |
Product development |  |  |  |  | 21,775 |
Depreciation |  |  |  |  | 6,928 |
Amortization of intangibles |  |  |  |  | 27,513 |
Change in fair value of contingent consideration |  |  |  |  | 1,053 |
Severance |  |  |  |  | 190 |
Litigation settlements and contingencies |  |  |  |  | (996) |
Operating income |  |  |  |  | 13,201 |
Interest expense, net |  |  |  |  | (9,789) |
Other income |  |  |  |  | 7 |
Income before income taxes and discontinued operations |  |  |  |  | $ | 3,419 |

NOTE 17—DISCONTINUED OPERATIONS
The LendingTree Loans Business is presented as discontinued operations in the accompanying financial statements. The LendingTree Loans Business originated various consumer mortgage loans through HLC. On June 6, 2012, the Company sold substantially all of the operating assets of HLC, including the LendingTree Loans Business, for $55.9 million in cash to a wholly-owned subsidiary of Discover Financial Services ("Discover"). Discover generally did not assume liabilities of HLC that arose before the closing date, except for certain liabilities directly related to assets Discover acquired. A portion of the purchase price received was deposited in escrow in accordance with the purchase agreement with Discover for certain loan loss obligations that remained with HLC following the sale. During 2018, the remaining funds in escrow were released to HLC in accordance with the terms of the purchase agreement with Discover.
Upon closing of the sale of substantially all of the operating assets of HLC on June 6, 2012, HLC ceased to originate consumer loans. HLC agreed to retain certain liability for losses on previously sold loans.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Litigation settlements and contingencies and legal fees associated with related bankruptcy and ongoing legal proceedings against the Company are included in discontinued operations in the accompanying financial statements.
Home Loan Center, Inc. Bankruptcy Filing
On June 21, 2019, the U.S. District Court of Minnesota entered judgment in ResCap Liquidating Trust v. Home Loan Center, Inc., against HLC for $68.5 million, see Litigation Related to Discontinued Operations below. The judgment against HLC exceeded the assets of HLC, which were $11.2 million at July 21, 2019, including cash of $5.9 million. On July 19, 2019, HLC appealed the judgment to the United States Court of Appeals for the Eighth Circuit.
On July 21, 2019, at the direction of the sole independent director of HLC, HLC voluntarily filed a petition under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) with the U.S. Bankruptcy Court in the Northern District of California in San Jose, California (the “Bankruptcy Court”) in order to preserve assets for the benefit of all creditors of HLC. On September 16, 2019, the Bankruptcy Court converted the bankruptcy to Chapter 7 of the Bankruptcy Code and appointed a Trustee to liquidate HLC's assets.
HLC’s voluntary petition under the Bankruptcy Code does not represent an event of default under LendingTree, LLC’s Second Amended and Restated Credit Agreement dated as of December 10, 2019, the Company’s indenture dated May 31, 2017 with respect to the Company’s 0.625% Convertible Senior Notes due 2022, or the Company’s indenture dated July 24, 2020 with respect to the Company’s 0.50% Convertible Senior Notes due 2025.
As a result of the voluntary petition, LendingTree, LLC was, as of the initial July 21, 2019 bankruptcy petition filing date, no longer deemed to have a controlling interest in HLC under applicable accounting standards. As a result, HLC and its consolidated subsidiary were deconsolidated from the Company’s consolidated financial statements as of July 21, 2019. The effect of such deconsolidation was the elimination of the consolidated assets and liabilities of HLC (and its consolidated subsidiary) from the Company’s consolidated balance sheets. Upon deconsolidation, in 2019 the Company recognized a loss of $5.5 million which includes a net gain of $4.5 million related to the removal of HLC's (and its consolidated subsidiary's) assets and liabilities and the recognition of a liability of $10.0 million related to LendingTree, LLC's ownership in HLC. No consideration was received by the Company as a result of the deconsolidation.
During its bankruptcy, HLC indicated that it believed that it had claims against HLC’s sole shareholder, LendingTree, LLC, and certain of its officers and directors, relating to the declaration of a dividend by HLC in January 2016 of $40.0 million. LendingTree, LLC believes the declaration of the dividend was proper, that the amounts paid to LendingTree, LLC following such declaration are not subject to recovery by HLC and that any claims by HLC relating to such dividend declaration are without merit. During the second quarter of 2020, LendingTree, LLC and HLC entered into a settlement agreement in the amount of $36.0 million for the release of any and all claims against the Company defendants by HLC, including the dividend claim. The bankruptcy court held a hearing on July 16, 2020 on the motion to approve the settlement to which no objections were made, and approved the settlement the same day. The $36.0 million settlement payment was made in the third quarter of 2020.
During the HLC bankruptcy, a bar date for claims against HLC was set, establishing a deadline for all HLC’s creditors to assert any claim they may have had against HLC. Distributions were made to holders of allowed claims deemed timely filed. After all distributions to creditors were made and HLC’s Chapter 7 bankruptcy estate was fully administered, the HLC bankruptcy case was closed on July 14, 2021.
Litigation Related to Discontinued Operations
Residential Funding Company
ResCap Liquidating Trust v. Home Loan Center, Inc., Case No. 14-cv-1716 (U.S. Dist. Ct., Minn.), successor to Residential Funding Company, LLC v Home Loan Center, Inc., No. 13-cv-3451 (U.S. Dist. Ct., Minn.). On or about December 16, 2013, Home Loan Center, Inc. was served in the original captioned matter, which involves claims of Residential Funding Company, LLC ("RFC") for damages for breach of contract and indemnification for certain residential mortgage loans as well as residential mortgage-backed securitizations ("RMBS") containing mortgage loans. RFC asserted that, beginning in 2008, RFC faced massive repurchase demands and lawsuits from purchasers or insurers of the loans and RMBS that RFC had sold. RFC filed for bankruptcy protection in May 2012. Plaintiff alleged that, after RFC filed for Chapter 11 protection, hundreds of proofs of claim were filed, many of which mirrored the litigation filed against RFC prior to its bankruptcy.
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LENDINGTREE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In December 2013, the United States Bankruptcy Court for the Southern District of New York entered an Order confirming the Second Amended Joint Chapter 11 Plan Proposed by Residential Capital, LLC et al. and the Official Committee of Unsecured Creditors. Plaintiff then began filing substantially similar complaints against approximately 80 of the loan originators from whom RFC had purchased loans, including HLC, in federal and state courts in Minnesota and New York. In each case, plaintiff claimed that the defendant is liable for a portion of the global settlement in RFC’s bankruptcy.
HLC’s filing under the Bankruptcy Code discussed above in Home Loan Center, Inc. Bankruptcy Filing created an automatic stay of enforcement of the judgment entered against HLC by the U.S. District Court in Minnesota. On August 27, 2019, plaintiff filed a lawsuit captioned ResCap Liquidating Trust v. LendingTree, LLC, et al., Case No. 19-cv-2360 (U.S. Dist. Ct., Minn.), seeking to hold the Company liable for the judgment against HLC, under assumption of liability, agency and alter ego theories. On June 17, 2020, the Company entered into a settlement agreement with ResCap, pursuant to which, the Company agreed to, among other things, pay ResCap $58.5 million, less any amounts ResCap receives in the HLC bankruptcy, in exchange for, among other things, ResCap releasing any and all claims against the Company, and the Company’s directors and officers, including any claims asserted in ResCap v. LendingTree. Pursuant to the settlement agreement, the Company was responsible for the difference of $58.5 million minus the amount that ResCap received through the HLC Bankruptcy. In the third and fourth quarters of 2020, the Company made payments of $26.5 million and $6.4 million, respectively, to the ResCap Liquidating Trust, and the ResCap Liquidating Trust, in turn, assigned its allowed claims against HLC to the Company. In the second quarter of 2021, the Company received a refund of $8.6 million related to these amounts, from the final distributions in the HLC Bankruptcy on account of the allowed claims that the ResCap Liquidating Trust had assigned to the Company.
Lehman Brothers Holdings, Inc.
Lehman Brothers Holdings Inc. v. 1st Advantage Mortgage, LLC et al., Case No. 08-13555 (SCC), Adversary Proceeding No. 16-01342 (SCC) (Bankr. S.D.N.Y.). In February 2016, Lehman Brothers Holdings, Inc. (“LBHI”) filed an Adversary Complaint against HLC and approximately 149 other defendants (the "Complaint"). On December 4, 2019, LBHI filed a $44.7 million proof of claim in HLC’s bankruptcy seeking recovery for the claims asserted in the lawsuit.
HLC’s filing under the Bankruptcy Code discussed above in Home Loan Center, Inc. Bankruptcy Filing created an automatic stay of this proceeding. On June 11, 2020, LBHI filed a lawsuit captioned Lehman Brothers Holdings Inc. v. LendingTree, LLC, et al., Case No. 20-cv-01351 (U.S. Dist. Ct., Minn.), transferred to Case No. 08-13555 (SCC), Adversary Proceeding No. 21-01107 (SCC) (Bankr. S.D.N.Y.), seeking to hold the Company liable for its allowed bankruptcy claim of $13.3 million. In July 2021, the Company reached a settlement with LBHI, which is included as a liability on the accompanying consolidated balance sheet as of June 30, 2021.
Financial Information of Discontinued Operations
The components of net loss reported as discontinued operations in the accompanying consolidated statements of operations and comprehensive income are as follows (in thousands):

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Revenue | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Loss before income taxes | (4,261) |  |  | (28,424) |  |  | (4,614) |  |  | (34,526) |
Income tax benefit | 1,062 |  |  | 7,283 |  |  | 1,152 |  |  | 8,810 |
Net loss | $ | (3,199) |  |  | $ | (21,141) |  |  | $ | (3,462) |  |  | $ | (25,716) |

Losses from discontinued operations included all activity of HLC prior to bankruptcy, including litigation settlements, contingencies and legal fees associated with legal proceedings.
The results of discontinued operations also include litigation settlements and contingencies and legal fees associated with ongoing legal proceedings against LendingTree, Inc. or LendingTree, LLC that arose due to the LendingTree Loans Business or the HLC bankruptcy filing.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement Regarding Forward-Looking Information
This report contains "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. These forward-looking statements include statements related to our anticipated financial performance, business prospects and strategy; anticipated trends and prospects in the various industries in which our businesses operate; new products, services and related strategies; and other similar matters. These forward-looking statements are based on management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. The use of words such as "anticipates," "estimates," "expects," "projects," "intends," "plans" and "believes," among others, generally identifies forward-looking statements.
Actual results could differ materially from those contained in the forward-looking statements. Factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include those matters discussed or referenced in Part II, Item 1A. Risk Factors included elsewhere in this quarterly report and Part I, Item 1A. Risk Factors of the 2020 Annual Report.
Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of LendingTree, Inc.'s management as of the date of this report. 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, except as required by law.
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.
We operate what we believe to be the leading online consumer platform that connects consumers with the choices they need to be confident in their financial decisions. Our online consumer platform provides consumers with access to product offerings from our Network Partners, including 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 and other related offerings. In addition, we offer tools and resources, including free credit scores, that facilitate comparison shopping for loans, deposit products, insurance and other offerings. We seek to match consumers with multiple providers, who can offer them competing quotes for the product, or products, they are seeking. We also serve 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 we generate with these Network Partners.
Our My LendingTree platform offers a personalized comparison-shopping experience by providing free credit scores and credit score analysis. This platform enables us to monitor consumers' credit profiles and then identify and alert them to loans and other offerings on our marketplace that may be more favorable than the terms they may have at a given point in time. This is designed to provide consumers with measurable savings opportunities over their lifetimes.
We are focused on developing new product offerings and enhancements to improve the experiences that consumers and Network Partners have as they interact with us. By expanding our portfolio of financial services offerings, we are growing and diversifying our business and sources of revenue. We intend to capitalize on our expertise in performance marketing, product development and technology, and to leverage the widespread recognition of the LendingTree brand, to effect this strategy.
We believe the consumer and small business financial services industry is still in the early stages of a fundamental shift to online product offerings, similar to the shift that started in retail and travel many years ago and is now well established. We believe that like retail and travel, as consumers continue to move towards online shopping and transactions for financial services, suppliers will increasingly shift their product offerings and advertising budgets toward the online channel. We believe the strength of our brands and of our partner network place us in a strong position to continue to benefit from this market shift.
The LendingTree Loans business is presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements of operations and comprehensive income and consolidated cash flows for all periods presented. Except
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for the discussion under the heading "Discontinued Operations," the analysis within Management's Discussion and Analysis of Financial Condition and Results of Operations reflects our continuing operations.
Economic Conditions
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus ("COVID-19"). The pandemic has significantly impacted the economic conditions in the U.S., as federal, state and local governments react to the public health crisis, creating significant uncertainties in the U.S. economy. The downstream impact of various lockdown orders and related economic pullback are affecting our business and marketplace participants to varying degrees. We are continuously monitoring the impacts of the current economic conditions related to the COVID-19 pandemic and the effect on our business, financial condition and results of operations.
Of our three reportable segments, the Consumer segment has been most impacted. The impact to our Home and Insurance segments was much less substantial and these segments recovered by the end of 2020. While forecasting the timeline of full recovery for the Consumer segment remains challenging, the momentum of recovery has increased in each quarter subsequent to the onset of the COVID-19 pandemic. We are encouraged by the progress made, and continue to view the Consumer segment with optimism over the medium to long term. Most of our selling and marketing expenses are variable costs that we adjust dynamically in relation to revenue opportunities to profitably meet demand. Thus, as our revenue was negatively impacted during the recession, our marketing expenses generally decreased in line with revenue.
Segment Reporting
We have three reportable segments: Home, Consumer and Insurance.
Recent Business Acquisitions
On February 28, 2020, we acquired an equity interest in Stash Financial, Inc. (“Stash”) for $80.0 million. On January 6, 2021, we acquired additional equity interest for $1.2 million. 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. See Note 7—Equity Investment for additional information on the equity interest in Stash.
North Carolina Office Properties
Our new corporate office is located on approximately 176,000 square feet of office space in Charlotte, North Carolina under an approximate 15-year lease that contractually commenced in April 2021.
With our expansion in North Carolina, in December 2016, we received a grant from the state that provides up to $4.9 million in reimbursements over 12 years beginning in 2017 for investing in real estate and infrastructure in addition to increasing jobs in North Carolina at specific targeted levels through 2020, and maintaining the jobs thereafter. Additionally, the city of Charlotte and the county of Mecklenburg provided a grant that will be paid over five years and is based on a percentage of new property tax we pay on the development of a corporate headquarters. In December 2018, we received an additional grant from the state that provides up to $8.4 million in reimbursements over 12 years beginning in 2020 for increasing jobs in North Carolina at specific targeted levels through 2023, and maintaining the jobs thereafter.
Recent Mortgage Interest Rate Trends
Interest rate and market risks can be substantial in the mortgage lead generation business. Short-term fluctuations in mortgage interest rates primarily affect consumer demand for mortgage refinancings, while long-term fluctuations in mortgage interest rates, coupled with the U.S. real estate market, affect consumer demand for new mortgages. Consumer demand, in turn, affects lender demand for mortgage leads from third-party sources, as well as our own ability to attract online consumers to our website.
Typically, when interest rates decline, we see increased consumer demand for mortgage refinancing, which in turn leads to increased traffic to our website and decreased selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically decreases, as there are more consumers in the marketplace seeking
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refinancings and, accordingly, lenders receive more organic mortgage lead volume. Due to lower lender demand, our revenue earned per consumer typically decreases, but with correspondingly lower selling and marketing costs.
Conversely, when interest rates increase, we typically see decreased consumer demand for mortgage refinancing, leading to decreased traffic to our website and higher associated selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically increases, as there are fewer consumers in the marketplace and, accordingly, the supply of organic mortgage lead volume decreases. Due to high lender demand, we typically see an increase in the amount lenders will pay per matched lead, which often leads to higher revenue earned per consumer. However, increases in the amount lenders will pay per matched lead in this situation is limited by the overall cost models of our lenders, and our revenue earned per consumer can be adversely affected by the overall reduced demand for refinancing in a rising rate environment.
We dynamically adjust selling and marketing expenditures in all interest rate environments to optimize our results against these variables.
According to Freddie Mac, 30-year mortgage interest rates generally increased from a monthly average of 2.68% in December 2020 to a monthly average of 2.98% in June 2021. On a quarterly basis, 30-year mortgage interest rates in the second quarter of 2021 averaged 3.00%, compared to 3.23% in the second quarter of 2020 and 2.88% in the first quarter of 2021.
Typically, as mortgage interest rates rise, there are fewer consumers in the marketplace seeking refinancings and, accordingly, the mix of mortgage origination dollars will move toward purchase mortgages. According to Mortgage Bankers Association ("MBA") data, total refinance origination dollars decreased to 56% of total mortgage origination dollars in the second quarter of 2021 compared to 71% in the first quarter of 2021. In the second quarter of 2021, total refinance origination dollars decreased 24% from the first quarter of 2021 and increased 2% from the second quarter of 2020. Industry-wide mortgage origination dollars in the second quarter of 2021 decreased 4% from the first quarter of 2021 and increased 13% from the second quarter of 2020.
In July 2021, the MBA projected 30-year mortgage interest rates to increase during 2021, to an average 3.4% for the year. According to MBA projections, the mix of mortgage origination dollars is expected to move back towards purchase mortgages with the refinance share representing approximately 54% for 2021.
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The U.S. Real Estate Market
The health of the U.S. real estate market and interest rate levels are the primary drivers of consumer demand for new mortgages. Consumer demand, in turn, affects lender demand for purchase mortgage leads from third-party sources. Typically, a strong real estate market will lead to reduced lender demand for leads, as there are more consumers in the marketplace seeking financing and, accordingly, lenders receive more organic lead volume. Conversely, a weaker real estate market will typically lead to an increase in lender demand, as there are fewer consumers in the marketplace seeking mortgages.
According to Fannie Mae data, existing-home sales decreased 8% in the second quarter of 2021 compared to the first quarter of 2021, and increased 32% compared to the second quarter of 2020. Fannie Mae predicts an overall increase in existing-home sales of approximately 3% in 2021 compared to 2020.
Results of Operations for the Three and Six Months ended June 30, 2021 and 2020

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 | 2020 | $ Change | % Change |  | 2021 | 2020 | $ Change | % Change
| (Dollars in thousands)
Home | $ | 104,861 |  | $ | 74,123 |  | $ | 30,738 |  | 41 | % |  | $ | 232,986 |  | $ | 153,297 |  | $ | 79,689 |  | 52 | %
Consumer | 75,676 |  | 37,118 |  | 38,558 |  | 104 | % |  | 133,583 |  | 157,042 |  | (23,459) |  | (15) | %
Insurance | 89,263 |  | 72,919 |  | 16,344 |  | 22 | % |  | 175,877 |  | 155,656 |  | 20,221 |  | 13 | %
Other | 214 |  | 166 |  | 48 |  | 29 | % |  | 318 |  | 1,415 |  | (1,097) |  | (78) | %
Revenue | 270,014 |  | 184,326 |  | 85,688 |  | 46 | % |  | 542,764 |  | 467,410 |  | 75,354 |  | 16 | %
Costs and expenses: |  |  |  |  |  |  |  |  |
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 13,934 |  | 13,464 |  | 470 |  | 3 | % |  | 27,829 |  | 27,716 |  | 113 |  | — | %
Selling and marketing expense | 185,206 |  | 113,921 |  | 71,285 |  | 63 | % |  | 382,668 |  | 309,459 |  | 73,209 |  | 24 | %
General and administrative expense | 39,811 |  | 28,489 |  | 11,322 |  | 40 | % |  | 74,800 |  | 60,571 |  | 14,229 |  | 23 | %
Product development | 13,290 |  | 10,812 |  | 2,478 |  | 23 | % |  | 25,758 |  | 21,775 |  | 3,983 |  | 18 | %
Depreciation | 4,443 |  | 3,550 |  | 893 |  | 25 | % |  | 8,161 |  | 6,928 |  | 1,233 |  | 18 | %
Amortization of intangibles | 11,310 |  | 13,756 |  | (2,446) |  | (18) | % |  | 22,622 |  | 27,513 |  | (4,891) |  | (18) | %
Change in fair value of contingent consideration | (8,850) |  | 9,175 |  | (18,025) |  | (196) | % |  | (8,053) |  | 1,053 |  | (9,106) |  | (865) | %
Severance | — |  | 32 |  | (32) |  | (100) | % |  | — |  | 190 |  | (190) |  | (100) | %
Litigation settlements and contingencies | 322 |  | (1,325) |  | 1,647 |  | 124 | % |  | 338 |  | (996) |  | 1,334 |  | 134 | %
Total costs and expenses | 259,466 |  | 191,874 |  | 67,592 |  | 35 | % |  | 534,123 |  | 454,209 |  | 79,914 |  | 18 | %
Operating income (loss) | 10,548 |  | (7,548) |  | 18,096 |  | 240 | % |  | 8,641 |  | 13,201 |  | (4,560) |  | (35) | %
Other (expense) income, net: |  |  |  |  |  |  |  |  |
Interest expense, net | (9,840) |  | (4,955) |  | 4,885 |  | 99 | % |  | (20,055) |  | (9,789) |  | 10,266 |  | 105 | %
Other income | — |  | 7 |  | (7) |  | (100) | % |  | 40,072 |  | 7 |  | 40,065 |  | n/a
Income (loss) before income taxes | 708 |  | (12,496) |  | 13,204 |  | 106 | % |  | 28,658 |  | 3,419 |  | 25,239 |  | 738 | %
Income tax benefit | 9,092 |  | 3,880 |  | 5,212 |  | 134 | % |  | 454 |  | 6,941 |  | (6,487) |  | (93) | %
Net income (loss) from continuing operations | 9,800 |  | (8,616) |  | 18,416 |  | 214 | % |  | 29,112 |  | 10,360 |  | 18,752 |  | 181 | %
Loss from discontinued operations, net of tax | (3,199) |  | (21,141) |  | (17,942) |  | (85) | % |  | (3,462) |  | (25,716) |  | (22,254) |  | (87) | %
Net income (loss) and comprehensive income (loss) | $ | 6,601 |  | $ | (29,757) |  | $ | 36,358 |  | 122 | % |  | $ | 25,650 |  | $ | (15,356) |  | $ | 41,006 |  | 267 | %

Revenue
Revenue increased in the second quarter of 2021 compared to the second quarter of 2020 due to increases in all our segments. Revenue increased in the first six months of 2021 compared to the first six months of 2020 due to increases in our Home and Insurance segments, partially offset by decreases in our Consumer segment and Other category.
Our Consumer segment includes the following products: credit cards, personal loans, small business loans, student loans, auto loans, deposit accounts, and other credit products such as credit repair and debt settlement. Many of our Consumer segment products are not individually significant to revenue. Revenue from our Consumer segment increased $38.6 million in the second quarter of 2021 from the second quarter of 2020, or 104%, primarily due to increases in our personal loans, credit cards, and small business loans products. Revenue from our Consumer segment decreased $23.5 million in the first six months of 2021 from the first six months of 2020, or 15%, primarily due to decreases in our credit cards and deposits products.
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Revenue from our credit cards product increased $15.2 million to $22.4 million in the second quarter of 2021 from $7.2 million in the second quarter of 2020, or 212%, primarily due to an increase in the number of approvals and an increase in revenue earned per approval. Revenue from our credit cards product decreased $18.7 million to $40.1 million in the first six months of 2021 from $58.8 million in the first six months of 2020, or 32%, primarily due to a decrease in the number of approvals and a decrease in revenue earned per approval.
For the periods presented, no other products in our Consumer segment represented more than 10% of revenue; however, certain other Consumer products experienced notable changes. Revenue from our personal loans product increased $16.4 million in the second quarter of 2021 compared to the second quarter of 2020, due to an increase in the number of consumers completing request forms as well as an increase in revenue earned per consumer. Revenue from our small business loans product increased $7.7 million in the second quarter of 2021 compared to the second quarter of 2020, due to loosening underwriting standards and improved flow of capital, as well as an increase in revenue earned per consumer. Revenue from our deposits product decreased $7.9 million in the first six months of 2021 compared to the first six months of 2020, due to a decrease in the number of consumers completing request forms as well as a decrease in revenue earned per consumer.
The ongoing COVID-19 pandemic is anticipated to continue to impact our Consumer product revenues in the near-term.
Our Home segment includes the following products: purchase mortgage, refinance mortgage, home equity loans and lines of credit, reverse mortgage loans, and real estate. Revenue from our Home segment increased $30.7 million in the second quarter of 2021 from the second quarter of 2020, or 41%, primarily due to increases in revenue from our refinance mortgage, purchase mortgage, and home equity loans and lines of credit products. Revenue from our Home segment increased $79.7 million in the first six months of 2021 from the first six months of 2020, or 52%, primarily due to increases in revenue from those same products. Revenue from our refinance mortgage product increased $12.7 million in the second quarter of 2021 compared to the second quarter of 2020, and increased $64.7 million in the first six months of 2021 compared to the first six months of 2020, due to an increase in revenue earned per consumer, partially offset by a decrease in the number of consumers completing request forms. Revenue from our home equity loans and lines of credit product increased $10.0 million in the second quarter of 2021 compared to the second quarter of 2020, and increased $9.9 million in the first six months of 2021 compared to the first six months of 2020. Revenue from our purchase mortgage product increased $8.2 million in the second quarter of 2021 compared to the second quarter of 2020, and increased $5.5 million in the first six months of 2021 compared to the first six months of 2020. Revenue from our home equity loans and lines of credit product and our purchase mortgage product increased due to a shift in both lender and consumer focus away from refinance products as well as an increase in revenue earned per consumer.
Revenue from our Insurance segment increased $16.3 million to $89.3 million in the second quarter of 2021 from $72.9 million in the second quarter of 2020, or 22%, and increased $20.2 million to $175.9 million in the first six months of 2021 from $155.7 million in the first six months of 2020, or 13%, due to an increase in the number of consumers seeking insurance coverage, partially offset by a decrease in revenue earned per consumer.
Revenue in the Other category decreased $1.1 million in the first six months of 2021 compared to the first six months of 2020, primarily as we ceased reselling online advertising space during the first quarter of 2020.
Cost of revenue
Cost of revenue consists primarily of costs associated with compensation and other employee-related costs (including stock-based compensation) relating to internally-operated customer call centers, third-party customer call center fees, costs for online advertising resold to third parties, credit scoring fees, credit card fees, website network hosting and server fees.
Cost of revenue increased in the second quarter of 2021 from the second quarter of 2020, primarily due to an increase in compensation and benefits of $0.8 million, partially offset by a $0.6 million decrease in credit card fees. Cost of revenue increased slightly in the first six months of 2021 from the first six months of 2020, primarily due to an increase in compensation and benefits of $1.7 million, partially offset by a $1.3 million decrease in credit card fees, as well as a $1.1 million decrease for the cost of resold advertising space.
Cost of revenue as a percentage of revenue decreased to 5% in the second quarter of 2021 compared to 7% in the second quarter of 2020, and decreased to 5% in the first six months of 2021 compared to 6% in the first six months of 2020.
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Selling and marketing expense
Selling and marketing expense consists primarily of advertising and promotional expenditures and compensation and other employee-related costs (including stock-based compensation) for personnel engaged in sales or marketing functions. Advertising and promotional expenditures primarily include online marketing, as well as television, print and radio spending. Advertising production costs are expensed in the period the related ad is first run.
Selling and marketing expense increased in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 primarily due to the increases in advertising and promotional expense discussed below.
Advertising and promotional expense is the largest component of selling and marketing expense, and is comprised of the following:

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 | 2020 | $ Change | % Change |  | 2021 | 2020 | $ Change | % Change
| (Dollars in thousands)
Online | $ | 165,038 |  | $ | 96,416 |  | $ | 68,622 |  | 71 | % |  | $ | 341,859 |  | $ | 269,497 |  | $ | 72,362 |  | 27 | %
Broadcast | 2,649 |  | 3,154 |  | (505) |  | (16) | % |  | 3,816 |  | 9,478 |  | (5,662) |  | (60) | %
Other | 3,908 |  | 2,259 |  | 1,649 |  | 73 | % |  | 9,623 |  | 6,621 |  | 3,002 |  | 45 | %
Total advertising expense | $ | 171,595 |  | $ | 101,829 |  | $ | 69,766 |  | 69 | % |  | $ | 355,298 |  | $ | 285,596 |  | $ | 69,702 |  | 24 | %

Revenue is primarily driven by Network Partner demand for our products, which is matched to corresponding consumer requests. We adjust our selling and marketing expenditures dynamically in relation to anticipated revenue opportunities in order to ensure sufficient consumer inquiries to profitably meet such demand. An increase in a product’s revenue is generally met by a corresponding increase in marketing spend, and conversely a decrease in a product’s revenue is generally met by a corresponding decrease in marketing spend. This relationship exists for our Home, Consumer and Insurance segments.
We adjusted our advertising expenditures in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 in response to changes in Network Partner demand on our marketplace as a result of the ongoing COVID-19 pandemic discussed above. We will continue to adjust selling and marketing expenditures dynamically in relation to this and in response to anticipated revenue opportunities.
General and administrative expense
General and administrative expense consists primarily of compensation and other employee-related costs (including stock-based compensation) for personnel engaged in finance, legal, tax, corporate information technology, human resources and executive management functions, as well as facilities and infrastructure costs and fees for professional services.
General and administrative expense increased in the second quarter of 2021 compared to the second quarter of 2020, primarily due to increases in compensation and benefits, technology expense, and facilities expense of $5.5 million, $1.7 million, and $1.4 million, respectively, as well as a $1.0 million increase in losses on asset impairments and disposals. General and administrative expense increased in the first six months of 2021 compared to the first six months of 2020, primarily due to increases in compensation and benefits, facilities expense, and technology expense of $10.2 million, $2.9 million, and $2.3 million, respectively. This was partially offset by a decrease in professional fees of $1.3 million.
General and administrative expense as a percentage of revenue decreased to 15% in the second quarter of 2021 compared to 16% in the second quarter of 2020, and increased to 14% in the first six months of 2021 compared to 13% in the first six months of 2020.
Product development
Product development expense consists primarily of compensation and other employee-related costs (including stock-based compensation) and third-party labor costs that are not capitalized, for employees and consultants engaged in the design, development, testing and enhancement of technology.
Product development expense increased in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 as we continued to invest in internal development of new and enhanced features, functionality and business opportunities that we believe will enable us to better and more fully serve consumers and Network Partners.
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Depreciation
The increase in depreciation expense in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 was primarily the result of depreciation on assets related to our new corporate office, which lease contractually commenced in the second quarter of 2021.
Amortization of intangibles
The decrease in amortization of intangibles in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 was due to certain intangible assets associated with our recent business acquisitions becoming fully amortized.
Contingent consideration
During the second quarter and first six months of 2021, we recorded contingent consideration gains of $8.9 million and $8.1 million, respectively, due to adjustments in the estimated fair value of the remaining earnout payment related to the QuoteWizard acquisition.
During the second quarter and first six months of 2020, we recorded aggregate contingent consideration expense of $9.2 million and $1.1 million, respectively, due to adjustments in the estimated fair value of the earnout payments related to our recent acquisitions. For the second quarter of 2020, the contingent consideration expense for the QuoteWizard, Ovation and SnapCap acquisitions was $8.1 million, $1.0 million and $0.1 million, respectively. For the first six months of 2020, the contingent consideration expense for the Ovation and SnapCap acquisitions was $1.2 million and $0.1 million, respectively, partially offset by a contingent consideration gain for the QuoteWizard acquisition of $0.2 million.
Interest expense
Interest expense increased in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 due to the issuance of $575.0 million of our 0.50% Convertible Senior Notes due July 15, 2025 (the “2025 Notes”) as well as the repurchase of a portion of our existing 0.625% Convertible Senior Notes due June 1, 2022 (the “2022 Notes”) in July 2020. In the second quarter and first six months of 2021, interest expense of $6.7 million and $13.5 million, respectively, was recognized on the 2025 Notes. This increase to interest expense was partially offset by lower interest expense on the 2022 Notes in the second quarter and first six months of 2021 compared to the second quarter and first six months of 2020 as a result of the July 2020 repurchase of $130.3 million principal amount of the 2022 Notes. See Note 13—Debt for additional information on the issuance of the 2025 Notes and the partial repurchase of the 2022 Notes.
Other income
For the first six months of 2021, other income primarily consists of a $40.1 million gain on our investment in Stash as a result of an adjustment to the fair value based on observable market events. See Note 7—Equity Investment for additional information on the equity interest in Stash.
Income tax expense
For the second quarter and first six months of 2021, the effective tax rate varied from the federal statutory rate of 21% in part due to a tax benefit of $8.3 million recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.
For the second quarter and first six months of 2020, the effective tax rate varied from the federal statutory rate of 21% in part due to a tax benefit of $0.8 million and $1.8 million, respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes. The effective tax rate for the first six months of 2020 was also impacted by a tax benefit of $6.1 million for the impact of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. See Note 12—Income Taxes for additional information.
Discontinued operations
The results of discontinued operations include the results of the LendingTree Loans business formerly operated by our wholly-owned subsidiary, Home Loan Center, Inc., or HLC. The sale of substantially all of the assets of HLC, including the LendingTree Loans business, was completed on June 6, 2012. HLC filed a petition under Chapter 11 of the United States
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Bankruptcy Code on July 21, 2019, which was converted to Chapter 7 of the United States Bankruptcy Code on September 16, 2019.
As a result of the voluntary bankruptcy petition, as of the initial July 21, 2019 bankruptcy petition filing date, HLC and its consolidated subsidiary were deconsolidated from LendingTree’s consolidated financial statements. The effect of such deconsolidation was the elimination of the consolidated assets and liabilities of HLC (and its consolidated subsidiary) from LendingTree’s consolidated balance sheets.
During the HLC bankruptcy, a bar date for claims against HLC was set, establishing a deadline for all HLC’s creditors to assert any claim they may have had against HLC. Distributions were made to holders of allowed claims deemed timely filed. After all distributions to creditors were made and HLC’s Chapter 7 bankruptcy estate was fully administered, the HLC bankruptcy case was closed on July 14, 2021.
Prior to the bankruptcy filing, losses from the LendingTree Loans business were primarily due to litigation settlements and contingencies and legal fees associated with ongoing legal proceedings.
The results of discontinued operations include litigation settlements and contingencies and legal fees associated with ongoing legal proceedings against LendingTree, Inc. or LendingTree, LLC that arose due to the LendingTree Loans business or the HLC bankruptcy filing.
See Note 17—Discontinued Operations to the consolidated financial statements included elsewhere in this report for more information.
Segment Profit

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 | 2020 | $ Change | % Change |  | 2021 | 2020 | $ Change | % Change
| (Dollars in thousands)
Home | $ | 39,017 |  | $ | 38,726 |  | $ | 291 |  | 1 | % |  | $ | 78,007 |  | $ | 74,637 |  | $ | 3,370 |  | 5 | %
Consumer | 33,394 |  | 19,402 |  | 13,992 |  | 72 | % |  | 58,001 |  | 62,501 |  | (4,500) |  | (7) | %
Insurance | 33,238 |  | 30,122 |  | 3,116 |  | 10 | % |  | 66,080 |  | 60,655 |  | 5,425 |  | 9 | %
Other | (49) |  | 81 |  | (130) |  | (160) | % |  | (141) |  | (247) |  | 106 |  | 43 | %
Segment profit | $ | 105,600 |  | $ | 88,331 |  | $ | 17,269 |  | 20 | % |  | $ | 201,947 |  | $ | 197,546 |  | $ | 4,401 |  | 2 | %

Segment profit is our primary segment operating metric. Segment profit is calculated as segment revenue less segment selling and marketing expenses attributed to variable costs paid for advertising, direct marketing and related expenses that are directly attributable to the segments' products. See Note 16—Segment Information in the notes to the consolidated financial statements for additional information on segments and a reconciliation of segment profit to pre-tax income from continuing operations.
Consumer segment profit increased $14.0 million in the second quarter of 2021 from the second quarter of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense. Consumer segment profit decreased $4.5 million in the first six months of 2021 from the first six months of 2020, primarily due to a decrease in revenue, partially offset by a corresponding decrease in selling and marketing expense. We continue to build momentum in the Consumer segment as demand from both consumers and our Network Partners returns. Consumer demand for personal loans began to return as the economy begins to reopen. Lender demand in our personal loans product continues to improve, with more lenders currently on our marketplace than prior to the onset of the COVID-19 pandemic. Credit card issuer budgets continue to increase, with an increasing number of issuers returning to our marketplace and increasing approval rates. The profitability of our credit card product remains constrained as we continue to re-invest incremental revenue into the product to capture wallet share. Our small business loans product continues steady recovery from the impact of the COVID-19 pandemic.
Insurance segment profit increased $3.1 million in the second quarter of 2021 from the second quarter of 2020, and increased $5.4 million in the first six months of 2021 from the first six months of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense. We continue to diversify and increase the durability of the Insurance segment by broadening traffic acquisition sources, expanding our insurance carrier network, and growing into non-automobile categories. During the second quarter of 2021, our publisher platform again delivered record performance, and our inbound channel continued positive momentum. These additional traffic sources enable incremental
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growth while reducing our reliance on paid search marketing, in which we have observed increasing competition in recent months. Additionally, our efforts to scale non-automobile categories continue to deliver returns. We again observed record revenue from the home category in the second quarter of 2021, as we increasingly leverage our presence in the mortgage industry. We continue to make significant investments in our Medicare category, ahead of the annual fourth quarter enrollment season.
Home segment profit remained relatively consistent in the second quarter of 2021 from the second quarter of 2020. Home segment profit increased $3.4 million in the first six months of 2021 from the first six months of 2020, primarily due to an increase in revenue, partially offset by a corresponding increase in selling and marketing expense. Although refinance activity is decelerating from the peak experienced earlier this year, the Home segment continues to perform well as we are an integral part of our Network Partners' marketing model. Demand for our services, and competition on our network, drove a 71% increase in mortgage revenue per lead in the second quarter of 2021 compared to the second quarter of 2020. The Home segment margin increased to 37% of revenue in the second quarter of 2021, compared to 30% in the first quarter of 2021. While there is uncertainty over the current low interest rate environment and corresponding impact to refinance activity, we are confident in our market-leading position and flexible business model.
Adjusted EBITDA
We report Adjusted EBITDA as a supplemental measure to GAAP. This measure is the primary metric by which we evaluate the performance of our businesses, on which our marketing expenditures and internal budgets are based and by which, in most years, management and many employees are compensated. We believe that investors should have access to the same set of tools that we use in analyzing our results. This non-GAAP measure 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. We provide and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures discussed below.
Definition of Adjusted EBITDA
We report Adjusted EBITDA as net income from continuing operations adjusted to exclude interest, income tax, amortization of intangibles and depreciation, and to further exclude (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) gain/loss on investments, (5) restructuring and severance expenses, (6) litigation settlements and contingencies, (7) acquisitions and dispositions income or expense (including with respect to changes in fair value of contingent consideration), and (8) one-time items. Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations of certain expenses, including depreciation, non-cash compensation and acquisition-related accounting. We endeavor to compensate for the limitations of the non-GAAP measures presented 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 is 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 below, there are no adjustments for one-time items.
Non-Cash Expenses that are Excluded from Adjusted EBITDA
Non-cash compensation expense consists principally of expense associated with grants of restricted stock, restricted stock units and stock options, some of which awards have performance-based vesting conditions. These expenses are not paid in cash, and we include the related shares in our 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 us remitting the required tax withholding amount from our current funds.
Amortization of intangibles are non-cash expenses relating primarily to intangible assets acquired through 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.
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The following table is a reconciliation of net income from continuing operations to Adjusted EBITDA (in thousands).

| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Net income (loss) from continuing operations | $ | 9,800 |  |  | $ | (8,616) |  |  | $ | 29,112 |  |  | $ | 10,360 |
Adjustments to reconcile to Adjusted EBITDA: |  |  |  |  |  |  |
Amortization of intangibles | 11,310 |  |  | 13,756 |  |  | 22,622 |  |  | 27,513 |
Depreciation | 4,443 |  |  | 3,550 |  |  | 8,161 |  |  | 6,928 |
Severance | — |  |  | 32 |  |  | — |  |  | 190 |
Loss on impairments and disposal of assets | 1,052 |  |  | 22 |  |  | 1,400 |  |  | 552 |
Unrealized gain on investments | — |  |  | — |  |  | (40,072) |  |  | — |
Non-cash compensation expense | 18,294 |  |  | 13,158 |  |  | 34,730 |  |  | 25,075 |
Change in fair value of contingent consideration | (8,850) |  |  | 9,175 |  |  | (8,053) |  |  | 1,053 |
Acquisition expense | 1,110 |  |  | 20 |  |  | 1,139 |  |  | 2,200 |
Litigation settlements and contingencies | 322 |  |  | (1,325) |  |  | 338 |  |  | (996) |
Interest expense, net | 9,840 |  |  | 4,955 |  |  | 20,055 |  |  | 9,789 |
Income tax benefit | (9,092) |  |  | (3,880) |  |  | (454) |  |  | (6,941) |
Adjusted EBITDA | $ | 38,229 |  |  | $ | 30,847 |  |  | $ | 68,978 |  |  | $ | 75,723 |

Financial Position, Liquidity and Capital Resources
General
As of June 30, 2021, we had $203.2 million of cash and cash equivalents, compared to $169.9 million of cash and cash equivalents as of December 31, 2020.
In the first quarter of 2021, we acquired additional equity interest in Stash for $1.2 million. See Note 7—Equity Investment to the consolidated financial statements included elsewhere in this report for additional information on the equity interest in Stash.
We could make an additional potential contingent consideration payment of up to $23.4 million related to the prior acquisition of QuoteWizard.
We expect our cash and cash equivalents and cash flows from operations to be sufficient to fund our operating needs for the next twelve months and beyond. We will continue to monitor the impact of the ongoing COVID-19 pandemic on our liquidity and capital resources. We expect our cashflow from operating activities to be negatively impacted by the economic recession.
Senior Secured Revolving Credit Facility
On December 10, 2019, we entered into an amended and restated $500.0 million five-year senior secured revolving credit facility, which matures on December 10, 2024 (the “Amended Revolving Credit Facility”). Borrowings under the Amended Revolving Credit Facility can be used to finance working capital needs, capital expenditures and general corporate purposes, including to finance permitted acquisitions. In July 2020, we executed a temporary amendment to the Amended Revolving Credit Facility to provide for certain covenant relief, primarily to facilitate the issuance of the 2025 Notes, the repurchase of a portion of the 2022 Notes, and to pay down existing borrowings under the credit facility. The amendment was applicable from the effective date through the fiscal quarter ending June 30, 2021. As a result of the expiration of the temporary amendment, we are currently unable to draw on the Amended Revolving Credit Facility and we are in the process of establishing a new facility during the third quarter of 2021. See Note 13—Debt for additional information.
As of July 29, 2021, we have outstanding a $0.2 million letter of credit under the Amended Revolving Credit Facility.
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Cash Flows from Continuing Operations
Our cash flows attributable to continuing operations are as follows:

| Six Months Ended June 30,
| 2021 |  | 2020
| (in thousands)
Net cash provided by operating activities | $ | 54,580 |  |  | $ | 87,916 |
Net cash used in investing activities | (24,765) |  |  | (89,108) |
Net cash (used in) provided by financing activities | (4,970) |  |  | 45,282 |

Cash Flows from Operating Activities
Our largest source of cash provided by our operating activities is revenues generated by our products. Our primary uses of cash from our operating activities include advertising and promotional payments. In addition, our uses of cash from operating activities include compensation and other employee-related costs, other general corporate expenditures, litigation settlements and contingencies, certain contingent consideration payments, and income taxes.
Net cash provided by operating activities attributable to continuing operations decreased in the first six months of 2021 from the first six months of 2020 primarily due to unfavorable changes in accounts receivable, partially offset by favorable changes in accounts payable, accrued expenses and other current liabilities, and income taxes receivable.
Cash Flows from Investing Activities
Net cash used in investing activities attributable to continuing operations in the first six months of 2021 of $24.8 million consisted of capital expenditures of $23.6 million primarily related to internally developed software and leasehold improvements for our new principal corporate offices, as well as the purchase of an additional $1.2 million equity interest in Stash, described above.
Net cash used in investing activities attributable to continuing operations in the first six months of 2020 of $89.1 million consisted of the initial purchase of an $80.0 million equity interest in Stash and capital expenditures of $9.1 million primarily related to internally developed software.
Cash Flows from Financing Activities
Net cash used in financing activities attributable to continuing operations in the first six months of 2021 of $5.0 million consisted primarily of $4.8 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options.
Net cash provided by financing activities attributable to continuing operations in the first six months of 2020 of $45.3 million consisted primarily of $55.0 million of net proceeds from our Amended Revolving Credit Facility, partially offset by $6.1 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options, and a $3.3 million contingent consideration payment for SnapCap.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements other than a letter of credit and our funding commitments pursuant to our surety bonds, none of which have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
New Accounting Pronouncements
For information regarding new accounting pronouncements, see Note 2—Significant Accounting Policies, in Part I, Item 1 Financial Statements.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Other than our Amended Revolving Credit Facility, we do not have any financial instruments that are exposed to significant market risk. We maintain our cash and cash equivalents in bank deposits and short-term, highly liquid money market investments. A hypothetical 100-basis point increase or decrease in market interest rates would not have a material impact on the fair value of our cash equivalents securities, or our earnings on such cash equivalents, but would have an effect on the interest paid on borrowings under the Amended Revolving Credit Facility, if any. As of July 29, 2021, there were no borrowings under the Amended Revolving Credit Facility.
Fluctuations in interest rates affect consumer demand for new mortgages and the level of refinancing activity which, in turn, affects lender demand for mortgage leads. Typically, when interest rates decline, we see increased consumer demand for mortgage refinancing, which in turn leads to increased traffic to our website and decreased selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically decreases, as there are more consumers in the marketplace seeking refinancings and, accordingly, lenders receive more organic lead volume. Due to lower lender demand, our revenue earned per consumer typically decreases but with correspondingly lower selling and marketing costs. Conversely, when interest rates increase, we typically see decreased consumer demand for mortgage refinancing, leading to decreased traffic to our website and higher associated selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically increases, as there are fewer consumers in the marketplace and, accordingly, the supply of organic mortgage lead volume decreases. Due to high lender demand, we typically see an increase in the amount lenders will pay per matched lead, which often leads to higher revenue earned per consumer. However, increases in the amount lenders will pay per matched lead in this situation is limited by the overall cost models of our lenders, and our revenue earned per consumer can be adversely affected by the overall reduced demand for refinancing in a rising rate environment.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), management, with the participation of our principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective, as of June 30, 2021, to reasonably ensure that information required to be disclosed and filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that management will be timely alerted to material information required to be included in our periodic reports filed with the Securities and Exchange Commission.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, we are party to litigation involving property, contract, intellectual property and a variety of other claims. The amounts that may be recovered in such matters may be subject to insurance coverage. We have provided information about certain legal proceedings in which we are involved in Part I, Item 3. Legal Proceedings of our 2020 Annual Report and updated that information in Note 14—Contingencies and Note 17—Discontinued Operations to the consolidated financial statements included elsewhere in this report.
Item 1A. Risk Factors
There have been no material changes to the risk factors included in Part I, Item 1A. Risk Factors of our 2020 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
In each of February 2018 and February 2019, the board of directors authorized and we announced a stock repurchase program which allowed for the repurchase of up to $100.0 million and $150.0 million, respectively, of our common stock. Under this program, we can repurchase stock in the open market or through privately-negotiated transactions. We have used available cash to finance these repurchases. We will determine the timing and amount of any additional repurchases based on our evaluation of market conditions, applicable SEC guidelines and regulations, and other factors. This program may be suspended or discontinued at any time at the discretion of our board of directors. During the quarter ended June 30, 2021, no shares of common stock were repurchased under the stock repurchase program. As of July 23, 2021, approximately $179.7 million remains authorized for share repurchase.
Additionally, the LendingTree Seventh Amended and Restated 2008 Stock Plan approved by our stockholders on June 9, 2021 allows, and the LendingTree 2017 Inducement Grant Plan terminated by us in April 2021 allowed, employees to forfeit shares of our common stock to satisfy federal and state withholding obligations upon the exercise of stock options, the settlement of restricted stock unit awards and the vesting of restricted stock awards granted to those individuals under the plans. During the quarter ended June 30, 2021, 3,506 shares were purchased related to these obligations under the LendingTree Seventh Amended and Restated 2008 Stock Plan and 721 shares were purchased related to these obligations under the LendingTree 2017 Inducement Grant Plan. The withholding of those shares does not affect the dollar amount or number of shares that may be purchased under the stock repurchase program described above.
The following table provides information about the Company's purchases of equity securities during the quarter ended June 30, 2021.

Period |  | Total Number of Shares Purchased (1) |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|  |  |  |  |  |  |  | (in thousands)
4/1/2021 - 4/30/2021 |  | 264 |  |  | $ | 226.78 |  |  | — |  |  | $ | 179,673 |
5/1/2021 - 5/31/2021 |  | 347 |  |  | $ | 211.68 |  |  | — |  |  | $ | 179,673 |
6/1/2021 - 6/30/2021 |  | 3,616 |  |  | $ | 216.81 |  |  | — |  |  | $ | 179,673 |
Total |  | 4,227 |  |  | $ | 217.02 |  |  | — |  |  | $ | 179,673 |

(1)During April 2021, May 2021 and June 2021, 264 shares, 347 shares and 3,616 shares, respectively (totaling 4,227 shares), were purchased to satisfy federal and state withholding obligations of our employees upon the settlement of restricted stock units and restricted stock awards, all in accordance with our Seventh Amended and Restated 2008 Stock Plan and 2017 Inducement Grant Plan, as described above.
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(2)See the narrative disclosure above the table for further description of our publicly announced stock repurchase program.
Item 5. Other Information
None.
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Item 6. Exhibits

Exhibit |  | Description |  | Location
3.1 |  |  | Amended and Restated Certificate of Incorporation of LendingTree, Inc. |  | Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed August 25, 2008
3.2 |  |  | Fourth Amended and Restated By-laws of LendingTree, Inc. |  | Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed November 15, 2017
10.1 |  |  | Memorandum on compensation changes for Trent Ziegler, dated May 12, 2021 |  | †
31.1 |  |  | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |  | †
31.2 |  |  | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |  | †
32.1 |  |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | ††
32.2 |  |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | ††
101.INS |  | XBRL Instance Document — The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |  | †††
101.SCH |  | XBRL Taxonomy Extension Schema Document |  | †††
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document |  | †††
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document |  | †††
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document |  | †††
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document |  | †††
104 |  | Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101) |  | †††

________________________________________________________________________________________________________________________________
† Filed herewith.
†† Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
††† Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: July 29, 2021

| LENDINGTREE, INC.
| By: | /s/ TRENT ZIEGLER
|  | Trent Ziegler
|  | Chief Financial Officer
|  | (principal financial officer and duly authorized officer)

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