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Equitable Group Inc.Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549__________________________________________________FORM 10-K__________________________________________________(Mark One) ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the Fiscal Year Ended December 31, 2018oro TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period from to Commission File No. 001-34063__________________________________________________LendingTree, Inc.(Exact name of Registrant as specified in its charter)Delaware(State or other jurisdiction of incorporation or organization) 26-2414818(I.R.S. Employer Identification No.)11115 Rushmore Drive, Charlotte, North Carolina 28277(Address of principal executive offices)(704) 541-5351(Registrant's telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each ClassCommon Stock, $0.01 Par Value Name of each exchange on which registeredThe Nasdaq Stock MarketSecurities registered pursuant to Section 12(g) of the Act: None________________________________________________________________________________________________________Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ýIndicate 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 preceding12 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 ý No oIndicate 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 (§232.405of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ý No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, tothe best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. oIndicate 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 growthcompany. 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 ý Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging growth company oIf 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 financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ýThe aggregate market value of the voting common stock held by non-affiliates of the Registrant as of June 29, 2018 was approximately $1,684 million. For the purposes of theforegoing calculation only, all directors and executive officers of the Registrant and the single stockholder who owns in excess of 20% of the voting common stock are assumed tobe affiliates of the Registrant.As of February 20, 2019, there were 12,830,510 shares of the Registrant's common stock, par value $.01 per share, outstanding.Documents Incorporated By Reference:Portions of the Registrant's proxy statement for its 2019 Annual Meeting of Stockholders are incorporated by reference into Part III herein. Table of ContentsTABLE OF CONTENTS Page PART I Item 1. Business 3Item 1A. Risk Factors 10Item 1B. Unresolved Staff Comments 27Item 2. Properties 27Item 3. Legal Proceedings 28Item 4. Mine Safety Disclosures 28 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29Item 6. Selected Financial Data 31Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 33Item 7A. Quantitative and Qualitative Disclosures about Market Risk 47Item 8. Financial Statements and Supplementary Data 49Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 101Item 9A. Controls and Procedures 101Item 9B. Other Information 102 PART III Item 10. Directors, Executive Officers and Corporate Governance 103Item 11. Executive Compensation 103Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 103Item 13. Certain Relationships and Related Transactions, and Director Independence 103Item 14. Principal Accounting Fees and Services 103 PART IV Item 15. Exhibits, Financial Statement Schedules 104Item 16. Form 10-K Summary 108 Table of ContentsCAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATIONThis annual report on Form 10-K for the fiscal year ended December 31, 2018 (the "Annual Report") contains "forward-looking statements" within themeaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. These forward-looking statements includestatements related to our anticipated financial performance, business prospects and strategy; anticipated trends and prospects in the various industries inwhich our businesses operate; new products, services and related strategies; and other similar matters. These forward-looking statements are based onmanagement's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstancesthat are difficult to predict. The use of words such as "anticipates," "estimates," "expects," "projects," "intends," "plans" and "believes," among others,generally identify forward-looking statements.Actual results could differ materially from those contained in the forward-looking statements. Factors currently known to management that could causeactual results to differ materially from those in forward-looking statements include those matters discussed below, including in Item 1A. Risk Factors.Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time totime. In light of these risks and uncertainties, the forward-looking statements discussed in this report may not prove to be accurate. Accordingly, you shouldnot 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 orchanges to future operating results or expectations, except as required by law.PART IITEM 1. BusinessOur CompanyLendingTree, Inc. ("LendingTree", the "Company", "we" or "us") operates what we believe to be the leading online consumer platform that connectsconsumers with the choices they need to be confident in their financial decisions. Through multiple branded marketplaces, LendingTree empowersconsumers to shop for financial services the same way they would shop for airline tickets or hotel stays, comparing multiple offers from a nationwide networkof over 550 partners (which we refer to as "Network Partners") in one simple search, and choose the option that best fits their financial needs. Services includemortgage loans, mortgage refinances, 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, thatfacilitate comparison shopping for loans, deposit products, insurance and other offerings. We seek to match consumers with multiple providers, who can offerthem competing quotes for the product, or products, they are seeking. We believe our platform, consisting of a deep network of Network Partners across abroad array of financial products, differentiates us from other loan or insurance comparison-shopping marketplaces which may focus on fewer productofferings or partner with fewer service providers.Our strategically designed and executed advertising and marketing campaigns (which we refer to as performance marketing) span a wide array of digitaland traditional media acquisition channels and promote our LendingTree and other brands and product offerings. Our marketing efforts are designed toattract consumers to our websites and toll-free telephone numbers. Interested consumers complete inquiry forms, providing detailed information aboutthemselves and the loans or other offerings they are seeking. We refer to such consumer inquiries as consumer requests. We then match these consumerrequests with Network Partners in our marketplace that are seeking to serve these consumers' needs. We generate revenue from our Network Partners, generallyat the time of transmitting a consumer request to them, in the form of a match fee. In certain instances outside our mortgage and insurance business, we chargeother kinds of fees, such as closed loan or closed sale fees. In addition to our primary consumer request data referral business, LendingTree also matchesconsumers with Network Partners via website clicks and calls for which partners pay either front-end or back-end fees.We are continually working to improve the consumer experience. We have made investments in technologically-adept personnel and we use in-marketreal-time testing to improve our digital platforms. Additionally, we work with our Network Partners, including providing training and other resources, toimprove the consumer experience throughout the process. Further, we have been building and improving our My LendingTree platform, which provides arelationship-based consumer experience, rather than just a transaction-based experience. Table of ContentsEvolution and Future Growth of Our BusinessAt its inception, our original business was to serve consumers seeking home mortgage loans by matching them with various lenders. We launched theLendingTree brand nationally in 1998 and, over the last twenty years, we invested significantly in this brand to gain widespread consumer recognition.More recently, we have actively sought to expand the suite of financial services offerings we provide to consumers, in order to both leverage theapplicability of the LendingTree brand as well as more fully serve the needs of consumers and Network Partners. We believe that consumers with existingLendingTree-branded associations will be more likely to utilize our other service offerings than those of other providers whose brands consumers may notrecognize.In June 2014, we re-launched My LendingTree, a platform that offers a personalized loan comparison-shopping experience, by providing free creditscores and credit score analysis. This platform enables us to observe consumers' credit profiles and then identify and alert them to loans and other offerings onour marketplace that may be more favorable than the terms they have at a given point in time. This is designed to provide consumers with measurable savingsopportunities over their lifetimes.By expanding our portfolio of financial services offerings, we are growing and diversifying our business and sources of revenue. We intend to capitalizeon our expertise in performance marketing, product development and technology, and to leverage the widespread recognition of the LendingTree brand toeffect 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 tomove towards online shopping and transactions for financial services, suppliers will increasingly shift their product offerings and advertising budgets towardthe 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 marketshift.Recent Business AcquisitionsOn January 10, 2019, we acquired Value Holding Inc., the parent company of ValuePenguin Inc. ("ValuePenguin"), a personal finance website that offersconsumers objective analysis on a variety of financial topics from insurance to credit cards. We believe that combining ValuePenguin’s high-quality contentand search engine optimization capability with recently acquired proprietary technology and insurance carrier network from QuoteWizard.com, LLC("QuoteWizard") (discussed below) enables us to provide immense value to carriers and agents. This strategic acquisition positions us to achieve further scalein the insurance space as well as the broader financial services industry.On October 31, 2018, we acquired QuoteWizard.com, one of the largest insurance comparison marketplaces in the growing online insurance advertisingmarket. QuoteWizard services clients by driving consumers to insurance companies’ websites, providing leads to agents and carriers, as well as phonetransfers of consumers into carrier call centers. We believe this acquisition will establish LendingTree as a leading player in the online insurance advertisingindustry while continuing our ongoing diversification within the financial services category. See "Management's Discussion and Analysis of FinancialCondition and Results of Operations - Results of Operations for the Years ended December 31, 2018, 2017, and 2016 - Revenue."On July 23, 2018, we acquired Student Loan Hero, Inc. (“Student Loan Hero”), a personal finance website dedicated to helping student loan borrowersmanage their student debt. Student Loan Hero offers current and former students in-depth financial comparison tools, educational resources, and unbiased,personalized advice. This strategic transaction allows us to scale our student loan business and provide consumers with the tools and resources to betterunderstand their personal finances and make smarter financial decisions.On June 11, 2018, we acquired Ovation Credit Services, Inc. (“Ovation”), a leading provider of credit services with a strong customer service reputation.Ovation utilizes a proprietary software application that facilitates the credit repair process and is integrated directly with certain credit bureaus whileeducating consumers on credit improvement via ongoing outreach with Ovation case advisors. The proprietary software application offers consumers asimple, streamlined process to identify, dispute, and correct inaccuracies within their credit reports. Ovation's experienced management team, strong creditbureau relationships and customized software platform enable us to help more consumers achieve their original financial goals through the LendingTreeplatform.On September 19, 2017, we acquired certain assets of Snap Capital LLC ("SnapCap"). SnapCap is a tech-enabled online platform, which connectsbusiness owners with lenders offering small business loans, lines of credit and merchant cash advance products through a concierge-based sales approach.SnapCap's high-touch, high-conversion sales approach with our brand and performance marketing expertise has enabled growth in our small businessoffering.On June 20, 2017, we acquired the membership interests of Camino Del Avion (Delaware), LLC, which does business under the name MagnifyMoney.MagnifyMoney is a leading consumer-facing media property that offers editorial content, expert commentary, tools and resources to help consumers comparefinancial products and make informed financial decisions. The4 Table of ContentsMagnifyMoney team brings the expertise and infrastructure to expand content creation and distribution across all of our consumer facing brands, improvingour presence and efficacy in acquisition channels such as search engine optimization.On June 14, 2017, we acquired substantially all of the assets of Deposits Online, LLC, which does business under the name DepositAccounts.com(“DepositAccounts”). DepositAccounts is a leading consumer-facing media property in the depository industry and is one of the most comprehensive sourcesof depository deals and analysis on the Internet, covering all major deposit product categories through editorial content, programmatic rate tables and user-generated content. This acquisition represented our first offering to address the asset side of the consumer balance sheet.On November 16, 2016, we acquired Iron Horse Holdings, LLC, which does business under the name CompareCards. CompareCards is a leading onlinesource for side-by-side credit card comparison shopping. CompareCards provides consumers with one centralized location for pertinent credit cardinformation needed to find the best card for their needs. CompareCards’ unique marketing platform and strong relationships with card issuers combined withLendingTree’s scale and organizational support have delivered substantial growth in our credit card business. See "Management's Discussion and Analysis ofFinancial Condition and Results of Operations - Results of Operations for the Years ended December 31, 2018, 2017, and 2016 - Revenue."These acquisitions continue our diversification strategy.ProductsWe currently report our revenues in two product categories: (i) mortgage products and (ii) non-mortgage products. Non-mortgage products include creditcards, personal loans, home equity loans, reverse mortgage loans, auto loans, small business loans, student loans and insurance quotes. Non-mortgageproducts also include deposit accounts, home improvement referrals and other credit products such as credit repair and debt settlement.Mortgage and non-mortgage product revenue is as follows (in thousands): For the Year Ended December 31, 2018 2017 2016Mortgage products$242,175 $275,910 $219,991Non-mortgage products522,690 341,826 164,411Total revenue$764,865 $617,736 $384,402LendingTree does not charge consumers or small businesses for the use of our services, except for credit repair services. Revenues from our mortgageproducts are mostly derived from upfront match fees paid by Network Partners that receive a consumer request, and in some cases upfront fees for clicks orcall transfers. Because a given consumer request form can be matched with more than one Network Partner, up to five match fees may be generated from asingle consumer request form. Revenues from our non-mortgage products are derived from upfront match fees paid on delivery of a consumer request, click orcall and closed loan fees. For our credit card product, we send click traffic to issuers and are paid per card approval. For the year ended December 31, 2018,there were no Network Partners accounting for more than 10% of total revenue. For the years ended December 31, 2017 and 2016, one Network Partner,Quicken Loans, accounted for 11% and 15% of total revenue, respectively. Another Network Partner, loanDepot, LLC, accounted for 13% of total revenue forthe year ended December 31, 2016.Mortgage ProductsOur mortgage products category includes our purchase and refinance products.We partner with lenders throughout the United States to provide full geographic lending coverage and to offer a complete suite of loan offerings on ourmarketplace. To participate on our marketplace, lenders are required to enter into contracts with us that state the terms and conditions for such participation,although these contracts generally may be terminated for convenience by either party. We perform certain due diligence procedures on prospective newlenders, including screening against a national anti-fraud database maintained by the Mortgage Asset Research Institute, which helps manage our riskexposure. The data is utilized to determine whether a lender and its principals are eligible to participate on our marketplace and have not been convicted ofand/or penalized for fraudulent activity.Consumers seeking mortgage loans through our loan marketplace can receive multiple conditional loan offers from participating lenders in response to asingle consumer request form. We refer to the process by which we match consumers and Network Partners as the matching process. This matching processconsists of the following steps:(1)Consumer Request. Consumers complete a single request form with information regarding the type of mortgage loan product they are seeking, loanpreferences and other data. Consumers also consent to a soft inquiry regarding their credit.5 Table of Contents(2)Consumer Request Form Matching and Transmission. Our proprietary systems and technology match a given consumer's request form data, creditprofile and geographic location against certain pre-established criteria of Network Partners, which may be modified from time to time. Once a givenrequest passes through the matching process, the request is automatically transmitted to up to five participating Network Partners.(3)Lender Evaluation and Response. Network Partners that receive a consumer request form evaluate the information contained in it to determinewhether to make a conditional loan offer.(4)Communication of a Conditional Offer. All matched Network Partners and any conditional offers are presented to the consumer upon completionof the consumer request form. Consumers can return to the site and view their offer(s) at any time by logging in to their My LendingTree profile.Additionally, matched lenders and offers are also sent to the email address associated with the consumer request.We also offer consumers other mortgage products such as:•an alternative "short-form" matching process, which provides them with lender contact information rather than conditional offers from NetworkPartners, and•a "rate table" loan marketplace, where consumers can enter their loan and credit profile and dynamically view real-time rates from lenders withoutentering their contact information.Non-Mortgage ProductsLending Products. Other lending products on our online marketplace include information, tools and access to multiple conditional loan offers for thefollowing:•Auto, which includes our auto refinance and purchase loan products. Auto loans enable consumers to purchase new or used vehicles or refinance anexisting loan secured by an automobile.•Credit cards, which include offerings from most major card issuers. As described above, during the fourth quarter of 2016, we purchasedCompareCards, a leader in the online credit card comparison industry, enhancing this product.•Home equity loans and lines of credit, which enable home owners to borrow against the equity in their home, as measured by the difference betweenthe market value of the home and any existing loans secured by the home. Home equity loans are one-time lump sum loans, whereas a home equityline of credit reflects a line of revolving credit where the borrower has flexibility to draw down and repay the line over time.•Personal loans, which are unsecured obligations generally carrying shorter terms and smaller loan amounts than home mortgages.•Reverse mortgage loans, which are a loan product available to qualifying homeowners age 62 or older.•Small business loans, which include a broad array of financing types, including but not limited to loans secured by working capital, equipment, realestate and other forms of financing, provided to small and medium-sized businesses. As described above, during the third quarter of 2017, wepurchased SnapCap, an online platform with a concierge-based approach to connecting business owners with sources of credit, enhancing thisproduct.•Student loans, which includes both new loans to finance an education and related expenses, as well as refinancing of existing loans. During thesecond quarter of 2016, we purchased SimpleTuition, a leading online marketing platform for student loans, and during the third quarter of 2018, wepurchased Student Loan Hero, a personal finance website dedicated to helping student loan borrowers manage their student debt, enhancing thisproduct.We intend to continue adding new offerings for consumers, small businesses and partners on our online marketplace, in order to grow and diversify oursources of revenue. We may develop such new offerings through internal product development efforts, strategic business relationships with third partiesand/or acquisitions.Other Products. Other products also includes information, tools and access to the following:•Deposit accounts, through which consumers can access depository deals and analysis covering all major deposit product categories. On June 14,2017, we acquired DepositAccounts.com, a leading consumer-facing media property in the depository industry and is one of the mostcomprehensive sources of depository deals and analysis on the Internet, covering all major deposit product categories through editorial content,programmatic rate tables and user-generated content.•Credit repair, through which consumers can obtain assistance improving their credit profiles, in order to expand and improve loan and otherfinancial product opportunities available to them. During the second quarter of 2018, we purchased Ovation, a leading provider of credit serviceswith a strong customer service reputation, enhancing this product.•Debt relief services, through which consumers can obtain assistance negotiating existing loans.6 Table of Contents•Home improvement services, through which consumers have the opportunity to research and find home improvement professional services.•Insurance products, including home and automobile, through which consumers are matched with insurance lead aggregators to obtain insuranceoffers. We enhanced our insurance products by acquiring QuoteWizard, one of the largest insurance comparison marketplaces in the growing onlineinsurance advertising market, in the fourth quarter of 2018. We also purchased ValuePenguin, a personal finance website that offers consumersobjective analysis on a variety of financial topics from insurance to credit cards, in the first quarter of 2019.•Personal credit data, through which consumers can gain insights into how prospective lenders and other third parties view their credit profiles.•Real estate brokerage services, through which consumers are matched with local realtors who can assist them in their home purchase or sale efforts.•Revenue earned through resale of online advertising space to third parties is also classified in other products.We refer to the various purchasers of leads from our other marketplaces as lead purchasers. We generate revenue from the deposit account product from aconsumer clicking from our website through to a financial institution's website. We generate revenue from insurance products through match fees, fees forwebsite clicks or fees for calls. We generate revenue from real estate brokerage services through match fees paid to us by real estate brokers participating inour online marketplace. We generate revenue from credit repair and debt relief services through subscription fees from consumers that enroll in our creditrepair product, or a fee for a customer referral to a service provider partner or through a fee at the time a consumer enrolls in a program with one of ourpartners. Revenue for home services is derived primarily through matching of leads to other home services lead aggregators.SeasonalityRevenue in our lending business is subject to cyclical and seasonal trends. Home sales (and purchase mortgages) typically rise during the spring andsummer months and decline during the fall and winter months, while refinancing and home equity activity is principally driven by mortgage interest rates aswell as real estate values. However, in certain historical periods additional factors affecting the mortgage and real estate markets, such as the 2008-2009financial crisis and ensuing recession have impacted customary seasonal trends.We anticipate revenue in our newer products to be cyclical as well; however, we have limited historical data to predict the nature and magnitude of thiscyclicality. Based on industry data, we anticipate that as our personal loan product matures we will experience less consumer demand during the fourth andfirst quarters of each year. We also anticipate less consumer demand for credit cards in the fourth quarter of each year and we anticipate higher consumerdemand for deposit accounts in the first quarter of each year. The majority of consumer demand for in-school student loan products occurs in the third quartercoinciding with collegiate enrollment in late summer. Other factors affecting our businesses include macro factors such as credit availability in the market,interest rates, the strength of the economy and employment.CompetitionOur lending and other businesses compete with other online marketing companies, including online intermediaries that operate network-typearrangements. We also face competition from lenders and insurance agents that source consumers directly. These companies typically operate consumer-branded websites and attract consumers via online banner ads, keyword placement on search engines, direct mail, television ads, retail branches, realtors,brokers, radio and other sources, partnerships with affiliates and business development arrangements with others, including major online portals.Corporate HistoryLendingTree, Inc., is the parent of LendingTree, LLC and several companies owned by LendingTree, LLC. LendingTree, LLC, formerly known asLendingTree, Inc., was incorporated in the state of Delaware in June 1996 and commenced nationwide operations in July 1998. LendingTree, Inc., wasacquired by IAC/InterActiveCorp ("IAC") in 2003 and converted to a Delaware limited liability company (LendingTree, LLC) in December 2004.LendingTree, LLC entered the mortgage origination business through the acquisition of Home Loan Center, Inc. in 2004. On August 20, 2008, LendingTree,LLC (along with its parent holding company Tree.com, Inc.) was spun off from IAC/InterActiveCorp into a separate publicly-traded company. We refer to theseparation transaction as the "spin-off" in this report. Tree.com was incorporated as a Delaware corporation in April 2008 in anticipation of the spin-off. TheHome Loan Center business was sold to Discover Financial Services in 2012. Since then, the Company has operated as a pure online marketplace and doesnot originate loans. Effective January 1, 2015, we changed our corporate name from Tree.com, Inc. to LendingTree, Inc.7 Table of ContentsRegulation and Legal ComplianceOur businesses market and provide services in heavily regulated industries through a number of different online and offline channels across the UnitedStates. As a result, we are subject to a variety of statutes, rules, regulations, policies and procedures in various jurisdictions in the United States, including:•Restrictions on the manner in which consumer loans are marketed and originated, including, but not limited to, the making of required consumerdisclosures, such as the Federal Trade Commission's Mortgage Advertising Practices ("MAP") Rules, federal Truth-in-Lending Act, the federal EqualCredit Opportunity Act, the federal Fair Credit Reporting Act, the federal Fair Housing Act, the federal Real Estate Settlement Procedures Act("RESPA"), and similar state laws;•Restrictions imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd Frank Act") and current or future rulespromulgated thereunder, including, but not limited to, limitations on fees charged by mortgage lenders, mortgage broker disclosures and rulespromulgated by the Consumer Financial Protection Bureau ("CFPB"), which was created under the Dodd-Frank Act;•Restrictions on the amount and nature of fees that may be charged to lenders and real estate professionals for providing or obtaining consumer loanrequests, such as under RESPA;•Federal and State laws relating to the implementation of the Secure and Fair Enforcement of Mortgage Licensing Act of 2008 (the "SAFE Act") thatrequire us to be licensed in all States and the District of Columbia (licensing requirements are applicable to both individuals and/or businessesengaged in the solicitation of or the brokering of residential mortgage loans and/or the brokering of real estate transactions);•State and federal restrictions on the marketing activities conducted by telephone, mail, email, mobile device or the internet, including theTelemarketing Sales Rule ("TSR"), the Telephone Consumer Protection Act ("TCPA"), state telemarketing laws, federal and state privacy laws, theCAN-SPAM Act, and the Federal Trade Commission Act and their accompanying regulations and guidelines;•State laws requiring licensure for or otherwise imposing restrictions on the solicitation of or brokering of consumer loans which could affect us inour personal loan, automobile loan, student loan, credit card, or other non-mortgage consumer lending businesses;•Federal and state laws relating to offering of credit repair services to consumers, such as Credit Repair Organizations Act ("CROA") and state levelCROA-type statutes.•Restrictions on the usage and storage of consumer credit information, such as those contained in the federal Fair Credit Reporting Act and thefederal CROA; and•State "Bird Dog" laws which restrict the amount and nature of fees, if any, that may be charged to consumers for automobile direct and indirectfinancing.Intellectual PropertyWe believe that our intellectual property rights are vital to our success. To protect our intellectual property rights in our brand, technology, products,improvements and inventions, we rely on a combination of trademarks, trade secrets, patents and other laws, and contractual restrictions on disclosure,including confidentiality agreements with strategic partners, employees, consultants and other third parties. As new or improved proprietary technologies aredeveloped or inventions are identified, we seek patent protection in the United States and abroad, as appropriate. We have one issued U.S. patent related tothe system and method for collecting financial information over a global communications network, which expires in 2032.Many of our services are offered under proprietary trademarks and service marks. We generally apply to register or secure by contract our principaltrademarks and service marks as they are developed and used. We have 28 trademarks and service marks registered with the United States Patent andTrademark Office. These registrations can typically be renewed at 10-year intervals.We reserve and register domain names when and where we deem appropriate and we currently have over 1,500 registered domain names. We also haveagreements with third parties that provide for the licensing of patented and proprietary technology used in our business.8 Table of ContentsFrom time to time, we may be subjected to legal proceedings and claims, or threatened legal proceedings or claims, including allegations of infringementof third-party trademarks, copyrights, patents and other intellectual property rights of third parties. In addition, the use of litigation and other disputeresolution processes, such as Uniform Domain Name Dispute Resolution, may be necessary for us to enforce our intellectual property rights, protect tradesecrets or to determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could resultin substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results ofoperations.EmployeesAs of December 31, 2018, we had 909 employees, of which approximately 892 are full-time and 17 are temporary or part-time. None of our employees arerepresented under collective bargaining agreements and we consider our relations with employees and independent contractors to be good.Additional InformationWebsite and Public FilingsWe maintain a corporate website at www.lendingtree.com and an investor relations website at investors.lendingtree.com. None of the information on ourwebsite is incorporated by reference in this report, or in any other filings with, or in any information furnished or submitted to, the Securities and ExchangeCommission (the "SEC").We make available, free of charge through our website, our reports on Forms 10-K, 10-Q and 8-K, our proxy statement for the annual shareholders'meeting and beneficial ownership reports on Forms 3, 4 and 5 as soon as reasonably practicable after we file such material with, or furnish such material to,the SEC. Our filings with the SEC are available to the public over the Internet at the SEC's website at www.sec.gov.Code of Business Conduct and EthicsOur code of business conduct and ethics, which applies to all employees, including all executive officers and senior financial officers and directors, isposted on our website at investors.lendingtree.com/governance/board-of-directors. This is our code of ethics pursuant to Item 406 of SEC Regulation S-Kand the rules of The Nasdaq Stock Market. Any amendments to or waivers of the code of business conduct and ethics that are of the type described inItem 406(b) and (d) of Regulation S-K will be disclosed on our website.9 Table of ContentsITEM 1A. Risk FactorsInvesting in our common stock involves a high degree of risk. Before making an investment decision, you should carefully consider the risks describedbelow, together with all of the other information included in this annual report and the information incorporated by reference herein. If any of the risksdescribed below, or incorporated by reference into this annual report actually occur, our business, financial condition or results of operations could suffer.In that case, the trading price of our common stock may decline and you may lose all or part of your investment. The risks and uncertainties we havedescribed are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affectour business, financial condition and results of operations. Certain statements below are forward-looking statements. See the information included underthe heading "Cautionary Statement Regarding Forward-Looking Information."Risks Related to Our Business and IndustryAdverse conditions in the primary and secondary mortgage markets, as well as the general economy, could materially and adversely affect our business,financial condition and results of operations.Constraints in the primary and secondary mortgage markets have in the past had, and may in the future have, an adverse effect on our business, financialcondition and results of operations. Generally, increases in interest rates adversely affect the ability of our mortgage Network Partners to close loans, andadverse economic trends limit the ability of our mortgage Network Partners to offer home loans other than low-margin conforming loans. Our businesses mayexperience a decline in demand for their offerings due to decreased consumer demand as a result of the conditions described above, now or in the future. Thedecreased consumer demand for mortgage refinancing typically leads to decreased traffic to our website and higher associated selling and marketing effortsassociated with that traffic. While higher lender demand during these periods often leads to an increase in the amount lenders will pay per matched lead andhigher revenue earned per consumer, increases in the amount lenders will pay per matched lead in this situation is limited by the overall cost models of ourlenders, and our revenue earned per consumer can be adversely affected by the overall reduced demand for refinancing in a rising rate environment. Thesefactors combined to cause lower revenue earned per consumer in the second half of 2018 compared to the prior year period. Conversely, during periods withdecreased interest rates, mortgage Network Partners have less incentive to use our marketplaces, or in the case of sudden increases in consumer demand, ourmortgage Network Partners may lack the ability to support sudden increases in volume.We depend on relationships with Network Partners and any adverse changes in these relationships could adversely affect our business, financial conditionand results of operations.Our success depends in significant part on the financial strength of lenders and lead purchasers participating on our marketplaces and continuingrelationships with such lenders and lead purchases. Network Partners could, for any reason, experience financial difficulties and cease participating on ourmarketplaces, fail to pay match and/or closing fees when due and/or drop the quality of their services to consumers. We could also have commercial or otherdisputes with such Network Partners from time to time. The occurrence of one or more of these events with a significant number of Network Partners could,alone or in combination, have a material and adverse effect on our business, financial condition and results of operations.If we fail to meet certain metrics required by Network Partners, then our business and financial results may be harmed.We compete against other online marketing companies in significant part based on the quality and convertibility of the leads we generate. NetworkPartners have expectations as to the quality and conversion rate of the leads that we generate. These expectations sometimes change over time. The leads thatwe supply to Network Partners may not meet the expectations that they have for such leads. Conversion rates for leads may be impacted by factors other thanthe lead quality, many of which are outside our control. Such factors include competition in lending and insurance markets and sales practices of NetworkPartners. Failure to meet the expectations of Network Partners in terms of quality and convertibility of leads may result in reduced fees paid to us by suchNetwork Partners, or in extreme cases, the loss of one or more Network Partners, which could materially and adversely affect our business, financial conditionand results of operations.Failure to maintain brand recognition and attract and retain consumers in a cost-effective manner could materially and adversely affect our business,financial condition and results of operations.In order to attract visitors to our websites, convert these visitors into loan or other financial product requests for our Network Partners and lead purchasersand generate repeat visits from consumers, our businesses must promote and maintain their various brands. Brand promotion and maintenance requires theexpenditure of considerable money and resources for online and offline advertising, marketing and related efforts, as well as the continued provision andintroduction of high-quality products and services.10 Table of ContentsBrand recognition is a key differentiating factor among providers of online services. We believe that continuing to build and maintain the recognition ofour various brands is critical to achieving increased demand for the services provided by our businesses. Accordingly, we have spent, and expect to continueto spend, significant amounts on, and devote significant resources to, branding, advertising and other marketing initiatives, which may not be successful orcost-effective. The failure of our businesses to maintain the recognition of their respective brands and attract and retain consumers in a cost-effective mannercould materially and adversely affect our business, financial condition and results of operations.Adverse publicity from legal proceedings against us or our businesses, including governmental proceedings and consumer class action litigation, or fromthe disclosure of information security breaches, could negatively impact our various brands, which could materially and adversely affect our business,financial condition and results of operations. In addition, the actions of our third-party marketing partners who engage in advertising on our behalf couldnegatively impact our various brands. Furthermore, adverse publicity and the potential corresponding impact on our reputation may be accelerated andamplified by the widespread use of social media platforms.We depend on search engines, online advertising and other online sources to attract visitors to our websites, and if we are unable to attract these visitorsand convert them into consumer requests for our Network Partners in a cost-effective manner, our business and financial results may be harmed.Our success depends on our ability to attract online consumers to our websites and convert them into customers in a cost-effective manner. We depend, inpart, on search engines, online advertising and other online sources for our website traffic. We are included in search results as a result of both paid searchlistings, where we purchase specific search terms that result in the inclusion of our advertisement, and, separately, organic searches, that depend upon thesearchable content on our sites. Search engines and other online sources revise their algorithms, and introduce new advertising products, from time to time inan attempt to optimize their search results.If one or more of the search engines or other online sources on which we rely for website traffic were to modify its general methodology for how itdisplays our websites, resulting in fewer consumers clicking through to our websites, our business could suffer. If any free search engine traffic on which werely begins charging fees for listing or placement, or if one or more of the search engines or other online sources on which we rely for purchased listings,modifies or terminates its relationship with us, our expenses could rise, we could lose customers, and traffic to our websites could decrease, all of which couldhave a material and adverse effect on our business, financial condition and results of operations. In addition, if our online advertisements are not able to reachcertain consumers due to consumers’ use of ad-blocking software, our business could suffer.We compete with a number of other online marketing companies, and we face the possibility of new competitors.We currently compete with a number of other online marketing companies and we expect that competition will intensify. Some of these existingcompetitors may have more capital or complementary products or services than we do, and they may leverage their greater capital or diversification in amanner that adversely affects our competitive position, including by making strategic acquisitions. In addition, new competitors may enter the market andmay be able to innovate and bring products and services to market faster, or anticipate and meet consumer or Network Partner demand before we do. Othernewcomers, including major search engines and content aggregators, may be able to leverage their existing products and services or access to data to ourdisadvantage. We may be forced to expend significant resources to remain competitive with current and potential competitors. If any of our competitors aremore successful than we are at attracting and retaining customers or Network Partners, our business, financial condition and results of operations could bematerially and adversely affected.Our success depends, in part, on the integrity of our systems and infrastructures. System interruption and the lack of integration and redundancy in thesesystems and infrastructures may have a material and adverse impact on our business, financial condition and results of operations.Our success depends, in part, on our ability to maintain the integrity of our systems and infrastructures, including websites, information and relatedsystems, call centers and distribution and fulfillment facilities. System interruption and the lack of integration and redundancy in our information systemsand infrastructures may materially and adversely affect our ability to operate websites, process and fulfill transactions, respond to customer inquiries andgenerally maintain cost-efficient operations. We may experience occasional system interruptions that make some or all systems or data unavailable or preventour businesses from efficiently providing services or fulfilling orders. We also rely on affiliate and third-party computer systems, broadband and othercommunications systems and service providers in connection with the provision of services generally, as well as to facilitate, process and fulfill transactions.Any interruptions, outages or delays in our systems and infrastructures, our businesses, our affiliates and/or third parties, or deterioration in the performanceof these systems and infrastructures, could impair the ability of our businesses to provide services, fulfill orders and/or process transactions. Fire, flood, powerloss, telecommunications failure, hurricanes, tornadoes, earthquakes, acts of war or terrorism, acts of God, unauthorized intrusions or computer viruses, andsimilar11 Table of Contentsevents or disruptions may damage or interrupt computer, broadband or other communications systems and infrastructures at any time. Any of these eventscould cause system interruption, delays and loss of critical data, and could prevent our businesses from providing services, fulfilling orders and/or processingtransactions. While our businesses have backup systems for certain aspects of their operations, these systems are not fully redundant and disaster recoveryplanning is not sufficient for all eventualities. In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption.If any of these events were to occur, it could materially and adversely affect our business, financial condition and results of operations.We are also in the process of transitioning certain product exchanges to a new technology platform. The risks associated with this transition include, butare not limited to, operational implementation, downtimes, and diversion of management and technical resources. If the transition to the new platform is morechallenging or time consuming than expected, then our business, financial condition and results of operations could be materially and adversely affected.Breaches or failures of our network and website security, the theft, unauthorized access, acquisition, use, disclosure or misappropriation of personalconsumer information, the occurrence of fraudulent activity, or other data security-related incidents may have a material and adverse impact on ourbusiness, financial condition and results of operations.Breaches or failures of security involving our systems and website or those of any of our affiliated third-parties may occur, and could result in the theft,unauthorized access, acquisition, use, disclosure, or misappropriation of personal consumer information, fraudulent activity, or system disruptions orshutdowns. Any breach, penetration, or failure of network security or theft, unauthorized access, acquisition, use, disclosure or misappropriate of personalconsumer information collected, processed, or maintained by us or our affiliated third-parties could cause interruptions in the operations of our businessesand subject us to increased costs, litigation, and other liabilities. The occurrence of any real or attempted breach, penetration, or failure of security, or thereporting of such an incident, whether accurate or not, could result in claims made against us or our third-party affiliates for the theft, unauthorized access,acquisition, use, disclosure, or misappropriation of personal information, which could result in state and/or federal litigation and related financial liabilities,as well as criminal penalties or civil liabilities and regulatory actions from state and/or federal governmental authorities. Real or perceived security breachesor failures could also significantly damage our brand and reputation with consumers and third parties with whom we do business and result in adversepublicity, loss of consumer confidence, and reduced sales and profits.We may be required to expend significant capital and other resources to protect against, respond to, and recover from any potential, attempted, orexisting security breaches or failures and their consequences. We also face risks associated with security breaches affecting third parties with whom we areaffiliated or otherwise conduct business. Consumers are generally concerned with security and privacy of the Internet, and any publicized security problemsaffecting our businesses and/or those of third parties may discourage consumers from doing business with us, which could have a material and adverse effecton our business, financial condition and results of operations.We are susceptible to fraudulent activity and data security-related incidents that may be committed against us, our Network Partners or external serviceproviders which may result in financial losses or increased costs to us, disclosure or misuse of our information, theft, unauthorized access, acquisition, use,disclosure or misappropriation of personal information, misappropriation of assets, privacy litigation, regulatory actions, or damage to our reputation. Suchfraudulent and malicious activity may take many forms, including check fraud, fraudulent inducement, electronic fraud, wire fraud, computer viruses,phishing, social engineering and other dishonest acts, any of which could be the result of a circumvention or failure of our data security processes,procedures, tools, and controls. Information security breaches and failures may include fraudulent or unauthorized access to systems used by us, NetworkPartners, or external service providers, denial or degradation of service attacks, and malware, such as ransomware, or other cyber-attacks. We rely on aframework of security, processes, procedures, tools, and controls designed to protect our information and assets, but despite our reasonable efforts to ensurethe integrity of our systems and website, it is possible that we may not be able to anticipate or implement effective preventative measures against all securitybreaches or failures and fraudulent activity, especially because the methods of attack and deception change frequently and because such conduct canoriginate from a wide variety of sources, including third parties such as external service providers. As a result, our business, financial condition or results ofoperations could be adversely affected.Litigation and indemnification of secondary market purchasers, including a pending case brought by Residential Funding Company, LLC, could have amaterial and adverse effect on our business, financial condition, results of operations and liquidity.In connection with the sale of loans to secondary market purchasers, Home Loan Center, Inc. ("HLC") may be liable for certain indemnification,repurchase and premium repayment obligations. For example, in connection with the sale of loans to secondary market purchasers, HLC made certainrepresentations regarding related borrower credit information, loan documentation and collateral. To the extent that these representations were incorrect, HLCmay be required to repurchase loans or indemnify secondary market purchasers for losses due to borrower defaults. HLC has made payments for theseliabilities in the past and expects to make payments for these liabilities in the future.12 Table of ContentsWe continue to be liable for these indemnification obligations, repurchase obligations and premium repayment obligations following the sale ofsubstantially all of the operating assets of our LendingTree Loans business. We have in the past and intend to continue to negotiate in the future withsecondary market purchasers to settle any existing and future contingent liabilities, but we cannot assure you we will be able to do so on terms acceptable tous, or at all.In the fourth quarter of 2018, the case of Residential Funding Company, LLC v Home Loan Center, Inc., went to trial, and the jury returned a verdict of$28.7 million in favor of the plaintiff. The plaintiff is also seeking up to $28.8 million in attorneys’ fees and $30.6 million in pre-judgment interest inaddition to the jury verdict amount. As of February 28, 2019, the court has not yet entered judgment in favor of the plaintiff. HLC believes it has stronggrounds for appeal and further believes that the plaintiff’s demand for attorneys’ fees and pre-judgment interest is excessive (and, if granted, would be subjectto appeal). HLC intends to vigorously pursue an appeal but we cannot assure you that the appeal will be successful or that even if successful on certaintheories, the plaintiff would not receive a substantial recovery upon retrial or otherwise. See Note 15 - Contingencies, in the notes to the consolidatedfinancial statements included elsewhere in this report. We have incurred substantial legal fees in this matter. See Item 7. Management's Discussion andAnalysis of Financial Condition and Results of Operations-Results of Operations for the Years Ended December 31, 2018, 2017 and 2016-DiscontinuedOperations.The ultimate outcome of the Residential Funding Company, LLC matter and the outcomes of other pending of indemnification claims, repurchaseobligations or premium repayments beyond our reserves for these contingencies, including legal fees we incur, may have a material and adverse effect on ourbusiness, financial condition and results of operations.Difficult market conditions have adversely affected the mortgage industry.Declines in the housing market from 2006 through early 2012, as measured by the S&P/Case-Schiller 20-city composite home price index, with homeprice declines and increased foreclosures, unemployment and under-employment, negatively impacted the credit performance of mortgage loans and resultedin significant write-downs of asset values by financial institutions, including government-sponsored entities as well as major commercial and investmentbanks. These write-downs, initially of mortgage-backed securities but subsequently of other asset-backed securities, credit default swaps and other derivativeand cash securities, in turn, caused many financial institutions to seek additional capital, merge with larger and stronger institutions and, in some cases, tofail.Reflecting concern about the stability of the housing markets generally and the strength of counterparties, many lenders and institutional investorsreduced or ceased providing funding to borrowers, including to other financial institutions. This market disruption and tightening of credit led to anincreased level of commercial and consumer delinquencies, lack of consumer confidence and increased market volatility. The resulting economic pressure onconsumers and lack of confidence in the financial markets has had in the past and may have in the future, an adverse effect on our business, financialcondition and results of operations.While conditions in the housing markets have improved since 2013, the failure to sustain such improvements could have adverse effects on us and ourmortgage Network Partners. Further, our business could be adversely affected by the actions and commercial soundness of other businesses in the financialservices sector, including our non-lender lead purchasers. As a result, defaults by, or even rumors or questions about, one or more of these entities, or thefinancial services industry generally, have in the past, and may in the future, lead to market-wide liquidity problems and could lead to disruptions in thefinancial technology industry. Any such disruption could have a material and adverse effect on our business, financial condition and results of operations.A significant portion of our revenue growth in 2017 and 2018 has been driven by our credit card product.Our credit card product offering is subject to particular risks:•adverse conditions in the economy may affect credit card issuers and their willingness to issue new credit;•credit losses among credit card issuers may increase beyond normal and budgeted levels which could cause a reduction in demand;•interest rate increases may make balance transfer cards less profitable for issuers;•credit card issuers and other advertisers in the business verticals in which we operate may be unwilling to advertise on our websites or mobileapplications;•changes in application approval rates by credit card issuer customers;•increased competition and its effect on our website traffic, click-through rates, advertising rates, revenue, margins, and market share;•ability to provide competitive service to credit card issuers and to consumers using our online offerings and other platforms;13 Table of Contents•credit card issuers may determine that the online digital marketing channel is no longer a viable marketing platform for generating new credit cardcustomers;•our ability to maintain brand recognition for both LendingTree and CompareCards and to effectively leverage the LendingTree brand with theCompareCards brand; and•our ability to develop new products and services and enhance existing ones.If our credit card product is impacted by the risks described above, then our results of operations and future growth prospects could be materially andadversely affected.A significant portion of our revenue growth in 2018 has been driven by our insurance leads business through our acquisition of QuoteWizard, which wascompleted in October 2018.The QuoteWizard acquisition poses risks for our ongoing operations, including, among others:•adverse conditions in the economy may affect insurance carriers and their willingness to issue policies;•covered losses among insurance carriers may increase beyond normal and budgeted levels which could cause a reduction in demand;•insurance carriers and other advertisers in the business verticals in which we or QuoteWizard operate may be unwilling to advertise on our orQuoteWizard’s websites or mobile applications;•changes in underwriting approval rates by insurance carrier customers;•increased competition and its effect on our or QuoteWizard’s website traffic, click-through rates, advertising rates, revenue, margins, and marketshare;•ability to provide competitive service to insurance carriers and to consumers using QuoteWizard’s and our online offerings and other platforms;•insurance carriers may determine that the online digital marketing channel is no longer a viable marketing platform for generating new insurancecustomers;•our ability to maintain brand recognition for both LendingTree and QuoteWizard and to effectively leverage the LendingTree brand with theQuoteWizard brand;•our ability to develop new products and services and enhance existing ones;•our ability to retain key employees of QuoteWizard;•costs and expenses associated with any undisclosed or potential liabilities;•that the business acquired in the acquisition may not continue to perform as well as anticipated; and •assumed liabilities associated with QuoteWizard’s historical operations, including liabilities arising from privacy and security regulations orsecurity breaches.If the QuoteWizard business is impacted by the risks described above, then our results of operations and future growth prospects could be materially andadversely affected.A portion of our revenue growth in recent years has been driven by personal loan offerings. If lenders participating on our marketplace decide to reducetheir offerings of personal loans or if such loans become unattractive to consumers because of higher interest rates demanded by lenders, then our resultsof operations and future growth prospects could be materially and adversely affected.Revenue from personal loan offerings was responsible for a significant portion of the growth in the non-mortgage revenue over the last few years.Revenue from our personal loan product increased $46.0 million in 2018 from 2017 and $21.7 million in 2017 from 2016.Personal loans are unsecured obligations and generally carry shorter terms and smaller loan amounts than mortgages. Because they are unsecured, theyare generally riskier assets for lenders than mortgages or other secured loans. Consumer demand for unsecured loans offered on our marketplace is often forrefinancing of higher interest credit card debt or for a lower interest alternative to credit card debt for a contemplated larger purchase that would otherwise bepurchased with a credit card. Lenders14 Table of Contentsparticipating on our marketplace may reduce their willingness to make personal loans at more attractive interest rates than credit card debt and may for thatreason, or for any other reason, reduce their demand for personal consumer requests generated from our personal loan marketplace. Reasons that lenders mightreduce their willingness to make personal loans at attractive interest rates may include regulatory changes, stricter institutional lending criteria, a lack ofadequate funding sources or capital for loan originations, or increased borrower default levels, which may occur upon adverse changes in regional, nationalor global economic conditions. Additionally, lenders may tighten their underwriting standards, making it more difficult for consumers to qualify for personalloans. If lenders participating on our marketplace decide to reduce their offerings of personal loans, tighten their underwriting standards, or if personal loansbecome unattractive to consumers because of higher interest rates demanded by lenders, then our results of operations and future growth prospects could bematerially and adversely affected.Network Partners affiliated with our marketplaces are not precluded from offering products and services outside of our marketplaces, or obtainingproducts and services from our competitors.Because our businesses do not have exclusive relationships with Network Partners, consumers may obtain loans and other financial products from thesethird-party service providers without having to use our marketplaces. Network Partners can offer loans and other financial products directly to consumersthrough their own marketing campaigns or other traditional methods of distribution, such as referral arrangements, physical store-front operations or brokeragreements. Network Partners may also offer loans and other financial products and services to prospective customers online directly, through one or moreonline competitors of our businesses, or both. If a significant number of consumers seek loans and other financial products and services directly from NetworkPartners or through our competitors as opposed to through our marketplaces, our business, financial condition and results of operations could be materiallyand adversely affected.Some of our non-mortgage products are new to the market and may fail to achieve or maintain customer acceptance and profitability.We have launched a number of new non-mortgage products over the last several years. We do not have as much experience with these new non-mortgageproducts as with the mortgage products and our other mature non-mortgage products. Accordingly, new non-mortgage products may be subject to greaterrisks than our more mature products.The success of new products we may offer will depend on a number of factors, including:•Implementing, at an acceptable cost, product features offered by our competitors and/or expected by consumers, lenders and lead purchasers;•Market acceptance by consumers, lenders and lead purchasers;•Offerings by current and future competitors;•Our ability to attract and retain management and other skilled personnel for these businesses;•Our ability to collect amounts owed to us from third parties;•Our ability to develop successful and cost-effective marketing campaigns; and•Our ability to timely adjust marketing expenditures in relation to changes in demand for the underlying products and services offered by ourNetwork Partners.Our results of operations may suffer if we fail to successfully anticipate and manage these issues associated with new products.If we are unable to continually enhance our products and services and adapt them to technological changes and consumer and lender and/or leadpurchaser needs, including the emergence of new computing devices and more sophisticated online services, we may lose market share and revenue andour business could suffer.We need to anticipate, develop and introduce new products, services and applications on a timely and cost-effective basis that keep pace withtechnological developments and changing consumer and customer needs. For example, the number of individuals who access the internet through devicesother than a personal computer, such as tablets, mobile telephones, voice assistants, televisions and set-top box devices has increased significantly and thistrend is likely to continue. Because each manufacturer or distributor may establish unique technical standards for its devices, our websites may not befunctional or viewable on these devices. Additionally, new devices and new platforms are continually being released. Consumers access many traditionalweb services on mobile devices through applications, or apps.It is difficult to predict the problems we may encounter in improving our websites' functionality with these alternative devices or developing apps formobile platforms. If we fail to develop our websites or apps to respond to these or other technological developments and changing consumer and customerneeds cost effectively, or if consumers and customers respond negatively to15 Table of Contentschanges, we may lose market share, which could materially and adversely affect our business, financial condition and results of operations.We improve our products and services in ways that forego short-term gains.We are constantly striving to improve the user experience for our consumers who use our websites and applications and for our Network Partners. Someof our changes may have the effect of reducing our short-term revenue or profitability if we believe that the benefits will ultimately improve our financialperformance over the long-term. Any short-term reductions in revenue or profitability could be more severe than we anticipate or these decisions may notproduce the long-term benefits that we expect, in which case our business and results of operations could be adversely affected.We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties.We regard our intellectual property rights, including patents, service marks, trademarks and domain names, copyrights, trade secrets and similarintellectual property (as applicable), as critical to our success. Our businesses also rely heavily upon software codes, informational databases and othercomponents that make up their products and services.We rely on a combination of laws and contractual restrictions with employees, customers, suppliers, affiliates and others to establish and protect theseproprietary rights. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use trade secrets or registered intellectualproperty without authorization which, if discovered, might require legal action to correct. In addition, third parties may independently and lawfully developsubstantially similar intellectual properties.We have generally registered and continue to apply to register, or secure by contract when appropriate, our principal trademarks and service marks asthey are developed and used, and reserve and register domain names when and where we deem appropriate. We generally consider the protection of ourtrademarks to be important for purposes of brand maintenance and reputation. While we vigorously protect our trademarks, service marks and domain names,effective trademark protection may not be available or may not be sought in every country in which products and services are made available, andcontractual disputes may affect the use of marks governed by private contract. Similarly, not every variation of a domain name may be available or beregistered, even if available. Our failure to protect our intellectual property rights in a meaningful manner or challenges to related contractual rights couldresult in erosion of brand names and limit our ability to control marketing on or through the Internet using our various domain names or otherwise, whichcould materially and adversely affect our business, financial condition and results of operations.We have been granted patents and from time to time we may have patent applications pending with the United States Patent and Trademark Office andvarious foreign patent authorities for various proprietary technologies and other inventions. The status of any patent involves complex legal and factualquestions, and the breadth of claims allowed is uncertain. Accordingly, any patent application filed may not result in a patent being issued, or existing orfuture patents may not be adjudicated valid by a court or be afforded adequate protection against competitors with similar technology. In addition, thirdparties may create new products or methods that achieve similar results without infringing upon patents that we own.Likewise, the issuance of a patent to us does not mean that our processes or inventions will be found not to infringe upon patents or other rightspreviously issued to third parties.From time to time, in the ordinary course of business we are subjected to legal proceedings, claims and counterclaims, or threatened legal proceedings,claims or counterclaims, including allegations relating to misappropriation of trade secrets or infringement of the trademarks, copyrights, patents and otherintellectual property rights of third parties. In addition, litigation may be necessary in the future to enforce our intellectual property rights, protect tradesecrets or to determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could resultin substantial costs and diversion of management and technical resources, any of which could materially and adversely affect our business, financialcondition and results of operations. Patent litigation tends to be particularly protracted and expensive.Our framework for managing risks may not be effective in mitigating our risk of loss.Our risk management framework seeks to mitigate risk and appropriately balance risk and return. We have established processes and procedures intendedto identify, measure, monitor and report the types of risk to which we are subject, including credit risk, market risk, liquidity risk, operational risk, legal andcompliance risk, and strategic risk. We seek to monitor and control our risk exposure through a framework of policies, procedures and reporting requirements.There may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated. If our risk managementframework does not effectively identify or mitigate our risks, we could suffer unexpected losses and could be materially and adversely affected.The intended benefits of recent acquisitions may not be realized.Our acquisitions pose risks for our ongoing operations, including, among others:16 Table of Contents•that senior management’s attention may be diverted from the management of daily operations to the integration of the businesses acquired in theacquisition;•we may be unable to retain key employees of businesses acquired;•costs and expenses associated with any undisclosed or potential liabilities;•that the businesses acquired in the acquisition may not perform as well as anticipated;•adverse conditions in the economy may affect the lenders or customers of the acquired businesses and their willingness to issue new credit;•advertisers in the business verticals in which we or the acquired businesses operate may be unwilling to advertise on our websites or mobileapplications;•increased competition and its effect on our or the acquired businesses' website traffic, click-through rates, submitted consumer requests, advertisingrates, revenue, margins, and market share;•our ability to maintain brand recognition for both us and the acquired businesses and to effectively leverage the LendingTree brand with the newlyacquired brands;•our ability to develop new products and services and enhance existing ones;•assumed liabilities associated with the historical operations of the acquired businesses, including as a result of privacy regulations or data breaches.As a result of the foregoing, our acquisitions may not be accretive to us in the near term or at all. Furthermore, if we fail to realize the intended benefits ofthe business acquired in the acquisition, the market price of our common stock could decline to the extent that the market price reflects an expectation ofthose benefits.Other acquisitions or strategic investments that we pursue may not be successful and could disrupt our business and harm our financial condition.We may consider or undertake strategic acquisitions of, or material investments in, businesses, products or technologies. We may not be able to identifysuitable acquisition or investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there isno guarantee that we can obtain any necessary regulatory approvals or complete such transactions on terms that are favorable to us. To the extent we pay thepurchase price of any acquisition or investment in cash or through borrowings under our Revolving Credit Facility, it would reduce our cash balances and/orresult in indebtedness we must service, which may have a material and adverse effect on our business and financial condition. If the purchase price is paidwith our stock, it would be dilutive to our stockholders. In addition, we may assume liabilities associated with a business acquisition or investment,including unrecorded liabilities that are not discovered at the time of the transaction, and the repayment of those liabilities may have a material and adverseeffect on our financial condition. There may also be litigation or other claims arising in connection with an acquisition itself.We may not be able to successfully integrate the personnel, operations, businesses, products or technologies of an acquisition or investment. Integrationmay be particularly challenging if we enter into a line of business in which we have limited experience and the business operates in a difficult legal,regulatory or competitive environment. We may find that we do not have adequate operations or expertise to manage the new business. The integration ofany acquisition or investment may divert management's time and resources from our core business, which could impair our relationships with our currentemployees, customers and strategic partners and disrupt our operations. Acquisitions and investments also may not perform to our expectations for variousreasons, including the loss of key personnel or customers. If we fail to integrate acquisitions or investments or realize the expected benefits, we may lose thereturn on these acquisitions or investments or incur additional transaction costs and our business and financial condition may be harmed as a result.If we fail to manage our growth effectively, our business and results of operations could be harmed.We have experienced rapid and significant growth in our headcount and operations, including as a result of acquisitions, which places substantialdemand on management and our operational infrastructure. As we continue to grow, we must effectively integrate, develop and motivate a large number ofnew employees, while maintaining the beneficial aspects of our company culture. If we do not manage the growth of our business and operations effectively,the quality of our services and efficiency of our operations could suffer, which could harm our business and results of operations.17 Table of ContentsWe rely on the performance of highly skilled personnel and if we are unable to attract, retain and motivate well-qualified employees, our business could beharmed.We believe our success has depended, and continues to depend, on the efforts and talents of our management team and our highly skilled employees,including our software engineers, analysts, marketing professionals and sales staff. Our future success depends on our continuing ability to attract, develop,motivate and retain highly qualified and skilled employees. The loss of any of our senior management or key employees could materially and adverselyaffect our ability to build on the efforts they have undertaken and to execute our business plan, and we may not be able to find adequate replacements. Wecannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If we do not succeed in attractingwell-qualified employees or retaining and motivating existing employees, our business and results of operations could be harmed.Network Partners on our marketplaces may not provide competitive levels of service to consumers, which could materially and adversely affect our brandsand businesses and their ability to attract consumers.The ability of our businesses to provide consumers with a high-quality experience depends, in part, on consumers receiving competitive levels ofconvenience, customer service, price and responsiveness from Network Partners participating on our other marketplaces with whom they are matched. If theseproviders do not provide consumers with competitive levels of convenience, customer service, price and responsiveness, the value of our various brands maybe harmed, the ability of our businesses to attract consumers to our websites may be limited and the number of consumers matched through our marketplacesmay decline, which could have a material and adverse effect on our business, financial condition and results of operations.A significant portion of our total revenue is derived from two Network Partners, and our results from operations could be adversely affected andstockholder value harmed if we lose significant business from either of these Network Partners.For the years ended December 31, 2017 and 2016, one Network Partner accounted for 11% and 15% of total revenue. For the year ended December 31,2016, another Network Partner accounted for 13% of total revenue. If either of these significant Network Partners were to cease purchasing consumer requestsand we were unable to replace the associated demand, the loss could have a material adverse effect on our results of operations in the short term andpotentially also the longer term. Also, if either Network Partner reduces its volume of consumer requests for any reason, our business could be adverselyaffected.Our current lack of geographic diversity exposes us to risk.Other than a support services office in India, our operations are geographically limited to and dependent upon the economic condition of the UnitedStates. As a result of this geographical concentration, we are more vulnerable to downturns or other conditions that affect the US economy. We may choose toexpand our operations in order to increase our geographic diversity, and if we do, such expansion would place increased responsibilities on our management,divert resources from other operations and expose us to new risks of foreign operations.We have incurred significant operating losses in the past and we may not be able to generate sufficient revenue to be profitable over the long term.We have incurred operating losses from continuing operations at times in our history, and although we were profitable in 2016, 2017 and 2018, we havean accumulated deficit of $610.5 million at December 31, 2018. If we fail to maintain or grow our revenue and manage our expenses, we may incursignificant losses in the future and not be able to maintain profitability.U.S. federal income tax reform could adversely affect us.On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (TCJA), which legislation significantly reforms the Internal RevenueCode of 1986, as amended. This tax legislation significantly reduced the U.S. statutory corporate tax rate and made other changes that could have a favorableimpact on our overall U.S. federal tax liability in a given period. However, the tax legislation also included a number of provisions, including, but not limitedto, the limitation or elimination of various deductions or credits (including for interest expense and for performance-based compensation under Section162(m) of the Internal Revenue Code), the changing of the timing of the recognition of certain income and deductions or their character, and the limitation ofasset basis under certain circumstances, that could significantly and adversely affect our U.S. federal income tax position. The legislation also made changesto the tax rules applicable to financial institutions and other entities with which we do business.We revalued deferred tax assets at December 31, 2017 in light of the changes in the TCJA, and we recorded a net tax expense of $9.1 million during thefourth quarter of 2017.18 Table of ContentsThe impact of the TCJA and associated anticipated regulations on future years may be material to our consolidated financial statements. For example, wehave historically relied extensively on performance-based compensation for our executive officers. The non-deductibility of future performance-basedcompensation to executive officers, and the expanded definition of “covered employees” whose compensation is subject to Section 162(m) may havematerial adverse effects on our effective tax rates. In addition, the limitations on the deductibility of interest may affect our anticipated tax benefits for theconvertible note and hedge transactions described in Note 13—Debt to the consolidated financial statements included elsewhere in this report. We continueto examine the impact this tax reform legislation may have on our business. The impact of this tax reform on holders of our common stock is uncertain andcould be adverse. Similarly, changes in tax laws and regulations that impact our Network Partners or the economy generally may also impact our financialcondition and results of operations.In addition, tax laws and regulations are complex and subject to varying interpretations, and any significant failure to comply with applicable tax lawsand regulations in all relevant jurisdictions could give rise to substantial penalties and liabilities. Any changes in enacted tax laws (such as the recent U.S.tax legislation), rules or regulatory or judicial interpretations; any adverse outcome in connection with tax audits in any jurisdiction; or any change in thepronouncements relating to accounting for income taxes could materially and adversely impact our effective tax rate, tax payments, financial condition andresults of operations.Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.As of December 31, 2018, we had pre-tax consolidated federal net operating losses (“NOLs”) of $203.5 million. The federal NOLs no longer expire underthe new TCJA. Our NOLs will be available to offset taxable income subject to the limitations found in Internal Revenue Code Sections 382 and 383. Inaddition, we have state NOLs of approximately $498.5 million at December 31, 2018, that will expire at various times between 2020 and 2038. If weexperience one or more ownership changes in the future as a result of future transactions in our stock, our ability to utilize NOLs could be limited. Our abilityto use our NOLs was limited by the TCJA. See "U.S. federal income tax reform could adversely affect us."We will need to relocate our corporate headquarters due to our growth and we may experience costs and risks associated with our ownership of a two-building office complex we purchased in Charlotte, North Carolina.Our principal executive offices are currently located in approximately 37,800 square feet of office space in Charlotte, North Carolina under a lease thatexpires in December 2020. We have determined that we will need to relocate our principal executive offices to accommodate our growth and we are in theprocess of selecting an alternative site. We will incur relocation costs associated with the movement of employees to a new principal executive office or othersites. We may experience loss of employees or lost employee productivity resulting from this relocation and other work location changes necessitated by ourgrowth. Any of these costs and risks may negatively impact our earnings and cause our stock price to decline.In December 2016, we completed the purchase of two office buildings in Charlotte, North Carolina for an aggregate purchase price of $23.5 million. Wecurrently lease a portion of this space to other tenants. We acquired these buildings with the intent to use such buildings as our principal executive offices inthe future, and rent any unused space. In November 2018, our board of directors approved a plan to sell these two office buildings and they were classified asheld for sale. In February 2019, we agreed to sell these buildings to an unrelated third party. For additional information, see Item 9B. Other Information andNote 7 - Assets Held For Sale in the notes to the consolidated financial statements included elsewhere in this report. There are costs and risks associated withour leasing and holding this real estate for sale, including:•real estate taxes and maintenance costs;•financial difficulties or lease defaults by our tenants;•tenant turnover and loss of potential tenants to competing landlords;•actions by competing landlords that may decrease or prevent increases in the occupancy and rental rates of our properties;•costs of compliance with governmental rules and regulations, including the Americans with Disabilities Act, and zoning laws and potential liabilitythereunder;•changes in the cost or availability of adequate insurance, including coverage for mold and asbestos;•costs associated with environmental conditions or retained liabilities for such conditions;•costs associated with remodeling the buildings;•securing required governmental construction, zoning or other approvals and permits;•management of modifications in the design to the size and scope of the remodeling or other unforeseen engineering problems;19 Table of Contents•exposure to real estate market conditions affecting the marketability and realizable value of the property;•the risk that binding purchase agreements for the sale of properties such as these buildings customarily have a post-signing inspection period duringwhich the buyer is able to terminate the agreement with limited remedies to us as the seller; and•the potential for retained liabilities following a sale, such as those imposed under environmental laws or that we may otherwise agree to.Our Revolving Credit Facility contains financial covenants and other restrictions on our actions, and it could therefore limit our operational flexibility orotherwise adversely affect our financial condition. Failure to comply with the terms of any such facility could impair our rights to the assets that have beenpledged as collateral under the facility.On November 21, 2017, our wholly-owned subsidiary LendingTree, LLC entered into an amended and restated $250.0 million five-year senior securedrevolving credit facility which matures on November 21, 2022 (the "Revolving Credit Facility"). On October 26, 2018, we amended the Revolving CreditFacility to increase its borrowing capacity by $100.0 million to $350.0 million. Borrowings under the Revolving Credit Facility can be used to financeworking capital needs, capital expenditures, and general corporate purposes, including to finance permitted acquisitions. As of February 28, 2019, there was$195.0 million borrowed under the Revolving Credit Facility.The Revolving Credit Facility contains a restrictive financial covenant, which limits the total consolidated debt to an EBITDA ratio. In addition, theRevolving Credit Facility contains customary affirmative and negative covenants, including, subject to certain exceptions, restrictions on our ability to,among other things:•incur additional indebtedness;•grant liens;•make loans and investments;•enter into mergers or make certain fundamental changes;•make certain restricted payments, including dividends, distributions, stock repurchases or redemptions;•sell assets;•enter into transactions with affiliates;•enter into restrictive transactions;•enter into sale and leaseback transactions;•enter into hedging transactions; and•engage in certain other transactions without the prior consent of the lenders.The 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 equity, and 100% of the non-voting equity, in all of its material foreignsubsidiaries (of which there are currently none). The obligations under this facility are unconditionally guaranteed on a senior basis by LendingTree, Inc. andmaterial 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, and100% of the non-voting equity, in all of its material foreign subsidiaries (of which there are currently none).If an event of default occurs or if we otherwise fail to comply with any of the negative or affirmative covenants of the Revolving Credit Facility, thelenders may declare all of the obligations and indebtedness under such facility due and payable. In such a scenario, the lenders could exercise their lien onthe pledged collateral, which would have a material adverse effect on our business, operations, financial condition and liquidity. For additional informationon the Revolving Credit Facility, see Note 13—Debt, in the notes to the consolidated financial statements included elsewhere in this report.20 Table of ContentsIf our goodwill or indefinite-lived intangible assets become impaired, we may be required to record a significant charge to earnings.Under accounting principles generally accepted in the United States of America ("GAAP"), we review the carrying value of goodwill and indefinite-livedintangible assets on an annual basis as of October 1, or more frequently if an event occurs or circumstances change that would more likely than not reduce thefair value of a reporting unit below its carrying value. Factors that may be considered a change in circumstances, indicating that the carrying value of ourgoodwill or indefinite-lived intangible assets may not be recoverable, include a decline in stock price and market capitalization, reduced future cash flowestimates and slower growth rates in our industry or our customers' industries. We may be required to record a significant charge in our financial statementsduring a period in which any impairment of our goodwill or indefinite-lived intangible assets is determined, negatively impacting our results of operations.Charges to earnings resulting from acquisitions may adversely affect our operating results.Under GAAP, when we acquire businesses, we allocate the purchase price to tangible assets and liabilities and identifiable intangible assets acquired attheir acquisition date fair values. Any residual purchase price is recorded as goodwill. We also estimate the fair value of any contingent consideration. Ourestimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments by management.After we complete an acquisition, the following factors could result in material charges and adversely affect our operating results and may adversely affectour cash flows:•costs incurred to combine the operations of companies we acquire, such as transitional employee expenses and employee retention or relocationexpenses;•impairment of goodwill or intangible assets;•a reduction in the useful lives of intangible assets acquired;•impairment of long-lived assets;•identification of, or changes to, assumed contingent liabilities;•changes in the fair value of any contingent consideration;•charges to our operating results due to duplicative pre-merger activities;•charges to our operating results from expenses incurred to effect the acquisition; and•charges to our operating results due to the expensing of certain stock awards assumed in an acquisition.Substantially all of these potential charges would be accounted for as expenses that would decrease our net income and earnings per share for the periodsin which those costs are incurred. Charges to our operating results in any given period could differ substantially from other periods based on the timing andsize of our acquisitions and the extent of acquisition accounting adjustments.For acquisitions with potential future contingent consideration payments, we assign a fair value to the contingent consideration and reassess this fairvalue quarterly. Increases or decreases based on the actual performance of the acquired company against the contingent consideration targets or other factorswill cause decreases or increases, respectively, in our results of operations. These quarterly adjustments could have a material adverse effect on our results ofoperations. During 2018 and 2017, we incurred $10.8 million and $23.9 million, respectively, of contingent consideration expense due to the change inestimated fair value of the earnout payments.Risks Related to Compliance and RegulationFailure to comply with past, existing or new laws, rules and regulations, or to obtain and maintain required licenses, could materially and adversely affectour business, financial condition and results of operations.We market and provide services in heavily regulated industries through a number of different channels across the United States. As a result, ourbusinesses have been and remain subject to a variety of statutes, rules, regulations, policies and procedures in various jurisdictions in the United States,which are subject to change at any time. The failure of our businesses to comply with past, existing or new laws, rules and regulations, or to obtain andmaintain required licenses, could result in administrative fines and/or proceedings against us or our businesses by governmental agencies and/or litigation byconsumers, which could materially and adversely affect our business, financial condition and results of operations and our brand.Our businesses conduct marketing activities via the telephone, the mail and/or through online marketing channels, which general marketing activitiesare governed by numerous federal and state regulations, such as the Telemarketing Sales Rule, state21 Table of Contentstelemarketing laws, federal and state privacy laws, the CAN-SPAM Act, the Telephone Consumer Protection Act and the Federal Trade Commission Act andits accompanying regulations and guidelines, among others. Increased regulation by the U.S. Federal Trade Commission ("FTC") and FederalCommunications Commission ("FCC") has resulted in restrictions on telephone calls to residential and wireless telephone subscribers.Additional federal, state and in some instances, local laws regulate secured and unsecured lending activities, which impacts the marketplace, lenders andconsumers. These laws generally regulate the manner in which lending and lending-related activities are marketed or made available, including advertisingand other consumer disclosures, payments for services and record keeping requirements; these laws include RESPA, the Fair Credit Reporting Act, the Truthin Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act and various state laws. State laws often restrict the amount (and nature) of interestand fees that may be charged by a lender or mortgage broker, or otherwise regulate the manner in which lenders or mortgage brokers operate or advertise.State, federal and foreign lending laws and regulations generally require accurate disclosure of the critical components of credit costs so that consumerscan readily compare credit terms from various lenders. These laws and regulations also impose certain restrictions on the advertisement of these credit terms.Because we are an aggregator of rate and other information regarding many financial products, including mortgages, deposits and credit cards, we may besubject to some of these laws and regulations and we may be held liable under these laws and regulations for information provided through our onlineservices. The insurance industry is also subject to numerous federal and state laws and regulations, including licensing requirements.Our operations in India may subject us to the Foreign Corrupt Practices Act of 1977 (“FCPA”) and other laws that prohibit improper payments or offers ofpayments to foreign governments and their officials and political parties by U.S. persons and issuers for the purpose of obtaining or retaining business.Failure to comply with applicable laws and regulatory requirements may result in, among other things, revocation of or inability to renew requiredlicenses or registrations, loss of approval status, termination of contracts without compensation, administrative enforcement actions and fines, privatelawsuits, including those styled as class actions, cease and desist orders and civil and criminal liability.Most states require licenses to solicit, broker or make loans secured by residential mortgages and other consumer loans to residents of those states, as wellas to operate real estate referral and brokerage services, and in many cases require the licensure or registration of individual employees engaged in aspects ofthese businesses. Further, as mandated by the federal Secure and Fair Enforcement for Mortgage Licensing Act (the "SAFE Act"), states adopted certainminimum standards for the licensing of individuals involved in mortgage lending or loan brokering. Compliance with these requirements may render it moredifficult for us and our Network Partners to operate or may raise our internal costs or the costs of our Network Partners, which may be passed on to us throughless favorable commercial arrangements. While our businesses have endeavored to comply with applicable requirements, the application of theserequirements to persons operating online is not always clear. Moreover, any of the licenses or rights currently held by our businesses or our employees maybe revoked prior to, or may not be renewed upon, their expiration. In addition, our businesses or our employees may not be granted new licenses or rights forwhich they may be required to apply from time to time in the future.Likewise, states or municipalities may adopt statutes or regulations making it unattractive, impracticable or infeasible for our businesses to continue toconduct business in such jurisdictions. The withdrawal from any jurisdiction due to emerging legal requirements could materially and adversely affect ourbusiness, financial condition and results of operations.Our businesses are also subject to various state, federal and/or local laws, rules and regulations that regulate the amount and nature of fees that may becharged for transactions and incentives, such as rebates, that may be offered to consumers by our businesses, as well as the manner in which these businessesmay offer, advertise or promote transactions. For example, RESPA generally prohibits the payment or receipt of referral fees and fee shares or splits inconnection with residential mortgage loan transactions, subject to certain exceptions. The applicability of referral fee and fee sharing prohibitions to lendersand real estate providers, including online networks, may have the effect of reducing the types and amounts of fees that may be charged or paid in connectionwith real estate-secured loan offerings or activities, including mortgage brokerage, lending and real estate brokerage services, or otherwise limiting our andour Network Partners' ability to conduct marketing and referral activities.Various federal, state and, in some instances, local, laws also prohibit unfair and deceptive sales practices. We have adopted appropriate policies andprocedures to address these requirements (such as appropriate consumer disclosures and call scripting, call monitoring and other quality assurance andcompliance measures), but it is not possible to ensure that all employees comply with our policies and procedures at all times.Compliance with these laws, rules and regulations is a significant component of our internal costs, and new laws, rules and regulations are frequentlyproposed and adopted, requiring us to adopt new procedures and practices. Changes to existing laws, rules and regulations or changes to interpretation ofexisting laws, rules and regulations could result in further restriction of activities incidental to our business and could have a material and adverse effect onour business, results of operation and financial condition.22 Table of ContentsParties through which our businesses conduct business similarly may be subject to federal and state regulation. These parties typically act asindependent contractors and not as agents in their solicitations and transactions with consumers. We cannot ensure that these entities will comply withapplicable laws and regulations at all times. Failure on the part of a lender, website operator or other third party to comply with these laws or regulationscould result in, among other things, claims of vicarious liability or a negative impact on our reputation and business.Regulatory authorities and private plaintiffs may allege that we failed to comply with applicable laws, rules and regulations where we believe we havecomplied. These allegations may relate to past conduct and/or past business operations, such as our discontinued mortgage origination operation (which wassubject to various state and local laws, rules and regulations). Even allegations that our activities have not complied or do not comply with all applicablelaws and regulations may have a material and adverse effect on our business, financial condition and results of operations. The alleged violation of such laws,rules or regulations may entitle an individual plaintiff to seek monetary damages, or may entitle an enforcing government agency to seek significant civil orcriminal penalties, costs and attorneys' fees. Regardless of its merit, an allegation typically requires legal fee expenditures to defend against. We have in thepast and may in the future decide to settle allegations of non-compliance with laws, rules and regulations when we determine that the cost of settlement is lessthan the cost and risk of continuing to defend against an allegation. Settlements may require us to pay monetary fines and may require us to adopt newprocedures and practices, which may render it more difficult to operate or may raise our internal costs. The future occurrence of one or more of these eventscould have a material and adverse effect on our business, financial condition and results of operations.In response to conditions in the U.S. financial markets and economy, as well as a heightened regulatory and Congressional focus on consumer lending,regulators have increased their scrutiny of the financial services industry, the result of which has included new regulations and guidance. We are unable topredict the long-term impact of this enhanced scrutiny. We are also unable to predict whether any additional or similar changes to statutes or regulations,including the interpretation or implementation thereof, will occur in the future.The collection, processing, storage, use and disclosure of personal information could give rise to liabilities as a result of governmental regulation,conflicting legal requirements or differing views of personal privacy rights.In the processing of consumer transactions, our businesses receive, transmit and store a large volume of personally identifiable information and other userdata. The collection, sharing, use, disclosure and protection of this information are governed by the privacy and data security policies maintained by us andour businesses. Moreover, there are federal, state and international laws regarding privacy and data security, and the storing, sharing, use, disclosure,protection of, and a natural person's rights relating to and in their personally identifiable information and user data. Specifically, personally identifiableinformation is increasingly subject to legislation and regulations in numerous jurisdictions around the world, the intent of which is to protect the privacy ofpersonal information that is collected, processed and transmitted in or from the governing jurisdiction. In the United States, regulations and interpretationsconcerning personally identifiable and data security promulgated by state and federal regulators, including the CFPB and FTC, could conflict or give rise todiffering views of personal privacy rights. We could be materially and adversely affected if legislation or regulations are expanded to require changes inbusiness practices or privacy policies, procedures, and controls relating to the privacy and data security of personal information or if governing jurisdictionsinterpret or implement their legislation or regulations in ways that negatively affect our business, financial condition and results of operations.Our failure, and/or the failure by the various third-party vendors and service providers with whom we do business, or the perceived failure, to complywith applicable privacy and data security policies, procedures, or controls, or federal, state or similar international laws and regulations or any compromise ofsecurity that results in the theft, unauthorized access, acquisition, use, disclosure, or misappropriation of personally identifiable information or other user datacould damage the reputation of these businesses, discourage potential users from our products and services and/or result in fines and/or proceedings orlitigation by governmental agencies and/or consumers, one or all of which could materially and adversely affect our business, financial condition and resultsof operations.Changes in the regulation of the Internet could negatively affect our business.Laws, rules and regulations governing Internet communications, advertising and e-commerce are dynamic and the extent of future governmentregulation is uncertain. Federal and state regulations govern various aspects of our online business, including intellectual property ownership andinfringement, trade secrets, the distribution of electronic communications, marketing and advertising, user privacy and data security, search engines andInternet tracking technologies. Future taxation on the use of the Internet or e-commerce transactions could also be imposed. Existing or future regulation ortaxation could hinder growth in or negatively impact the use of the Internet generally, including the viability of Internet e-commerce, which could reduce ourrevenue, increase our operating expenses and expose us to significant liabilities.23 Table of ContentsIf Network Partners fail to produce required documents for examination by, or other affiliated parties fail to make certain filings with, state regulators, wemay be subject to fines, forfeitures and the revocation of required licenses.Some of the states in which our businesses maintain licenses require them to collect various loan documents from Network Partners and produce thesedocuments for examination by state regulators. While Network Partners are contractually obligated to provide these documents upon request, these measuresmay be insufficient. Failure to produce required documents for examination could result in fines, as well as the revocation of our licenses to operate in certainstates, which could have a material and adverse effect on our business, financial condition and results of operations.Regulations promulgated by some states may impose compliance obligations on directors, executive officers, large customers and any person whoacquires a certain percentage (for example, 10% or more) of the equity in a licensed entity, including requiring such persons to periodically file financial andother personal and business information with state regulators. If any such person refuses or fails to comply with these requirements, we may be unable toobtain certain licenses and existing licensing arrangements may be jeopardized. The inability to obtain, or the loss of, required licenses could have a materialand adverse effect on our business, financial condition and results of operations.Risks Related to an Investment in our Common StockFluctuations in our operating results, quarter to quarter earnings and other factors may result in significant decreases in the price of our common stock.The market price for our common stock has been volatile since our spin-off. In addition, the trading volume in our common stock has fluctuated and maycontinue to fluctuate, causing significant price variations to occur. As of December 31, 2018, since our spin-off, the price per share of our common stock hasfluctuated from an intra-day low of $1.42 per share to an intra-day high of $404.40 per share. The market price of our common stock may fluctuate or declinesignificantly in the future. Some of the factors that could negatively affect the price of our common stock or result in fluctuations in the price or tradingvolume of our common stock include:•variations in our quarterly operating and financial results;•variations in our projected operating and financial results;•failure to meet analysts' earnings estimates;•publication of research reports about us, our Network Partners or our industry or the failure of securities analysts to cover our common shares or ourindustry;•additions or departures of key management personnel;•adverse market reaction to any indebtedness we may incur or preferred or common shares we may issue in the future;•actions by stockholders, including "activist" investors;•changes in market valuations of other companies in our industry, including our customers and competitors;•announcements by us or our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capitalcommitments;•speculation in the press or investment community, including short selling;•changes or proposed changes in laws or regulations affecting our industry or enforcement of these laws and regulations, or announcements relatingto these matters;•changes in estimated fair value of contingent consideration related to acquisitions; and•changes in general economic or market conditions.Recently, and in the past, the stock market has experienced extreme price and volume fluctuations. These market fluctuations could result in extremevolatility in the trading price of our common stock, which could cause a decline in the value of your investment in our common shares. In addition, thetrading price of our common stock could decline for reasons unrelated to our business or financial results, including in reaction to events that affect othercompanies in our industry even if those events do not directly affect us. You should also be aware that price volatility may be greater if the public float andtrading volume of our common stock are low. These factors may result in short-term or long-term negative pressure on the value of our common stock.24 Table of ContentsIf securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and tradingvolume could decline.The trading market for internet marketplace operators and lead-generation companies depends, in part, on the research and reports that securities orindustry analysts publish about the industry and specific companies. If one or more analysts covering us currently or in the future fail to publish reports on usregularly, demand for our common stock could decline, which could cause our stock price and trading volume to decline. If one or more recognized securitiesor industry analysts that cover our company or our industry in the future downgrades our common stock or publishes inaccurate or unfavorable researchabout our business or industry, our stock price would likely decline.Two holders of our common stock own a substantial portion of our outstanding common stock, which concentrates voting control and limits your ability toinfluence corporate matters.As of February 20, 2019, Douglas Lebda, our Chairman and Chief Executive Officer, beneficially owned approximately 17% of our outstanding commonstock. Additionally, Mr. Lebda holds restricted stock unit awards representing 9,896 shares and options to purchase a maximum of 797,082 shares that are notincluded in beneficial ownership because Mr. Lebda does not have the right to acquire them within 60 days. If these restricted stock units were to settle andthese options were exercisable, they would represent additional beneficial ownership of approximately 5% of our outstanding common stock. As ofFebruary 20, 2019, GCI Liberty, Inc. beneficially owned approximately 27% of our outstanding common stock. GCI Liberty, Inc. also has the right tonominate 20% of the total number of directors serving on the board, rounded up. Two of our ten directors, Neal Dermer and Craig Troyer, were nominated byLiberty Interactive Corporation, the predecessor in interest of GCI Liberty, Inc.Therefore, for the foreseeable future, Mr. Lebda and GCI Liberty, Inc. will each have influence over our management and affairs and all matters requiringstockholder approval, including the election or removal (with or without cause) of directors and approval of any significant corporate transaction, such as amerger or other sale of us or our assets. The interests of Mr. Lebda or GCI Liberty, Inc. may not necessarily align with the interests of our other stockholders.Mr. Lebda or GCI Liberty, Inc. could elect to sell a significant interest in us and you may receive less than the then-current fair market value or the price youpaid for your shares as a result of such transaction. This concentrated control could delay, defer or prevent a change of control, merger, consolidation,takeover or other business combination involving us that other stockholders may otherwise support. This concentrated control could also discourage apotential investor from acquiring our common stock and might harm the market price of our common stock.Future sales of common stock by our existing stockholders may cause our stock price to fall.The market price of our common stock could decline as a result of sales by our existing stockholders in the market, or the perception that these salescould occur. These sales might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate.We may issue additional shares of our common stock in the future pursuant to current or future equity incentive plans, or in connection with current orfuture acquisitions or financings. If we were to raise capital in the future by selling shares of our common stock, or securities that are convertible into ourcommon stock or issuing shares of our common stock in a business acquisition, their issuance would have a dilutive effect on the percentage ownership ofour stockholders and, depending on the prices at which such shares or convertible securities are sold or issued, on their investment in our common stock and,therefore, could have a material adverse effect on the market prices of our common stock.Under a registration rights agreement with GCI Liberty, Inc., GCI Liberty, Inc. and its permitted transferees are entitled to three demand registrationsrights (and unlimited piggyback registration rights) in respect of the shares of our common stock received by GCI Liberty, Inc. as a result of the spin-off andother shares of our common stock acquired by GCI Liberty, Inc. or its affiliates. These holders will also be permitted to exercise their registration rights inconnection with certain hedging transactions that they may enter into in respect of the registrable shares. The presence of additional shares of our commonstock trading in the public market, as a result of the exercise of such registration rights, may have an adverse effect on the market price of our securities.Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by stockholdersto replace or remove our management and affect the market price of our common stock.Provisions in our certificate of incorporation and bylaws, as amended and restated, may have the effect of delaying or preventing a change of control orchanges in our management. Our amended and restated certificate of incorporation and/or amended and restated bylaws include provisions that:•Authorize our board of directors to issue, without further action by our stockholders, up to five million shares of undesignated preferred stock,sometimes referred to as "blank check preferred";25 Table of Contents•Prohibit cumulative voting in the election of directors;•Provide that vacancies on our board of directors may be filled only by the affirmative vote of a majority of directors then in office or by the soleremaining director;•Provide that only our board of directors may change the size of our board of directors;•Specify that special meetings of our stockholders may be called only by or at the direction of our board of directors or by a person specificallydesignated with such authority by the board; and•Prohibit stockholders from taking action by written consent.The provisions described above may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making itmore difficult for stockholders to replace members of our board of directors, which is responsible for appointing our management. These provisions may alsohave the effect of delaying or preventing a change of control of our company, even if stockholders support such a change of control.We do not intend to pay any cash dividends on our common stock in the foreseeable future.We have not declared or paid a cash dividend on our common stock during the six most recent fiscal years. We have no current intention to declare orpay cash dividends on our common stock in the foreseeable future. In addition, the Revolving Credit Facility contains certain restrictions on our ability topay dividends. See Note 13—Debt, in the notes to the consolidated financial statements included elsewhere in this report. The declaration, payment andamount of future cash dividends, if any, will be at the discretion of our board of directors. As a result, capital appreciation, if any, of our common stock will bethe sole source of gain for the foreseeable future for holders of our common stock.Our financial results fluctuate as a result of seasonality, which may make it difficult to predict our future performance and may adversely affect ourcommon stock price.Our mortgage products business is historically subject to seasonal trends. These trends reflect the general patterns of the mortgage industry and housingsales, which typically peak in the spring and summer seasons. In recent periods, broader cyclical trends in interest rates, as well as the mortgage and real estatemarkets, have upset the customary seasonal trends. However, seasonal trends may resume and our quarterly operating results may fluctuate. Our non-mortgageproducts businesses have various seasonality trends which may create further uncertainty in our quarterly operating results. See Item 1. Business—Seasonality included elsewhere in this report for more information. Any of these seasonal trends, or the combination of them, may negatively impact the priceof our common stock.The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.While the conditional conversion feature of the 0.625% Convertible Senior Notes due June 1, 2022 (the “Notes”) is triggered, holders of Notes will beentitled to convert the Notes at any time during specified periods at their option. Because of the trading price of our common stock during the measurementperiod applicable to the quarter ended December 31, 2018, holders of the Notes are not entitled to convert the Notes during the calendar quarter endingMarch 31, 2019. Convertibility for each quarter thereafter will be determined based on whether the last reported sales price of our common stock, for at least20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of theimmediately preceding calendar quarter, is greater than or equal to 130% of the conversion price under the Notes on each applicable trading day. If so, thenthe Notes will be convertible during that calendar quarter. The Notes will also be convertible at any time during the five business day period immediatelyfollowing any five consecutive trading day period in which the trading price per $1,000 principal amount of Notes for each trading Day of such five tradingday period is less than 98% of the product of the last reported sale price of our common stock on each such trading day and the conversion ratio under theNotes, as more fully described in the indenture governing the Notes, which is incorporated by reference as an exhibit to this annual report.If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock(other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through thepayment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we could be required underapplicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which wouldresult in a material reduction of our net working capital.26 Table of ContentsWe may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change,and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.Holders of the Notes will have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a fundamental change at arepurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid special interest, if any. We may not haveenough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefore, or pay cash with respectto Notes being converted if we elect not to issue shares, which could harm our reputation and affect the trading price of our common stock.Our hedge and warrant transactions may affect the value of the Notes and our common stock.In connection with the pricing of the Notes, we entered into convertible note hedge transactions with certain counterparties. The hedge transactions aregenerally expected to reduce the potential dilution upon conversion of the Notes and/or offset any cash payments we are required to make in excess of theprincipal amount of converted Notes, as the case may be. We also entered into warrant transactions with such counterparties. However, the warranttransactions could separately have a dilutive effect to the extent that the market price per share of our common stock exceeds the applicable strike price of thewarrants. The initial strike price of the warrants is $266.39.In connection with establishing their initial hedge of the hedge and warrant transactions, the counterparties or their respective affiliates may havepurchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock concurrently with or shortly afterthe pricing of the Notes. In addition, the counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding variousderivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactionsprior to the maturity of the Notes (and are likely to do so during any observation period related to a conversion of Notes or following any repurchase of Notesby us on any fundamental repurchase date or otherwise). This activity could cause or avoid an increase or a decrease in the market price of our common stockor the Notes.The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financialresults.In May 2008, the FASB issued FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash UponConversion (Including Partial Cash Settlement), which has subsequently been codified as ASC 470-20, Debt with Conversion and Other Options, which werefer to as ASC 470-20. Under ASC 470-20, an entity must separately account for the liability and equity components of the convertible debt instruments(such as the Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect ofASC 470-20 on the accounting for the Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’equity on our consolidated balance sheet, and the value of the equity component would be treated as debt discount for purposes of accounting for the debtcomponent of the Notes. As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of theamortization of the discounted carrying value of the Notes to their face amount over the term of the Notes. We will report lower net income in our financialresults because ASC 470-20 will require interest to include the current period’s amortization of the debt discount, which could adversely affect our reportedor future financial results, the trading price of our common stock and the trading price of the Notes.We may still incur substantially more debt in the future or take other actions which would intensify the risks associated with our debt.We and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in our debt instruments, someof which may be secured debt. We are not restricted under the terms of the indenture governing the Notes from incurring additional debt, securing existing orfuture debt, recapitalizing our debt or taking a number of other actions that are not limited by the terms of the indenture governing the Notes that could havethe effect of diminishing our ability to make payments on the Notes when due. Our existing credit facility restricts our ability to incur additionalindebtedness, including secured indebtedness, but if the facility matures or is repaid, we may not be subject to such restrictions under the terms of anysubsequent indebtedness.ITEM 1B. Unresolved Staff CommentsNot applicable.ITEM 2. Properties27 Table of ContentsOur principal executive offices are currently located in approximately 37,800 square feet of office space in Charlotte, North Carolina under a lease thatexpires in December 2020. We have determined that we will need to relocate our principal executive offices to accommodate our growth and we are in theprocess of selecting an alternative site. In addition, we have offices located in approximately 9,400 square feet of office space in Burlingame, Californiaunder a lease that expires in March 2020 and approximately 9,400 square feet, 13,100 square feet and 27,800 square feet of additional office space inCharlotte, North Carolina under leases that expire in April 2019, December 2020 and September 2021, respectively. As a result of our acquisitions during2018, 2017 and 2016, we also operate offices in: Charleston, South Carolina; Denver, Colorado; Jacksonville, Florida; New York City, New York;Northbrook, Illinois; Sacramento, California; Seattle, Washington; and Makarba, India.In December 2016, we completed the acquisition of two office buildings in Charlotte, North Carolina, with approximately 64,000 and 73,000 square feetof office space, respectively. In November 2018, the office buildings were classified as held for sale. In February 2019, we agreed to sell these buildings to anunrelated third party. For additional information, see Item 9B. Other Information and see Note 7—Assets Held for Sale in the notes to the consolidatedfinancial statements included elsewhere in this report.ITEM 3. Legal ProceedingsIn the ordinary course of business, we are party to litigation involving property, contract, intellectual property and a variety of other claims. The amountsthat may be recovered in such matters may be subject to insurance coverage. See Note 15—Contingencies in the notes to the consolidated financialstatements included elsewhere in this report for a discussion of our current and recently settled litigation.ITEM 4. Mine Safety DisclosuresNot applicable.28 Table of ContentsPART IIITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesGeneral Market Information, Holders and DividendsOur common stock is quoted on the Nasdaq Global Select Market under the ticker symbol "TREE". As of February 20, 2019, there were approximately660 holders of record of our common stock.We have no current intention to declare or pay cash dividends on our common stock in the foreseeable future. The declaration, payment and amount offuture cash dividends, if any, will be at the discretion of our board of directors.Performance GraphThe performance graph shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or incorporated by reference into any filings underthe Securities Act or the Exchange Act, except as otherwise expressly set forth by specific reference in such filing.Set forth below is a line graph, for the period from December 31, 2013 through December 31, 2018, comparing the cumulative total stockholder return of$100 invested (assuming that all dividends were reinvested) in (1) our common stock, (2) the cumulative return of all companies listed on the NasdaqComposite Index and (3) the cumulative total return of the Research Development Group ("RDG") Internet index. Returns over the indicated periods shouldnot be considered indicative of future stock prices or stockholder returns.29 Table of ContentsUnregistered Sales of Equity Securities and Use of ProceedsDuring the year ended December 31, 2018, we did not issue or sell any shares of our common stock or other equity securities in transactions that were notregistered under the Securities Act.Issuer Purchases of Equity SecuritiesIn each of May 2014, January 2016, February 2016, February 2018 and February 2019, the board of directors authorized and we announced a stockrepurchase program which allowed for the repurchase of up to $10.0 million, $50.0 million, $40.0 million, $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 availablecash 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 ofdirectors. During the quarter ended December 31, 2018, 174,139 shares of common stock were repurchased under the stock repurchase program. As ofFebruary 28, 2019, approximately $181.2 million is authorized for future share repurchases.Additionally, the LendingTree Fifth Amended and Restated 2008 Stock and Award Incentive Plan and the LendingTree 2017 Inducement Grant Planallow employees to forfeit shares of our common stock to satisfy federal and state withholding obligations upon the exercise of stock options, the settlementof restricted stock unit awards and the vesting of restricted stock awards granted to those individuals under the plans. During the quarter ended December 31,2018, 8,586 shares were purchased related to these obligations under the LendingTree Fifth Amended and Restated 2008 Stock and Award Incentive Planand no shares have yet been purchased related to these obligations under the LendingTree 2017 Inducement Grant Plan. The withholding of those sharesdoes 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 December 31, 2018.Period Total Number ofShares Purchased (1) Average PricePaid per Share Total Number ofShares Purchased asPart of PubliclyAnnounced Plans orPrograms (2) MaximumNumber/ApproximateDollar Value of Sharesthat May Yet bePurchased Under thePlans or Programs (in thousands)10/1/18 - 10/31/18 177,185 $203.46 174,039 $35,16311/1/18 - 11/30/18 4,915 $231.70 — $35,16312/1/18 - 12/31/18 625 $233.24 100 $35,143Total 182,725 $204.32 174,139 $35,143(1)During October 2018, November 2018 and December 2018, 3,146 shares, 4,915 shares and 525 shares, respectively (totaling 8,586 shares), werepurchased to satisfy federal and state withholding obligations of our employees upon the settlement of restricted stock unit awards, all in accordancewith our Fifth Amended and Restated 2008 Stock and Award Incentive Plan, as described above.(2)See the narrative disclosure above the table for further description of our publicly announced stock repurchase program.30 Table of ContentsITEM 6. Selected Financial DataThe summary financial data presented below represents portions of our consolidated financial statements and are not complete. The following financialinformation should be read in conjunction with Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and ourconsolidated financial statements and notes thereto contained in Item 8. Financial Statements and Supplementary Data included elsewhere in this annualreport. Historical results are not necessarily indicative of future performance or results of operations. Year Ended December 31, 2018 2017 2016 2015 2014 (in thousands, except per share amounts)Results of Operations: Revenue(1)$764,865 $617,736 $384,402 $254,216 $167,350Income (loss) from continuing operations (2)109,319 19,418 31,208 51,316 (487)(Loss) income from discontinued operations (3)(12,820) (3,840) (3,714) (3,269) 9,849Net income and comprehensive income$96,499 $15,578 $27,494 $48,047 $9,362 Weighted average shares outstanding: Basic12,504 11,945 11,812 11,516 11,188Diluted14,097 13,682 12,773 12,541 11,188Income (loss) per share from continuing operations: Basic$8.74 $1.63 $2.64 $4.46 $(0.04)Diluted$7.75 $1.42 $2.44 $4.09 $(0.04)(Loss) income per share from discontinued operations: Basic$(1.03) $(0.32) $(0.31) $(0.28) $0.88Diluted$(0.91) $(0.28) $(0.29) $(0.26) $0.88Net income per share: Basic$7.72 $1.30 $2.33 $4.17 $0.84Diluted$6.85 $1.14 $2.15 $3.83 $0.84Cash dividend per share$— $— $— $— $— Financial Position: Cash and cash equivalents (4) (5) (6) (7) (8) (9)$105,102 $368,550 $91,131 $206,975 $86,212Total assets (4) (7)$896,115 $693,459 $323,427 $295,781 $139,891Total long-term liabilities (5) (7) (8) (9)$287,954 $251,069 $25,285 $612 4,889Total shareholders' equity (4) (7)$346,208 $294,874 $231,435 $241,142 $96,366(1)See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations for the Years EndedDecember 31, 2018, 2017 and 2016—Revenue for a discussion of revenue.(2)In 2015, we released the majority of the valuation allowance, which, along with federal and state income taxes, resulted in a total tax benefit of $23.0million.(3)See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations for the Years EndedDecember 31, 2018, 2017 and 2016—Discontinued Operations for a discussion of discontinued operations.(4)In November 2015, we completed an equity offering of 852,500 shares of our common stock, receiving net proceeds of $91.5 million.(5)In November 2016, we acquired CompareCards for $80.7 million in cash at closing and contingent consideration payments of up to $22.5 million foreach of 2017 and 2018. Total long-term liabilities at the end of 2016 included the fair value of the contingent consideration of $23.1 million. The fullpotential contingent consideration of $45.0 million was paid in 2018.31 Table of Contents(6)In December 2016, we acquired two office buildings in Charlotte, North Carolina for $23.5 million in cash. In November 2018, the office buildingswere classified as held for sale. For additional information, see Note 7—Assets Held for Sale and Note 22—Subsequent Events in the notes to theconsolidated financial statements included elsewhere in this report.(7)In May 2017, we issued $300.0 million aggregate principal amount of our 0.625% Convertible Senior Notes due June 1, 2022 and, in connectiontherewith, entered into Convertible Note Hedge and Warrant transactions with respect to our common stock. For more information, see Note 13—Debt,in the notes to the consolidated financial statements included elsewhere in this report.(8)In June 2017, we acquired DepositAccounts for $24.0 million in cash at closing and contingent consideration payments of up to $9.0 million, andacquired MagnifyMoney for $29.6 million in cash at closing. In September 2017, we acquired SnapCap for $11.9 million in cash at closing and up tothree additional contingent consideration payments, each ranging from zero to $3.0 million. Total long-term liabilities at the end of 2017 included thefair value of DepositAccounts non-current contingent consideration of $4.3 million and the fair value of SnapCap contingent consideration of $7.0million. Total long-term liabilities at the end of 2018 included the fair value of SnapCap non-current contingent consideration of $3.7 million.(9)In June 2018, we acquired Ovation for $12.2 million in cash at closing and up to two contingent consideration payments, each ranging from zero to$4.375 million. In July 2018, we acquired Student Loan Hero for $60.7 million in cash at closing. In October 2018, we acquired QuoteWizard for$299.9 million in cash at closing, which was funded through $174.9 million of cash on hand and by $125.0 million drawn on our amended andrestated revolving credit facility, and up to three contingent consideration payments, each ranging from zero to $23.4 million. In December 2018, weexercised our option to acquire an affiliate of Magnify Money in India for $0.5 million in cash. Total long-term liabilities at the end of 2018 includedthe fair value of Ovation non-current contingent consideration of $3.3 million and the fair value of QuoteWizard contingent consideration of $20.7million.32 Table of ContentsITEM 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with ourconsolidated financial statements and accompanying notes included elsewhere within this report. This discussion includes both historical information andforward-looking information that involves risks, uncertainties and assumptions. Our actual results may differ materially from management's expectations as aresult of various factors, including but not limited to those discussed in the sections entitled "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Information."Company OverviewLendingTree, Inc. is the parent of LendingTree, LLC and several companies owned by LendingTree, LLC.LendingTree operates what we believe to be the leading online consumer platform that connects consumers with the choices they need to be confident intheir financial decisions. Our online consumer platform provides consumers with access to product offerings from our Network Partners, including mortgageloans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, deposit accounts, personal loans, student loans, small businessloans, insurance quotes and other related offerings. In addition, we offer tools and resources, including free credit scores, that facilitate comparison shoppingfor loans, deposit products, insurance and other offerings. We seek to match consumers with multiple providers, who can offer them competing quotes for theproduct, or products, they are seeking. We also serve as a valued partner to lenders and other providers seeking an efficient, scalable and flexible source ofcustomer acquisition with directly measurable benefits, by matching the consumer inquiries we generate with these partners.Our My LendingTree platform offers a personalized loan comparison-shopping experience by providing free credit scores and credit score analysis. Thisplatform enables us to observe consumers' credit profiles and then identify and alert them to loans and other offerings on our marketplace that may be morefavorable than the terms they may have at a given point in time. This is designed to provide consumers with measurable savings opportunities over theirlifetimes.We are focused on developing new product offerings and enhancements to improve the experiences that consumers and Network Partners have as theyinteract with us. By expanding our portfolio of financial services offerings, we are growing and diversifying our business and sources of revenue. We intendto capitalize on our expertise in performance marketing, product development and technology, and to leverage the widespread recognition of theLendingTree 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 tomove towards online shopping and transactions for financial services, suppliers will increasingly shift their product offerings and advertising budgets towardthe 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 marketshift.The LendingTree Loans business is presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements ofoperations and comprehensive income and consolidated cash flows for all periods presented. Except for the discussion under the heading "DiscontinuedOperations," the analysis within Management's Discussion and Analysis of Financial Condition and Results of Operations reflects our continuing operations.Recent Business AcquisitionsOn January 10, 2019, we acquired ValuePenguin, a personal finance website that offers consumers objective analysis on a variety of financial topics frominsurance to credit cards, for $105.0 million in cash at the closing of the transaction, subject to adjustments for working capital. We believe that combiningValuePenguin’s high-quality content and search engine optimization capability with recently acquired proprietary technology and insurance carrier networkfrom QuoteWizard enables us to provide immense value to carriers and agents. This strategic acquisition positions us to achieve further scale in the insurancespace as well as the broader financial services industry.On October 31, 2018, we acquired QuoteWizard, one of the largest insurance comparison marketplaces in the growing online insurance advertisingmarket, for $299.9 million in cash at the closing of the transaction, subject to post-closing adjustments to working capital and potential contingentconsideration payments of up to $70.2 million through October 2021, subject to achieving specific targets. QuoteWizard services clients by drivingconsumers to insurance companies’ websites, providing leads to agents and carriers, as well as phone transfers of consumers into carrier call centers. Webelieve this acquisition will establish LendingTree as a leading player in the online insurance advertising industry, while continuing our ongoingdiversification within the financial services category.33 Table of ContentsOn July 23, 2018, we acquired Student Loan Hero for $62.7 million in cash, of which $2.3 million was recognized as severance expense in ourconsolidated statements of operations and comprehensive income. Student Loan Hero, a personal finance website dedicated to helping student loanborrowers manage their student debt, offers current and former students in-depth financial comparison tools, educational resources, and unbiased,personalized advice. This strategic transaction allows us to scale our student loan business and provide consumers with the tools and resources to betterunderstand their personal finances and make smarter financial decisions.On June 11, 2018, we acquired Ovation, a leading provider of credit services with a strong customer service reputation for $12.1 million in cash andpotential contingent consideration payments of up to $8.75 million through June 2020, subject to achieving specified targets. Ovation utilizes a proprietarysoftware application that facilitates the credit repair process and is integrated directly with certain credit bureaus while educating consumers on creditimprovement via ongoing outreach with Ovation case advisors. The proprietary software application offers consumers a simple, streamlined process toidentify, dispute, and correct inaccuracies within their credit reports. Ovation's experienced management team, strong credit bureau relationships andcustomized software platform enable us to help more consumers achieve their original financial goals through the LendingTree platform.On September 19, 2017, we acquired certain assets of SnapCap for $11.9 million in cash at closing and contingent consideration payments of up to $9.0million through March 31, 2020, subject to achieving specific targets. SnapCap is a tech-enabled online platform, which connects business owners withlenders offering small business loans, lines of credit and merchant cash advance products through a concierge-based sales approach. SnapCap's high-touch,high-conversion sales approach with our brand and performance marketing expertise has enabled growth in our small business offering.On June 20, 2017, we acquired MagnifyMoney for $29.6 million cash consideration at the closing of the transaction. MagnifyMoney is a leadingconsumer-facing media property that offers editorial content, expert commentary, tools and resources to help consumers compare financial products and makeinformed financial decisions. The MagnifyMoney team brings the expertise and infrastructure to expand content creation and distribution across all of ourconsumer facing brands, improving our presence and efficacy in acquisition channels such as search engine optimization.On June 14, 2017, we acquired substantially all of the assets of DepositAccounts for $24.0 million in cash at closing and contingent considerationpayments of up to $9.0 million through June 30, 2020, subject to achieving specific targets. DepositAccounts is a leading consumer-facing media property inthe depository industry and is one of the most comprehensive sources of depository deals and analysis on the Internet, covering all major deposit productcategories through editorial content, programmatic rate tables and user-generated content. This acquisition represented our first offering to address the assetside of the consumer balance sheet.On November 16, 2016, we acquired CompareCards for $80.7 million in cash at closing and contingent consideration payments of up to $22.5 millionfor each of 2017 and 2018, subject to achieving specific growth targets. CompareCards is a leading online source for side-by-side credit card comparisonshopping. CompareCards provides consumers with one centralized location for pertinent credit card information needed to find the best card for their needs.CompareCards’ unique marketing platform and strong relationships with card issuers combined with LendingTree’s scale and organizational support havedelivered substantial growth in our credit card business.These acquisitions continue our diversification strategy.Recent Mortgage Interest Rate TrendsInterest rate and market risks can be substantial in the mortgage lead generation business. Short-term fluctuations in mortgage interest rates primarilyaffect consumer demand for mortgage refinancings, while long-term fluctuations in mortgage interest rates, coupled with the U.S. real estate market, affectconsumer demand for new mortgages. Consumer demand, in turn, affects lender demand for mortgage leads from third-party sources, as well as our ownability 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 websiteand decreased selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typicallydecreases, as there are more consumers in the marketplace seeking refinancings and, accordingly, lenders receive more organic mortgage lead volume. Due tolower 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 ourwebsite and higher associated selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sourcestypically increases, as there are fewer consumers in the marketplace and, accordingly, the supply of organic mortgage lead volume decreases. Due to highlender 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 revenue34 Table of Contentsearned per consumer can be adversely affected by the overall reduced demand for refinancing in a rising rate environment. These factors combined to causelower revenue earned per consumer for mortgage products in 2018 compared to the prior year.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 declined from a monthly average of 3.87% in January 2016 to an average of 3.44% in August2016, the lowest monthly average since January 2013. By December 2016, 30-year mortgage interest rates increased to an average of 4.20%. During 2017,30-year mortgage interest rates then declined to a monthly average of 3.81% in September 2017, before increasing to 3.95% at the end of 2017. During 2018,30-year mortgage interest rates generally increased to a monthly average of 4.87% in November 2018, but declined to 4.64% at the end of 2018.On a full-year basis, 30-year mortgage interest rates increased to an average 4.54% in 2018, as compared to 3.99% and 3.65% in 2017 and 2016,respectively.Typically, as mortgage interest rates rise, there are fewer consumers in the marketplace seeking refinancings and, accordingly, the mix of mortgageorigination dollars will move towards purchase mortgages. According to Mortgage Bankers Association ("MBA") data, total purchase origination dollarsincreased from 52% of total 2016 mortgage origination dollars to 65% in 2017 and 72% in 2018, as a result of the general increase in average mortgageinterest rates.Looking forward, MBA is projecting 30-year mortgage interest rates to climb in 2019, to an average 4.8% on 30-year fixed rate mortgages. According toMBA projections, as interest rates climb, the mix of mortgage origination dollars will continue to move towards purchase mortgages with the refinance sharerepresenting just 24% for 2019.The U.S. Real Estate MarketThe health of the U.S. real estate market and interest rate levels are the primary drivers of consumer demand for new mortgages. Consumer demand, inturn, affects lender demand for purchase mortgage leads from third-party sources. Typically, a strong real estate market will lead to reduced lender demand forleads, as there are more consumers in the marketplace seeking financing and, accordingly, lenders receive more organic lead volume. Conversely, a weakerreal estate market will typically lead to an increase in lender demand, as there are fewer consumers in the marketplace seeking mortgages. According to the National Association of Realtors ("NAR"), nationwide existing home sales in 2016 increased approximately 3% over 2015. Growth in2017 was approximately 2% over 2016 due to limited inventory of homes for sale in 2017. In addition to continued low inventory, rising interest ratescontributed to declining home sales in 2018, resulting in nationwide existing home35 Table of Contentssales in 2018 contracting approximately 3% from 2017. The NAR expects an increase in home sales in early 2019 as interest rates decrease from the high inlate 2018, but expect an overall annual decrease of 2% compared to 2018.Convertible Senior Notes and Hedge and Warrant TransactionsOn May 31, 2017, we issued $300.0 million aggregate principal amount of our 0.625% Convertible Senior Notes due June 1, 2022 and, in connectiontherewith, entered into Convertible Note Hedge and Warrant transactions with respect to our common stock. For more information, see Note 13—Debt, in thenotes to the consolidated financial statements included elsewhere in this report.North Carolina Office PropertiesIn December 2016, we completed the acquisition of two office buildings in Charlotte, North Carolina, for $23.5 million in cash. The buildings wereacquired with the intent to use such buildings as our corporate headquarters and rent any unused space. In November 2018, the office buildings wereclassified as held for sale. In February 2019, we agreed to sell these buildings to an unrelated third party. For additional information, see Note 7—Assets Heldfor Sale and Note 22—Subsequent Events in the notes to the consolidated financial statements included elsewhere in this report.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 12years beginning in 2017 for investing in real estate and infrastructure in addition to increasing jobs in North Carolina at specific targeted levels through2020, and maintaining the jobs thereafter. Additionally, the city of Charlotte and the county of Mecklenburg provided a grant that will be paid over fiveyears 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 additionalgrant 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 specifictargeted levels through 2023, and maintaining the jobs thereafter.36 Table of ContentsResults of Operations for the Years ended December 31, 2018, 2017 and 2016Year Ended December 31, 2018 vs. 2017 2017 vs. 2016201820172016 $Change%Change $Change%Change(Dollars in thousands)Mortgage products$242,175$275,910$219,991 $(33,735)(12)% $55,91925 %Non-mortgage products522,690341,826164,411 180,86453 % 177,415108 %Revenue764,865617,736384,402 147,12924 % 233,33461 %Costs and expenses: Cost of revenue (exclusive of depreciation and amortization shownseparately below)36,39917,22313,764 19,176111 % 3,45925 %Selling and marketing expense500,291432,784261,100 67,50716 % 171,68466 %General and administrative expense101,21971,54137,227 29,67841 % 34,31492 %Product development26,95817,92513,761 9,03350 % 4,16430 %Depreciation7,3857,0854,944 3004 % 2,14143 %Amortization of intangibles23,46812,9921,243 10,47681 % 11,749945 %Change in fair value of contingent consideration10,78823,931— (13,143)(55)% 23,931n/aSeverance2,352404122 1,948482 % 282231 %Litigation settlements and contingencies(186)718129 (904)(126)% 589457 %Total costs and expenses708,674584,603332,290 124,07121 % 252,31376 %Operating income56,19133,13352,112 23,05870 % (18,979)(36)%Other (expense) income, net: Interest expense, net(12,437)(7,028)(561) (5,409)77 % (6,467)1,153 %Other (expense) income(10)(396)23 38697 % (419)(1,822)%Income before income taxes43,74425,70951,574 18,03570 % (25,865)(50)%Income tax benefit (expense)65,575(6,291)(20,366) 71,8661,142 % 14,07569 %Net income from continuing operations109,31919,41831,208 89,901463 % (11,790)(38)%Loss from discontinued operations, net of tax(12,820)(3,840)(3,714) (8,980)(234)% (126)(3)%Net income and comprehensive income$96,499$15,578$27,494 $80,921519 % $(11,916)(43)%RevenueRevenue increased in 2018 compared to 2017 due to increases in our non-mortgage products of $180.9 million, partially offset by a decrease in ourmortgage products of $33.7 million.Our non-mortgage products include the following non-mortgage lending products: credit cards, personal loans, home equity loans and lines of credit,small business loans, student loans, reverse mortgage loans and auto loans. Our non-mortgage products also include insurance quotes, deposit accounts,home improvement referrals and other credit products such as credit repair and debt settlement. Revenue earned through resale of online advertising space tothird parties is also included in non-mortgage products. Many of our non-mortgage products are not individually significant to revenue. The increase inrevenue from our non-mortgage products in 2018 compared to 2017 is primarily due to an increase in our products for personal loans, insurance, credit cards,home equity, small business loans and student loans.Revenue from our personal loan product increased $46.0 million to $134.2 million in 2018 from $88.2 million in 2017, or 52%. Revenue from ourpersonal loan product increased in 2018 due to increased revenue earned per consumer. Additionally, the number of consumers completing request formsincreased as a result of increased lender demand and corresponding increases in selling and marketing efforts.Revenue from our credit card product increased $18.8 million to $165.8 million in 2018 from $147.0 million in 2017, or 13%. Revenue from our creditcard product increased in 2018 primarily due to increases in click traffic sent to issuers, and increased revenue earned per approval.37 Table of ContentsFor 2018 and 2017, no other non-mortgage product represented more than 10% of revenue, however certain other non-mortgage products experiencednotable increases. Revenue from our insurance product increased $31.2 million in 2018 compared to 2017, due to the QuoteWizard acquisition, completedon October 31, 2018. Revenue from our home equity product increased $16.3 million in 2018 compared to 2017, due to increases in the number ofconsumers completing request forms as a result of increases in lender coverage and lender demand, and corresponding increases in selling and marketingefforts, and increased revenue earned per consumer. Revenue from our small business loans product increased $16.2 million in 2018 compared to 2017, dueto increases in the number of consumers seeking business loans, increases in selling and marketing efforts, and increased revenue earned per consumer,primarily due to the acquisition of SnapCap. Revenue from our student loans product increased $14.8 million in 2018 compared to 2017, due to increasedconsumers and increased revenue earned per consumer, partially due to the acquisition of Student Loan Hero.We believe the market for our non-mortgage products remains under-penetrated and we believe long-term growth prospects are strong for non-mortgageproducts. A significant industry-wide contraction in the availability of capital for non-mortgage products would likely adversely affect our non-mortgageproduct revenues. We expect increases in revenue for non-mortgage products in future periods due to expected increases in many products, most notablyinsurance product revenue from our acquisitions of QuoteWizard and ValuePenguin.The decrease in revenue from our mortgage products in 2018 compared to 2017 is due to a decrease in revenue from our refinance product, partiallyoffset by an increase in revenue from our purchase product. The revenue from our refinance product decreased $39.3 million in 2018 from 2017, while therevenue from our purchase product increased $5.6 million. The decrease in revenue from our refinance product is primarily due to a decrease in the number ofconsumers completing request forms as a result of fewer consumers seeking refinancing in a period of rising interest rates. The increase in revenue from ourpurchase product is primarily due to an increase in revenue earned per consumer. In 2019, we expect a more moderate year-over-year decline in mortgagerevenue.Revenue increased in 2017 compared to 2016 due to increases in our non-mortgage products of $177.4 million and in our mortgage products of $55.9million.The increase in revenue from our non-mortgage products in 2017 compared to 2016 is primarily due to an increase in our credit cards, home equity, andpersonal loans products.Revenue from our credit card product increased $107.6 million to $147.0 million in 2017 from $39.4 million in 2016, or 273%. Revenue from our creditcard product increased in 2017 primarily due to the CompareCards acquisition, completed on November 16, 2016.Revenue from our personal loan product increased $21.7 million to $88.2 million in 2017 from $66.5 million in 2016, or 33%. Revenue from ourpersonal loan product increased in 2017 due to the number of consumers completing request forms as a result of increases in lender demand andcorresponding increases in selling and marketing efforts, partially offset by decreases in revenue earned per consumer. Certain of our online personal loanlenders experienced well-publicized challenges in 2016, in particular, general unavailability of capital and increased pricing demanded by investors ofpersonal loans, which in some cases led to reductions in marketing spend, and tightening in underwriting standards.For 2017 and 2016, no other non-mortgage product represented more than 10% of revenue, however certain other non-mortgage products experiencednotable increases. Revenue from our home equity product increased $28.3 million in 2017 compared to 2016, due to increases in the number of consumerscompleting request forms as a result of increases in lender coverage and lender demand, corresponding increases in selling and marketing efforts, andincreased revenue earned per consumer.The increase in revenue from our mortgage products in 2017 compared to 2016 is due to an increase in revenue from both our purchase and refinanceproducts. The revenue from our purchase product increased $33.6 million in 2017 from 2016, while the revenue from our refinance product increased $22.4million. The increase in revenue from our mortgage products is primarily due to an increase in revenue earned per consumer. Additionally, the number ofconsumers completing request forms for mortgage products increased in 2017 from 2016, due to an increase in lender demand and a corresponding increasein selling and marketing efforts.Cost of revenueCost 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 scoringfees, credit card fees, website network hosting and server fees.38 Table of ContentsCost of revenue increased in 2018 from 2017, primarily due to increases of $8.8 million for the cost of resold advertising space, $6.3 million incompensation and benefits as a result of increases in headcount, $2.1 million in credit scoring fees and $1.2 million in website network hosting and serverfees.Cost of revenue as a percentage of revenue increased to 5% in 2018 compared to 3% in 2017 due to the items above.Cost of revenue increased in 2017 from 2016, primarily due to increases of $2.1 million in compensation and benefits as a result of increases inheadcount, $0.9 million in website network hosting and server fees and $0.8 million in third-party customer call center fees, partially offset by a $0.7 milliondecrease in credit scoring fees.Cost of revenue as a percentage of revenue decreased slightly to 3% in 2017 compared to 4% in 2016 due to the items above.We expect increases in cost of revenue in future periods due to our acquisition of QuoteWizard.Selling and marketing expenseSelling 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 includeonline marketing, as well as television, print and radio spending. Advertising production costs are expensed in the period the related ad is first run.The increases in selling and marketing expense in 2018 compared to 2017 and in 2017 compared to 2016 were primarily due to increases in advertisingand promotional expense of $59.2 million and $167.6 million, respectively, as discussed below. In addition, selling and marketing expense increased in2018 compared to 2017 and in 2017 compared to 2016 due to an increase in compensation and benefits of $8.3 million and $4.1 million, respectively, as aresult of increases in headcount.Advertising and promotional expense is the largest component of selling and marketing expense, and is comprised of the following: Year Ended December 31, 2018 vs. 2017 2017 vs. 20162018 2017 2016 $Change%Change $Change%Change(Dollars in thousands)Online$453,066 $368,004 $210,635 $85,06223 % $157,36975%Broadcast5,974 35,681 28,455 (29,707)(83)% 7,22625%Other10,908 7,098 4,131 3,81054 % 2,96772%Total advertising expense$469,948 $410,783 $243,221 $59,16514 % $167,56269%Revenue is primarily driven by Network Partner demand for our products, which is matched to corresponding consumer requests. We adjust our sellingand marketing expenditures dynamically in relation to anticipated revenue opportunities in order to ensure sufficient consumer inquiries to profitably meetsuch 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’srevenue is generally met by a corresponding decrease in marketing spend. This relationship exists for both mortgage and non-mortgage products.We increased our advertising expenditures in 2018 compared to 2017 and in 2017 compared to 2016, in order to generate additional consumer inquiriesto meet the increased demand of Network Partners on our marketplace. We will continue to adjust selling and marketing expenditures dynamically in relationto anticipated revenue opportunities.We expect increases in selling and marketing expense in future periods due to our acquisition of QuoteWizard.General and administrative expenseGeneral and administrative expense consists primarily of compensation and other employee-related costs (including stock-based compensation) forpersonnel engaged in finance, legal, tax, corporate information technology, human resources and executive management functions, as well as facilities andinfrastructure costs and fees for professional services. General and administrative expense increased in 2018 compared to 2017, primarily due to increases in compensation and benefits of $26.3 million as aresult of increases in headcount and long-term equity awards granted to our Chairman and Chief Executive Officer in the third quarter of 2017 and in the firstquarter of 2018, which awards have both time and significant performance-based vesting conditions. We also granted long-term equity awards to certainmembers of our leadership team in the fourth quarter of 2017 and in the first quarter of 2018. For additional information regarding the awards granted to ourChairman and Chief Executive Officer, see Note 11—Stock-Based Compensation in the notes to the consolidated financial statements39 Table of Contentsincluded elsewhere in this report. Non-cash compensation expense is excluded from Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization("Adjusted EBITDA"), as discussed below. In addition, the results of operations for 2018 includes a charge of $1.6 million due to the write-off of certain fixedassets.General and administrative expense as a percentage of revenue increased to 13% in 2018 compared to 12% in 2017 due to the items above.General and administrative expense increased in 2017 compared to 2016, primarily due to increases in compensation and benefits of $19.4 million as aresult of increases in headcount, the long-term equity awards granted to our Chairman and Chief Executive Officer in the third quarter of 2017, and the long-term equity awards granted to certain members of our leadership team in the fourth quarter of 2017.Included in general and administrative expense in 2017 was a $10.0 million charitable contribution to fund the newly formed LendingTree Foundationin the fourth quarter of 2017. This one-time item is excluded from Adjusted EBITDA, as discussed below.General and administrative expense as a percentage of revenue increased to 12% in 2017 compared to 10% in 2016 due to the items above.We expect increases in general and administrative expense in future periods due to our acquisitions of QuoteWizard and ValuePenguin.Product developmentProduct 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 2018 compared to 2017 and in 2017 compared to 2016, as we continued to invest in internal development ofnew and enhanced features, functionality and business opportunities that we believe will enable us to better and more fully serve consumers and lenders.We expect increases in product development expense in future periods due to our acquisition of QuoteWizard.DepreciationThe increases in depreciation expense in 2018 compared to 2017 and in 2017 compared to 2016 were primarily the result of higher investment ininternally developed software in recent years, to support the growth of our business.Amortization of intangiblesThe increases in amortization of intangibles in 2018 compared to 2017 and in 2017 compared to 2016 were primarily due to intangible assets associatedwith our business acquisitions in 2018, 2017 and 2016.We expect increases in amortization of intangibles in future periods due to our acquisitions of QuoteWizard and ValuePenguin.Contingent considerationDuring 2018, we recorded an aggregate of $10.8 million of contingent consideration expense due to adjustments in the estimated fair value of theearnout payments related to our recent acquisitions. For 2018, the contingent consideration expense for the CompareCards acquisition, the DepositAccountsacquisition, the Ovation acquisition and the QuoteWizard acquisition was $0.7 million, $2.0 million, $1.6 million and $6.8 million, respectively. This waspartially offset by a contingent consideration gain for the SnapCap acquisition of $0.3 million.During 2017, we recorded an aggregate of $23.9 million of contingent consideration expense due to adjustments in the estimated fair value of theearnout payments related to our recent acquisitions. For 2017, the contingent consideration expense for the CompareCards acquisition, the DepositAccountsacquisition and the SnapCap acquisition was $21.2 million, $2.0 million and $0.7 million, respectively.40 Table of ContentsIncome tax expense Year Ended December 31, 2018 2017 2016 (in thousands, except percentages)Income tax (expense) benefit$65,575 $(6,291) $(20,366)Effective tax rate(149.9)% 24.5% 39.5%For 2018, the effective tax rate varied from the federal statutory rate of 21% primarily due to the benefit derived from excess tax deductions from thevesting of restricted stock and exercise of stock options of $77.6 million, including state taxes.For 2017, the effective tax rate varied from the federal statutory rate of 35% primarily due to the benefit derived from excess tax deductions from thevesting of restricted stock and exercise of stock options of $12.9 million, including state taxes, and the federal tax research credit. Additionally, during thefourth quarter of 2017, a net tax expense of $9.1 million was recorded related to the enactment of the Tax Cuts and Jobs Act ("TCJA"). The expense wasprimarily related to the remeasurement of deferred tax assets and liabilities considering the TCJA’s newly enacted tax rates and certain other impacts.For 2016, the effective tax rate varied from the federal statutory rate of 35% primarily due to the benefit derived from the federal research tax credit,partially offset by state taxes, including the impact of a reduction in the North Carolina state income tax rate which reduced the value of our deferred taxassets. The federal research tax credit benefit is the result of a study completed during the second quarter for the open tax years of 2011 through 2015, plus anestimate of the benefit from current research activities.Discontinued OperationsOn June 6, 2012, we sold substantially all of the operating assets of our LendingTree Loans business for approximately $55.9 million in cash to awholly-owned subsidiary of Discover Financial Services ("Discover").Discover generally did not assume liabilities of the LendingTree Loans business that arose before the closing date, except for certain liabilities directlyrelated to assets Discover acquired. Of the purchase price received, a portion was deposited in escrow in accordance with the agreement with Discover forcertain loan loss obligations that remain with us following the sale. During the second quarter of 2018, the remaining funds in escrow were released to us inaccordance with the terms of the agreement with Discover.During 2018, 2017 and 2016, loss from discontinued operations of $12.8 million, $3.8 million and $3.7 million, respectively, was attributable to theLendingTree Loans business. In 2018, loss from discontinued operations was primarily due to legal fees and litigation contingencies incurred in theResidential Funding Company, LLC v Home Loan Center, Inc. matter. In 2017 and 2016, loss from discontinued operations was primarily due to litigationsettlements and contingencies and legal fees associated with ongoing legal proceedings, primarily for the above matter. For more information, see Note 15—Contingencies, in the notes to the consolidated financial statements included elsewhere in this report, and Item 1A. Risk Factors - Litigation andindemnification of secondary market purchasers, including a pending case brought by Residential Funding Company, LLC, could have a material andadverse effect on our business, financial condition, results of operations and liquidity.Adjusted Earnings Before Interest, Taxes, Depreciation and AmortizationWe report Adjusted EBITDA as a supplemental measure to GAAP. This measure is the primary metric by which we evaluate the performance of ourbusinesses, on which our marketing expenditures and internal budgets are based and by which management and many employees are compensated. Webelieve 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 inaddition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. We provide and encourageinvestors to examine the reconciling adjustments between the GAAP and non-GAAP measures discussed below.Definition of Adjusted EBITDAWe report Adjusted EBITDA as net income from continuing operations adjusted to exclude interest, income tax, amortization of intangibles anddepreciation, and to further exclude (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) restructuringand severance expenses, (5) litigation settlements and contingencies and legal fees for certain patent litigation, (6) acquisitions and dispositions income orexpense (including with respect to changes in fair value of contingent consideration), and (7) one-time items. Adjusted EBITDA has certain limitations inthat it does not take into account the impact to our statement of operations of certain expenses, including depreciation, non-cash compensation and41 Table of Contentsacquisition-related accounting. We endeavor to compensate for the limitations of the non-GAAP measures presented by also providing the comparable GAAPmeasures 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 ItemsAdjusted EBITDA is adjusted for one-time items, if applicable. Items are considered one-time in nature if they are non-recurring, infrequent or unusualand have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. For the periods presented in thisreport, there are no adjustments for one-time items, except for a $10.0 million contribution to fund the LendingTree Foundation in 2017.Non-Cash Expenses that are Excluded from Adjusted EBITDANon-cash compensation expense consists principally of expense associated with grants of restricted stock, restricted stock units and stock options, someof which awards have performance-based vesting conditions. These expenses are not paid in cash, and we include the related shares in our calculations offully diluted shares outstanding. Upon settlement of restricted stock units, exercise of certain stock options or vesting of restricted stock awards, the awardsmay 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, theintangible assets of the acquired company, such as purchase agreements, technology and customer relationships, are valued and amortized over theirestimated lives.The following table is a reconciliation of net income from continuing operations to Adjusted EBITDA. Year Ended December 31,2018 2017 2016 (in thousands)Net income from continuing operations$109,319 $19,418 $31,208Adjustments to reconcile to Adjusted EBITDA: Amortization of intangibles23,468 12,992 1,243Depreciation7,385 7,085 4,944Severance2,352 404 122Loss on impairments and disposal of fixed assets2,210 839 640Non-cash compensation44,365 23,361 9,647Contribution to LendingTree Foundation— 10,000 —Change in fair value of contingent consideration10,788 23,931 —Acquisition expense6,303 1,595 959Litigation settlements and contingencies(186) 718 129Interest expense, net12,437 7,028 561Rental amortization of intangibles and depreciation630 1,475 —Income tax (benefit) expense(65,575) 6,291 20,366Adjusted EBITDA$153,496 $115,137 $69,819Financial Position, Liquidity and Capital ResourcesGeneralAs of December 31, 2018, we had $105.1 million of cash and cash equivalents and $0.1 million of restricted cash and cash equivalents, compared to$368.6 million of cash and cash equivalents and $4.1 million of restricted cash and cash equivalents as of December 31, 2017.Notable transactions affecting cash and cash equivalents during the reported periods are as follows:42 Table of ContentsRecent DevelopmentsIn January 2019, we acquired ValuePenguin for $105.0 million in cash at closing of the transaction, subject to adjustments for working capital. Theacquisition was funded through $90.0 million drawn on our Revolving Credit Facility (defined below) and the balance using cash on hand.2018In 2018, we purchased an aggregate of 379,449 shares of our common stock pursuant to a stock repurchase program for $92.6 million. Additionally, wepaid $1.1 million in the first quarter of 2018 related to common stock repurchases in the fourth quarter of 2017.In October 2018, we acquired QuoteWizard for $299.9 million in cash at closing of the transaction, subject to post-closing adjustments to workingcapital, and potential future contingent consideration payments up to $70.2 million through October 2021, subject to achieving specific targets. Theacquisition was funded through $174.9 million of cash on hand and by $125.0 million drawn on our Revolving Credit Facility.In July 2018, we acquired Student Loan Hero for $62.7 million in cash.In June 2018, we acquired Ovation for $12.1 million in cash at closing and could make potential future contingent consideration payments of up to$8.75 million through June 2020, subject to achieving specified targets.2017In May 2017, we issued $300.0 million of our 0.625% Convertible Senior Notes for net proceeds of $290.7 million. We used approximately $18.1million of the net proceeds to enter into Convertible Note Hedge and Warrant transactions.In 2017, we purchased an aggregate of 75,393 shares of our common stock pursuant to a stock repurchase program for $21.0 million, of which we paid$19.9 million prior to year-end.In September 2017, we acquired certain assets of SnapCap for $11.9 million in cash at closing and potential future contingent consideration payments ofup to $9.0 million through March 31, 2020, subject to achieving specific targets. We made a contingent consideration payment of $3.0 million in January2019.In June 2017, we acquired the membership interests of MagnifyMoney for $29.6 million cash consideration at the closing of the transaction.In June 2017, we acquired substantially all of the assets of DepositAccounts for $24.0 million in cash at closing and potential future contingentconsideration payments of up to $9.0 million through June 30, 2020, subject to achieving specified targets. We made contingent consideration payments of$4.0 million and $1.0 million in 2018 and 2017, respectively. In January 2019, we made a payment of $1.0 million, which will be included within cash flowsfrom operating activities on the consolidated statement of cash flows for the first quarter of 2019.2016In 2016, we purchased an aggregate of 690,218 shares of our common stock pursuant to a stock repurchase program for $48.5 million.In December 2016, we acquired two office buildings in Charlotte, North Carolina for $23.5 million in cash. In November 2018 the office buildings wereclassified as held for sale. See Item 2. Properties and Item 9B. Other Information for further information.In November 2016, we acquired CompareCards for $80.7 million in cash at closing and potential future contingent consideration payments of up to$22.5 million for each of 2017 and 2018, subject to achieving specified targets. We made the initial $22.5 million earnout payment in the first quarter of2018 and paid the remaining $22.5 million earnout in the second quarter of 2018, of which $21.9 million is included within cash flows from operatingactivities on the consolidated statement of cash flows for 2018.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 andbeyond. Our Revolving Credit Facility described below is an additional potential source of liquidity.Senior Secured Revolving Credit FacilityOn October 26, 2018, we amended our five-year senior secured revolving credit facility which matures on November 21, 2022 (the “Revolving CreditFacility”) to increase its borrowing capacity by $100.0 million to $350.0 million. Borrowings under the Revolving Credit Facility can be used to financeworking capital needs, capital expenditures and general corporate purposes,43 Table of Contentsincluding to finance permitted acquisitions. As of February 28, 2019, we have $195.0 million of borrowings under the Revolving Credit Facility.For additional information on the Revolving Credit Facility, see Note 13—Debt in the notes to the consolidated financial statements included elsewherein this report.Cash Flows from Continuing OperationsOur cash flows attributable to continuing operations are as follows:Year Ended December 31,2018 2017 2016(in thousands)Net cash provided by operating activities$123,948 $103,538 $64,214Net cash used in investing activities(383,038) (74,435) (119,667)Net cash provided by (used in) financing activities4,843 253,125 (52,640)Cash Flows from Operating ActivitiesOur largest source of cash provided by our operating activities is revenues generated by our mortgage and non-mortgage products. Our primary uses ofcash from our operating activities include advertising and promotional payments. In addition, our uses of cash from operating activities includecompensation and other employee-related costs, other general corporate expenditures, litigation settlements and contingencies, certain contingentconsideration payments, and income taxes.Net cash provided by operating activities attributable to continuing operations increased in 2018 from 2017 primarily due to an increase in revenue,partially offset by an increase in selling and marketing expense, and the $21.9 million portion of the CompareCards earnout payment made in the secondquarter of 2018 in excess of the contingent consideration liability recognized at the acquisition date. Additionally, there was a net decrease in cash fromchanges in working capital primarily driven by changes in accounts payable, accrued expenses and other current liabilities and accounts receivable, partiallyoffset by changes in income taxes receivable and prepaids and other current assets.Net cash provided by operating activities attributable to continuing operations increased in 2017 from 2016 primarily due to an increase in revenue,partially offset by an increase in selling and marketing expense. Additionally, there was a net increase in cash from changes in working capital primarilydriven by changes in accounts payable, accrued expenses and other liabilities, partially offset by changes in prepaids and income taxes receivable.Cash Flows from Investing ActivitiesNet cash used in investing activities attributable to continuing operations in 2018 of $383.0 million consisted primarily of the acquisition ofQuoteWizard for $297.1 million, the acquisition of Student Loan Hero for $59.5 million, the acquisition of Ovation for $11.6 million, and capitalexpenditures of $14.9 million.Net cash used in investing activities attributable to continuing operations in 2017 of $74.4 million consisted primarily of the acquisition of SnapCap for$11.9 million, the acquisition of DepositAccounts for $25.0 million, the acquisition of MagnifyMoney for $29.5 million and capital expenditures of $8.0million.Net cash used in investing activities attributable to continuing operations in 2016 of $119.7 million consisted primarily of the acquisition ofCompareCards for $81.2 million, the acquisition of SimpleTuition for $4.5 million, the acquisition of two office buildings in Charlotte, North Carolina for$23.4 million and $10.6 million related to internally developed software and the acquisition of an aircraft.Cash Flows from Financing ActivitiesNet cash provided by financing activities attributable to continuing operations in 2018 of $4.8 million consisted primarily of $125.0 million of netproceeds from our Revolving Credit Facility, partially offset by $27.6 million of contingent consideration payments for CompareCards, DepositAccounts andSimpleTuition, and $93.7 million for the repurchase of our stock.Net cash provided by financing activities attributable to continuing operations in 2017 of $253.1 million consisted primarily of $300.0 million of grossproceeds from the issuance of our 0.625% Convertible Senior Notes and $43.4 million of proceeds from the sale of Warrants in connection with our 0.625%Convertible Senior Notes, partially offset by $61.5 million for the payment44 Table of Contentsof Convertible Note Hedge transactions, $10.5 million for the payment of debt issuance costs and Revolving Credit Facility issuance costs and $19.9 millionfor the repurchase of our stock.Net cash used in financing activities attributable to continuing operations in 2016 of $52.6 million consisted primarily of the repurchase of our stock of$48.5 million and $4.1 million in withholding taxes paid by us upon surrender of shares to satisfy obligations on equity awards.Off-Balance Sheet ArrangementsWe have no off-balance sheet arrangements other than our operating lease obligations and funding commitments pursuant to our surety bonds, none ofwhich have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, resultsof operations, liquidity, capital expenditures or capital resources that is material to investors. See Note 14—Commitments to the consolidated financialstatements included elsewhere in the report for further details.Summary of Contractual ObligationsThe following table sets forth our contractual obligations and commercial commitments as of December 31, 2018. Payments Due By Period as of December 31, 2018Contractual Obligations (a)TotalLess Than1 Year1-3 Years3-5 YearsMore Than5 YearsOperating lease obligations (b)$9,652$4,406$4,282$964$—Long-term contractual obligations (c)56,56325,90827,1253,530—Convertible debt300,000——300,000—Total contractual obligations$366,215$30,314$31,407$304,494$—(a)Excludes potential obligations under surety bonds and the indemnification obligations, repurchase obligations and premium repayment obligationsfor which our HLC subsidiary continues to be liable following the sale of substantially all of the operating assets of our LendingTree Loans businessin the second quarter of 2012. Excludes a $1.2 million accrual related to uncertain tax position, as we are unable to determine when, or if, paymentsfor these taxes will ultimately be made.(b)Our operating lease obligations are associated with office space.(c)Includes a liability of $38.8 million for the estimated fair value of contingent consideration obligations reflected on the balance sheet for theacquisition of DepositAccounts, SnapCap, Ovation and QuoteWizard. Actual contingent consideration payments could range from $3.0 million to$4.0 million for DepositAccounts, $3.0 million to $9.0 million for SnapCap, zero to $8.75 million for Ovation and zero to $70.2 million forQuoteWizard. Also includes $17.7 million of certain other commitments.Critical Accounting Policies and EstimatesThe following disclosure is provided to supplement the description of our accounting policies contained in Note 2—Significant Accounting Policies tothe consolidated financial statements included elsewhere in this report in regard to significant areas of judgment. This disclosure includes accountingpolicies related to both continuing operations and discontinued operations. Management is required to make certain estimates and assumptions during thepreparation of the consolidated financial statements in accordance with generally accepted accounting principles. These estimates and assumptions impactthe reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. Theyalso impact the reported amount of net earnings during any period. Actual results could differ from those estimates. Because of the size of the financialstatement elements to which they relate, some of our accounting policies and estimates have a more significant impact on our consolidated financialstatements than others. A discussion of some of our more significant accounting policies and estimates follows.Loan Loss ObligationsWe make estimates as to our exposure related to our obligation to repurchase loans previously sold to investors or to repay premiums paid by investors inpurchasing loans, and reserve for such contingencies accordingly. Such payments to investors may be required in cases where underwriting deficiencies,borrower fraud and documentation defects occurred.45 Table of ContentsOur HLC subsidiary continues to be liable for certain indemnification obligations, repurchase obligations and premium repayment obligations followingthe sale of substantially all of the operating assets of our LendingTree Loans business on June 6, 2012. We have been negotiating with certain secondarymarket purchasers to settle any existing and future contingent liabilities, but we may not be able to complete such negotiations on acceptable terms, or at all.Because we do not service the loans LendingTree Loans sold, we do not maintain nor have access to the current balances and loan performance data withrespect to the individual loans previously sold to investors. Accordingly, we are unable to determine, with precision, our maximum exposure for breaches ofthe representations and warranties LendingTree Loans made to the investors that purchased such loans.We estimate the liability for loan losses using a settlement discount framework. This approach estimates the lifetime losses on the population ofremaining loans originated and sold by LendingTree Loans using actual defaults for loans with similar characteristics and projected future defaults. It alsoconsiders the likelihood of claims expected due to alleged breaches of representations and warranties made by LendingTree Loans and the percentage ofthose claims investors estimate LendingTree Loans may agree to repurchase. We then apply a settlement discount factor to the result of the foregoing toreflect publicly- announced bulk settlements for similar loan types and vintages, our own settlement experience, as well as LendingTree Loans' non-operatingstatus, in order to estimate a range of the potential obligation. Changes to any one of these factors could significantly impact the estimate of the liability andcould have a material and adverse impact on our results of operations for any particular period.We have considered both objective and subjective factors in our estimation process, but given current general industry trends in mortgage loans as wellas housing prices, market expectations and actual losses related to LendingTree Loans' obligations could vary significantly from the obligation recorded asof December 31, 2018 of $7.6 million or the range of remaining loan losses of $4.3 million to $7.9 million. See Note 19—Discontinued Operations—LendingTree Loans—Loan Loss Obligations to the consolidated financial statements included elsewhere in this report for additional information on the loanloss reserve.Income TaxesEstimates of deferred income taxes and the significant items giving rise to the deferred assets and liabilities are shown in Note 12—Income Taxes to theconsolidated financial statements included elsewhere in this report, and reflect management's assessment of actual future taxes to be paid on items reflected inthe consolidated financial statements, giving consideration to both timing and the probability of realization. Actual income taxes could vary from theseestimates due to future changes in income tax law, state income tax apportionment or the outcome of any review of our tax returns by the IRS, as well asactual operating results that may vary significantly from anticipated results.We also recognize liabilities for uncertain tax positions based on the two-step process prescribed by the accounting guidance for uncertainty in incometaxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not thatthe position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit asthe largest amount that is more than 50% likely of being realized upon ultimate settlement. This measurement step is inherently difficult and requiressubjective estimations of such amounts to determine the probability of various possible outcomes. We consider many factors when evaluating and estimatingour tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.A valuation allowance is provided on deferred tax assets if it is determined that it is "more likely than not" that the deferred tax asset will not be realized.At December 31, 2018, 2017 and 2016, we recorded a partial valuation allowance of $2.2 million, $2.7 million and $2.1 million, respectively, primarilyrelated to state net operating losses, which we do not expect to be able to utilize prior to expiration.Stock-Based CompensationThe forms of stock-based awards granted to our employees are principally restricted stock units ("RSUs"), RSUs with performance conditions, restrictedstock, stock options and stock options with performance conditions. Further, performance-based stock options with market conditions and time-vestedrestricted stock with a performance condition have been granted to our Chairman and Chief Executive Officer. The value of RSU and restricted stock awardsis measured at their grant dates as the fair value of common stock and amortized ratably as non-cash compensation expense over the vesting term. The valueof stock options issued is estimated using a Black-Scholes option pricing model. The value of performance-based awards is measured at their grant dates andrecognized as non-cash compensation expense, considering the probability of the targets being achieved. Performance-based awards with a market conditionare valued using a Monte Carlo simulation model. If an award is modified, we determine if the modification requires a new calculation of fair value or changein the vesting term of the award. See Note 11—Stock-Based Compensation to the consolidated financial statements included elsewhere in this report foradditional information on assumptions and inputs to the fair value determination of stock-based awards.46 Table of ContentsEvaluation of Goodwill and Indefinite-Lived Intangible Assets ImpairmentWe test goodwill and indefinite-lived intangible assets, consisting of certain trade names and trademarks, annually for impairment as of October 1, ormore frequently upon the occurrence of certain events or substantive changes in circumstances. As part of our annual impairment testing of goodwill andindefinite-lived intangible assets, in each instance, we may elect to assess qualitative factors as a basis for determining whether it is necessary to perform thetraditional quantitative impairment testing. If our assessment of these qualitative factors indicates that it is not more likely than not that the fair value of thereporting unit or indefinite-lived intangible asset is less than its carrying value, then no further testing is required. Otherwise, the goodwill reporting unit orlong-lived intangible assets, as applicable, must be quantitatively tested for impairment.The quantitative test for goodwill impairment is determined using a two-step process. Performing the first step to compare reporting unit fair value withits carrying value using a discounted cash flow ("DCF") analysis requires the exercise of significant judgments, including judgments about appropriatediscount rates, perpetual growth rates and the amount and timing of expected future cash flows. If the carrying amount of a reporting unit exceeds its fairvalue, the second step of the goodwill impairment test is required to be performed to measure the amount of impairment, if any. The second step of thegoodwill impairment test compares the implied fair value of the reporting unit's goodwill (determined in the same manner as the amount of goodwillrecognized in a business combination) with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the impliedfair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.The quantitative impairment test for indefinite-lived intangible assets involves a DCF valuation analysis that employs a relief-from-royalty methodologyin estimating the fair value of trade names and trademarks. Significant judgments inherent in this analysis include the determination of royalty rates, discountrates, perpetual growth rates and the amount and timing of future revenues. If the carrying value of the indefinite-lived intangible asset exceeds its estimatedfair value, an impairment loss is recognized in an amount equal to that excess.The value of goodwill and indefinite-lived intangible assets subject to assessment for impairment at December 31, 2018 is $348.3 million and $10.1million, respectively.Recoverability of Long-Lived AssetsWe review the carrying value of all long-lived assets, primarily property and equipment, and definite-lived intangible assets for impairment wheneverevents or changes in circumstances indicate that the carrying value of an asset may be impaired. Impairment is considered to have occurred whenever thecarrying value of a long-lived asset cannot be recovered from cash flows that are expected to result from the use and eventual disposition of the asset. Thisrecoverability test requires us to make assumptions and judgments related to factors used in a calculation of undiscounted cash flows, including, but notlimited to, management’s expectations for future operations and projected cash flows. The key assumptions used in this calculation include AdjustedEBITDA, the remaining useful lives of the primary cash flow generating asset in the asset group and, to a lesser extent, the deduction of capital expendituresand taxes paid in cash to arrive at net cash flows.The value of long-lived assets subject to assessment for impairment is $218.7 million at December 31, 2018.Business AcquisitionsWhen we acquire businesses, we allocate the purchase price to tangible assets and liabilities and identifiable intangible assets acquired at theiracquisition date fair values. Any residual purchase price is recorded as goodwill. We also estimate the fair value of any contingent consideration using Level3 unobservable inputs. Our estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significantjudgments by management.We reassess the fair value of contingent consideration quarterly until the contingency is resolved, and changes in the fair value are recorded in operatingincome in the consolidated statements of operations and comprehensive income.New Accounting PronouncementsSee Note 2—Significant Accounting Policies to the consolidated financial statements included elsewhere in this report for a description of recentaccounting pronouncements.ITEM 7A. Quantitative and Qualitative Disclosures about Market RiskOther than our Revolving Credit Facility, we do not have any financial instruments that are exposed to significant market risk. We maintain our cash andcash equivalents in bank deposits and short-term, highly liquid money market investments. A hypothetical 100-basis point increase or decrease in marketinterest 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 havean effect on the interest paid on borrowings47 Table of Contentsunder the Revolving Credit Facility, if any. As of February 28, 2019, there was $195.0 million borrowed under the Revolving Credit Facility. Increases in theFederal Funds interest rates may also affect contingent consideration payable to DepositAccounts. See Note 8 - Business Acquisition - 2017 Acquisitions -DepositAccounts.Fluctuations in interest rates affect consumer demand for new mortgages and the level of refinancing activity which, in turn, affects lender demand formortgage leads. Typically, when interest rates decline, we see increased consumer demand for mortgage refinancing, which in turn leads to increased traffic toour website and decreased selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sourcestypically decreases, as there are more consumers in the marketplace seeking refinancings and, accordingly, lenders receive more organic lead volume. Due tolower lender demand, our revenue earned per consumer typically decreases but with correspondingly lower selling and marketing costs. Conversely, wheninterest rates increase, we typically see decreased consumer demand for mortgage refinancing, leading to decreased traffic to our website and higherassociated selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically increases, asthere are fewer consumers in the marketplace and, accordingly, the supply of organic mortgage lead volume decreases. Due to high lender demand, wetypically see an increase in the amount lenders will pay per matched lead, which often leads to higher revenue earned per consumer. However, increases in theamount 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 beadversely affected by the overall reduced demand for refinancing in a rising rate environment.48 Table of ContentsITEM 8. Financial Statements and Supplementary DataINDEX TO FINANCIAL STATEMENTS PageNumberLENDINGTREE, INC. AND SUBSIDIARIES:Report of Independent Registered Public Accounting Firm50 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Statements of Operations and Comprehensive Income52 Consolidated Balance Sheets53 Consolidated Statements of Shareholders' Equity54 Consolidated Statements of Cash Flows55 Notes to Consolidated Financial Statements5649 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Shareholders of LendingTree, Inc.Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of LendingTree, Inc. and its subsidiaries (the "Company") as of December 31, 2018 and2017, and the related consolidated statements of operations and comprehensive income, of shareholders’ equity and of cash flows for each of the three yearsin the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). We also have auditedthe Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO.Basis for OpinionsThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, andfor its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controlover Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internalcontrol over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.As described in Management’s Report on Internal Control over Financial Reporting, management has excluded certain elements of the internal control overfinancial reporting of QuoteWizard.com, LLC from its assessment of internal control over financial reporting as of December 31, 2018 because it wasacquired by the Company in a purchase business combination during 2018. Subsequent to the acquisition, certain elements of QuoteWizard.com, LLC’sinternal control over financial reporting and related processes were integrated into the Company’s existing systems and internal control over financialreporting. Those controls that were not integrated have been excluded from management’s assessment of the effectiveness of internal control over financialreporting as of December 31, 2018. We have also excluded these elements of the internal control over financial reporting of QuoteWizard.com, LLC from ouraudit of the Company’s internal control over financial reporting. The excluded elements represent controls over approximately 3% of consolidated assets and4% of the consolidated revenues.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain50 Table of Contentsto the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of managementand directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or dispositionof the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPCharlotte, North CarolinaFebruary 28, 2019We have served as the Company’s auditor since 2012.51 Table of ContentsLENDINGTREE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Year Ended December 31, 2018 2017 2016 (in thousands, except per share amounts)Revenue$764,865$617,736 $384,402Costs and expenses: Cost of revenue (exclusive of depreciation and amortization shown separately below)36,39917,223 13,764Selling and marketing expense500,291432,784 261,100General and administrative expense101,21971,541 37,227Product development26,95817,925 13,761Depreciation7,3857,085 4,944Amortization of intangibles23,46812,992 1,243Change in fair value of contingent consideration10,788 23,931 —Severance2,352404 122Litigation settlements and contingencies(186)718 129Total costs and expenses708,674584,603 332,290Operating income56,19133,133 52,112Other (expense) income, net: Interest expense, net(12,437)(7,028) (561)Other (expense) income(10) (396) 23Income before income taxes43,74425,709 51,574Income tax benefit (expense)65,575(6,291) (20,366)Net income from continuing operations109,31919,418 31,208Loss from discontinued operations, net of tax(12,820)(3,840) (3,714)Net income and comprehensive income$96,499$15,578 $27,494 Weighted average shares outstanding: Basic12,50411,945 11,812Diluted14,09713,682 12,773Income per share from continuing operations: Basic$8.74$1.63 $2.64Diluted$7.75$1.42 $2.44Loss per share from discontinued operations: Basic$(1.03)$(0.32) $(0.31)Diluted$(0.91)$(0.28) $(0.29) Net income per share: Basic$7.72$1.30 $2.33Diluted$6.85$1.14 $2.15The accompanying notes to consolidated financial statements are an integral part of these statements.52 Table of ContentsLENDINGTREE, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDecember 31, 2018December 31,2017 (in thousands, except par valueand share amounts)ASSETS: Cash and cash equivalents$105,102$368,550Restricted cash and cash equivalents564,091Accounts receivable (net of allowance of $1,143 and $675, respectively)91,07253,444Prepaid and other current assets16,42811,881Assets held for sale21,328 —Current assets of discontinued operations18575Total current assets234,171438,041Property and equipment (net of accumulated depreciation of $13,887 and $13,043, respectively)23,17536,431Goodwill348,347113,368Intangible assets, net205,69981,125Deferred income tax assets79,289 20,156Other non-current assets2,1681,910Non-current assets of discontinued operations3,2662,428Total assets$896,115$693,459LIABILITIES: Revolving credit facility$125,000 $—Accounts payable, trade15,0749,250Accrued expenses and other current liabilities93,19077,183Current contingent consideration11,080 46,576Current liabilities of discontinued operations (Note 19)17,60914,507Total current liabilities261,953147,516Long-term debt, net of current portion250,943 238,199Non-current contingent consideration27,75711,273Other non-current liabilities8,3601,597Deferred income tax liabilities894—Total liabilities549,907398,585Commitments and contingencies (Notes 14 and 15)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; 15,428,351 and 14,218,572 shares issued,respectively, and 12,809,764 and 11,979,434 shares outstanding, respectively154142Additional paid-in capital1,134,2271,087,582Accumulated deficit(610,482)(708,354)Treasury stock; 2,618,587 and 2,239,138 shares, respectively(177,691)(85,085)Noncontrolling interest (Note 8)— 589Total shareholders' equity346,208294,874Total liabilities and shareholders' equity$896,115$693,459 The accompanying notes to consolidated financial statements are an integral part of these statements.53 Table of ContentsLENDINGTREE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Common Stock Treasury Stock Total Numberof Shares Amount AdditionalPaid-inCapital AccumulatedDeficit Numberof Shares Amount NoncontrollingInterest (in thousands)Balance as of December 31, 2015$241,142 13,866 $139 $1,006,688 $(750,124) 1,474 $(15,561) $—Net income and comprehensive income27,494 — — — 27,494 — — —Non-cash compensation9,647 — — 9,647 — — — —Purchase of treasury stock(48,524) — — — — 690 (48,524) —Issuance of common stock for stockoptions, restricted stock awards andrestricted stock units, net of withholdingtaxes(4,084) 89 1 (4,085) — — — —Tax benefit from stock-based award activity5,760 — — 5,760 — — — —Balance as of December 31, 2016$231,43513,955$140$1,018,010$(722,630)2,164$(64,085) $—Net income and comprehensive income15,578 — — — 15,578 — — —Non-cash compensation23,361 — — 23,361 — — — —Purchase of treasury stock(21,000) — — — — 75 (21,000) —Issuance of common stock for stockoptions, restricted stock awards andrestricted stock units, net of withholdingtaxes1,601 263 2 1,599 — — — —Cumulative effect adjustment due to ASU2016-09985 — — 2,287 (1,302) — — —Issuance of 0.625% Convertible SeniorNotes, net60,415 — — 60,415 — — — —Convertible note hedge(61,500) — — (61,500) — — — —Sale of warrants43,410 — — 43,410 — — — —Noncontrolling interest (Note 8)589 — — — — — — 589Balance as of December 31, 2017$294,874 14,218 $142 $1,087,582 $(708,354) 2,239 $(85,085) $589Net income and comprehensive income96,499 — — — 96,499 — — —Non-cash compensation44,365 — — 44,365 — — — —Purchase of treasury stock(92,606) — — — — 379 (92,606) —Issuance of common stock for stockoptions, restricted stock awards andrestricted stock units, net of withholdingtaxes2,217 1,210 12 2,205 — — — —Cumulative effect adjustment due to ASU2014-091,373 — — — 1,373 — — —Issuance of 0.625% Convertible SeniorNotes, net(4) — — (4) — — — —Acquisition of noncontrolling interest (Note8)(510) — — 79 — — — (589)Balance as of December 31, 2018$346,20815,428$154$1,134,227$(610,482)2,618$(177,691) $— The accompanying notes to consolidated financial statements are an integral part of these statements.54 Table of ContentsLENDINGTREE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 201820172016 (in thousands)Cash flows from operating activities attributable to continuing operations: Net income and comprehensive income$96,499$15,578$27,494Less: Loss from discontinued operations, net of tax12,8203,8403,714Income from continuing operations109,31919,41831,208Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable tocontinuing operations: Loss on impairments and disposal of fixed assets2,210840640Amortization of intangibles23,46812,9921,243Depreciation7,3857,0854,944Rental amortization of intangibles and depreciation6301,474—Non-cash compensation expense44,36523,3619,647Deferred income taxes(63,901)(6,370)6,367Change in fair value of contingent consideration10,78823,931—Bad debt expense880195515Amortization of debt issuance costs1,7761,032245Write-off of previously-capitalized debt issuance costs—90—Amortization of convertible debt discount11,3976,385—Changes in current assets and liabilities: Accounts receivable(16,820)(11,381)(8,361)Prepaid and other current assets(2,985)(5,358)(1,558)Accounts payable, accrued expenses and other current liabilities14,27031,1084,769Current contingent consideration(21,912)——Income taxes receivable3,669(1,104)13,385Other, net(591)(160)1,170Net cash provided by operating activities attributable to continuing operations123,948103,53864,214Cash flows from investing activities attributable to continuing operations: Capital expenditures(14,907)(8,040)(31,955)Acquisition of intangible assets—(5)(2,030)Acquisition of QuoteWizard, net of cash acquired(297,072)——Acquisition of Student Loan Hero, net of cash acquired(59,483)——Acquisition of Ovation, net of cash acquired(11,566)——Acquisition of SnapCap(10)(11,886)—Acquisition of DepositAccounts—(25,000)—Acquisition of MagnifyMoney, net of cash acquired—(29,504)—Acquisition of CompareCards——(81,182)Acquisition of other businesses——(4,500)Net cash used in investing activities attributable to continuing operations(383,038)(74,435)(119,667)Cash flows from financing activities attributable to continuing operations: Proceeds from exercise of stock options, net of payments related to net-share settlement of stock-based compensation2,2171,602(4,085)Contingent consideration payments(27,588)——Proceeds from revolving credit facility125,000——Acquisition of noncontrolling interest(499)——Proceeds from the issuance of 0.625% Convertible Senior Notes—300,000—Payment of convertible note hedge transactions—(61,500)—Proceeds from the sale of warrants—43,410—Proceeds from equity offering, net of offering costs——(23)Payment of debt issuance costs(583)(10,486)(8)Purchase of treasury stock(93,704)(19,901)(48,524)Net cash provided by (used in) financing activities attributable to continuing operations4,843253,125(52,640)Total cash (used in) provided by continuing operations(254,247)282,228(108,093)Discontinued operations:Net cash used in operating activities attributable to discontinued operations(13,236)(4,807)(10,203)Total cash used in discontinued operations(13,236)(4,807)(10,203)Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents(267,483)277,421(118,296)Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period372,64195,220213,516Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period$105,158$372,641$95,220Supplemental cash flow information:Interest paid$3,593$1,327$320 Income tax payments54120,3593,095Income tax refunds5,67813322The accompanying notes to consolidated financial statements are an integral part of these statements.55 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 1—ORGANIZATIONCompany OverviewLendingTree, Inc. ("LendingTree" or the "Company"), is the parent of LendingTree, LLC and several companies owned by LendingTree, LLC.LendingTree operates what it believes to be the leading online consumer platform that connects consumers with the choices they need to be confident intheir financial decisions. The Company offers consumers tools and resources, including free credit scores, that facilitate comparison-shopping for mortgageloans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, deposit accounts, personal loans, student loans, small businessloans, insurance quotes and other related offerings. The Company primarily seeks to match in-market consumers with multiple providers on its marketplacewho can provide them with competing quotes for loans, deposit products, insurance or other related offerings they are seeking. The Company also serves as avalued partner to lenders and other providers seeking an efficient, scalable and flexible source of customer acquisition with directly measurable benefits, bymatching the consumer inquiries it generates with these providers.The consolidated financial statements include the accounts of LendingTree and all its wholly-owned entities. Intercompany transactions and accountshave been eliminated.Discontinued OperationsThe LendingTree Loans business is presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements ofoperations and comprehensive income and consolidated cash flows for all periods presented. The notes accompanying these consolidated financialstatements reflect the Company's continuing operations and, unless otherwise noted, exclude information related to the discontinued operations. See Note 19—Discontinued Operations for additional information.Basis of PresentationThe accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the UnitedStates of America ("GAAP") and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").Certain prior year amounts have been reclassified to conform to current year presentation. See the discussion in Note 2—Significant Accounting Policiesfor the impact of adopting Accounting Standards Update ("ASU") 2016-18 on the presentation of changes in restricted cash, and ASU 2016-09 on thepresentation of excess tax benefits and deficiencies, within the statement of cash flows.NOTE 2—SIGNIFICANT ACCOUNTING POLICIESRevenue RecognitionThe Company derives its revenue primarily from match fees and closing fees. Revenue is recognized when performance obligations under the terms of acontract with a customer are satisfied and promised services have transferred to the customer. In identifying performance obligations, judgment is requiredaround contracts where there was a possibility of bundled services and multiple parties. In applying judgment, the Company considers customer expectationsof performance, materiality and the core principles of Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. TheCompany's services are generally transferred to the customer at a point in time.Variable consideration is included in revenue if it is probable that a significant future reversal of cumulative revenue under the contract will not occur.Revenue within the mortgage product category is primarily generated from upfront match fees paid by mortgage Network Partners that receive a loanrequest, 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 ofloan requests that originated through the Company's websites or affiliates. The Company recognizes revenue at the time a loan request is delivered to thecustomer, provided that no significant obligations remain. Revenue recognition on match fees was not impacted by the adoption of ASC Topic 606 in thefirst quarter of 2018, as56 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSthe Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the performance obligation to deliver a loanrequest to the customer.In addition to match and other upfront fees, revenue within the non-mortgage product category is also generated from closing fees and approval 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 theconsumer. Prior to the adoption of ASC Topic 606, closed loan fees were recognized at the time the lender reported the closed loan to the Company, whichcould be several months after the original request was transmitted.Approval fees are derived from credit card issuers when the credit card consumer receives card approval from the credit card issuer. Prior to the adoptionof ASC Topic 606, approval fees were recognized at the time the credit card issuer reported the card approval for the consumer to the Company, which isgenerally within two weeks after the consumer's request was transmitted.Under ASC Topic 606, the timing of recognizing revenue for closing fees and approval fees is accelerated to the point when a loan request or a creditcard consumer is delivered to the customer, as opposed to when the consumer loan is closed by the lender or credit card approval is made by the issuer. TheCompany's contractual right to closing fees and approval fees is not contemporaneous with the satisfaction of the performance obligation to deliver a loanrequest 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 variableconsideration on closing fees and approval fees for which the Company has satisfied the related performance obligation, but are still pending the loan closingor credit card approval before the Company has a contractual right to payment. This estimate is based on the Company's historical closing rates and historicaltime 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 approvedby the card issuer. The time between satisfaction of the Company's performance obligation and when the Company's right to consideration becomesunconditional is generally less than 90 days.Upfront fees and subscription fees are derived from consumers in the Company's credit services business, which was acquired on June 11, 2018. Upfrontfees paid by consumers are recognized as revenue over the estimated time the consumer will remain a customer and receive services. Subscription fees arerecognized over the period a consumer is receiving services.Revenue from the Company's insurance business, which was acquired on October 31, 2018, is primarily generated from match fees, fees for website clicksor fees for calls. Match fees and upfront fees for clicks and call transfers are earned through the delivery of consumer requests that originated through theCompany's websites or affiliates. The Company recognizes revenue at the time a consumer request is delivered to the customer, provided that no significantobligations remain. The Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the performance obligationto deliver a consumer request to the customer.Both the mortgage and non-mortgage product categories are included in the Company's single reportable segment.Our payment terms vary by customer and services offered. The term between invoicing and when payment is due is generally 30 days or less.Sales commissions are incremental costs of obtaining contracts with customers. The Company expenses sales commissions when incurred as the durationof contracts with customers is less than one year, based on the right for either party to terminate the contract with less than one year's notice withoutcompensation to either party. These costs are recorded within selling and marketing expense on the consolidated statements of operations and comprehensiveincome.For additional information on the adoption of ASC Topic 606, please see the discussion over ASU 2014-09 in the section titled "Recent AccountingPronouncements" within this Note.Cash and Cash EquivalentsCash and cash equivalents include cash and short-term, highly liquid money market investments with original maturities of three months or less.57 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSRestricted CashCash escrowed or contractually restricted for a specific purpose is designated as restricted cash.Accounts ReceivableAccounts 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 arepast due, previous loss history and the specific customer's current ability to pay its obligation. Accounts receivable are considered past due when they areoutstanding longer than the contractual payment terms. Accounts receivable are written off when management deems them uncollectible.A reconciliation of the beginning and ending balances of the allowance for doubtful accounts is as follows (in thousands): Year Ended December 31, 2018 2017 2016Balance, beginning of the period$675 $1,059 $606Charges to earnings880 195 515Write-off of uncollectible accounts receivable(412) (579) (62)Balance, end of the period$1,143 $675 $1,059Loan Loss Obligations (Discontinued Operations)The Company's Home Loan Center, Inc. ("HLC") subsidiary, which during its period of active operation primarily conducted business as LendingTreeLoans, sold loans it originated to investors on a servicing-released basis and the risk of loss or default by the borrower was generally transferred to theinvestor. However, LendingTree Loans was required by these investors to make certain representations relating to credit information, loan documentation andcollateral. To the extent LendingTree Loans did not comply with such representations, LendingTree Loans may be required to repurchase loans or indemnifythe investors for any losses from borrower defaults. LendingTree Loans maintains a liability for the estimated exposure relating to such contingentobligations and changes to the estimate are recorded in income from discontinued operations in the periods they occur.The Company estimates the liability for loan losses using a settlement discount framework. This approach estimates the lifetime losses on the populationof remaining loans originated and sold by LendingTree Loans using actual defaults for loans with similar characteristics and projected future defaults. It alsoconsiders the likelihood of claims expected due to alleged breaches of representations and warranties made by LendingTree Loans and the percentage ofthose claims investors estimate LendingTree Loans may agree to repurchase. The Company then applies a settlement discount factor to the result of theforegoing to reflect publicly-announced bulk settlements for similar loan types and vintages, the Company's own settlement experience, as well asLendingTree Loans' non-operating status, in order to estimate a range of potential liability. Changes to any one of these factors could significantly impact theestimate of the liability and could have a material impact on the Company's results of operations for any particular period. See Note 19—DiscontinuedOperations—LendingTree Loans—Loan Loss Obligations for additional information on the loan loss reserve.Segment ReportingThe Company has one reportable segment.Property and EquipmentProperty and equipment, including internally-developed software and significant improvements, are recorded at cost less accumulated depreciation.Acquisition and construction costs for land and building is capitalized and depreciated over the applicable useful lives. Due to the rapid advancements intechnology and evolution of company products, all internally-developed software is written-off at the end of its useful life. Repairs and maintenance and anygains or losses on dispositions are recognized as incurred in current operations.58 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDepreciation is recorded on a straight-line basis to allocate the cost of depreciable assets to operations over their estimated service lives. The followingtable presents the estimated useful lives for each asset category:Asset CategoryEstimated Useful LivesLandN/ABuilding34 yearsSite Improvements1 to 15 yearsComputer equipment and capitalized software1 to 5 yearsLeasehold improvementsLesser of asset life or life of leaseFurniture and other equipment3 to 7 yearsAircraft and automobile5 to 10 yearsSoftware Development CostsSoftware development costs primarily include internal and external labor expenses incurred to develop the software that powers the Company's websites.Certain costs incurred during the application development stage are capitalized based on specific activities tracked, while costs incurred during thepreliminary project stage and post-implementation/operation stage are expensed as incurred. Capitalized software development costs are amortized over anestimated useful life of one to five years.Goodwill and Indefinite-Lived Intangible AssetsGoodwill acquired in business combinations is assigned to the reporting units that are expected to benefit from the combination as of the acquisitiondate. Goodwill and indefinite-lived intangible assets, consisting of certain trade names and trademarks, are not amortized. Rather, these assets are testedannually for impairment as of October 1, or more frequently upon the occurrence of certain events or substantive changes in circumstances.As part of its annual impairment testing of goodwill and indefinite-lived intangible assets, in each instance, the Company may elect to assess qualitativefactors as a basis for determining whether it is necessary to perform the traditional quantitative impairment testing. If the Company’s assessment of thesequalitative factors indicates that it is not more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than itscarrying value, then no further testing is required. Otherwise, the goodwill reporting unit or long-lived intangible assets, as applicable, must be quantitativelytested for impairment.The quantitative test for goodwill impairment is determined using a two-step process. The first step is to compare the fair value of a reporting unit with itscarrying amount, including goodwill. In performing the first step, the Company determines the fair value of its reporting units by using a market approachand a discounted cash flow ("DCF") analysis. Determining fair value using a DCF analysis requires the exercise of significant judgments, includingjudgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. If the fair value of a reportingunit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not required. If the carryingamount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is required to be performed to measure the amount ofimpairment, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amountof that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If thecarrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to thatexcess.The quantitative impairment test for indefinite-lived intangible assets involves a comparison of the estimated fair value of the intangible asset with itscarrying value. If the carrying value of the indefinite-lived intangible asset exceeds its estimated fair value, an impairment loss is recognized in an amountequal to that excess. The estimates of fair value of indefinite-lived intangible assets are determined using a DCF valuation analysis that employs a relief-from-royalty methodology in estimating the fair value of trade names and trademarks. Significant judgments inherent in this analysis include the determination ofroyalty rates, discount rates, perpetual growth rates and the amount and timing of future revenues.For the October 1, 2018 and 2017 annual impairment tests of goodwill and indefinite-lived intangible assets, the Company elected to perform qualitativeassessments as a precursor to the traditional quantitative tests. Results of the October 1, 2018 and 2017 annual impairment tests indicated that it is not morelikely than not that the fair value of the goodwill and the indefinite-lived intangible assets were each less than their respective carrying values. Accordingly,no further testing was required.59 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSLong-Lived Assets and Intangible Assets with Definite LivesLong-lived assets include property and equipment and intangible assets with definite lives. Amortization of definite-lived intangible assets is recordedon a straight-line basis over their estimated lives.Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventualdisposition of the asset. If the carrying amount is deemed to not be recoverable, an impairment loss is recorded as the amount by which the carrying amountof the long-lived asset exceeds its fair value.At December 31, 2018 and 2017, the Company performed its review of impairment triggering events for long-lived assets and determined that atriggering event had not occurred.Assets and Liabilities Held for SaleThe Company classifies assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met:•Management, having the authority to approve the action, commits to a plan to sell the asset or disposal group;•The asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales ofsuch assets or disposal groups;•An active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated;•The sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completedsale within one year, except if events or circumstances beyond the Company's control extend the period of time required to sell the asset or disposalgroup beyond one year;•The asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and•Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.A long-lived asset or disposal group that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs tosell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized onthe sale of a long-lived asset or disposal group until the date of sale. The fair value of a long-lived asset or disposal group, less any costs to sell, is assessedeach reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the asset ordisposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale.Fair Value MeasurementsThe Company categorizes its assets and liabilities measured at fair value into a fair value hierarchy that prioritizes the assumptions used in pricing theasset or liability into the following three levels:•Level 1: Observable inputs, such as quoted prices for identical assets and liabilities in active markets obtained from independent sources.•Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted pricesfor identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observablemarket data.•Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions, based onthe best information available under the circumstances, about the assumptions market participants would use in pricing the asset or liability.60 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe Company's non-financial assets, such as goodwill, intangible assets and property and equipment are recorded at fair value upon acquisition. Theseassets are remeasured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized. Suchfair value measurements are based predominantly on Level 3 inputs.Contingent consideration payments related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. TheCompany's estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments bymanagement. Any changes in the fair value of these contingent consideration payments are included in operating income in the consolidated statements ofoperations and comprehensive income.Cost of RevenueCost of revenue consists primarily of expenses associated with compensation and other employee-related costs (including stock-based compensation)related to internally-operated customer call centers, third-party customer call center fees, costs for online advertising resold to third parties, credit scoringfees, credit card fees, website network hosting and server fees.Product DevelopmentProduct 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.AdvertisingAdvertising costs are expensed in the period incurred (except for production costs which are initially capitalized and then recognized as expense whenthe advertisement first runs) and principally represent offline costs, including television, print and radio advertising, and online advertising costs, includingfees paid to search engines and distribution partners. Advertising expense was $469.9 million, $410.8 million and $243.2 million for the years endedDecember 31, 2018, 2017 and 2016, respectively, and is included in selling and marketing expense on the consolidated statements of operations andcomprehensive income.Income TaxesIncome taxes are accounted for under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In estimatingfuture tax consequences, all expected future events are considered. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the yearin which those temporary differences are expected to be recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined thatit is more likely than not that the deferred tax asset will not be realized. Interest is recorded on potential tax contingencies as a component of income taxexpense and recorded net of any applicable related income tax benefit. For the years ended December 31, 2018, 2017 and 2016, the Company followed theincremental or "with" and "without" approach to intraperiod tax allocation for determination of the amount of tax benefit to allocate to continuing operationsas prescribed in Accounting Standards Codification ("ASC") 740-20-45-7.In accordance with the accounting standard for uncertainty in income taxes, liabilities for uncertain tax positions are recognized based on the two-stepprocess prescribed by the accounting standards. The first step is to evaluate the tax position for recognition by determining if the weight of availableevidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.Effective January 1, 2018, the Company changed the method used to estimate the deduction for prepaid marketing and advertising costs. This change inmethodology impacts the timing of the tax deductibility of these related costs. The Company historically estimated these expenses to be deductible as longas the services were provided within 12 months of payment. Under the proposed method of accounting, the Company will take into account only prepaidmarketing and advertising as the Company makes payment for the services to the extent that the payment is due and the services are reasonably expected bythe Company to be provided to the applicant within 3 ½-months after the date of payment as authorized by Treas. Reg. §1.461-4(d)(6)(ii). The Company hasaccounted for this change as a change in accounting method and recorded a cumulative impact of $1.0 million as a deferred tax liability to be recognizedover four years.61 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSEffective January 1, 2017, the Company changed the method used to estimate the deduction for internally developed software. This change inmethodology impacts the timing of the tax deductibility of these related costs. The Company historically capitalized these expenses and amortized themover three years. Under the proposed method of accounting, the Company will treat costs attributable to internally developed software as current expensesand take them into account in full in accordance with Section 5.01(1) of Rev. Proc. 2000-50 and rules similar to those applicable under Section 174(a). TheSection 481(a) adjustment is the cumulative difference between the present method and the proposed method of accounting computed as of the first day ofthe year of change, January 1, 2017 and was reflected in the timely filed income tax return during 2018 related to the period of change.On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effect ofthe Tax Cuts and Jobs Act ("TCJA"). SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date forcompanies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of theTCJA for which the accounting under ASC 740 is complete. To the extent that a company's accounting for certain income tax effects of the TCJA isincomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. In accordance with SAB 118, theCompany determined that the $9.1 million of the deferred tax expense recorded in connection with the remeasurement of certain deferred tax assets andliabilities was a provisional amount and a reasonable estimate at December 31, 2017.During the fourth quarter of the year ended December 31, 2018, the Company finalized the computations of the income tax effects of the Act. As such, inaccordance with SAB 118, the Company's accounting for the effects of the Act is complete. The Company did not significantly adjust provisional amountsrecorded in the prior year and the SAB 118 measurement period subsequently ended on December 22, 2018. Although the Company no longer considersthese amounts to be provisional, the determination of the Act's income tax effects may change following future legislation or further interpretation of the Actbased on future guidance from the Internal Revenue Service and state tax authorities.Stock-Based CompensationThe forms of stock-based awards granted to LendingTree employees are principally restricted stock units ("RSUs"), RSUs with performance conditions,restricted stock, stock options and stock options with performance conditions. Further, performance-based stock options with market conditions and time-vested restricted stock with a performance condition have been granted to the Company's Chairman and Chief Executive Officer. RSUs are awards in the formof units, denominated in a hypothetical equivalent number of shares of LendingTree common stock and with the value of each award equal to the fair valueof LendingTree common stock at the date of grant. RSUs may be settled in cash, stock or both, as determined by the Company's Compensation Committee atthe time of grant. The Company does not have a history of settling these awards in cash. Each stock-based award is subject to service-based vesting, where aspecific period of continued employment must pass before an award vests. The Compensation Committee can modify the vesting provisions of an award.Certain awards also include performance-based vesting, where certain performance targets set at the time of grant must be achieved before an award vests.LendingTree recognizes as expense non-cash compensation for all stock-based awards for which vesting is considered probable. Prior to the adoption ofASU 2016-09, the amount of non-cash compensation was reduced by estimated forfeitures, using a rate estimated at the grant date based on historicalexperience and revised, if necessary, in subsequent periods if the actual forfeiture rate differed from the estimated rate. Subsequent to the adoption of ASU2016-09 in the first quarter of 2017, forfeitures are recognized when they occur.For service-based awards, non-cash compensation is measured at fair value on the grant date and expensed ratably over the vesting term. The fair value ofeach stock option award without a market condition is estimated using the Black-Scholes option pricing model, while the fair value of an RSU or restrictedstock award is measured as the closing common stock price at the time of grant. For performance-based awards, the fair value is measured on the grant dateand recognized as non-cash compensation expense, considering the probability of the targets being achieved. Performance-based awards with a marketcondition are valued using a Monte Carlo simulation model.Subsequent to the Company's adoption of ASU 2016-09 in the first quarter of 2017, excess tax benefits and deficiencies that arise due to the difference inthe measure of stock compensation and the amount deductible for tax purposes are prospectively recorded in income tax expense within the consolidatedstatement of operations and comprehensive income, and are retrospectively classified as a component of operating cash flows within the consolidatedstatements of cash flows. Prior to the adoption of ASU 2016-09, these excess tax benefits were recognized in the consolidated statement of shareholders'equity and reported as a component of financing cash flows. For additional information on the adoption of ASU 2016-09, please see the section titled"Recent Accounting Pronouncements" within this Note.62 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSLitigation Settlements and ContingenciesLitigation settlements and contingencies consists of expenses related to actual or anticipated litigation settlements, in addition to legal fees incurred inconnection with various patent litigation claims the Company pursues against others.The Company is involved in legal proceedings on an ongoing basis. If the Company believes that a loss arising from such matters is probable and can bereasonably estimated, the estimated liability is accrued in the consolidated financial statements. If only a range of estimated losses can be determined, anamount within the range is accrued that, in the Company's judgment, reflects the most likely outcome; if none of the estimates within that range is a betterestimate than any other amount, the low end of the range is accrued. For those proceedings in which an unfavorable outcome is reasonably possible but notprobable, an estimate of the reasonably possible loss or range of losses or a conclusion that an estimate of the reasonably possible loss or range of lossesarising directly from the proceeding (i.e., monetary damages or amounts paid in judgment or settlement) are not material is disclosed. Legal expensesassociated with these matters are recognized as incurred.Accounting EstimatesManagement is required to make certain estimates and assumptions during the preparation of the consolidated financial statements in accordance withGAAP. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the dateof the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from thoseestimates.Significant estimates underlying the accompanying consolidated financial statements, including discontinued operations, include: loan lossobligations; 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; contract assets; various other allowances, reserves and accruals; and assumptions related to the determination of stock-basedcompensation.Certain Risks and ConcentrationsLendingTree's business is subject to certain risks and concentrations including dependence on third-party technology providers, exposure to risksassociated with online commerce security and credit card fraud.Financial instruments, which potentially subject the Company to concentration of credit risk at December 31, 2018, consist primarily of cash and cashequivalents and accounts receivable, as disclosed in the consolidated balance sheet. Cash and cash equivalents are in excess of Federal Deposit InsuranceCorporation insurance limits, but are maintained with quality financial institutions of high credit. The Company generally requires certain network partnersto 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.For the year ended December 31, 2018, there were no network partners accounting for more than 10% of total revenue. For the years ended December 31,2017 and 2016, one network partner accounted for 11% and 15% of total revenue, respectively. For the year ended December 31, 2016, another networkpartner accounted for 13% of total revenue.Lenders and lead purchasers participating on the Company's marketplace can offer their products directly to consumers through brokers, mass marketingcampaigns or through other traditional methods of credit distribution. These lenders and lead purchasers can also offer their products online, either directly toprospective borrowers, through one or more online competitors, or both. If a significant number of potential consumers are able to obtain loans and otherproducts from network partners without utilizing the Company's services, the Company's ability to generate revenue may be limited. Because the Companydoes not have exclusive relationships with the network partners whose loans and other financial products are offered on its online marketplace, consumersmay obtain offers from these network partner 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 theUnited States.Recent Accounting PronouncementsIn August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-15 which aligns the requirements for capitalizingimplementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing63 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSimplementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This ASUis effective for annual and interim reporting periods beginning after December 15, 2019. Early adoption is permitted, including adoption in any interimperiod. The amendments should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. TheCompany is evaluating the impact this ASU will have on its consolidated financial statements and whether to early adopt.In August 2018, the FASB issued ASU 2018-13 which removes, modifies and adds certain disclosure requirements in ASC Topic 820, Fair ValueMeasurement. This ASU is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. Entities arepermitted to adopt any removed or modified disclosures and delay adoption of the additional disclosures until the effective date of the ASU. Certainamendments must be applied prospectively while others are to be applied on a retrospective basis to all periods presented. The Company is evaluating theimpact this ASU will have on its consolidated financial statements and whether to early adopt.In June 2018, the FASB issued ASU 2018-07 which simplifies the accounting for nonemployee share-based payments by expanding the scope of ASCTopic 718, Compensation—Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Underthe new guidance, most of the initial and subsequent measurement for such payments to nonemployees is aligned with the requirements for share-basedpayments to employees. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted.Entities must transition to the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.The Company early-adopted this ASU during the second quarter of 2018, with no impact to its consolidated financial statements.In May 2017, the FASB issued ASU 2017-09 which clarifies when to account for a change to the terms or conditions of a share-based payment award as amodification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions or the classification of the awardchanges as a result of the change in terms or conditions. This ASU is effective prospectively for annual periods beginning on or after December 15, 2017, andearly adoption was permitted. The Company adopted this ASU during the first quarter of 2018.In January 2017, the FASB issued ASU 2017-04 which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwillimpairment charge (Step 2 of the goodwill impairment test). Instead, an impairment charge will be based on the excess of the carrying amount over the fairvalue. This ASU is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted forannual and interim goodwill impairment testing dates after January 1, 2017. The Company is evaluating the impact this ASU will have on its consolidatedfinancial statements and whether to early adopt.In November 2016, the FASB issued ASU 2016-18 which is intended to reduce the diversity in the classification and presentation of changes in restrictedcash in the statement of cash flows, by requiring entities to combine the changes in cash and cash equivalents and restricted cash in one line. As a result,entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. In addition, if more than one lineitem is recorded on the balance sheet for cash and cash equivalents and restricted cash, a reconciliation between the statement of cash flows and balance sheetis required. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017, and early adoption was permitted. Theretrospective transition method, requiring adjustment to all comparative periods presented, is required. The Company adopted this ASU during the firstquarter of 2018. The adoption resulted in an immaterial reclassification of cash outflows from investing activities to operating activities for 2017, and areclassification of $2.5 million of cash inflows from investing activities to operating activities for 2016. See Note 4—Cash and Restricted Cash for thereconciliation of cash and cash equivalents and restricted cash reported on the balance sheet to the total of such amounts shown on the statement of cashflows.In August 2016, the FASB issued ASU 2016-15 which addresses eight cash flow classification issues, eliminating the diversity in practice. This ASU iseffective for annual and interim reporting periods beginning after December 15, 2017, and early adoption was permitted. The retrospective transition method,requiring adjustment to all comparative periods presented, is required unless it is impracticable for some of the amendments, in which case those amendmentswould be prospectively applied as of the earliest date practicable. The Company adopted this ASU during the first quarter of 2018, and there was noadjustment to prior periods. Pursuant to adoption of this ASU, contingent consideration payments made are classified as cash outflows from financingactivities up to the amount of the contingent consideration liability recognized at the acquisition date, and the portion of payments in excess of that initialliability are classified as cash outflows from operating activities. See Note 8—Business Acquisitions for additional information.64 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSIn March 2016, the FASB issued ASU 2016-09 which simplifies various aspects related to how share-based payments are accounted for and presented inthe financial statements, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures and classification of excesstax benefits on the statement of cash flows. This ASU was effective for annual and interim reporting periods beginning after December 15, 2016, and earlyadoption was permitted. Upon adoption, any adjustments were to be reflected as of the beginning of the fiscal year of adoption. The Company adopted thisASU during the first quarter of 2017.The new standard required excess tax benefits and deficiencies, which arise due to the difference in the measure of stock compensation and the amountdeductible for tax purposes, to be recorded in earnings in income tax expense. These excess tax benefits and deficiencies were generally previously recordedin additional paid-in capital and had no impact on net income. The standard required prospective adoption for this portion of the new guidance.Additionally, the new standard required the excess tax benefits and deficiencies to be classified as an operating activity in the accompanying consolidatedstatements of cash flows. These excess tax benefits and deficiencies were previously recorded as a financing activity in the statement of cash flows. Thestandard allowed for either prospective or retrospective adoption for the change in presentation in the statement of cash flows. The Company elected toretrospectively adopt the classification change in the statement of cash flows. Accordingly, prior periods have been adjusted to increase the cash provided byoperating activities and decrease the cash provided by financing activities by $5.8 million in 2016 within the accompanying consolidated statements of cashflows. The standard also allows for an election by the Company to either estimate forfeitures, as required under previous guidance, or recognize forfeitureswhen they occur. The Company elected to recognize forfeitures of stock awards as they occur, with the modified retrospective transition method required.Accordingly, the Company recognized a $1.4 million cumulative-effect adjustment to retained earnings as of January 1, 2017.In February 2016, the FASB issued ASU 2016-02 related to leases. This ASU introduces ASC Topic 842, Leases, which will supersede the existing leaseaccounting guidance in ASC Topic 840, Leases. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018, with earlyadoption permitted. In July 2018, the FASB issued ASU 2018-10 which clarifies certain narrow aspects of implementing ASU 2016-02, includingclarifications related to the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options,variable payments that depend on an index or rate, and impairment of the net investment in the lease. In the same month, the FASB issued ASU 2018-11which provides an optional transition method that allows entities to initially apply the lease accounting transition requirements at the adoption date andrecognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption without restating comparative prior periodspresented. ASU 2018-11 also includes a practical expedient for lessors to not separate the lease and nonlease components of a contract. In December 2018,the FASB issued ASU 2018-20 which provides certain narrow scope improvements for lessors, including an accounting policy election to not evaluatewhether certain sales taxes and other similar taxes are lessor costs or lessee costs. ASU 2018-10, ASU 2018-11 and ASU 2018-20 must be adoptedconcurrently with the adoption of ASU 2016-02 (collectively, "ASC Topic 842"). The Company does not expect the adoption of ASC Topic 842, whichincludes the recognition of right-of-use assets and lease liabilities related to operating leases greater than one year in duration for which the Company is thelessee, to have a material effect on its consolidated financial statements. The Company will adopt ASC Topic 842 as of January 1, 2019 using the optionaltransition method to apply the new requirements at the adoption date without restating comparative prior periods presented, and does not expect a materialcumulative effect adjustment, if any, to the opening balance of accumulated deficit in the period of adoption. The Company will elect the package ofpractical expedients which allows for an entity to not reassess whether expired or existing contracts contain leases, lease classification for expired or existingleases, and initial direct costs for existing leases. Additionally, the Company will elect as accounting policy to not record on the balance sheet leases with aterm of twelve months or less.In May 2014, the FASB issued ASU 2014-09 related to revenue recognition. This guidance introduces ASC Topic 606, Revenue from Contracts withCustomers, and supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. In 2016, the FASB issued final amendmentsclarifying implementation guidance for principal versus agent considerations, identifying performance obligations, assessing collectability, presenting salestaxes, measuring noncash consideration and certain other transition matters. The clarification ASUs must be adopted concurrently with the adoption of ASU2014-09 (collectively, "ASC Topic 606"). Under the new ASUs, the timing of recognizing revenue for closing fees and approval fees in the Company's non-mortgage product category has been accelerated to the point when a loan request or a credit card consumer is delivered to the customer as opposed to whenthe consumer loan is closed by the lender or credit card approval is made by the issuer and communicated to the Company.The Company has adopted ASC Topic 606 as of January 1, 2018 using the modified retrospective transition approach. The Company recognized thecumulative effect of initially applying ASC Topic 606 as an adjustment to the opening balance of accumulated deficit. Under this approach, revenue for2017 and 2016 is reported in the consolidated statements of operations and comprehensive income on the historical basis, and revenue for 2018 is reported inthe consolidated statements of operations and65 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTScomprehensive income under ASC Topic 606. A comparison of revenue for 2018 periods to the historical basis is included below. See Note 3—Revenue foradditional information.The cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet for the adoption of ASC Topic 606 were as follows (inthousands): December 31, 2017 Adjustmentsdue toASC Topic 606 January 1, 2018Assets: Prepaid and other current assets$11,881 $1,903 $13,784Deferred income tax assets20,156 (530) 19,626 Shareholders' equity: Accumulated deficit$(708,354) $1,373 $(706,981)The impact of adoption on the consolidated income statement and balance sheet for the period ended December 31, 2018 was as follows (in thousands): Year Ended December 31, 2018 As Reported Balances withoutadoption ofASC Topic 606 Effect of ChangeRevenue$764,865 $762,739 $2,126 Costs and expenses: Income tax benefit65,575 66,182 (607) Net income from continuing operations$109,319 $107,800 $1,519 December 31, 2018 As Reported Balances withoutadoption ofASC Topic 606 Effect of ChangeAssets: Prepaid and other current assets$16,428 $11,627 $4,801Deferred income tax assets79,289 79,819 (530) Shareholders' equity: Accumulated deficit$(610,482) $(614,753) $4,27166 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 3—REVENUERevenue is as follows (in thousands): Year Ended December 31, 2018 2017 2016Revenue: Mortgage products$242,175 $275,910 $219,991Non-mortgage products Credit cards165,776 147,028 39,434Personal loans134,199 88,244 66,457Other222,715 106,554 58,520Total non-mortgage products522,690 341,826 164,411Total revenue$764,865 $617,736 $384,402The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was$1.9 million and $4.8 million on January 1, 2018 and December 31, 2018, respectively. The increase in the contract asset from January 1, 2018 to December31, 2018 is primarily due to recent business acquisitions. During 2018, the Company established a contract asset for business loans from a recent acquisition,for which the Company has determined it has established sufficient historical information to determine an estimate. Additionally, the Company increased thecontract asset balance for the acquisition of Student Loan Hero, Inc. (“Student Loan Hero”), which was acquired on July 23, 2018.As a result of the acquisition of Ovation Credit Services, Inc. ("Ovation") on June 11, 2018, a $0.4 million contract liability was recorded within accruedexpenses and other current liabilities on the December 31, 2018 consolidated balance sheet related to the upfront fees paid by consumers.Revenue recognized in any reporting period includes estimated variable consideration for which the Company has satisfied the related performanceobligations, but are still pending the occurrence or non-occurrence of a future event outside the Company's control (such as lenders providing loans toconsumers or credit card approvals of consumers) before the Company has a contractual right to payment. The Company recognized an increase to suchrevenue from prior periods of $0.7 million in 2018.NOTE 4—CASH AND RESTRICTED CASHTotal cash, cash equivalents, restricted cash and restricted cash equivalents consist of the following (in thousands): December 31, 2018 December 31, 2017Cash and cash equivalents$105,102 $368,550Restricted cash and cash equivalents56 4,091Total cash, cash equivalents, restricted cash and restricted cash equivalents$105,158 $372,641Restricted cash and cash equivalents consists of the following (in thousands): December 31, 2018 December 31, 2017Cash in escrow from sale of LendingTree Loans (a)$— $4,034Other56 57Total restricted cash and cash equivalents$56 $4,091(a)HLC, a subsidiary of the Company, continues to be liable for certain indemnification obligations, repurchase obligations and premium repaymentobligations following the sale of substantially all of the operating assets of its LendingTree Loans business in the second quarter of 2012. Of thepurchase price received, a portion was deposited in escrow in accordance with the agreement with Discover for certain loan loss obligations thatremain with the Company following the sale. During the second quarter of 2018, the remaining funds in escrow were released to the Company inaccordance with the terms of the agreement with Discover.67 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 5—PROPERTY AND EQUIPMENTThe balance of property and equipment, net is as follows (in thousands): December 31, 2018 December 31, 2017Land$— $5,818Building— 14,984Site improvements— 950Computer equipment and capitalized software22,847 16,885Leasehold improvements4,651 3,257Furniture and other equipment1,935 1,203Aircraft and automobile2,621 2,621Projects in progress5,008 3,756Total gross property and equipment37,062 49,474Accumulated depreciation(13,887) (13,043)Total property and equipment, net$23,175 $36,431See Note 7—Assets Held for Sale for property and equipment classified as held for sale during the fourth quarter of 2018.Unamortized capitalized software development costs, in service or under development, are $16.2 million and $9.5 million at December 31, 2018 and2017, respectively. Capitalized software development depreciation expense was $6.1 million, $5.7 million and $4.3 million for the years ended December 31,2018, 2017 and 2016, respectively.Long-lived assets located outside the United States, the Company's country of domicile, were $0.1 million at December 31, 2018.NOTE 6—GOODWILL AND INTANGIBLE ASSETSThe balance of goodwill, net is as follows (in thousands): Goodwill AccumulatedImpairment Loss Net GoodwillBalance at December 31, 2016$539,545 $(483,088) $56,457Acquisition of DepositAccounts19,389 — 19,389Acquisition of MagnifyMoney23,784 — 23,784Acquisition of SnapCap13,738 — 13,738Balance at December 31, 2017$596,456 $(483,088) $113,368Acquisition of Ovation11,260 — 11,260Acquisition of Student Loan Hero40,856 — 40,856Acquisition of QuoteWizard182,863 — 182,863Balance at December 31, 2018$831,435 $(483,088) $348,347The balance of intangible assets, net is as follows (in thousands): December 31, 2018 December 31, 2017Intangible assets with indefinite lives$10,142 $10,142Intangible assets with definite lives, net195,557 70,983Total intangible assets, net$205,699 $81,12568 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSGoodwill and Indefinite-Lived Intangible AssetsThe Company's goodwill is associated with its one reportable segment. The carrying amount of goodwill increased during the year ended December 31,2018 due to the acquisitions of Ovation, Student Loan Hero and QuoteWizard, and increased during the year ended December 31, 2017 due to theacquisitions of DepositAccounts, MagnifyMoney and SnapCap. See Note 8—Business Acquisitions for a discussion of the acquisitions and associatedgoodwill. Results of the annual impairment test as of October 1, 2018 indicated that no impairment had occurred.Intangible assets with indefinite lives relate to the Company's trademarks. Results of the annual impairment test as of October 1, 2018 indicated that noimpairment had occurred.Intangible Assets with Definite LivesIntangible assets with definite lives relate to the following (dollars in thousands): Weighted AverageAmortization Life Cost AccumulatedAmortization NetTechnology4.2 years $112,400 $(21,022) $91,378Customer lists12.9 years 80,200 (7,746) 72,454Trademarks and tradenames4.7 years 16,742 (3,730) 13,012Website content3.0 years 24,900 (6,192) 18,708Other3.0 years 256 (251) 5Balance at December 31, 2018 $234,498 $(38,941) $195,557 Weighted AverageAmortization Life Cost AccumulatedAmortization NetTechnology4.2 years $37,500 $(8,694) $28,806Customer lists11.3 years 33,100 (3,239) 29,861Trademarks and tradenames4.5 years 6,942 (1,992) 4,950Tenant leases3.3 years 1,362 (504) 858Website content3.0 years 7,800 (1,300) 6,500Other3.0 years 256 (248) 8Balance at December 31, 2017 $86,960 $(15,977) $70,983See Note 7—Assets Held for Sale for tenant leases classified as held for sale during the fourth quarter of 2018.Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of December 31, 2018, futureamortization is estimated to be as follows (in thousands): Amortization ExpenseYear ending December 31, 2019$45,774Year ending December 31, 202042,819Year ending December 31, 202132,479Year ending December 31, 202224,255Year ending December 31, 20238,442Thereafter41,788Total intangible assets with definite lives, net$195,557See Note 8—Business Acquisitions for a discussion of the 2018 and 2017 acquisitions and associated intangibles.69 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 7—ASSETS HELD FOR SALEIn December 2016, the Company acquired two office buildings in Charlotte, North Carolina for $23.5 million in cash, which included $0.1 million inacquisition-related costs which were capitalized. The buildings were acquired with the intent to use such buildings as the Company's corporate headquartersand rent any unused space. The acquisition was accounted for as an asset purchase and the allocation of the purchase price to the assets acquired was asfollows (in thousands): Fair Value WeightedAverageDepreciation LifeLand$5,818 N/ABuilding14,679 34.0 yearsSite improvements950 6.6 yearsTenant leases2,029 3.2 yearsTotal purchase price$23,476 In November 2018, the Company's Board of Directors approved a plan to sell the two office buildings. The properties are expected to be sold in 2019 toan unrelated third-party and are classified as current assets held for sale in the consolidated balance sheet for December 31, 2018. In February 2019, theCompany agreed to sell these buildings to an unrelated third party. For additional information, see Note 22—Subsequent Events. These properties areassociated with the Company's one reportable segment.Property and equipment classified as held for sale is as follows (in thousands): December 31, 2018Land$5,818Building14,984Site improvements950Computer equipment and capitalized software166Furniture and other equipment145Total gross property and equipment22,063Accumulated depreciation(1,278)Total property and equipment, net$20,785Intangible assets classified as held for sale relate to the following (in thousands): December 31, 2018Tenant leases$961Total gross intangible assets961Accumulated amortization(468)Total intangible assets, net$49370 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFuture rental income from the building tenants as of December 31, 2018 under operating lease agreements having an initial or remaining non-cancelablelease term in excess of one year are as follows (in thousands):Year ending December 31,Amount2019$65720206732021269202259202356Thereafter65Total$1,779Rental income of $0.9 million in 2018 and $1.6 million in 2017 is included in other income on the accompanying consolidated statement of operationsand comprehensive income.NOTE 8—BUSINESS ACQUISITIONS2018 AcquisitionsQuoteWizardOn October 31, 2018, the Company acquired QuoteWizard.com, LLC ("QuoteWizard"), one of the largest insurance comparison marketplaces in thegrowing online insurance advertising market. QuoteWizard services clients by driving consumers to insurance companies’ websites, providing leads toagents and carriers, as well as phone transfers of consumers into carrier call centers.The Company paid $299.9 million in initial cash consideration, funded through $174.9 million of cash on hand and $125.0 million drawn on theRevolving Credit Facility (defined below), and could make up to three additional earnout payments, each ranging from zero to $23.4 million, based oncertain defined operating results during the earnout periods November 1, 2018 through October 31, 2019, November 1, 2019 through October 31, 2020, andNovember 1, 2020 through October 31, 2021. These additional payments, to the extent earned, will be payable in cash. The Company has estimated apreliminary purchase price of $313.3 million, comprised of the upfront cash payment of $299.9 million, $13.9 million for the estimated fair value of theearnout payments, and an estimated $0.5 million post-closing reduction to working capital.As of December 31, 2018, the estimated fair value of the contingent consideration totaled $20.7 million, which is included in non-current contingentconsideration in the accompanying consolidated balance sheet. The estimated fair value of the contingent consideration payments is determined using anoption pricing model. The estimated value of the contingent consideration is based upon available information and certain assumptions, known at the time ofthis report, which management believes are reasonable. Any differences in the actual contingent consideration payments will be recorded in operatingincome in the consolidated statements of operations and comprehensive income. During 2018, the Company recorded $6.8 million of contingentconsideration expense in the consolidated statement of operations and comprehensive income due to the change in estimated fair value of the contingentconsideration.The acquisition has been accounted for as a business combination. The preliminary allocation of purchase price to the assets acquired and liabilitiesassumed is as follows (in thousands): Preliminary Fair ValueNet working capital$8,535Fixed assets1,501Intangible assets120,400Goodwill182,863Other noncurrent assets17Total preliminary purchase price$313,31671 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that werebased on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.The acquired intangible assets are definite-lived assets consisting of developed technology, customer relationships, content and trademarks andtradenames. The estimated fair values of the developed technology were determined using excess earnings analysis, the customer relationships weredetermined using the distributor method, the content was determined using cost replacement analysis, and the trademarks and tradenames were determinedusing relief from royalty analysis. The fair value of the intangible assets with definite lives are as follows (dollars in thousands): Preliminary Fair ValueWeighted AverageAmortization LifeTechnology$68,9004 yearsCustomer lists42,70014.7 yearsContent1,0003 yearsTrademarks and tradenames7,8005 yearsTotal intangible assets$120,4007.9 yearsAs of December 31, 2018, the Company has not completed its determination of the final purchase price or the final allocation of the purchase price to theassets and liabilities of the acquisition. The purchase price and final allocation of purchase price is expected to be finalized in the first quarter of 2019. Anyadjustment to the preliminary purchase price or the assets and liabilities assumed with the acquisition will adjust goodwill.The Company recorded preliminary goodwill of $182.9 million, which represents the excess of the purchase price over the estimated fair value oftangible and intangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to QuoteWizard as a going concern, whichrepresents the ability of the Company to earn a higher return on the collection of assets and business of QuoteWizard than if those assets and business were tobe acquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill is recorded in the Company’sone reportable segment. For income tax purposes, the acquisition was an asset purchase and the goodwill will be tax deductible.As of the acquisition date, the Company’s consolidated results of operations include the results of the acquired QuoteWizard business. In 2018, revenueof $31.3 million and net income from continuing operations of $2.2 million, which excludes any contingent consideration expense associated with theacquisition, have been included in the Company’s consolidated results of operations. Acquisition-related costs were $4.8 million in 2018 and are included ingeneral and administrative expense on the consolidated statement of operations and comprehensive income.The unaudited pro forma financial results for the years ended December 31, 2018 and 2017 below combine the consolidated results of the Company andQuoteWizard, giving effect to the acquisition as if it had been completed on January 1, 2017. This unaudited pro forma financial information is presented forinformational purposes only and is not indicative of future operations or results had the acquisition been completed as of January 1, 2017, or any other date.The unaudited pro forma financial results include adjustments for additional amortization expense based on the fair value of the intangible assets withdefinite lives and their estimated useful lives, as well as changes in depreciation expense associated with the change in fair value of the property, plant andequipment recorded in relation to the acquisition. Interest expense was adjusted to eliminate historical interest associated with QuoteWizard's revolvingcredit facility and notes payable that were not assumed with the acquisition, as well as reflect incremental interest expense associated with debt issued tofinance the acquisition. The provision for income taxes from continuing operations has also been adjusted to reflect taxes on the historical results ofoperations of QuoteWizard. QuoteWizard did not pay taxes at the entity level as it was a limited liability company whose members elected for it to be taxedas a partnership. 20182017 (in thousands)Pro forma revenue$900,978$701,184Pro forma net income from continuing operations$110,015$1,16472 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe unaudited pro forma net income from continuing operations in 2018 includes the aggregate after tax contingent consideration expense associatedwith the QuoteWizard earnout of $4.9 million. The unaudited pro forma net income from continuing operations for 2017 has been adjusted to includeacquisition-related costs of $5.9 million incurred by the Company and QuoteWizard that are directly attributable to the acquisition, which will not have anongoing impact. Accordingly, these acquisition-related costs have been eliminated from the unaudited pro forma net income from continuing operations for2018.Student Loan HeroOn July 23, 2018, the Company acquired Student Loan Hero, Inc., a personal finance website dedicated to helping student loan borrowers manage theirstudent debt. Student Loan Hero offers current and former students in-depth financial comparison tools, educational resources, and unbiased, personalizedadvice. The Company made an upfront cash payment of $60.7 million at the closing of the transaction, of which $2.3 million was recognized as severanceexpense in the Company's consolidated statements of operations and comprehensive income. The purchase price of $60.4 million is comprised of the upfrontcash payment of $60.7 million less the $2.3 million recognized as severance expense, and a $2.0 million post-closing payment for working capitalsettlement.The acquisition has been accounted for as a business combination. During 2018, the Company completed the determination of the final allocation ofpurchase price to the assets acquired and liabilities assumed as follows (in thousands): Fair ValueNet working capital$5,429Intangible assets19,600Goodwill40,856Deferred tax liabilities(5,467)Total purchase price$60,418The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that werebased on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.The acquired intangible assets are definite-lived assets consisting of content, customer relationships and trademarks and tradenames. The estimated fairvalues of the content was determined using excess earnings analysis, the customer relationships were determined using the distributor method and thetrademarks and tradenames were determined using relief from royalty analysis. The fair value of the intangible assets with definite lives are as follows (dollarsin thousands): Fair ValueWeighted AverageAmortization LifeContent$16,1003 yearsCustomer lists2,50010 yearsTrademarks and tradenames1,0005 yearsTotal intangible assets$19,6004.0 yearsThe Company recorded goodwill of $40.9 million, which represents the excess of the purchase price over the estimated fair value of tangible andintangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to Student Loan Hero as a going concern, which represents theability of the Company to earn a higher return on the collection of assets and business of Student Loan Hero than if those assets and business were to beacquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill is recorded in the Company’sone reportable segment. For income tax purposes, the acquisition was an equity purchase and the goodwill will not be tax deductible. Acquisition-relatedcosts were $0.5 million in 2018 and are included in general and administrative expense on the consolidated statement of operations and comprehensiveincome.73 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSOvationOn June 11, 2018, the Company acquired Ovation Credit Services, Inc., a leading provider of credit services with a strong customer service reputation.Ovation utilizes a proprietary software application that facilitates the credit repair process and is integrated directly with certain credit bureaus whileeducating consumers on credit improvement via ongoing outreach with Ovation case advisors. The proprietary software application offers consumers asimple, streamlined process to identify, dispute, and correct inaccuracies within their credit reports.The Company paid $12.2 million in initial cash consideration and could make up to two additional earnout payments, each ranging from zero to $4.375million, based on certain defined operating metrics during the earnout periods July 1, 2018 through June 30, 2019 and July 1, 2019 through June 30, 2020.These additional payments, to the extent earned, will be payable in cash. The purchase price of $17.9 million is comprised of the upfront cash paymentof $12.2 million, $5.8 million for the estimated fair value of the earnout payments, and a $0.1 million post-closing receipt for working capital settlement.As of December 31, 2018, the estimated fair value of the contingent consideration totaled $7.4 million, of which $4.1 million is included in currentcontingent consideration and $3.3 million is included in non-current contingent consideration in the accompanying consolidated balance sheet. Theestimated fair value of the contingent consideration payments is determined using an option pricing model. The estimated value of the contingentconsideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable. Anydifferences in the actual contingent consideration payments will be recorded in operating income in the consolidated statements of operations andcomprehensive income. During 2018, the Company recorded $1.6 million of contingent consideration expense in the consolidated statement of operationsand comprehensive income due to the change in estimated fair value of the contingent consideration.The acquisition has been accounted for as a business combination. The preliminary allocation of purchase price to the assets acquired and liabilitiesassumed is as follows (in thousands): Preliminary Fair ValueNet working capital$323Fixed assets76Intangible assets8,900Goodwill11,260Net deferred tax liabilities(2,688)Total purchase price$17,871The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that werebased on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.The acquired intangible assets are definite-lived assets consisting of developed technology, customer relationships and trademarks and tradenames. Theestimated fair values of the developed technology were determined using excess earnings analysis, the customer relationships were determined using costsavings analysis and the trademarks and tradenames were determined using relief from royalty analysis. The fair value of the intangible assets with definitelives are as follows (dollars in thousands): Fair ValueWeighted AverageAmortization LifeTechnology$6,0007 yearsCustomer lists1,9001 yearTrademarks and tradenames1,0004 yearsTotal intangible assets$8,9005.4 yearsAs of December 31, 2018, the Company has not completed its determination of the final allocation of the purchase price to the assets and liabilities ofthe acquisition. The final allocation of purchase price is expected to be finalized in the first quarter of 2019. Any adjustment to the assets and liabilitiesassumed with the acquisition will adjust goodwill.74 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe Company recorded preliminary goodwill of $11.3 million, which represents the excess of the purchase price over the estimated fair value of tangibleand intangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to Ovation as a going concern, which represents theability of the Company to earn a higher return on the collection of assets and business of Ovation than if those assets and business were to be acquired andmanaged separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill is recorded in the Company’s one reportablesegment. For income tax purposes, the acquisition was an equity purchase and the goodwill will not be tax deductible. Acquisition-related costs were $0.4million in 2018 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income.2017 AcquisitionsSnapCapOn September 19, 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”).SnapCap, a tech-enabled online platform, connects business owners with lenders offering small business loans, lines of credit and merchant cash advanceproducts through a concierge-based sales approach. The Company paid $11.9 million of initial cash consideration and could make up to three additionalcontingent consideration payments, each ranging from zero to $3.0 million, based on certain defined operating results during the periods of October 1, 2017through September 30, 2018, October 1, 2018 through September 30, 2019 and October 1, 2019 through March 31, 2020. These additional payments, to theextent earned, will be payable in cash. The purchase price for the acquisition is $18.2 million, comprised of the upfront cash payment of $11.9 million and$6.3 million for the estimated fair value of the contingent consideration.As of December 31, 2018, the estimated fair value of the contingent consideration totaled $6.7 million, of which $3.0 million is included in currentcontingent consideration and $3.7 million is included in non-current contingent consideration in the accompanying consolidated balance sheet. Theestimated fair value of the contingent consideration payments is determined using an option pricing model. The estimated value of the contingentconsideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable. Anydifferences in the actual contingent consideration payments will be recorded in operating income in the consolidated statements of operations andcomprehensive income. During 2018 and 2017, the Company recorded a gain of $0.3 million and expense of $0.7 million, respectively, in the consolidatedstatement of operations and comprehensive income due to the change in estimated fair value of the contingent consideration.In January 2019, the Company paid $3.0 million related to the earnout payment for the period of October 1, 2017 through September 30, 2018.The acquisition has been accounted for as a business combination. During 2017, the Company completed the determination of the final allocation ofpurchase price to the assets acquired and liabilities assumed as follows (in thousands):Fair ValueNet working capital and other assets$42Fixed assets146Intangible assets4,300Goodwill13,738Total purchase price$18,226The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that werebased on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.The acquired intangible assets are definite-lived assets consisting primarily of developed technology, customer relationships and trade name andtrademarks. The estimated fair values of the developed technology were determined using cost savings analysis, the customer relationships were determinedusing the excess earnings analysis method and the trade name and trademarks were determined using relief from royalty analysis. The fair value of theintangible assets with definite lives are as follows (dollars in thousands):75 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFair ValueWeighted AverageAmortization LifeTechnology$4003 yearsCustomer lists3,30010 yearsTrade name and trademarks6005 yearsTotal intangible assets$4,3008.7 yearsThe Company recorded goodwill of $13.7 million, which represents the excess of the purchase price over the estimated fair value of the intangible assetsacquired. The goodwill is primarily attributable to SnapCap as a going concern which represents the ability of the Company to earn a higher return on thecollection of assets and business of SnapCap than if those assets were to be acquired and managed separately. The benefit of access to the workforce is anadditional element of goodwill. The goodwill is recorded in the Company’s one reportable segment. For income tax purposes, the acquisition was an assetpurchase and the goodwill will be tax deductible. Acquisition-related costs were $0.3 million in 2017 and are included in general and administrative expenseon the consolidated statement of operations and comprehensive income.MagnifyMoneyOn June 20, 2017, the Company acquired the membership interests of Camino Del Avion (Delaware), LLC, which does business under the nameMagnifyMoney (“MagnifyMoney”) for $29.6 million cash consideration at the closing of the transaction. Camino del Avion (Delaware), LLC wasimmediately merged with and into LendingTree, LLC following such acquisition. MagnifyMoney is a leading consumer-facing media property that offerseditorial content, expert commentary, tools and resources to help consumers compare financial products and make informed financial decisions. TheCompany also acquired an option to purchase an affiliate in India, which provides technology and research support to MagnifyMoney under a servicesagreement, for an estimated fair value of $0.5 million at any time during the three years after the closing. This purchase option was exercised on December 31,2018.In addition, the Company issued two key employees of MagnifyMoney restricted stock unit awards for a total of 38,468 shares of Company commonstock. In connection with the terms of the purchase option described above, the Company issued a further restricted stock unit award for 19,234 shares to akey employee of technology and research operations in India upon the exercise of the purchase option. The total value of these restricted stock unit awardswas $10.0 million on June 20, 2017. All of these restricted stock units will vest, if at all, on the basis of performance conditions following the acquisition.The acquisition has been accounted for as a business combination. During 2017, the Company completed the determination of the final allocation ofpurchase price to the assets acquired and liabilities assumed as follows (in thousands):Fair ValueNet working capital$921Intangible assets9,700Goodwill23,784Deferred tax liabilities(4,176)Noncontrolling interest(637)Total purchase price$29,592The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that werebased on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.The acquired intangible assets are definite-lived assets consisting primarily of content, developed technology, customer relationships and trade nameand trademarks. The estimated fair values of the content was determined using excess earnings analysis, developed technology was determined using costsavings analysis, the customer relationships were determined using the distributor method and the trade name and trademarks were determined using relieffrom royalty analysis.76 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe fair value of the intangible assets with definite lives are as follows (dollars in thousands):Fair ValueWeighted AverageAmortization LifeTechnology$2003 yearsCustomer lists1,1009 yearsTrade name and trademarks6004 yearsContent7,8003 yearsTotal intangible assets$9,7003.7 yearsThe Company recorded goodwill of $23.8 million, which represents the excess of the purchase price over the estimated fair value of the tangible andintangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to MagnifyMoney as a going concern which represents theability of the Company to earn a higher return on the collection of assets and business of MagnifyMoney than if those assets were to be acquired andmanaged separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill is recorded in the Company’s one reportablesegment. For income tax purposes, the acquisition was an equity purchase and the goodwill will not be tax deductible. Acquisition-related costs were $0.4million in 2017 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income.Prior to exercising the purchase option to acquire technology and support operations in India on December 31, 2018, the Company determined that thiswas a variable interest entity which must be consolidated for financial reporting. The Company recorded the assets, liabilities and non-controlling interest inthis entity at their estimated fair value as of December 31, 2017.DepositAccountsOn June 14, 2017, the Company acquired substantially all of the assets of Deposits Online, LLC, which does business under the nameDepositAccounts.com (“DepositAccounts”). DepositAccounts is a leading consumer-facing media property in the depository industry and is one of the mostcomprehensive sources of depository deals and analysis on the Internet, covering all major deposit product categories through editorial content,programmatic rate tables and user-generated content.The Company paid $24.0 million of initial cash consideration and could make additional contingent consideration payments of up to $9.0 million. Thepotential contingent consideration payments are comprised of (i) up to seven payments of $1.0 million each based on specified increases in Federal Fundsinterest rates during the period commencing on the closing date and ending on June 30, 2020 and (ii) a one-time performance payment of up to $2.0 millionbased on the net revenue of deposit products during the period of January 1, 2018 through December 31, 2018. These additional payments, to the extentearned, will be payable in cash. The purchase price for the acquisition is $29.0 million, comprised of the upfront cash payment of $24.0 million and $5.0million for the estimated fair value of the contingent consideration at the time of closing the acquisition.In the third quarter of 2017, the Company made a payment of $1.0 million associated with a specified increase in the Federal Funds rate in June 2017. Ineach of the four quarters of 2018, the Company paid $1.0 million associated with specified increases in the Federal Funds rate in December 2017, March2018, June 2018 and September 2018, respectively, which are included within cash flows from financing activities on the consolidated statement of cashflows, except for an immaterial portion of the fourth quarter payment included within cash flows from operating activities. As of December 31, 2018, theestimated fair value of the contingent consideration totaled $4.0 million, which is included in current contingent consideration in the accompanyingconsolidated balance sheet. The estimated fair value of the portion of the contingent consideration payments based on increases in interest rates isdetermined using a scenario approach based on the interest rate forecasts of Federal Open Market Committee participants. The estimated fair value of theportion of the contingent consideration payments potentially earned based on net revenue is determined using an option pricing model. The estimated valueof the contingent consideration is based upon available information and certain assumptions, known at the time of this report, which management believesare reasonable. Any differences in the actual contingent consideration payments will be recorded in operating income in the consolidated statements ofoperations and comprehensive income. During each of 2018 and 2017, the Company recorded $2.0 million of contingent consideration expense in theconsolidated statement of operations and comprehensive income due to the change in estimated fair value of the contingent consideration.In January 2019, the Company paid $1.0 million associated with a specified increase in the Federal Funds rate in December 2018.77 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe acquisition has been accounted for as a business combination. During 2017, the Company completed the determination of the final allocation ofpurchase price to the assets acquired and liabilities assumed as follows (in thousands):Fair ValueIntangible assets$9,600Goodwill19,389Total purchase price$28,989The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that werebased on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.The acquired intangible assets are definite-lived assets consisting primarily of developed technology, customer relationships and trade name andtrademarks. The estimated fair values of the developed technology were determined using excess earnings analysis, the customer relationships weredetermined using the distributor method and the trade name and trademarks were determined using relief from royalty analysis. The fair value of theintangible assets with definite lives are as follows (dollars in thousands):Fair ValueWeighted AverageAmortization LifeTechnology$8,6005 yearsCustomer lists6008 yearsTrade name and trademarks4004 yearsTotal intangible assets$9,6005.2 yearsThe Company recorded goodwill of $19.4 million, which represents the excess of the purchase price over the estimated fair value of the intangible assetsacquired. The goodwill is primarily attributable to DepositAccounts as a going concern which represents the ability of the Company to earn a higher returnon the collection of assets and business of DepositAccounts than if those assets were to be acquired and managed separately. The benefit of access to theworkforce is an additional element of goodwill. The goodwill is recorded in the Company’s one reportable segment. For income tax purposes, the acquisitionwas an asset purchase and the goodwill will be tax deductible. Acquisition-related costs were $0.3 million in 2017 and are included in general andadministrative expense on the consolidated statement of operations and comprehensive income.2016 AcquisitionsCompareCardsOn November 16, 2016, the Company acquired all of the membership interests of Iron Horse Holdings, LLC, which does business under the nameCompareCards ("CompareCards"). CompareCards is an online marketing platform for credit cards, which the Company is utilizing to grow its existing creditcard business. The Company paid $80.7 million in initial cash consideration and agreed to make two earnout payments, each up to $22.5 million, based onthe amount of earnings before interest, taxes, depreciation and amortization CompareCards generates during the periods of January 1, 2017 throughDecember 31, 2017 and January 1, 2018 through December 31, 2018, or up to $45.0 million in aggregate payments. The purchase price for the acquisition is$103.8 million comprised of an upfront cash payment of $80.7 million on November 16, 2016 and $23.1 million for the estimated fair value of the earnoutpayments at the time of closing the acquisition.In the first quarter of 2018, the Company paid $22.5 million related to the earnout payment for the period of January 1, 2017 through December 31,2017, which is included within cash flows from financing activities on the consolidated statement of cash flows. In the second quarter of 2018, the Companypaid $22.5 million related to the earnout payment for the period of January 1, 2018 through December 31, 2018, of which $0.6 million is included withincash flows from financing activities and $21.9 million is included within cash flows from operating activities on the consolidated statement of cash flows.During 2018 and 2017, the Company recorded $0.7 million and $21.2 million, respectively, of contingent consideration expense in the consolidatedstatement of operations and comprehensive income due to the change in estimated fair value of the earnout payments.The acquisition has been accounted for as a business combination. During 2017, the Company completed the determination of the final allocation of thepurchase price with respect to the assets acquired and liabilities assumed as follows (in thousands):78 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFair ValueAccounts receivable$3,538Intangible assets55,400Goodwill52,450Accounts payable and accrued liabilities(7,638)Total purchase price$103,750The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that werebased on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date.The acquired intangible assets are definite-lived assets consisting primarily of developed technology, customer relationships, and trade name andtrademarks. The estimated fair values of the developed technology was determined using excess earnings analysis, the customer relationships weredetermined using the distributor method and the trade name and trademarks were determined using relief from royalty analysis. The fair value of theintangible assets with definite lives are as follows (dollars in thousands): Fair ValueWeighted AverageAmortization LifeTechnology$27,9004 yearsCustomer lists23,20012 yearsTrade name and trademarks4,3005 yearsTotal intangible assets$55,4007.4 yearsThe Company recorded goodwill of $52.5 million, which represents the excess of the purchase price over the estimated fair value of tangible andintangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to CompareCards as a going concern, which represents theability of the Company to earn a higher return on the collection of assets and business of CompareCards than if those assets and business were to be acquiredand managed separately. The benefit of access to the work force is an additional relevant element of goodwill. The goodwill is recorded in the Company’sone reportable segment. For income tax purposes, the acquisition was an asset purchase and the goodwill will be tax deductible. Acquisition-related costs of$0.1 million and $0.4 million in 2017 and 2016, respectively, are included in general and administrative expense on the consolidated statement ofoperations and comprehensive income.SimpleTuition, Inc.On May 31, 2016, the Company acquired certain assets of SimpleTuition, Inc. ("SimpleTuition"), a leading online marketing platform for student loans,for $5.0 million of cash consideration. Of the purchase price, $4.5 million was funded with available cash on hand and $0.5 million was held-back insatisfaction of any potential claims. The $0.5 million hold-back was paid in full in the second quarter of 2018.The acquisition has been accounted for as a business combination. During 2016, the Company completed its determination of the final allocation of thepurchase price with respect to the acquired assets. The Company has recorded the $5.0 million paid to the tangible and identifiable intangible assets based ontheir fair value, with the residual recorded to goodwill in the Company's one reportable segment. No liabilities were assumed. Acquisition-related costs were$0.1 million for 2016 and are included in general and administrative expense on the consolidated statements of operations and comprehensive income. Theallocation of the purchase price to the assets acquired is as follows (dollars in thousands):Fair Value Weighted AverageAmortization LifeAccounts receivable$125 N/ATotal intangible assets with definite lives, net$4,500 9.2 yearsGoodwill$375 N/A79 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe purchase was an asset acquisition for income tax purposes and the Company will deduct the recognized goodwill for income tax purposes. Theacquisition of SimpleTuition was not considered significant to the accompanying consolidated financial statements.Pro forma Financial Results and Other InformationThe unaudited pro forma financial results for the years ended December 31, 2018, 2017 and 2016 combine the consolidated results of the Company andCompareCards, DepositAccounts, MagnifyMoney, SnapCap, Ovation, Student Loan Hero and QuoteWizard, giving effect to the acquisitions as if theCompareCards acquisition had been completed on January 1, 2015, as if the DepositAccounts, MagnifyMoney and SnapCap acquisitions had beencompleted on January 1, 2016, and as if the Ovation, Student Loan Hero and QuoteWizard acquisitions had been completed on January 1, 2017. Thisunaudited pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had theacquisitions been completed as of January 1, 2015, 2016 or 2017, or any other date.The unaudited pro forma financial results include adjustments for additional amortization expense based on the fair value of the intangible assets withdefinite lives and their estimated useful lives. Depreciation expense and interest expense was also adjusted for the impact of the QuoteWizard acquisition, asdescribed above. The provision for income taxes from continuing operations has been adjusted to reflect taxes on the historical results of operations ofCompareCards, DepositAccounts, SnapCap and QuoteWizard. CompareCards, DepositAccounts, SnapCap and QuoteWizard did not pay taxes at the entitylevel as these entities were limited liability companies whose members elected for them to be taxed as a partnership. 201820172016 (in thousands)Pro forma revenue$917,393$729,370$461,969Pro forma net income from continuing operations$111,376$(2,998)$31,139The unaudited pro forma net income from continuing operations in 2018 includes the aggregate after tax contingent consideration expense associatedwith the CompareCards, DepositAccounts, SnapCap, Ovation and QuoteWizard earnouts of $7.7 million. The unaudited pro forma net income fromcontinuing operations for 2017 has been adjusted to include acquisition-related costs of $6.9 million incurred by the Company, Student Loan Hero andQuoteWizard that are directly attributable to the Ovation, Student Loan Hero and QuoteWizard acquisitions, which will not have an ongoing impact.Accordingly, these acquisition-related costs have been eliminated from the unaudited pro forma net income from continuing operations for 2018.The unaudited pro forma net income from continuing operations in 2017 include the aggregate after tax contingent consideration expense associatedwith the CompareCards, DepositAccounts and SnapCap earnouts of $14.4 million. The unaudited pro forma net income from continuing operations for 2016has been adjusted to include acquisition-related costs of $1.0 million incurred by the Company, DepositAccounts, MagnifyMoney and SnapCap that aredirectly attributable to the DepositAccounts, MagnifyMoney and SnapCap acquisitions, which will not have an ongoing impact. Accordingly, theseacquisition-related costs have been eliminated from the unaudited pro forma net income from continuing operations for 2017.The Company’s consolidated results of operations include the results of the business acquisitions completed in 2018 as of the acquisition dates. In 2018,revenue of $44.8 million and net income from continuing operations of $1.8 million, which excludes any contingent consideration expense associated withthe acquisitions, have been included in the Company’s consolidated results of operations.80 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 9—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIESAccrued expenses and other current liabilities consist of the following (in thousands): December 31, 2018 December 31, 2017Accrued advertising expense$60,268 $40,727Accrued compensation and benefits6,381 7,679Accrued professional fees2,549 2,072Customer deposits and escrows6,913 5,564Contribution to LendingTree Foundation (a)3,333 10,000Other13,746 11,141Total accrued expenses and other current liabilities$93,190 $77,183(a)The Company expects to pay $3.3 million of the $10.0 million contribution in 2019, and the remainder by 2021.NOTE 10—SHAREHOLDERS' EQUITYBasic and diluted net income per share was determined based on the following share data (in thousands):Year Ended December 31,2018 2017 2016Weighted average basic common shares12,504 11,945 11,812Effect of stock options1,043 1,626 886Effect of dilutive share awards153 111 75Effect of Convertible Senior Notes and warrants397 — —Weighted average diluted common shares14,097 13,682 12,773For the year ended December 31, 2018, the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of dilutedincome per share, included options to purchase 0.4 million shares of common stock. For the year ended December 31, 2017, the weighted average shares thatwere anti-dilutive included options to purchases 0.1 million shares of common stock.The 0.625% Convertible Senior Notes due June 1, 2022 and the warrants issued by the Company in the second quarter of 2017 could be converted intothe Company’s common stock in the future, subject to certain contingencies. See Note 13—Debt for additional information. Shares of the Company’scommon stock associated with these instruments were excluded from the calculation of diluted income per share during 2017 as they were anti-dilutive sincethe conversion price of the Convertible Senior Notes and the strike price of the warrants were greater than the average market price of the Company’scommon stock.See Note 11—Stock-Based Compensation for a full description of outstanding equity awards.Common Stock RepurchasesIn each of January 2010, May 2014, January 2016, February 2016 and February 2018, the board of directors authorized and the Company announced therepurchase of up to $10.0 million, $10.0 million, $50.0 million, $40.0 million and $100.0 million, respectively, of LendingTree's common stock. During theyears ended December 31, 2018, 2017 and 2016, the Company purchased 379,449, 75,393 and 690,218 shares, respectively, of its common stock foraggregate consideration of $92.6 million, $21.0 million and $48.5 million, respectively. At December 31, 2018, $35.1 million remains authorized for sharerepurchase.81 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 11—STOCK-BASED COMPENSATIONThe Company currently has two active plans, the Fifth Amended and Restated LendingTree 2008 Stock and Annual Incentive Plan (the "Equity AwardPlan") and the LendingTree 2017 Inducement Grant Plan (the "Inducement Plan"), under which future awards may be granted, which currently coversoutstanding stock options to acquire shares of the Company's common stock, restricted stock, restricted stock with performance conditions, RSUs and RSUswith performance conditions, and provides for the future grants of these and other equity awards. Under the Equity Award Plan and the Inducement Plan, theCompany is authorized to grant stock options, restricted stock, RSUs and other equity-based awards for up to 5.35 million and 0.5 million shares,respectively, of LendingTree common stock to employees, and, under the Equity Award Plan only, to non-employee consultants and directors.The Equity Award Plan and Inducement Plan each have a stated term of ten years and provide that the exercise price of stock options granted will not beless than the market price of the common stock on the grant date. The Equity Award Plan and Inducement Plan do not specify grant dates or vestingschedules, as those determinations are delegated to the Compensation Committee of the board of directors. Each grant agreement reflects the vestingschedule for that particular grant, as determined by the Compensation Committee. The Compensation Committee has the authority to modify the vestingprovisions of an award.Non-cash compensation related to equity awards is included in the following line items in the accompanying consolidated statements of operations andcomprehensive income (in thousands): Year Ended December 31, 2018 2017 2016Cost of revenue$378 $175 $129Selling and marketing expense3,568 3,973 2,722General and administrative expense34,325 16,874 4,699Product development6,094 2,339 2,097Total non-cash compensation$44,365 $23,361 $9,647For the years ended December 31, 2018, 2017 and 2016, the Company recognized $11.2 million, $9.5 million and $3.7 million of income tax benefitrelated to non-cash compensation. Additionally, for the years ended December 31, 2018 and 2017, the Company recognized $77.6 million and $12.9 million,respectively, of excess tax benefit, including state taxes, in income tax expense. See Note 2—Significant Accounting Policies—Recent AccountingPronouncements, for additional information regarding excess tax benefits and deficiencies.Stock OptionsA summary of the changes in outstanding stock options is as follows: Number of Options WeightedAverageExercisePrice WeightedAverageRemainingContractualTerm AggregateIntrinsicValue(a) (per option) (in years) (in thousands)Outstanding at December 31, 20171,863,739 $30.70 Granted77,576 293.18 Exercised(994,222) 16.83 Forfeited(6,560) 301.51 Expired— — Outstanding at December 31, 2018940,533 $65.12 5.17 $150,897Options exercisable766,552 $28.37 4.40 $146,742(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $219.57 on thelast trading day of 2018 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been receivedby the option holder had the option holder exercised these options on December 31, 2018. The intrinsic value changes based on the market value ofthe Company's common stock.82 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSAs of December 31, 2018, there was approximately $15.8 million of unrecognized compensation cost related to stock options. These costs are expectedto be recognized over a weighted-average period of approximately 2.3 years.Upon exercise, the intrinsic value represents the pre-tax difference between the Company's closing stock price on the exercise date and the exercise price,multiplied by the number of stock options exercised. During the years ended December 31, 2018, 2017 and 2016, the total intrinsic value of stock optionsthat were exercised was $268.3 million, $27.7 million and $0.3 million, respectively. Cash received from stock option exercises and the related actual taxbenefit realized were $16.7 million and $73.3 million, respectively, for the year ended December 31, 2018.During the years ended December 31, 2018, 2017 and 2016, the Company granted stock options with a weighted average grant date fair value per shareof $150.55 , $105.15, and $40.05, respectively, of which the vesting periods include (a) immediately upon grant, (b) five months from the grant date, (c) oneyear from the grant date, (d) 50% over a period of two years from the grant date, (e) 20% over a period of one and half years to five and half years, (f) 33% overa period of three years from the grant date, (g) 25% and 75% over a period of two years and three years, respectively, (h) four years from the grant date, (i) 25%over a period of four years from the grant date, (j) 8% over a period of five months and 18% in each of the following five years, (k) 25%, 25% and 50% over aperiod of one year, two years and three years, respectively, and (l) 50%, 31% and 19% over a period of two years, three years and four years, respectively.For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimatedusing the Black-Scholes option pricing model, which requires the use of various key assumptions. The weighted average assumptions used are as follows: Year Ended December 31, 201820172016Expected term (1)5.00 - 6.71 years5.00 - 7.00 years5.22 - 6.38 yearsExpected dividend (2)———Expected volatility (3)50% - 53%51% - 52%48% - 53%Risk-free interest rate (4)2.33% - 3.06%1.74% - 2.24%1.10% - 2.18%(1)The expected term of stock options granted was calculated using the 'Simplified Method', which utilizes the midpoint between the weightedaverage time of vesting and the end of the contractual term. This method was utilized for the stock options due to a lack of historical exercisebehavior by the Company's employees.(2)For all stock options granted during the years ended December 31, 2018, 2017 and 2016, no dividends are expected to be paid over thecontractual 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 comparableexpected terms as the awards, in effect at the grant date.During the years ended December 31, 2018, 2017 and 2016, the total fair value of options vested was $11.4 million, $4.1 million and $0.9 million,respectively.83 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSStock Options with Performance ConditionsA summary of the changes in outstanding stock options with performance conditions is as follows: Number of Options WeightedAverageExercisePrice WeightedAverageRemainingContractualTerm AggregateIntrinsicValue(a) (per option) (in years) (in thousands)Outstanding at December 31, 201737,877 $308.90 Granted— — Exercised— — Forfeited— — Expired— — Outstanding at December 31, 201837,877 $308.90 8.95 $—Options exercisable— $— 0.00 $—(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $219.57 on thelast trading day of 2018 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been receivedby the option holder had the option holder exercised these options on December 31, 2018. The intrinsic value changes based on the market value ofthe Company's common stock.No stock options with performance conditions were granted in 2018 or 2016. During 2017, the Company granted stock options with performanceconditions with a weighted average grant date fair value per share of $152.45, of which vesting periods range from 1.2 years to 2.2 years, pending theattainment of certain performance targets set at the time of grant.As of December 31, 2018, the performance conditions associated with the performance-based nonqualified stock options had not been met. None of theperformance-based nonqualified stock options had been earned, and no compensation cost associated with these options has been recorded, as of December31, 2018.For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimatedusing the Black-Scholes option pricing model, which requires the use of various key assumptions. The weighted average assumptions used are as follows: Year endedDecember 31, 2017Expected term (1)5.50 - 6.00 yearsExpected dividend (2)—Expected volatility (3)51%Risk-free interest rate (4)2.16% - 2.23%(1)The expected term of stock options granted was calculated using the 'Simplified Method', which utilizes the midpoint between the weightedaverage time of vesting and the end of the contractual term. This method was utilized for the stock options due to a lack of historical exercisebehavior by the Company's employees.(2)For all stock options granted during the year ended December 31, 2017, no dividends are expected to be paid over the contractual term of thestock 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 comparableexpected terms as the awards, in effect at the grant date.84 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSRestricted Stock UnitsA summary of the changes in outstanding nonvested RSUs, exclusive of RSUs granted to the Chairman and Chief Executive Officer in 2018 describedbelow, is as follows: RSUs Number of Units Weighted Average GrantDateFair Value (per unit)Nonvested at December 31, 2017152,829 $121.68Granted (a)121,751 272.93Vested(68,915) 103.56Forfeited(13,993) 213.59Nonvested at December 31, 2018191,672 $217.56(a)The grant date fair value per share of the RSUs is calculated as the closing market price of LendingTree's common stock at the time of grant.As of December 31, 2018, there was approximately $30.5 million of unrecognized compensation cost related to these RSUs. These costs are expected tobe recognized over a weighted-average period of approximately 2.0 years.The total fair value of RSUs that vested during the years ended December 31, 2018, 2017 and 2016 was $21.8 million, $11.5 million and $10.1 million,respectively.Restricted Stock Units with Performance ConditionsA summary of the changes in outstanding nonvested RSUs with performance conditions is as follows:RSUs with Performance ConditionsNumber of Units Weighted AverageGrant Date Fair Value (per unit)Nonvested at December 31, 2017111,205 $160.34Granted (a)19,234 178.85Vested(30,806) 121.37Forfeited(7,152) 94.28Nonvested at December 31, 201892,481 $182.28(a)The grant date fair value per share of the RSUs with performance conditions is calculated as the closing market price of LendingTree's common stockat the time of grant.During 2018, 2017 and 2016, the Company granted RSUs with performance conditions to certain employees, of which vesting periods range from 0.33years to 4.00 years, pending the attainment of certain performance targets set at the time of grant.As of December 31, 2018, there was approximately $10.3 million of unrecognized compensation cost related to RSUs with performance conditions.These costs are expected to be recognized over a weighted-average period of approximately 1.0 year.The total fair value of RSUs with performance conditions that vested during the years ended December 31, 2018, 2017, and 2016 was $7.9 million, $0.4million, and 0.2 million, respectively.85 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSRestricted StockSubsequent to the end of 2017, there was no outstanding nonvested restricted stock other than the restricted stock grants to the Chairman and ChiefExecutive Officer described in the section below.The total fair value of restricted stock, exclusive of restricted stock granted to the Chairman and Chief Executive Officer in 2018 described below, thatvested during the years ended December 31, 2017 and 2016 was $2.1 million and $3.9 million, respectively.Chairman and Chief Executive Officer Grants2017 GrantsOn July 25, 2017, the Company’s Compensation Committee approved new compensation arrangements for its Chairman and Chief Executive Officer.The new compensation arrangements include the issuance of performance based equity compensation grants with a modeled total grant date value of $87.5million of which 25% (119,015 shares) would be in the form of time-vested restricted stock awards with a performance condition and 75% (a maximumof 769,376 shares) would be in the form of performance-based nonqualified stock options.The performance-based nonqualified stock options have a target number of shares that vest upon achieving targeted total shareholder return performanceof 110% stock price appreciation and a maximum number of shares for achieving superior performance up to 167% of the target number of shares. No shareswill vest unless 70% of the targeted performance is achieved. Time-based service vesting conditions would also have to be satisfied in order for performance-vested shares to become fully vested and no longer subject to forfeiture. On July 26, 2017, an initial grant of performance-based nonqualified stock optionswith a target number of shares of 402,694 and a maximum number of shares of 672,499 were issued with an exercise price of $183.80, the closing stock priceon July 26, 2017. The performance measurement period ends on September 30, 2022. The fair value of the performance-based stock options will berecognized on a straight-line basis through the vest date of September 30, 2022, whether or not any of the total shareholder return targets are met.The Company's Equity Award Plan imposes a per employee upper annual grant limit of 672,500 shares. As a result, the remaining 58,010 targetperformance-based nonqualified stock options and potential performance-based restricted stock awards were awarded on January 2, 2018. The form of theawards consisted of 31,336 performance-based nonqualified stock options with a per share exercise price of $340.25, and 26,674 performance-basedrestricted stock awards, substituting for an equal number of the performance-based options, to compensate for the increase in the exercise price of theperformance-based option granted on July 26, 2017. These performance-based nonqualified stock options and performance-based restricted stock awardswere issued with respective total grant date fair values of $9.5 million and $1.9 million.As of December 31, 2018, performance-based nonqualified stock options of 312,008 and performance-based restricted stock awards of 19,175 had beenearned, which have a vest date of September 30, 2022. As of December 31, 2018 there was approximately $1.4 million of unrecognized compensation costrelated to the performance-based restricted stock awards.On January 2, 2018, the 119,015 time-vested restricted stock awards with a performance condition were granted. The terms of these awards were fixed inthe approved new compensation agreements in July 2017 with a total grant date fair value of $21.9 million. The performance condition was tied to theCompany's operating results during the first six months of 2018, and has been met. During 2018, 47,603 of these awards vested at a total fair value of $13.6million. As of December 31, 2018, there was approximately $13.1 million of unrecognized compensation cost related to these time-vested restricted stockawards. These costs are expected to be recognized through the vest date of December 31, 2021.2018 GrantsOn February 16, 2018, the Company’s Compensation Committee approved the issuance of performance based equity compensation grants to itsChairman and Chief Executive Officer with a modeled total grant date value of $7.5 million, of which 50% (9,896 shares) would be in the form of time-vestedrestricted stock units and 50% (a maximum of 21,982 shares) would be in the form of performance-based nonqualified stock options. On February 16, 2018,the 9,896 time-vested restricted stock units were granted with a grant date fair value of $378.95. As of December 31, 2018, there was approximately $2.9million of unrecognized compensation costs related to these RSUs. These costs ares expected to be recognized through the vest date of February 16, 2022.The performance-based nonqualified stock options have a target number of shares that vest upon achieving targeted total shareholder return performanceof 81% stock price appreciation and a maximum number of shares for achieving superior86 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSperformance up to 167% of the target number of shares. No shares will vest unless 41% of the targeted performance is achieved. Time-based service vestingconditions would also have to be satisfied in order for performance-vested shares to become fully vested and no longer subject to forfeiture. On February 16,2018, the performance-based nonqualified stock options with a target number of shares of 13,163 and a maximum number of shares of 21,982 were issuedwith an exercise price of $378.95, the closing stock price on February 16, 2018. The performance measurement period ends on March 31, 2022. The fair valueof the performance-based stock options will be recognized on a straight-line basis through the vest date of March 31, 2022, whether or not any of the totalshareholder return targets are met. As of December 31, 2018, the performance targets associated with the performance-based nonqualified stock options hadnot been met.In 2018 and 2017, the Company recorded $20.5 million and $8.9 million, respectively, in stock-based compensation expense related to the 2017 and2018 grants to its Chairman and Chief Executive Officer in the consolidated statement of operations and comprehensive income.A summary of changes in outstanding stock options with market conditions is as follows:Number of Optionswith MarketConditions WeightedAverageExercisePrice WeightedAverageRemainingContractualTerm AggregateIntrinsicValue(a) (per option) (in years) (in thousands)Outstanding at December 31, 2017402,694 $183.80 Granted (b)44,499 351.70 Exercised— — Forfeited— — Expired— — Outstanding at December 31, 2018447,193 200.51 8.62 $14,404Options exercisable— $— 0.00 $—(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $219.57 on thelast trading day of 2018 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been receivedby the option holder had the option holder exercised these options on December 31, 2018. The intrinsic value changes based on the market value ofthe Company's common stock.(b)During the years ended December 31, 2018 and 2017, the Company granted stock options with a weighted-average grant date fair value per share of$296.80 and $142.45, respectively, calculated using the Monte Carlo simulation model, which have vesting dates of March 31, 2022 and September30, 2022.For purposes of determining stock-based compensation expense, the weighted-average grant date fair value per share of the stock options wasestimated using the Monte Carlo simulation model, which requires the use of various key assumptions. The weighted-average assumptions used areas follows: Year Ended December 31, 20182017Expected term (1)7.00 - 7.15 years7.50 yearsExpected dividend (2)——Expected volatility (3)50%50%Risk-free interest rate (4)2.38% - 2.81%2.12%(1)The expected term of stock options with a market condition granted was calculated using the midpoint between the weighted average time ofvesting and the end of the contractual term.(2)For all stock options with a market condition granted during the years ended December 31, 2018 and 2017, no dividends are expected to bepaid 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.87 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(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 comparableexpected terms as the awards, in effect at the grant date.As of December 31, 2018, there was approximately $51.3 million of unrecognized compensation cost related to stock options with market conditions.These costs are expected to be recognized over a weighted-average period of approximately 3.7 years.NOTE 12—INCOME TAXESIncome Tax ProvisionThe components of the income tax expense (benefit) are as follows (in thousands): Year Ended December 31, 2018 2017 2016Current income tax expense: Federal$(1,470) $10,055 $11,519State(204) 2,606 2,480Current income tax (benefit) expense(1,674) 12,661 13,999Deferred income tax (benefit) provision: Federal(44,950) (3,805) 3,703State(18,951) (2,565) 2,664Deferred income tax (benefit) provision(63,901) (6,370) 6,367Income tax expense (benefit)$(65,575) $6,291 $20,366A reconciliation of the income tax expense (benefit) to the amounts computed by applying the statutory federal income tax rate to income fromcontinuing operations before income taxes is shown as follows (in thousands): Year Ended December 31, 2018 2017 2016Federal statutory income tax$9,186 $8,998 $18,051State income taxes, net of effect of federal tax benefit(14,884) (268) 4,038Impact of Tax Cuts and Jobs Act270 9,062 —Excess tax deductions on non-cash compensation(59,601) (11,134) —Change in (release of) valuation allowance(12) 593 (416)Research and experimentation tax credit(2,523) (1,318) (2,574)Other, net1,989 358 1,267Income tax expense (benefit)$(65,575) $6,291 $20,366During the fourth quarter of 2017, LendingTree recorded a net tax expense of $9.1 million related to the enactment of the TCJA. The expense is primarilyrelated to the remeasurement of LendingTree’s deferred tax assets and liabilities considering the TCJA’s enacted tax rates and certain other impacts.Simultaneous with the Act, the SEC Staff released Accounting Bulletin No. 118 ("SAB 118"), which allows the use of provisional amounts (reasonableestimates) if the analysis of the impacts of the Act have not been completed when financial statements are issued. During the fourth quarter of 2018, theCompany finalized the computations of the income tax effects of the Act. As such, in accordance with SAB 118, the Company's accounting for the effects ofthe Act is complete. The Company did not significantly adjust provisional amounts recorded in the prior fiscal year and the SAB 118 measurement periodsubsequently ended on December 22, 2018. Although the Company no longer considers these amounts to be provisional, the determination of the Act’sincome tax effects may change following future legislation or further interpretation of the Act based on the publication of recently proposed U.S. Treasuryregulations and guidance from the Internal Revenue Service and state tax authorities.88 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDeferred Income TaxesThe tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are asfollows (in thousands): December 31, 2018 2017Deferred tax assets: Provision for accrued expenses$5,953 $4,368Net operating loss carryforwards (a)59,817 6,296Non-cash compensation expense12,505 8,929Interest limitation3,532 —Contingent liabilities3,053 6,666Other4,545 2,138Total gross deferred tax assets89,405 28,397Less: valuation allowance (b)(2,229) (2,694)Total deferred tax assets, net of the valuation allowance87,176 25,703Deferred tax liabilities: Intangible and other assets(4,623) (1,960)Other(892) (1,160)Total gross deferred tax liabilities(5,515) (3,120)Net deferred taxes$81,661 $22,583(a)At December 31, 2018, the Company had pre-tax consolidated federal net operating losses ("NOLs") of $203.5 million. The federal NOLs no longerexpire under the new TCJA. The Company's NOLs will be available to offset taxable income subject to the Internal Revenue Code Section 382annual limitation. In addition, the Company has state NOLs of approximately $498.5 million at December 31, 2018 that will expire at various timesbetween 2020 and 2038.(b)The valuation allowance is related to items for which it is "more likely than not" that the tax benefit will not be realized.Deferred income taxes are presented in the accompanying consolidated balance sheets as follows (in thousands): December 31, 2018 2017Deferred income tax assets$79,289 $20,156Non-current assets of discontinued operations3,266 2,427Deferred income tax liabilities(894) —Net deferred taxes$81,661 $22,583Valuation AllowanceA valuation allowance is provided on deferred tax assets if it is determined that it is "more likely than not" that the deferred tax asset will not be realized.As of each reporting date, management considers both positive and negative evidence regarding the likelihood of future realization of the deferred tax assets.At December 31, 2018, 2017 and 2016, the Company recorded a partial valuation allowance of $2.2 million, $2.7 million and $2.1 million, respectively,primarily related to state net operating losses, which the Company does not expect to be able to utilize prior to expiration.89 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSA reconciliation of the beginning and ending balances of the deferred tax valuation allowance is as follows (in thousands): Year Ended December 31, 2018 2017 2016Balance, beginning of the period$2,694 $2,101 $2,341Charges to earnings(465) 593 (240)Balance, end of the period$2,229 $2,694 $2,101Unrecognized Tax BenefitsA reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands): Year Ended December 31, 2018 2017Balance, beginning of the period$748 $550Additions based on tax positions of the current period249 198Additions based on tax positions of the prior period130 —Balance, end of the period$1,127 $748Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. Interest and penalties on unrecognizedtax benefits included in income tax expense for each of the years ended December 31, 2018, 2017 and 2016 was immaterial.As of December 31, 2018, the accrual for unrecognized tax benefits, including interest, was $1.2 million, which would benefit the effective tax rate ifrecognized. As of December 31, 2017, the accrual for unrecognized tax benefits, including interest, was $0.7 million, which would benefit the effective taxrate if recognized.Tax AuditsLendingTree is subject to audits by federal, state and local authorities in the area of income tax. These audits include questioning the timing and theamount of deductions and the allocation of income among various tax jurisdictions. Income taxes payable include amounts considered sufficient to payassessments that may result from examination of prior year returns; however, any amounts paid upon resolution of issues raised may differ from the amountprovided. Differences between the reserves for tax contingencies and the amounts owed by the Company are recorded in the period they become known. Asof December 31, 2018, the Company is subject to a federal income tax examination for the tax years 2014 through 2017. In addition, the Company is subjectto state and local tax examinations for the tax years 2014 through 2017.NOTE 13—DEBTConvertible Senior NotesOn May 31, 2017, the Company issued $300.0 million aggregate principal amount of its 0.625% Convertible Senior Notes due June 1, 2022 (the“Notes”) in a private placement. The 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 Notes will mature on June 1, 2022, unless earlier repurchased or converted.The initial conversion rate of the Notes is 4.8163 shares of Common Stock per $1,000 principal amount of Notes (which is equivalent to an initialconversion price of approximately $207.63 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events butwill not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a fundamental change prior to the maturity of the Notes, theCompany will, in certain circumstances, increase the conversion rate by a specified number of additional shares for a holder that elects to convert the Notes inconnection with such fundamental change. Upon conversion, the Notes will settle for cash, shares of the Company’s stock, or a combination thereof, at theCompany’s option. It is the intent of the Company to settle the principal amount of the Notes in cash and any conversion premium in shares of its commonstock.90 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that isexpressly subordinated in right of payment to the Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not sosubordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the senior securedRevolving Credit Facility, described below, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness andother 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 Notes will be convertible at the option of the holdersthereof 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 lastreported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day periodending on, and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion priceon 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 (asdefined in the Notes) per $1,000 principal amount of Notes for such trading day was less than 98% of the product of the last reported sale price of theCommon 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 Notes became entitled to convert the Notes on January 1, 2018, based on the last reported sales price of the Company's common stock, forat least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on December 31, 2017, being greater than orequal to 130% of the conversion price of the Notes on each applicable trading day. Holders of the Notes continued to have such right until June 30, 2018based on the last reported sales price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30consecutive trading days ending on March 31, 2018, being greater than or equal to 130% of the conversion price of the Notes on each applicable trading day.Holders of the Notes have not been entitled to convert the Notes since July 1, 2018. Holders of the Notes are not entitled to convert the Notes during thecalendar quarter ended March 31, 2019 as the last reported sales price of the Company's common stock, for at least 20 trading days (whether or notconsecutive) during the period of 30 consecutive trading days ending on December 31, 2018, was not greater than or equal to 130% of the conversion priceof the Notes on each applicable trading day.On or after February 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes,holders of the Notes may convert all or a portion of their Notes regardless of the foregoing conditions.The Company may not redeem the Notes prior to the maturity date and no sinking fund is provided for the Notes. Upon the occurrence of a fundamentalchange prior to the maturity date of the Notes, holders of the Notes may require the Company to repurchase all or a portion of the Notes for cash at a priceequal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental changerepurchase date.If the market price per share of the Common Stock, as measured under the terms of the Notes, exceeds the conversion price of the Notes, the Notes couldhave a dilutive effect, unless the Company elects, subject to certain conditions, to settle the principal amount of the Notes and any conversion premium incash.The initial measurement of convertible debt instruments that may be settled in cash is separated into a debt and an equity component whereby the debtcomponent is based on the fair value of a similar instrument that does not contain an equity conversion option. The separate components of debt and equityof the Company’s Notes were determined using an interest rate of 5.36%, which reflects the nonconvertible debt borrowing rate of the Company at the date ofissuance. 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 Notes were approximately $9.3 million of which $7.4 million were allocated to the liability component andare being amortized to interest expense over the term of the debt and $1.9 million were allocated to the equity component.During 2018, the Company recorded interest expense on the Notes of $14.6 million which consisted of $1.9 million associated with the 0.625% couponrate, $11.4 million associated with the accretion of the debt discount, and $1.3 million associated with the amortization of the debt issuance costs. During2017, the Company recorded interest expense on the Notes of $8.2 million which consisted of $1.1 million associated with the 0.625% coupon rate, $6.4million associated with the accretion of the debt91 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSdiscount, 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 December 31, 2018, the fair value of the Notes is estimated to be approximately $368.3 million using the Level 1 observable input of the lastquoted market price on December 31, 2018.A summary of the gross carrying amount, unamortized debt cost, debt issuance costs and net carrying value of the liability component of the Notes are asfollows (in thousands):December 31, 2018 December 31, 2017Gross carrying amount$300,000 $300,000Unamortized debt discount43,805 55,202Debt issuance costs5,252 6,599Net carrying amount$250,943 $238,199Convertible Note Hedge and Warrant TransactionsOn May 31, 2017, in connection with the issuance of the Notes, the Company entered into Convertible Note Hedge (the “Hedge”) and Warranttransactions with respect to the Company’s common stock. The Company used approximately $18.1 million of the net proceeds from the Notes to pay for thecost of the 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 Hedge transactions. The Hedge transactions cover approximately 1.4million shares of the Company’s common stock, the same number of shares initially underlying the Notes, and are exercisable upon any conversion of theNotes. The Hedge Transactions are expected generally to reduce the potential dilution to the Common Stock upon conversion of the Notes and/or offset anycash payments the Company is required to make in excess of the principal amount of the converted Notes, as the case may be, in the event that the marketprice per share of Common Stock, as measured under the terms of the Hedge transactions, is greater than the strike price of the Hedge transactions, whichinitially corresponds to the initial conversion price of the Notes, or approximately $207.63 per share of Common Stock. The Hedge transactions will expireupon the maturity of the Notes.On May 31, 2017, the Company sold to the counterparties, warrants (the "Warrants") to acquire 1.4 million shares of Common Stock at an initial strikeprice of $266.39 per share, which represents a premium of 70% over the 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 Warrants.If the market price per share of the Common Stock, as measured under the terms of the Warrants, exceeds the strike price of the Warrants, the Warrantscould have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the Warrants in cash.The Hedge and Warrant transactions are indexed to, and potentially settled in, the Company's common stock and the net cost of $18.1 million has beenrecorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity.Senior Secured Revolving Credit FacilityOn November 21, 2017, the Company's wholly-owned subsidiary, LendingTree, LLC, entered into an amended and restated $250.0 million five-yearsenior secured revolving credit facility which matures on November 21, 2022 (the “Revolving Credit Facility”). Under certain conditions, the Company willbe permitted to add one or more term loans and/or increase revolving commitments under the Revolving Credit Facility by an additional $100.0 million or agreater amount provided that a total consolidated senior secured debt to EBITDA ratio does not exceed 2.50 to 1.00. On October 26, 2018, the Companyamended the Revolving Credit Facility to increase the borrowing capacity by $100.0 million to $350.0 million. Pricing and other terms and conditions of theRevolving Credit Facility remain unchanged. Borrowings under the Revolving Credit Facility can be used to finance working capital needs, capitalexpenditures and general corporate purposes, including to finance permitted acquisitions. As of December 31, 2018, the Company had a $125.0 million, 31-day borrowing outstanding under the Revolving Credit Facility bearing interest at the LIBO rate option of 4.02%. See Note 22—Subsequent Events foradditional information regarding the Senior Secured Revolving Credit Facility.92 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSUp to $10.0 million of the Revolving Credit Facility will be available for short-term loans, referred to as swingline loans. Additionally, up to $10.0million of the Revolving Credit Facility will be available for the issuance of letters of credit.The Company’s borrowings under the 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 SunTrust 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% to1.0% 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 loansand on the last day of each interest rate period (but not less often than three months) for LIBO rate loans.The Revolving Credit Facility contains a restrictive financial covenant, which initially limits the total consolidated debt to EBITDA ratio to 4.5, withstep 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 RevolvingCredit 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 suchagreements. The Company was in compliance with all covenants at December 31, 2018.The 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 equity, and 100% of the non-voting equity, in all of its material foreignsubsidiaries (of which there are currently none). The obligations under this facility are unconditionally guaranteed on a senior basis by LendingTree, Inc. andmaterial 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% ofthe non-voting equity, in all of its material foreign subsidiaries (of which there are currently none).The Company is required to pay an unused commitment fee quarterly in arrears on the difference between committed amounts and amounts actuallyborrowed under the Revolving Credit Facility equal to an applicable percentage of 0.25% to 0.45% per annum based on a total consolidated debt to EBITDAratio. 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 participationfee 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 debtto EBITDA ratio. The letter of credit fronting fee is 0.125% per annum on the face amount of each letter of credit.The Company recognized $0.1 million in additional interest expense in the fourth quarter of 2017 due to the write-off of certain unamortized debtissuance costs associated with the original revolving credit facility entered into on October 22, 2015. In addition to the remaining unamortized debt issuancecosts associated with the original revolving credit facility and the Revolving Credit Facility, debt issuance costs of $0.5 million related to the October 2018amendment are being amortized to interest expense over the life of the Revolving Credit Facility, and are included in prepaid and other current assets andother non-current assets in the Company's consolidated balance sheet.During 2018, the Company recorded interest expense related to the Revolving Credit Facility of $2.0 million which consisted of $0.8 million associatedwith borrowings bearing interest at the base rate and the LIBO rate, $0.8 million in unused commitment fees, and $0.4 million associated with theamortization of the debt issuance costs. During 2017, the Company recorded interest expense related to the Revolving Credit Facility of $0.5 million inunused commitment fees and $0.4 million associated with the amortization of the debt issuance costs.93 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 14—COMMITMENTSOperating LeasesThe Company leases office space used in connection with its operations under various operating leases, which contain escalation clauses. TheCompany's operating leases relate to its office space in: Charlotte, North Carolina; Burlingame, California; Charleston, South Carolina; New York City, NewYork; Northbrook, Illinois; Jacksonville, Florida; Seattle, Washington; Sacramento, California; Denver, Colorado; and Makarba, India.Future minimum payments as of December 31, 2018 under operating lease agreements having an initial or remaining non-cancelable lease term in excessof one year are as follows (in thousands):Year ending December 31, Amount2019 $4,4062020 3,1882021 1,0942022 7362023 228Total $9,652Rental expense for all operating leases, except those with terms of a month or less that were not renewed, charged to continuing operations was $3.4million, $2.0 million and $1.6 million, for each of the years ended December 31, 2018, 2017 and 2016, respectively, which is included in general andadministrative expense in the consolidated statements of operations and comprehensive income.BondsThe Company has funding commitments that could potentially require performance in the event of demands by third parties or contingent events, asfollows (in thousands): Commitments Due By Period Total Less Than1 year 1-3 years 3-5 years More Than5 yearsSurety bonds (a)$4,193 $4,168 $25 $— $—(a) State laws and regulations generally require businesses which engage in mortgage brokering activity to maintain a mortgage broker or similar license.Mortgage brokering activity is generally defined to include, among other things, receiving valuable consideration for offering assistance to a buyer inobtaining a residential mortgage or soliciting financial and mortgage information from the public and providing that information to an originator ofresidential mortgage loans. All states require that the Company maintain surety bonds for potential claims.Other CommitmentsThe Company has certain other commitments through 2020, where the commitments for these contracts range from $2.9 million to $5.2 million each yearthroughout the remaining life of the contract.NOTE 15—CONTINGENCIESOverviewLendingTree is involved in legal proceedings on an ongoing basis. In assessing the materiality of a legal proceeding, the Company evaluates, amongother 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 business. With respect to the mattersdisclosed in this Note 15, unless otherwise indicated, the Company is unable to estimate the possible loss or range of losses that could potentially result fromthe application of such non-monetary remedies.94 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSAs of December 31, 2018 and 2017, the Company had litigation settlement accruals of $0.2 million and $0.3 million, respectively, in continuingoperations and $8.0 million and $4.0 million, respectively, in discontinued operations. The litigation settlement accruals relate to litigation matters that wereeither settled or a firm offer for settlement was extended, thereby establishing an accrual amount that is both probable and reasonably estimable.Specific MattersLitigation Related to Discontinued OperationsResidential Funding CompanyResidential Funding Company, LLC v Home Loan Center, Inc., No. 13-cv-3451 (U.S. Dist. Ct., Minn.). On or about December 16, 2013, Home LoanCenter, Inc. was served in the above captioned matter. Generally, Residential Funding Company, LLC ("RFC") seeks damages for breach of contract andindemnification for certain residential mortgage loans as well as residential mortgage-backed securitizations ("RMBS") containing mortgage loans. RFCasserts 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 alleges 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.In December 2013, the United States Bankruptcy Court for the Southern District of New York entered an Order confirming the Second Amended JointChapter 11 Plan Proposed by Residential Capital, LLC et al. and the Official Committee of Unsecured Creditors. Plaintiff then began filing substantiallysimilar complaints against approximately 80 of the loan originators from whom RFC had purchased loans, including HLC, in federal and state courts inMinnesota and New York. In each case, Plaintiff claims that the defendant is liable for a portion of the global settlements in RFC’s bankruptcy.Plaintiff asserts two claims against HLC: (1) breach of contract based on HLC’s alleged breach of representations and warranties concerning the qualityand characteristics of the mortgage loans it sold to RFC; and (2) contractual indemnification for alleged liabilities, losses, and damages incurred by RFCarising out of purported defects in loans that RFC purchased from HLC and sold to third parties. Plaintiff alleges that the “types of defects” contained in theloans it purchased from HLC included “income misrepresentation, employment misrepresentation, appraisal misrepresentations or inaccuracies, undiscloseddebt, and missing or inaccurate documents.” Plaintiff sought damages of up to $61.0 million plus attorney's fees and prejudgment interest.HLC denied the material allegations of the complaint and asserted numerous defenses thereto. The matter went to trial in October 2018, and the juryreturned a verdict of $28.7 million in favor of Plaintiff. Plaintiff is also seeking up to $28.8 million in attorneys’ fees and $30.6 million in pre-judgmentinterest in addition to the jury verdict amount. As of February 28, 2019, the court has not yet entered judgment in favor of Plaintiff. HLC believes it hasstrong grounds for appeal and further believes that Plaintiff’s demand for attorneys’ fees and pre-judgment interest is excessive (and, if granted, would besubject to appeal). HLC intends to vigorously pursue an appeal. The Company estimates the range of HLC’s potential losses in the RFC matter to be $0.0million to $88.1 million. An estimated liability of $7.0 million for this matter is included in the accompanying consolidated balance sheet as of December31, 2018.Lehman Brothers Holdings, Inc.Lehman Brothers Holdings Inc. v. Home Loan Center, Inc., Case No. 08-13555 (SCC), Adversary Proceeding No. 16-01342 (SCC) (Bankr. S.D.N.Y.). InFebruary 2016, Lehman Brothers Holdings Inc. (“LBHI”) filed an Adversary Complaint against HLC and approximately 149 other defendants (the“Complaint”). In December 2018, LBHI amended its complaint against HLC. The amended complaint references approximately 370 allegedly defectivemortgage loans sold by HLC with purported "Claim Amounts" totaling $40.2 million. LBHI alleges it settled all such claims and is seeking indemnificationfrom HLC for LBHI’s purported losses and liabilities associated with such settlements, plus prejudgment interest, attorneys’ fees, litigation costs and otherexpenses. The amended complaint does not specify the amount of LBHI’s purported damages. HLC believes that these claims lack merit and intends todefend this action vigorously. An estimated liability of $1.0 million for this matter is included in the accompanying consolidated balance sheet as ofDecember 31, 2018.NOTE 16—FAIR VALUE MEASUREMENTSOther than the Notes and the Warrants, the carrying amounts of the Company's financial instruments are equal to fair value at December 31, 2018. SeeNote 13—Debt for additional information on the Notes and the Warrants.95 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSContingent consideration payments related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. Thechanges in the fair value of the Company's Level 3 liabilities during the years ended December 31, 2018, 2017 and 2016 are as follows (in thousands): Year Ended December 31, 2018 2017 2016Contingent consideration, beginning of period$57,349 $23,100 $—Transfers into Level 3— — —Transfers out of Level 3— — —Total net (gains) losses included in earnings (realized and unrealized)10,788 23,931 —Purchases, sales and settlements: Additions19,700 11,318 23,100Payments(49,000) (1,000) —Contingent consideration, end of period$38,837 $57,349 $23,100The contingent consideration liability at December 31, 2018 is the estimated fair value of the earnout payments of the DepositAccounts, SnapCap,Ovation, and QuoteWizard acquisitions. The contingent consideration liability at December 31, 2017 was the estimated fair value of the earnout payments ofthe CompareCards, DepositAccounts, and SnapCap acquisitions. The contingent consideration liability at December 31, 2016 was the estimated fair value ofthe earnout payments of the CompareCards acquisition. The Company will make earnout payments ranging from $3.0 million to $4.0 million based on theachievement of defined milestone and performance targets for DepositAccounts, payments ranging from $3.0 million to $9.0 million based on theachievement of certain defined earnings targets for SnapCap, payments ranging from zero to $8.75 million based on the achievement of certain definedoperating metrics for Ovation, and payments ranging from zero to $70.2 million based on the achievement of certain defined performance targets forQuoteWizard. See Note 8—Business Acquisitions for additional information on the contingent consideration for each of these respective acquisitions.The significant unobservable inputs used to calculate the fair value of the contingent consideration are estimated future cash flows for the acquisitions,estimated customer growth rates, estimated date and likelihood of an increase in interest rates and the discount rate. Actual results will differ from theprojected results and could have a significant impact on the estimated fair value of the contingent considerations. Additionally, as the liability is stated atpresent 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 recordedin operating income in the consolidated statements of operations and comprehensive income.NOTE 17—RELATED PARTY TRANSACTIONSOne of the Company's board of directors also serves as a director to a marketing partner of the Company. During 2018, 2017 and 2016, the Companyrecognized $0.7 million, $1.2 million and $1.3 million, respectively, of expenses for this marketing partner through the normal course of business.In the fourth quarter of 2017, the Company's Board of Directors approved a $10.0 million contribution to fund the newly formed LendingTreeFoundation. The Company expects to pay $3.3 million of the $10.0 million contribution in 2019, and the remainder by 2021. Officers of the Company serveas officers of the LendingTree Foundation. The contribution is recorded in general and administrative expense on the consolidated statement of operationsand comprehensive income.96 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 18—BENEFIT PLANSThe Company operates a retirement savings plan for its employees in the United States that is qualified under Section 401(k) of the Internal RevenueCode. Employees are eligible to enroll in the plan upon date of hire. Participating employees may contribute up to 50% of their pre-tax earnings, but notmore than statutory limits ($18,000 for 2016 and 2017, and $18,500 for 2018). The company match contribution is fifty cents for each dollar a participantcontributes to the plan, with a maximum contribution of 6% of a participant's eligible earnings. Matching contributions are invested in the same manner aseach participant's voluntary contributions in the investment options provided under the plan. LendingTree stock is not included in the available investmentoptions or the plan assets. Funds contributed to the plan vest according to the participant's years of service, with less than three years of service vesting at 0%,and three years or more of service vesting at 100%. Matching contributions were approximately $1.4 million, $0.9 million and $0.7 million for the yearsended December 31, 2018, 2017 and 2016, respectively.NOTE 19—DISCONTINUED OPERATIONSThe revenue and net loss reported as discontinued operations in the accompanying consolidated statements of operations and comprehensive income areas follows (in thousands): Year Ended December 31, 2018 2017 2016Revenue$— $(750) $1,325 Loss before income taxes$(16,228) $(5,909) $(5,728)Income tax benefit3,408 2,069 2,014Net loss$(12,820) $(3,840) $(3,714)In 2018, 2017 and 2016, loss from discontinued operations was primarily due to litigation settlements and contingencies and legal fees associated withongoing legal proceedings.LendingTree LoansOn June 6, 2012, the Company sold substantially all of the operating assets of its 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 the LendingTree Loans business that arose before the closing date, except for certain liabilities directlyrelated to assets Discover acquired. Of the purchase price received, a portion was deposited in escrow in accordance with the agreement with Discover forcertain loan loss obligations that remain with the Company following the sale. During the second quarter of 2018, the remaining funds in escrow werereleased to the Company in accordance with the terms of the agreement with Discover.Significant Assets and Liabilities of LendingTree LoansUpon closing of the sale of substantially all of the operating assets of the LendingTree Loans business on June 6, 2012, LendingTree Loans ceased tooriginate consumer loans. Liability for losses on previously sold loans will remain with LendingTree Loans and are discussed below.Loan Loss ObligationsLendingTree Loans sold loans it originated to investors on a servicing-released basis, so the risk of loss or default by the borrower was generallytransferred to the investor. However, LendingTree Loans was required by these investors to make certain representations and warranties relating to creditinformation, loan documentation and collateral. These representations and warranties may extend through the contractual life of the loan. Subsequent to theloan sale, if underwriting deficiencies, borrower fraud or documentation defects are discovered in individual loans, LendingTree Loans may be obligated torepurchase the respective loan or indemnify the investors for any losses from borrower defaults if such deficiency or defect cannot be cured within thespecified period following discovery.97 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSHLC, a subsidiary of the Company, continues to be liable for these indemnification obligations, repurchase obligations and premium repaymentobligations following the sale of substantially all of the operating assets of its LendingTree Loans business in the second quarter of 2012.The following table represents the aggregate loans sold, subsequent settlements and remaining unsettled loans as of December 31, 2018: Number of Loans Original Issue Balance (in thousands) (in billions)Loans sold by HLC234 $38.9Subsequent settlements(172) (28.8)Remaining unsettled loans62 $10.1During the fourth quarter of 2015, LendingTree Loans completed a settlement agreement for $0.6 million with one of the investors to which it had soldloans. This investor accounted for approximately 10% of the total number of loans sold and 12% of the original issue balance. This settlement related to allexisting and future losses on loans sold to this investor.During the fourth quarter of 2014, LendingTree Loans completed a settlement agreement for $5.4 million with the largest investor to which it had soldloans. This investor accounted for approximately 40% of both the total number of loans sold and the original issue balance. This settlement related to allexisting and future losses on loans sold to this investor.In the second quarter of 2014, LendingTree Loans completed settlements with two buyers of previously purchased loans.The Company has been negotiating with certain of the remaining secondary market purchasers to settle any existing and future contingent liabilities, butit may not be able to complete such negotiations on acceptable terms, or at all. Because LendingTree Loans does not service the loans it sold, it does notmaintain nor generally have access to the current balances and loan performance data with respect to the individual loans previously sold to investors.Accordingly, LendingTree Loans is unable to determine, with precision, its maximum exposure for breaches of the representations and warranties it made tothe investors that purchased such loans.The Company uses a settlement discount framework for evaluating the adequacy of the reserve for loan losses. This model estimates lifetime losses onthe population of remaining loans originated and sold by LendingTree Loans using actual defaults for loans with similar characteristics and projected futuredefaults. It also considers the likelihood of claims expected due to alleged breaches of representations and warranties made by LendingTree Loans and thepercentage of those claims investors estimate LendingTree Loans may agree to repurchase. A settlement discount factor is then applied to the result of theforegoing to reflect publicly-announced bulk settlements for similar loan types and vintages, the Company's own settlement experience, as well asLendingTree Loans' non-operating status, in order to estimate a range of potential obligation.The estimated range of remaining loan losses using this settlement discount framework was determined to be $4.3 million to $7.9 million atDecember 31, 2018. The reserve balance recorded as of December 31, 2018 was $7.6 million. Management has considered both objective and subjectivefactors in the estimation process, but given current general industry trends in mortgage loans as well as housing prices and market expectations, actual lossesrelated to LendingTree Loans' obligations could vary significantly from the obligation recorded as of the balance sheet date or the range estimated above.Additionally, LendingTree has guaranteed certain loans sold to two investors in the event that LendingTree Loans is unable to satisfy its repurchase andwarranty obligations related to such loans.Based on historical experience, it is anticipated that LendingTree Loans will continue to receive repurchase requests and incur losses on loans sold inprior years.The activity related to loss reserves on previously sold loans is as follows (in thousands): Year Ended December 31, 2018 2017 2016Loan loss reserve, beginning of period$7,554 $6,804 $8,127Provision adjustments (a)— 750 (1,323)Charge-offs to reserves— — —Loan loss reserve, end of period$7,554 $7,554 $6,80498 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(a)During 2016, the Company adjusted the loan loss reserve by $1.8 million to remove the estimated liability for loans sold to RFC. The Company is inlitigation with RFC and separately reserved for the estimated loss for this litigation. See Note 15—Contingencies for additional information aboutthe RFC litigation.The liability for losses on previously sold loans is presented as current liabilities of discontinued operations in the accompanying consolidated balancesheets as of December 31, 2018 and 2017.NOTE 20—SEGMENT INFORMATIONThe Company has one reportable segment.Mortgage and non-mortgage product revenue is as follows (in thousands): Year Ended December 31, 2018 2017 2016Mortgage products$242,175 $275,910 $219,991Non-mortgage products522,690 341,826 164,411Total revenue$764,865 $617,736 $384,402NOTE 21—QUARTERLY FINANCIAL INFORMATION (UNAUDITED)The following tables set forth summary financial information for the years ended December 31, 2018 and 2017: Q1 Q2 Q3 Q4 (in thousands, except per share amounts)2018 Revenue$181,035 $184,101 $197,057 $202,672Operating income (1)15,350 18,123 20,290 2,428Income from continuing operations (1)35,857 44,849 28,362 251Loss from discontinued operations(4,333) (2,302) (2,634) (3,551)Net income (loss) and comprehensive income (loss)$31,524 $42,547 $25,728 $(3,300)Income (loss) per share from continuing operations: Basic$2.97 $3.61 $2.22 $0.02Diluted$2.41 $3.17 $2.05 $0.02Loss per share from discontinued operations: Basic$(0.36) $(0.19) $(0.21) $(0.28)Diluted$(0.29) $(0.16) $(0.19) $(0.26)Net income (loss) per share: Basic$2.61 $3.43 $2.01 $(0.26)Diluted$2.12 $3.01 $1.86 $(0.24)(1)The fourth quarter of 2018 includes contingent consideration expense of $6.8 million for the QuoteWizard acquisition due to an increased probabilityof achievement of certain defined performance targets for QuoteWizard.99 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS Q1 Q2 Q3 Q4 (in thousands, except per share amounts)2017 Revenue$132,515 $152,773 $171,494 $160,954Operating income (expense) (1)6,884 8,969 17,455 (175)Income (loss) from continuing operations (1) (2)7,798 8,007 10,131 (6,518)Loss from discontinued operations(932) (689) (1,011) (1,208)Net income (loss) and comprehensive income (loss)$6,866 $7,318 $9,120 $(7,726)Income (loss) per share from continuing operations: Basic$0.66 $0.67 $0.84 $(0.54)Diluted$0.58 $0.59 $0.74 $(0.54)Loss per share from discontinued operations: Basic$(0.08) $(0.06) $(0.08) $(0.10)Diluted$(0.07) $(0.05) $(0.07) $(0.10)Net income (loss) per share: Basic$0.58 $0.61 $0.76 $(0.64)Diluted$0.51 $0.54 $0.66 $(0.64)(1)In the fourth quarter of 2017, the Company's Board of Directors approved a $10.0 million contribution to fund the newly formed LendingTreeFoundation. The contribution is recorded in general and administrative expense on the consolidated statement of operations and comprehensiveincome.(2)During the fourth quarter of 2017, the Company recorded a net tax expense of $9.1 million related to the enactment of the TCJA. See Note 12—IncomeTaxes for additional information.NOTE 22—SUBSEQUENT EVENTSAcquisition of Value Holding Inc.On January 10, 2019, the Company acquired Value Holding Inc., the parent company of ValuePenguin Inc., a personal finance website that offersconsumers objective analysis on a variety of financial topics from insurance to credit cards, for $105.0 million in cash at the closing of the transaction,subject to adjustments for working capital. The acquisition was funded through $90.0 million drawn on the Company's Revolving Credit Facility and thebalance using cash on hand.Common Stock Repurchase ProgramIn February 2019, the board of directors authorized and the Company announced the addition of up to $150.0 million under the stock repurchaseprogram. Between January 1, 2019 and February 28, 2019, the Company purchased 17,501 shares of its common stock for aggregate consideration of $3.9million. As of February 28, 2019, approximately $181.2 million remains authorized for future share repurchases.Sale of North Carolina Office PropertiesOn February 22, 2019, the Company entered into a real estate purchase and sale agreement for the sale of its two office buildings to an unrelated thirdparty. See Item 2. Properties and Note 7—Assets Held For Sale for further information on these buildings. The agreement provides for a sale price of $24.75million subject to prorations and adjustments. The agreement allows the purchaser a period of inspection through March 28, 2019 during which time it mayelect to not proceed with the purchase and receive a return of its earnest money deposit. After such period, an earnest money deposit of $1.0 million wouldbecome non-refundable if the purchaser does not purchase the property, subject to certain exceptions.100 Table of ContentsITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNot applicable.ITEM 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresAs required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), management, with the participation of our principalexecutive officer (Chief Executive Officer) and our principal financial officer (Chief Financial Officer), evaluated, as of the end of the period covered by thisreport, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Management necessarily applied its judgmentin assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable assurance regarding management'scontrol objectives. Management does not expect that our disclosure controls and procedures will prevent or detect all errors and fraud. A control system,irrespective of how well it is designed and operated, can only provide reasonable assurance and cannot guarantee that it will succeed in its stated objectives.Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2018, our disclosure controlsand procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under theExchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information isaccumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timelydecisions regarding required disclosure.Management's Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under theExchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includesthose policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions anddispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors;and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate.Management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control overfinancial reporting as of December 31, 2018. In making this assessment, our management used the criteria for effective internal control over financialreporting described in "Internal Control-Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission("COSO"). However, the assessment did not include certain elements of the QuoteWizard.com, LLC business, as the acquisition occurred during 2018.Subsequent to the acquisition, certain elements of QuoteWizard.com, LLC’s internal control over financial reporting and related processes were integratedinto the Company’s existing systems and internal control over financial reporting. Those controls that were not integrated have been excluded frommanagement’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2018. The excluded elements represent controlsover approximately 3% of consolidated assets and 4% of the consolidated revenues. Based on our evaluation under the framework in the Internal Control-Integrated Framework, issued by the COSO, management has concluded that our internal control over financial reporting was effective as of December 31,2018. The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report appearing under "Item 8. Financial Statements and Supplementary Data" includedelsewhere in this annual report.Changes in Internal Control over Financial ReportingThere was no change in our internal control over financial reporting (as defined in the Exchange Act, Rules 13a-15(f)) that occurred during the quarterended December 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.101 ITEM 9B. Other InformationOn February 22, 2019, our subsidiary Rexford Office Holdings, LLC, entered into a real estate purchase and sale agreement for the sale of its two officebuildings to an unrelated third party. See Item 2. Properties for further information on these buildings. The agreement provides for a sale price of $24.75million subject to prorations and adjustments. The agreement allows the purchaser a period of inspection through March 28, 2019 during which time it mayelect to not proceed with the purchase and receive a return of its earnest money deposit. After such period, an earnest money deposit of $1.0 million wouldbecome non-refundable if the purchaser does not purchase the property, subject to certain exceptions.102 Table of ContentsPART IIIAs set forth below, the information required by Part III (Items 10, 11, 12, 13 and 14) is incorporated herein by reference to the Company's definitive proxystatement to be used in connection with its 2019 Annual Meeting of Stockholders and which will be filed with the Securities and Exchange Commission notlater than 120 days after the end of the Company's fiscal year ended December 31, 2018 (the "2019 Proxy Statement"), in accordance with GeneralInstruction G(3) of Form 10-K.ITEM 10. Directors, Executive Officers and Corporate GovernanceThe information required by Item 10 will be contained in, and is hereby incorporated by reference to, the 2019 Proxy Statement.ITEM 11. Executive CompensationThe information required by Item 11 will be contained in, and is hereby incorporated by reference to, the 2019 Proxy Statement.ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by Item 12 will be contained in, and is hereby incorporated by reference to, the 2019 Proxy Statement.ITEM 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by Item 13 will be contained in, and is hereby incorporated by reference to, the 2019 Proxy Statement.ITEM 14. Principal Accounting Fees and ServicesThe information required by Item 14 will be contained in, and is hereby incorporated by reference to, the 2019 Proxy Statement.103 Table of ContentsPART IVITEM 15. Exhibits, Financial Statement Schedules(a) List of documents filed as part of this report:(1) Consolidated Financial Statements of LendingTree, Inc.Report of Independent Registered Public Accounting Firm: PricewaterhouseCoopers LLP.Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 2017 and 2016.Consolidated Balance Sheets as of December 31, 2018 and 2017.Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2018, 2017 and 2016.Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016.Notes to Consolidated Financial Statements.(2) Consolidated Financial Statement Schedules of LendingTree, Inc.All financial statements and schedules have been omitted since the required information is included in the consolidated financial statements or the notesthereto, or is not applicable or required.(3) ExhibitsThe documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith or incorporated herein by reference to thelocation indicated below.ExhibitNumberDescriptionLocation2.1Separation and Distribution Agreement among IAC/InterActiveCorp,HSN, Inc., Interval Leisure Group, Inc., Ticketmaster and Tree.com, Inc.,dated August 20, 2008.Exhibit 2.1 to the Registrant's Registration Statement on Form S-1(No. 333-152700), filed August 1, 20082.2Tax Sharing Agreement among IAC/InterActiveCorp, HSN, Inc.,Interval Leisure Group, Inc., Ticketmaster and Tree.com, Inc., datedAugust 20, 2008.Exhibit 10.2 to the Registrant's Current Report on Form 8-K (No.001-34063) filed August 25, 20082.3Employee Matters Agreement among IAC/InterActiveCorp, HSN, Inc.,Interval Leisure Group, Inc., Ticketmaster and Tree.com, Inc., datedAugust 20, 2008.Exhibit 10.3 to the Registrant's Current Report on Form 8-K (No.001-34063) filed August 25, 20082.4Transition Services Agreement among IAC/InterActiveCorp, HSN, Inc.,Interval Leisure Group, Inc., Ticketmaster and Tree.com, Inc., datedAugust 20, 2008.Exhibit 10.4 to the Registrant's Current Report on Form 8-K (No.001-34063) filed August 25, 20082.5Spinco Assignment and Assumption Agreement amongIAC/InterActiveCorp, Tree.com, Inc., Liberty Media Corporation andLiberty USA Holdings, LLC, dated August 20, 2008.Exhibit 10.6 to the Registrant's Current Report on Form 8-K (No.001-34063) filed August 25, 20082.6Asset Purchase Agreement among Home Loan Center, Inc., FirstResidential Mortgage Network, Inc. dba SurePoint Lending, and theshareholders of First Residential Mortgage Network named therein,dated November 15, 2010.Exhibit 2.1 to Registrant's Current Report on Form 8-K (No. 001-34063) filed November 16, 20102.7First Amendment to Asset Purchase Agreement among HLC, SurePointand the shareholders party thereto, dated March 14, 2011.Exhibit 2.1 to the Registrant's Current Report on Form 8-K filedMarch 21, 20112.8Second Amendment to Asset Purchase Agreement among HLC,SurePoint and the shareholders party thereto, dated March 15, 2011.Exhibit 2.2 to the Registrant's Current Report on Form 8-K filedMarch 21, 2011104 ExhibitNumberDescriptionLocation2.9Asset Purchase Agreement among Tree.com, Inc., Home Loan Center,Inc., LendingTree, LLC, HLC Escrow, Inc. and Discover Bank, datedMay 12, 2011**Exhibit 2.1 to the Registrant's Current Report on Form 8-K filedMay 16, 20112.10Asset Purchase Agreement among LendingTree, LLC, RealEstate.com,Inc. and Market Leader, Inc., dated September 15, 2011**Exhibit 2.1 to the Registrant's Current Report on Form 8-K filedSeptember 21, 20112.11Amendment to Asset Purchase Agreement among Home Loan Center,Inc., HLC Escrow, Inc., LendingTree, LLC, Tree.com, Inc., DiscoverBank and Discover Financial Services, dated February 7, 2012**Exhibit 2.1 to the Registrant's Current Report on Form 8-K filedFebruary 8, 20122.12Membership Interest Purchase Agreement, dated as of November 16,2016, by and among LendingTree, LLC, Iron Horse Holdings, LLC, allof the members of Iron Horse Holdings, LLC and Christopher J. Mettler.**Exhibit 2.1 to the Registrant's Current Report on Form 8-K filedNovember 22, 20162.13Assignment and Assumption Agreement, dated November 2, 2017, byand among General Communication, Inc., Liberty InteractiveCorporation, Liberty USA Holdings, LLC, Ventures Holdco, LLC, andLendingTree, Inc.Exhibit 99.7(D) to the Registrant's Current Report on Form SC13D/A filed November 3, 20172.14Unit Purchase Agreement dated as of October 4, 2018 by and amongLendingTree, LLC, QuoteWizard.com, LLC, all of the members ofQuoteWizard.com, LLC, and Scott Peyree as the SecurityholdersRepresentative. **Exhibit 2.1 to the Registrant’s Current Report on Form 8-K/A filedOctober 12, 20182.15Stock Purchase Agreement dated as of December 20, 2018 by andamong LendingTree, LLC, Value Holding Inc., all of the shareholdersof Value Holding Inc., and Jonathan Wu as the Sellers’ Representative.**Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filedDecember 27, 20183.1Amended and Restated Certificate of Incorporation ofLendingTree, Inc.Exhibit 3.1 to the Registrant's Current Report on Form 8-K (No. 001-34063) filed August 25, 20083.2Fourth Amended and Restated By-laws of LendingTree, Inc.Exhibit 3.1 to the Registrant's Current Report on Form 8-K filedNovember 15, 20174.1Amended and Restated Restricted Share Grant and Shareholders'Agreement, among Forest Merger Corp., LendingTree, Inc.,InterActiveCorp and the Grantees named therein, dated July 7, 2003*Exhibit 10.8 to the Registrant's Registration Statement on Form S-1(No. 333-152700), filed August 1, 20084.2Registration Rights Agreement among Tree.com, Inc., Liberty MediaCorporation and Liberty USA Holdings, LLC, dated August 20, 2008.Exhibit 10.5 to the Registrant's Current Report on Form 8-K (No.001-34063) filed August 25, 20084.3Indenture for .0625% Convertible Senior Notes due 2022Exhibit 4.1 to the Registrant's Current Report on Form 8-K filedMay 31, 20174.4Purchase Agreement for .0625% Convertible Senior Notes due 2022Exhibit 99.1 to the Registrant's Current Report on Form 8-K filedMay 31, 20174.5Base Issuer Warrant TransactionExhibit 99.4 to the Registrant's Current Report on Form 8-K filedMay 31, 20174.6Additional Issuer Warrant TransactionExhibit 99.5 to the Registrant's Current Report on Form 8-K filedMay 31, 201710.1Amendment No. 1 to the Restricted Share Grant and Stockholder'sAgreement between Tree.com, Inc., LendingTree Holdings Corp. andDouglas R. Lebda, dated August 30, 2010*Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q (No.001-34063) filed November 12, 201010.2Stock Purchase Agreement between Tree.com, Inc. and Douglas R.Lebda, dated February 8, 2009*Exhibit 10.1 to the Registrant's Current Report on Form 8-K (No.001-34063) filed February 11, 200910.3Amendment No. 1 to the Stock Option Award Agreement betweenDouglas R. Lebda and Tree.com, Inc., dated May 10, 2010*Exhibit 10.15 to the Registrant's Quarterly Report on Form 10-Q(No. 001-34063) filed May 12, 201010.4Amendment No. 1 to Stock Purchase Agreement between Tree.com, Inc.and Douglas R. Lebda, dated May 10, 2010*Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q (No.001-34063) filed May 12, 2010105 ExhibitNumberDescriptionLocation10.5Form of Amendment to Restricted Stock Awards for Douglas R. Lebda*Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q filedMay 12, 201010.6Amendment No. 1 to the Restricted Share Grant and Stockholder'sAgreement between Tree.com, Inc., LendingTree Holdings Corp. andDouglas R. Lebda, dated August 30, 2010*Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q (No.001-34063) filed November 12, 201010.7Employment Agreement between Douglas Lebda and the Company,dated September 20, 2017*Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q filedOctober 26, 201710.8Letter Agreement between Tree.com, Inc. and Carla Shumate, datedDecember 11, 2012*Exhibit 10.1 to the Registrant's Annual Report on Form 10-K filedApril 1, 201310.9Letter Agreement between LendingTree, Inc. and Carla Shumate, datedMarch 11, 2015*Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filedApril 30, 201510.10Letter Agreement between LendingTree, Inc. and Carla Shumate, datedDecember 31, 2015*Exhibit 10.6 to the Registrant's Annual Report on Form 10-K filedMarch 1, 201610.11Fifth Amended and Restated Tree.com, Inc. 2008 Stock and AnnualIncentive Plan*Exhibit 4.3(A) to the Registrant's Registration Statement on Form S-8 (No. 333-218747), filed June 14, 201710.12Form of Notice of Stock Option Award Granted Under the 2008 Stockand Annual Incentive Plan*Exhibit 10.6 to the Registrant's Current Report on Form 8-K (No.001-34063) filed March 27, 200910.13Form of Notice of Restricted Stock Unit Award*Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q filedMay 7, 201410.14Form of Notice of Restricted Stock Award*Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q filedMay 7, 201410.15Form of Notice of Stock Option Award Granted Under the 2008 Stockand Annual Incentive Plan*Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q filedMay 7, 201410.16LendingTree, Inc. 2017 Inducement Grant Plan*Exhibit 4.4(A) to the Registrant's Registration Statement on Form S-8 (No. 333-218747), filed June 14, 201710.17Notice of Restricted Stock Unit Award Granted Under the LendingTree,Inc. 2017 Inducement Plan*Exhibit 4.4(B) to the Registrant's Registration Statement on Form S-8 (No. 333-218747), filed June 14, 201710.18Restricted Stock Award Agreement*Exhibit 4.4(C) to the Registrant's Registration Statement on Form S-8 (No. 333-218747), filed June 14, 201710.19Notice of [year] Stock Option Award Granted Under the LendingTree,Inc. 2017 Inducement Grant Plan*Exhibit 4.4(D) to the Registrant's Registration Statement on Form S-8 (No. 333-218747), filed June 14, 201710.202011 Deferred Compensation Plan for Non-Employee Directors*Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q filedApril 30, 201510.21Deferred Compensation Plan for Non-Employee Directors*Exhibit 10.15 to the Registrant's Registration Statement on Form S-1 (No. 333-152700), filed August 1, 200810.22Standard Terms and Conditions to Restricted Stock Award Letters ofTree.com BU Holding Company, Inc.*Exhibit 10.2 to the Registrant's Current Report on Form 8-K filedFebruary 3, 201110.23Form of Notice of Restricted Stock Unit Award*Exhibit 10.86(b) to the Registrant's Post-Effective Amendment to itsRegistration Statement on Form S-1 (No. 333-152700), filed July 13,201210.24Form of Restricted Stock Award*Exhibit 10.86(c) to the Registrant's Post-Effective Amendment to itsRegistration Statement on Form S-1 (No. 333-152700), filed July 13,201210.25Form of Notice of Stock Option Award Granted Under the Amendedand Restated 2008 Stock and Annual Incentive Plan*Exhibit 10.86(d) to the Registrant's Post-Effective Amendment to itsRegistration Statement on Form S-1 (No. 333-152700), filed July 13,201210.26Form of Notice of Stock Option Award Granted Under the SecondAmended and Restated 2008 Stock and Annual Incentive Plan*Exhibit 10.13 to the Registrant's Quarterly Report on Form 10-Q(No. 001-34063) filed May 12, 2010106 ExhibitNumberDescriptionLocation10.27Base Convertible Bond Hedge TransactionExhibit 99.2 to the Registrant's Current Report on Form 8-K filedMay 31, 201710.28Additional Convertible Bond Hedge TransactionExhibit 99.3 to the Registrant's Current Report on Form 8-K filedMay 31, 201710.29Amended and Restated Credit Agreement, dated as of November 21,2017+Exhibit 10.38 to the Registrant's Annual Report on Form 10-K filedFebruary 26, 201810.30Joinder to Amended and Restated Credit Agreement, dated as ofOctober 26, 2018†+10.31Agreement of Purchase and Sale, by and among LendingTree, LLC andan affiliate of Greenstreet Real Estate Partners, L.P., dated October 17,2016Exhibit 10.31 to the Registrant's Annual Report on Form 10-K filedFebruary 28, 201710.32First Amendment to Purchase and Sale, by and among LendingTree,LLC and an affiliate of Greenstreet Real Estate Partners, L.P., datedNovember 28, 2016Exhibit 10.32 to the Registrant's Annual Report on Form 10-K filedFebruary 28, 201710.33Employment Agreement dated December 21, 2017, among John DavidMoriarty, LendingTree, Inc., and LendingTree, LLC.*Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filedApril 27, 201810.34Employment Agreement, dated January 2, 2018, among Neil Salvage,LendingTree, Inc., and LendingTree, LLC*Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filedApril 27, 201810.35Employment Agreement, dated March 27, 2018, among Nikul Patel,LendingTree, Inc., and LendingTree, LLC.*Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filedApril 27, 201821.1Subsidiaries of LendingTree, Inc.†23.1Consent of independent registered public accounting firm.†24.1Power of Attorney (included on signature page of this Annual Reporton Form 10-K)†31.1Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 2002†31.2Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 2002†32.1Certification of the Chief Executive Officer pursuant to 18 U.S.C.Section 1350 as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002††32.2Certification of the Chief Financial Officer pursuant to 18 U.S.C.Section 1350 as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002††101.CALXBRL Taxonomy Extension Calculation Linkbase Document†††101.DEFXBRL Taxonomy Extension Definition Linkbase Document†††101.INSXBRL Instance Document†††101.LABXBRL Taxonomy Extension Label Linkbase Document†††101.PREXBRL Taxonomy Extension Presentation Linkbase Document†††101.SCHXBRL Taxonomy Extension Schema Document†††___________________________________________________________________________† Filed 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 theExchange Act and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of anygeneral incorporation language in such filing.107 ††† 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 aregistration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act are deemed not filed for purposes of Section 18 of the ExchangeAct and otherwise are not subject to liability under those sections.* Management contract or compensation plan or arrangement.** Certain schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally acopy of all omitted schedules to the SEC upon its request.+ Portions of this exhibit have been omitted pursuant to a request for confidential treatment and this exhibit has been submitted separately to the SEC.ITEM 16. Form 10-K SummaryNone.108 Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.Date: February 28, 2019LendingTree, Inc. By:/s/ DOUGLAS R. LEBDADouglas R. LebdaChairman and Chief Executive Officer109 Table of ContentsKNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints each of J.D. Moriarty andRyan Quinn as his or her true and lawful attorney and agent, with full power of substitution and resubstitution, for him or her and in his or her name, placeand stead, in any and all capacities, to sign any and all amendments to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31,2018, and to file the same with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, grantingunto said attorney and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intentsand purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney and agent may lawfully do or cause to be doneby virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theRegistrant and in the capacities indicated and on the dates indicated.Signature Title Date /s/ DOUGLAS R. LEBDA Chairman, Chief Executive Officer and Director(Principal Executive Officer) February 28, 2019Douglas R. Lebda /s/ J.D. MORIARTY Chief Financial Officer(Principal Financial Officer) February 28, 2019J.D. Moriarty /s/ CARLA SHUMATE Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) February 28, 2019Carla Shumate /s/ GABRIEL DALPORTO Director February 28, 2019Gabriel Dalporto /s/ THOMAS DAVIDSON Director February 28, 2019Thomas Davidson /s/ NEAL DERMER Director February 28, 2019Neal Dermer /s/ ROBIN HENDERSON Director February 28, 2019Robin Henderson /s/ PETER HORAN Director February 28, 2019Peter Horan /s/ STEVEN OZONIAN Director February 28, 2019Steven Ozonian /s/ SARAS SARASVATHY Director February 28, 2019Saras Sarasvathy /s/ G. KENNEDY THOMPSON Director February 28, 2019G. Kennedy Thompson /s/ CRAIG TROYER Director February 28, 2019Craig Troyer 110 Exhibit 10.30JOINDER TO AMENDED AND RESTATED CREDIT AGREEMENTThis JOINDER TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered into as of October 26, 2018, amongLENDINGTREE, LLC, a Delaware limited liability company (the “Borrower”), LENDINGTREE, INC., a Delaware corporation (“Parent”), each other LoanParty party hereto, each bank and other financial institution party hereto as a provider of Incremental Revolving Commitments (each, an “IncrementalLender” and, collectively, the “Incremental Lenders”), and SUNTRUST BANK, as administrative agent under the Credit Agreement referred to below (in suchcapacity and together with its successors, the “Administrative Agent”).RECITALS:WHEREAS, the Borrower, the Parent, the Administrative Agent, and the Lenders from time to time party thereto are parties to that certain Amendedand Restated Credit Agreement dated as of November 21, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “CreditAgreement”).WHEREAS, in accordance with Section 2.23 of the Credit Agreement, the Borrower notified the Administrative Agent of its request for IncrementalRevolving Commitments, and pursuant to Section 2.23 of the Credit Agreement, the Borrower hereby requests that the Incremental Lenders set forth onAnnex I hereto make Incremental Revolving Commitments hereunder as additional revolving commitments (the “Incremental Revolving Commitments”) inan aggregate principal amount of $100,000,000 to the Borrower on the Incremental Effective Date (as defined below).WHEREAS, in accordance with Section 2.23 of the Credit Agreement, the Incremental Revolving Commitments shall be effected by, among otherthings, the execution of an instrument of joinder entered into among the Borrower, the Administrative Agent and the Incremental Lenders, in accordance withthe terms and conditions of the Credit Agreement.WHEREAS, each Incremental Lender is willing to make Incremental Revolving Commitments available to the Borrower on the IncrementalEffective Date on the terms set forth in Section 2 and in the Credit Agreement and subject to the conditions set forth herein and to become, if not already, aLender for all purposes under the Credit Agreement and to bound by all of the terms and conditions thereof and of the Loan Documents.WHEREAS, the Borrower has also requested, and the Administrative Agent has agreed, to amend the Credit Agreement to give effect to theIncremental Revolving Commitments and certain mechanical changes necessary or advisable in connection therewith, all in accordance with the terms of thisAgreement.AGREEMENT:In consideration of the undertakings set forth herein and other good and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the parties hereto hereby agree as follows:Section 1.Definitions. Unless otherwise defined herein, each capitalized term used in this Agreement (including the recitals) andnot defined herein shall be defined in accordance with the Credit Agreement.Section 2.Incremental Revolving Commitments.2.1Incremental Revolving Commitments. Each Incremental Lender hereby agrees, severally and not jointly, on the terms set forth hereinand in the Credit Agreement and subject to the conditions set forth herein, to lend and relend to the Borrower, from time to time on any Business Day on orafter the Incremental Effective Date and prior to the Revolving Commitment Termination Date, amounts which do not exceed such Incremental Lender’sIncremental Revolving Commitment (as set forth opposite such Incremental Lender’s name on Annex I hereto) as of such Business Day. The IncrementalRevolving Commitments will be added to the existing Revolving Commitments. Subject to the terms and conditions set forth herein and in the CreditAgreement, on or after the Incremental Effective Date and prior to the Revolving Commitment Termination Date, Borrowings under the IncrementalRevolving Commitments may be repaid and reborrowed from time to time on a revolving basis. Pursuant to Section 2.23 of the Credit Agreement, upon theeffectiveness of the Incremental Revolving Commitments hereunder, the Commitments and Pro Rata Share of each Lender will be adjusted to give effect tothe Incremental Revolving Commitments, and Schedule II to the Credit Agreement shall automatically be deemed amended as set forth on Annex II attachedhereto. 2.2Terms of the Incremental Revolving Commitments Generally. Except as expressly provided herein, the Incremental RevolvingCommitments shall have identical terms as the existing Revolving Commitments (including, without limitation, with respect to interest rates, prepayments,and maturity) and shall otherwise be subject to the provisions, including any provisions restricting the rights, or regarding the obligations, of the Loan Partiesor any provisions regarding the rights of the Lenders, of the Credit Agreement and the other Loan Documents. Immediately upon this Agreement becomingeffective on the Incremental Effective Date, the Incremental Revolving Commitments shall constitute “Revolving Commitments” for all purposes under, andsubject to the provisions of, the Loan Documents (and shall be fully fungible with the existing Revolving Commitments). Each reference to a “RevolvingCommitment” or “Revolving Commitments” in the Credit Agreement or the other Loan Documents shall be deemed to include the Incremental RevolvingCommitments and all other related terms will have correlative meanings mutatis mutandis. For the avoidance of doubt, any Borrowings under the IncrementalRevolving Commitments shall rank pari passu with the other Obligations and all collateral securing any such Borrowings shall secure all other Obligationson a pari passu basis, and such Borrowings shall be guaranteed on a pari passu basis with the other Obligations.Section 3.New Lenders; Use of Proceeds; Tax Matters.3.1New Lenders. Each Incremental Lender that is not, prior to the effectiveness of this Agreement, a Lender under the Credit Agreement,hereby agrees that upon, and subject to, the occurrence of the Incremental Effective Date, such Incremental Lender shall be deemed to be, and shall become, a“Lender” for all purposes of, and subject to all the obligations of a “Lender” under, the Credit Agreement and the other Loan Documents.3.2Use of Proceeds. The proceeds of any Borrowings under the Incremental Revolving Commitments shall be used to finance workingcapital needs, including, without limitation, Permitted Acquisitions and other growth initiatives, capital expenditures, and for other general corporatepurposes of the Borrower and its Subsidiaries; provided that, such proceeds shall not be used, directly or indirectly, for any purpose that would violate anyrule or regulation of the Board of Governors of the Federal Reserve System, including Regulations T, U or X, or in a manner that would violate Section 7.13of the Credit Agreement.3.3Tax Matters. The Borrower and each Lender party hereto hereby acknowledge and agree that the amendments to the Credit Agreementcontemplated hereby do not constitute a “significant modification,” within the meaning of Section 1.1001-3 of the U.S. Treasury regulations, of the existingLoans for U.S. federal income tax purposes.Section 4.Conditions to Effectiveness. The effectiveness of this Agreement and the obligation of each Incremental Lender to makeits Incremental Revolving Commitment available to the Borrower shall become effective on the Business Day on which the following conditions are satisfiedor waived (the “Incremental Effective Date”):(a)the Administrative Agent (or its counsel) shall have received counterparts of this Agreement that, when taken together, bear thesignatures of (i) the Administrative Agent, (ii) each Incremental Lender, (iii) the Borrower, and (iv) each Guarantor;(b)at the time of and immediately after giving effect to this Agreement and the Incremental Revolving Commitments, no Default orEvent of Default shall exist;(c)all representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all materialrespects (other than those representations and warranties that are expressly qualified by a Material Adverse Effect or other materiality, in which casesuch representations and warranties shall be true and correct in all respects);(d)Parent and its Subsidiaries shall be in compliance with the financial covenant set forth in Article VI of the Credit Agreement asof the last day of the most recently ended four Fiscal Quarter period for which financial statements are required to have been delivered pursuant toSection 5.1(a) or (b) of the Credit Agreement, calculated on a Pro Forma Basis and as if all such Incremental Revolving Commitments had beenestablished (and fully funded) as of the first day of the relevant period for testing compliance (but calculated without including the cash proceeds ofany Incremental Revolving Commitments in the amount of unrestricted cash and Cash Equivalents to be netted in the calculation of ConsolidatedTotal Net Leverage Ratio); provided, that, in the case of any Incremental Revolving Commitments established to finance a Material Acquisition, theConsolidated Total Net Leverage Ratio may be 0.50 greater than the otherwise applicable covenant level set forth in Article VI of the CreditAgreement;(e)such evidence of appropriate corporate authorization on the part of the Borrower with respect to the Incremental RevolvingCommitments and such opinions of counsel for the Borrower with respect to such Incremental Revolving Commitments as the Administrative Agentmay reasonably request; (f)a certificate of the Borrower signed by a Responsible Officer, in form and substance reasonably acceptable to the AdministrativeAgent, certifying that each of the conditions in Section 2.23(a) of the Credit Agreement has been satisfied;(g)to the extent requested by any Incremental Lender, executed promissory notes evidencing the Incremental RevolvingCommitments issued by the Borrower in accordance with Section 2.10 of the Credit Agreement;(h)any other certificates or documents that the Administrative Agent shall reasonably request, in form and substance reasonablysatisfactory to the Administrative Agent; and(i)the Borrower shall have paid all fees and other amounts due and payable on or prior to the Incremental Effective Date, includingreimbursement or payment of all out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel to the AdministrativeAgent) required to be reimbursed or paid by the Borrower hereunder, under any fee letter, or under any other Loan Document.Section 5.Acknowledgments and Affirmations of the Loan Parties. Each Loan Party hereby expressly acknowledges the terms ofthis Agreement and confirms and reaffirms, as of the date hereof, (i) the covenants and agreements contained in each Loan Document to which it is a party,including, in each case, such covenants and agreements as in effect immediately after giving effect to this Agreement and the transactions contemplatedhereby and thereby, (ii) its guarantee of the Guaranteed Obligations (as defined in the Guaranty and Security Agreement) (including, without limitation, anyBorrowings under the Incremental Revolving Commitments) and (iii) its grant of Liens on the Collateral to secure the Obligations (including, withoutlimitation, the Obligations with respect to any Borrowings under the Incremental Revolving Commitments) pursuant to the Collateral Documents, all asprovided in the Loan Documents as originally executed, and each Loan Party acknowledges and agrees that such guarantee, pledge and/or grant shallcontinue in full force and effect in respect of, and to secure, such Obligations under the Credit Agreement and the other Loan Documents. Each Loan Partyhereby restates and renews each and every representation and warranty heretofore made by it in the Credit Agreement and the other Loan Documents as fullyas if made on the date hereof and with specific reference to this Agreement and any other Loan Documents executed or delivered in connection herewith(except with respect to representations and warranties made as of an expressed date, in which case such representations and warranties shall be true andcorrect as of such date).Section 6.Miscellaneous.6.1Loan Document; Effect of Agreement. For avoidance of doubt, the Loan Parties, the Lenders party hereto, and the Administrative Agenteach hereby acknowledges and agrees that this Agreement is a Loan Document. Except as set forth expressly hereinabove, all terms of the Credit Agreementand the other Loan Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding, and enforceable obligations of theLoan Parties.6.2Counterparts; Integration. This Agreement may be executed by one or more of the parties to this Agreement on any number of separatecounterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Agreement together with the CreditAgreement, the other Loan Documents, any separate engagement letter and any separate fee letter relating to fees payable to the Administrative Agent andthe Incremental Lenders constitute the entire agreement among the parties hereto and thereto and their affiliates regarding the subject matters hereof andthereof and supersede all prior agreements and understandings, oral or written, regarding such subject matters. Delivery of an executed counterpart to thisAgreement or any other Loan Document by facsimile transmission or by electronic mail in Adobe Corporation’s Portable Document Format (or PDF) shall beas effective as delivery of a manually executed counterpart hereof.6.3Governing Law. This Agreement and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) basedupon, arising out of or relating to this Agreement and the transactions contemplated hereby shall be construed in accordance with and be governed by thelaw (without giving effect to the conflict of law principles thereof) of the State of New York.[Signature pages follow.] IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of the date first above written.LENDINGTREE, LLC, as the BorrowerBy: /s/ J.D. Moriarty Name: J.D. MoriartyTitle: Chief Financial OfficerLENDINGTREE, INC., as the Parent and a GuarantorBy: /s/ J.D. Moriarty Name: J.D. MoriartyTitle: Chief Financial OfficerIRON HORSE HOLDINGS, LLC, as a GuarantorBy: /s/ Carla Shumate Name: Carla ShumateTitle: TreasurerOVATION CREDIT SERVICES, INC., as a GuarantorBy: /s/ J.D. Moriarty Name: J.D. MoriartyTitle: Treasurer SUNTRUST BANK,as Administrative Agent and an Incremental LenderBy: /s/ Cynthia W. Burton Name: Cynthia W. BurtonTitle: Director Bank of America, N.A.,as an Incremental LenderBy: /s/ Charles R. Dickerson Name: Charles R. DickersonTitle: Senior Vice President ROYAL BANK OF CANADA,as an Incremental LenderBy: /s/ Christian Gutierrez Name: Christian GutierrezTitle: Authorized Signatory FIFTH THIRD BANK,as an Incremental LenderBy: /s/ Jodie R. Ayres Name: Jodie R. AyresTitle: Vice President Regions Bank,as an Incremental LenderBy: /s/ Jason Douglas Name: Jason DouglasTitle: Director GOLDMAN SACHS BANK USA,as an Incremental LenderBy: /s/ Rebecca Kratz Name: Rebecca KratzTitle: Authorized Signatory PNC BANK, NATIONAL ASSOCIATION,as an Incremental LenderBy: /s/ Krutesh Trivedi Name: Krutesh TrivediTitle: Vice President Annex IIncremental Revolving CommitmentsIncremental LenderIncremental RevolvingCommitmentSunTrust Bank$[***]Bank of America, N.A.$[***]Royal Bank of Canada$[***]Fifth Third Bank$[***]Regions Bank$[***]Goldman Sachs Bank USA$[***]PNC Bank, National Association$[***]Total$100,000,000 Annex IISCHEDULE IICommitment AmountsLenderRevolvingCommitment AmountSunTrust Bank$[***]Bank of America, N.A.$[***]Royal Bank of Canada$[***]Fifth Third Bank$[***]Regions Bank$[***]JPMorgan Chase Bank, N.A.$[***]Goldman Sachs Bank USA$[***]PNC Bank, National Association$[***]Total$350,000,000 Exhibit 21.1SUBSIDIARIES OF LENDINGTREE, INC.NameJurisdiction ofFormationLendingTree, LLCDETree.com BU Holding Company, Inc.DEDegreeTree, Inc.DERexford Office Holdings, LLCDEHome Loan Center, Inc.CAHLC Escrow, Inc.CALT Real Estate, Inc.DELT India Holding Company, LLCDELendingTree Research Services LLPIndiaOvation Credit Services, Inc.FLCM LT Holdings, LLCDEValue Holding Inc.DEValuePenguin Inc.DEQuoteWizard.com, LLCDE Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-197952, No. 333-182670 and No. 333-218747) ofLendingTree, Inc. of our report dated February 28, 2019 relating to the financial statements and the effectiveness of internal control over financial reporting,which appears in this Form 10-K./s/ PricewaterhouseCoopers LLPCharlotte, North CarolinaFebruary 28, 2019 Exhibit 31.1CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERPURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a) OF THESECURITIES EXCHANGE ACT OF 1934,AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Douglas R. Lebda, certify that:1. I have reviewed this annual report on Form 10-K for the period ended December 31, 2018 of LendingTree, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Dated: February 28, 2019 /s/ DOUGLAS R. LEBDA Douglas R. Lebda Chairman and Chief Executive Officer(principal executive officer) Exhibit 31.2CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICERPURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a) OF THESECURITIES EXCHANGE ACT OF 1934,AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, J.D. Moriarty, certify that:1.I have reviewed this annual report on Form 10-K for the period ended December 31, 2018 of LendingTree, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Dated: February 28, 2019 /s/ J.D. MORIARTY J.D. Moriarty Chief Financial Officer(principal financial officer) Exhibit 32.1CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, Douglas R. Lebda, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to myknowledge:(1)the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 of LendingTree, Inc. (the "Report") which this statement accompaniesfully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LendingTree, Inc. Dated:February 28, 2019 /s/ DOUGLAS R. LEBDA Douglas R. Lebda Chairman and Chief Executive Officer(principal executive officer) Exhibit 32.2CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, J.D. Moriarty, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to myknowledge:(1)the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 of LendingTree, Inc. (the "Report") which this statement accompaniesfully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LendingTree, Inc. Dated:February 28, 2019 /s/ J.D. MORIARTY J.D. Moriarty Chief Financial Officer(principal financial officer)
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