online loan companies

1-LendingTreeQTR_7233 11/20/00 2:21 PM Page 1 2000 Corporate Information A b o u t L e n d i n g Tr e e , I n c . LendingTree (NASDAQ: TREE) is the leading online loan marketplace and loan exchange technology provider. LendingTree’s unique loan technology, Lend-X, powers the online loan marketplace at LendingTree.com, as well as the online lending resources of other institutions. At LendingTree.com qualified consumers may receive multiple loan offers, within one business day, in response to a single loan request for home mortgages, home equity loans, personal loans, automobile financing loans, and credit cards. The site also provides access to small business loans. More than 100 banks and lenders compete for consumers’ business in the LendingTree loan marketplace at www.lendingtree.com, providing consumers with an unprecedented level of control over the lending process, by enabling them to compare and review multiple loan offers and accept the loan offer that is best for them. The banks and lenders in the LendingTree marketplace generate new business that meets their specific underwriting criteria at reduced acquisition costs. For more information, or for a full listing of the more than 100 banks and lenders in the LendingTree marketplace please go to www.lendingtree.com or call 704-541-5351. Shareholder Report LendingTree, Inc., 11115 Rushmore Drive, Charlotte, NC 28277 www.lendingtree.com Corporate Headquarters 11115 Rushmore Drive Charlotte, NC 28277 Telephone: (704) 541-5351 Facsimile: (704) 541-1824 Web site: www.lendingtree.com Mission To be the dominant online loan marketplace connecting consumers and lenders. R e g i s t r a r a n d Tr a n s f e r A g e n t First Union National Bank Charlotte, NC Telephone: (800) 829-8432 Investor Inquiries To receive copies of annual and quarterly reports filed with the Securities and Exchange Commission along with other corporate information about LendingTree, contact Edward Powell, Director of Finance and Investor Relations, at the Corporate Headquarters. Recent press releases, quarterly reports and additional investor information may also be obtained by accessing LendingTree’s Web site at www.lendingtree.com. Stock Listing Nasdaq National Market Symbol: TREE 1-LendingTreeQTR_7233 11/20/00 2:21 PM Page 4 D e a r S h a r e h o l d e r, Mortgage Loans Home Equity Loans Auto Loans Credit Cards Personal Loans Small Business Loans Student Loans On behalf of LendingTree, Inc., I am writing to provide you with our first shareholders’ letter which we will be sending out periodically going forward. As you know, LendingTree has made significant strides throughout the first three quarters of 2000 and I am pleased to share these results with you, as well as to provide an update regarding major initiatives and a general overview of our future plans. I am confident that under the leadership of the LendingTree management team we will continue on our path toward profitability. BUSINESS RESULTS In the first three quarters of 2000, we successfully transmitted more than 500,000 completed credit requests representing over $11.5 billion in closed loan volume. For these three quarters, our revenue grew to $21.2 million, compared with just $4.0 million for the first nine months of 1999. Sales from Lend-XSM and Lend-XSM technology combined for over $3.6 million of revenue, up 164% from the first three quarters of 1999. Loans closed through the LendingTree marketplace grew to 105,204, totaling more than $3.2 billion in dollar volume, an increase of 626% and 240% respectively, for the same time period in 1999. At the conclusion of the third quarter, we had processed more than 1.3 million credit requests for the year and we have now exceeded 3,000,000 completed credit requests for the lifetime of the company. We believe these metrics make us the leader in online lending solutions. Our lender network continues to grow and as of the conclusion of the third quarter, the number of lenders participating on our network stood at 112 lenders. This ever-expanding network of lenders allows us to connect multiple loan products to millions of customers, thereby resulting in billions of dollars of closed loan volume for lenders on our network. MAJOR INITIATIVES On July 10th, we announced a significant, multi-year agreement with FreddieMac (FHLMC) to integrate their LoanProspector mortgage evaluation and processing tools with LendingTree’s Lend-XSM technology. The result of this unique integration will be a complete end-to-end lending solution for our mortgage lenders and their customers. This enhanced technology will facilitate the development of the next generation of our Lend-XSM technology, Version 4.0. The relationship with FreddieMac represents the potential for revenue from upfront licensing, development, and ongoing transaction fees from each client who participates in the program. Perhaps the most significant part of this is the ringing endorsement that the FreddieMac allegiance bestows upon our Lend-XSM technology as a leader and innovator in the field. We have already teamed up with FreddieMac’s sales force to begin joint marketing efforts for this exciting initiative with the goal of signing up new clients. Our long-term goal is to elevate Lend-X to the position of the operating system of Internet lending. To achieve this goal, we must deploy Lend-XSM on a broad scope and maximize volume on our exchange. We are accomplishing this through partnerships with top-tier technology resellers who help us integrate our technology into the product and service suites of leading SM Operating Metrics Transmitted QFs(a) (000´s) ($ 000´s) 211 L e n d i n g Tr e e , I n c . Statements of Operations Total Revenue For the Three Months Ended September 30, For the Nine Months Ended September 30, (in thousands, except per share amount) $9,030 1999 (unaudited) 2000 1999 (unaudited) 2000 240 CAGR 351% 178 $10,000 CAGR 486% $7,698 $8,000 180 134 $6,000 120 62 68 $4,483 Revenue: LendingTree.com network Lend-X Lend-X network Lend-X technology Total revenue $ 1,535 338 445 2,318 697 1,621 272 6,186 2,596 9,054 (7,433) — 55 (7,378) (887) $(8,265) $ (2.24) 3,686 $ 7,451 380 1,199 9,030 2,597 6,433 532 12,493 8,762 21,787 (15,354) (102) 425 (15,031) — $(15,031) $ (0.81) 18,479 $ 2,666 732 630 4,028 1,553 2,475 808 12,025 5,703 18,536 (16,061) — 80 (15,981) (1,272) $(17,253) $ (4.60) 3,748 $ 17,616 1,890 1,706 21,212 6,327 14,885 2,096 46,113 19,461 67,670 (52,785) (102) 1,830 (51,057) (2,461) $(53,518) $ (3.49) 15,354 $4,000 $2,318 $2,936 60 22 Total cost of revenue Gross profit 34 $2,000 $637 $1,073 0 Q1 1999 Q2 1999 Q3 1999 Q4 1999 Q1 2000 Q2 2000 Q3 2000 0 Q1 1999 Q2 1999 Q3 1999 Q4 1999 Q1 2000 Q2 2000 Q3 2000 (a) Represents completed loan requests that are transmitted to at least one lender Operating Expenses: Product development Marketing and advertising Sales, general and administrative Total operating expenses Loss from operations Miscellaneous expense, net Interest income, net Net loss Dividends & Other Net loss attributable to common shareholders Net loss per common share—basic and diluted Weighted average shares used in basic and diluted net loss per common share calculation financial institutions. We are clearly on track with this strategy and currently have agreements with S-1 Corporation, Financial Fusion, and HomeAccount Network. Combined, these companies have more than one thousand clients representing 50 percent of the top 100 financial institutions in the United States with more than 4 million potential consumers. On August 2nd we announced the acquisition of certain assets from HomeSpace Services, Inc. for approximately $12 million paid in a combination of cash and stock. As part of this purchase, LendingTree acquired a national network of more than 7,000 real estate professionals—the key influencers of purchase mortgage transactions. LendingTree also benefits from pre-existing relationships with Costco and Delta Airlines, representing a combined 56 million-strong consumer base which corresponds with LendingTree’s most profitable mortgage customers. We believe the effect of this value-added real estate service could result in increased site traffic and conversion rates. Long-term, we envision our online loan marketplace, powered by Lend-XSM, on the desktops of real estate professionals nationwide, facilitating the loan request process and producing loan offers on the spot. The current environment in the capital markets paints all Internet companies with a broad brush which we believe has had a negative impact on our stock price. However, we believe that as we continue to deliver results and successfully execute our strategy, the markets will properly recognize our true value. In fact, in recent weeks we have seen the demise of some online lenders as LendingTree continues to improve its operational performance. This has led to increased interest in our company, giving us the opportunity to differentiate our model and reiterate our proposition as the only online loan exchange. We remain focused on our business plan, our strategic alliances, and maintaining our position as a leader in Internet lending and I am confident that LendingTree will continue to improve its operating results in the future. I look forward to communicating with you in our annual report to share more successes as LendingTree continues to grow. If you have any questions, please feel free to contact us. Best Regards, Balance Sheets (000’s) Assets Total cash and cash equivalents Accounts receivable Property, equipment and software, net Excess purchase price, HomeSpace, net Other assets Investments in other businesses Total assets Liabilities and Shareholders’ Equity Accounts payable Other liabilities Total current liabilities Shareholders’ equity: Issuance of stock & additional paid in capital Treasury stock & other Accumulated deficit Total shareholders’ equity Total liabilities and shareholders’ equity 1999 December 31, (unaudited) $ 29,472 2,027 1,086 1,182 — $ 33,767 $ 24,501 6,618 4,515 11,498 1,785 2,500 $ 51,417 2000 September 30, $ 3,579 2,451 6,030 68,582 (8,699) (32,146) 27,737 $ 33,767 $ 6,517 6,925 13,442 132,480 (11,302) (83,203) 37,975 $ 51,417 DOUG LEBDA Founder and CEO This document contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding: projected future revenues; optimism about the results of certain strategic and consumer initiatives; product and technological implementations; and projected expenditures and growth. These statements are based on management’s current expectations or beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. The Company’s actual results might differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with the Company’s business, which include, but are not limited to: variations in consumer demand or acceptance; the willingness of lending institutions to offer their products over the Internet; further changes in the Company’s relationships with existing lenders, companies, and/or strategic partners; the Company’s ability to attract and integrate new lending companies and strategic partners; implementation of competing Internet strategies by existing and potential lending participants; implementation and acceptance of new product or service offerings, consumer lending industry regulation; competition in all aspects of the Company’s business; fluctuations in operating results; or other unforeseen factors. The forward-looking statements should be considered in the context of these and other risk factors disclosed in the Company’s filings with the Securities and Exchange Commission.