Bankrate's Record Second Quarter Revenue and Earnings Exceed Earlier Expectations; Strong Revenue Per Page and Across the Board Improvements Fuel Higher Profits.Business Editors NEW YORK--(BUSINESS WIRE)--July 30, 2002 Bankrate, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :RATE), the Internet's leading source of consumer financial news and information, today reported record net income of $1,002,000, or $0.07 per share, for the quarter ended June June: see month. 30, 2002 compared to a net loss of $249,000, or $0.02 per share, in the comparable quarter in 2001. The Company reported net income of $3,714,000, or $0.26 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, for the six months ended June 30, 2002 compared to a net loss of $873,000, or $0.06 per share, for the comparable period in 2001. Excluding the non-cash gain on early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt of $2,022,000, or $0.14 per share, in the quarter ended March 31, 2002, the Company would have reported net income of $1,692,000, or $0.12 per share on a diluted basis, for the six months ended June 30, 2002. "A number of very positive factors were in play during the second quarter that enabled us to exceed our plan and achieve these impressive earnings," commented President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Elisabeth Elisabeth. For persons thus named, use Elizabeth. DeMarse. "Bankrate's strong brand recognition and quality lead generation for our advertisers has increased the value of our site. Additionally, our effective sales initiatives have attracted new advertisers as well as expanded the commitments of our partners. As a result, the sales up-tick Noun 1. up-tick - a small increase; "the up-tick in terrorist activity" increment, increase - the amount by which something increases; "they proposed an increase of 15 percent in the fare" in the first quarter has continued into the second, with high demand across each of our revenue streams. For the fifth consecutive quarter, the Company generated cash from operations. Cash increased from $6,510,000 at March 31, 2002 to $7,310,000 at June 30, 2002, and the Company remains virtually debt-free. "As reported in the first quarter, we negotiated the early payoff of our subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". , putting the Company in excellent financial condition and preparing for opportunities that may present themselves," explained Bob DeFranco, Chief Financial Officer. Second Quarter Highlights Bankrate experienced unprecedented strength in revenue in all categories, resulting in both year-over-year and consecutive quarter revenue for the three-month period: -- Total revenue for the six months ended June 30, 2002 of $11,839,000 was $2,892,000, or 32%, higher than the $8,947,000 reported for the same period in 2001. -- Online revenue of $9,981,000 was 36% above first half of 2001. -- Hyperlink revenue increased 95% over the same period in 2001. -- Print publishing and licensing revenue of $1,858,000 was 17% higher than the $1,593,000 reported for the first half of 2001. Online publishing revenue for the three months ended June 30, 2002 and 2001 included barter barter: see exchange. barter Direct exchange of goods or services without the use of money or any other intervening medium of exchange. Barter is conducted either according to established rates of exchange or by bargaining. revenue of $906,000 and $592,000, representing approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 15% and 14% of total revenue, respectively. Hyperlink A predefined linkage between one object and another. See hypertext. hyperlink - anchor revenue accounted for 51% of online publishing revenue excluding barter revenue for the three months ended June 30, 2002, up from 45% for the quarter ended March 31, 2002 and 39% for the quarter ended June 30, 2001. First Half Highlights -- Total revenue for the six months ended June 30, 2002 of $11,839,000 was $2,892,000, or 32%, higher than the $8,947,000 reported for the same period in 2001. -- Online revenue of $9,981,000 was 36% above first half of 2001. -- Hyperlink revenue increased 95% over the same period in 2001. -- Print publishing and licensing revenue of $1,858,000 was 17% higher than the $1,593,000 reported for the first half of 2001. Online publishing revenue for the six months ended June 30, 2002 and 2001 included barter revenue of $1,761,000 and $1,465,000, representing approximately 15% and 16% of total revenue, respectively. Hyperlink revenue accounted for 48% of online publishing revenue excluding barter in the 2002 period compared to 34% in the 2001 period. Excluding barter expense, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the six months ended June 30, 2002 of $5,241,000 were $163,000, or 3%, lower than the $5,404,000 reported for the six months ended June 30, 2001. Barter expense was $1,769,000 and $1,665,000 for the six months ended June 30, 2002 and 2001, respectively. Excluding barter revenue gross margin improved from 64% for the six months ended Jun 30, 2001 to 69% for the same period in 2002. Visitors Generate High Quality Leads for Advertisers "The percentage of visitors that come directly to Bankrate increased in the second quarter of 2002 to 70% from 60% in the prior quarter," said DeMarse. The remainder was contributed by the Company's vast partnership network, which includes AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. , Yahoo!, MSN (1) (MicroSoft Network) A family of Internet-based services from Microsoft, which includes a search engine, e-mail (Hotmail), instant messaging (Windows Live Messaging) and a general-purpose portal with news, information and shopping (MSN Directory). , Netscape (1) (Netscape Communications Corporation, Mountain View, CA, www.netscape.com) Part of America Online (AOL), Netscape specializes in Web software, including the Netscape Web browser. and more than 70 other best of breed sites. "In addition to the growing brand recognition, the quality of our leads for advertisers has allowed us to generate increased per page rates. As a result, we have been able to generate increased revenues on a modest decrease in the total amount of viewers VIEWERS. Persons appointed by the courts to see and examine certain matters, and make a report of the facts together with their opinion to the court. In practice they are usually appointed to lay out roads and the like. Vide Experts. to our site since the first quarter." "For the second half of the year, our aggressive sales and marketing team will continue to review new products and associations with partners that should increase both our revenue stream and our eye-share. At the same time we remain vigilant in controlling the cost side of the business. While we have historically experienced a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in traffic during our third and fourth quarters, if traffic patterns and advertiser ad·ver·tise v. ad·ver·tised, ad·ver·tis·ing, ad·ver·tis·es v.tr. 1. To make public announcement of, especially to proclaim the qualities or advantages of (a product or business) so as to increase demand remain strong, we look forward to a profitable second half," DeMarse concluded. About Bankrate, Inc. Bankrate, Inc. (OTCBB:RATE) owns and operates Bankrate.com, the Internet's leading consumer banking marketplace. Averaging 4 million unique visitors A count of how many different people access a Web site. For example, if a user leaves and comes back to the site five times during the measurement period, that person is counted as one unique visitor, but would count as five "user sessions. per month, comScore comScore is an internet marketing research company that provides marketing data and services to many of the internet's largest businesses [1]. comScore tracks all internet data on its surveyed computers in order to study online behavior. Media Metrix ranked Bankrate.com first in unique visitors in the "Financial Information and Advice" category in June, 2002. Bankrate.com reviews more than 4,800 financial institutions in 173 markets in 50 states. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes and small business finance. It is the leading aggregator of over 100 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com provides financial applications and information to a network of more than 100 partners, including MSN (Nasdaq:MSFT MSFT Microsoft (stock symbol) MSFT Movimento Sociale Fiamma Tricolore (Italy) MSFT Multi-Stage Fitness Test MSFT Master of Science in Family Therapy MSFT Macalester Students for Fair Trade ), Yahoo! (Nasdaq:YHOO YHOO Yahoo! Inc. (NASDAQ symbol) ), America Online See AOL. (NYSE NYSE See: New York Stock Exchange :AOL), CNN CNN or Cable News Network Subsidiary company of Turner Broadcasting Systems. It was created by Ted Turner in 1980 to present 24-hour live news broadcasts, using satellites to transmit reports from news bureaus around the world. and Smart Money. Bankrate.com's information is also distributed through more than 100 national and state publications. Certain matters discussed in this press release are or may be considered to be "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team. Such forward-looking statements include without limitation statements made with respect to future revenue, revenue growth, market acceptance of our products, and profitability. Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following: we have a history of losses and could run out of cash; we use barter transactions that do not generate cash; our success depends on Internet advertising Delivering ads to Internet users via Web sites, e-mail, ad-supported software and Internet-enabled cellphones. Also called an "ad network," Internet advertising organizations act as a middleman between the advertiser and the Web sites and software publishers that display the ads. revenue, interest rate volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , establishing and maintaining distribution arrangements, and increasing brand awareness of our Web site; our markets are highly competitive; our Web site may encounter technical problems and service interruptions; we rely on the protection of our intellectual property; we may face liability for information on our Web site; future government regulation of the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the is uncertain and subject to change; our ownership is heavily concentrated; our success may depend on management and key employees; we may encounter difficulties with future acquisitions; our results of operation may fluctuate significantly; and our stock price may be volatile in the future. These and additional important factors to be considered are set forth under "Item 1. Business - Risk Factors," "Item 7. Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" and in the other sections of our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2001, and in our other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations.
Bankrate, Inc.
Condensed Balance Sheets
(Unaudited)
June 30, December 31,
2002 2001
------------ -------------
Assets
Cash and cash equivalents $ 7,309,975 $ 9,755,032
Accounts receivable, net of allowance for
doubtful accounts of $140,000
at June 30, 2002 and December 31, 2001 2,179,918 1,259,256
Other current assets 304,519 231,134
------------ -------------
Total current assets 9,794,412 11,245,422
Furniture, fixtures and equipment, net 899,335 1,076,508
Intangible assets, net 56,001 69,622
Other assets 411,599 134,460
------------ -------------
Total assets $ 11,161,347 $ 12,526,012
============ =============
Liabilities and Stockholders'
Equity
Liabilities:
Accounts payable $ 749,974 $ 699,054
Other accrued expenses 2,150,244 1,871,492
Accrued interest - 217,500
Deferred revenue 255,294 347,869
Current portion of obligations under
capital leases 9,264 36,406
Other current liabilities 236,543 207,952
------------ -------------
Total current liabilities 3,401,319 3,380,273
10% convertible subordinated note payable - 4,350,000
Accrued interest - 810,363
Other liabilities 64,251 3,264
------------ -------------
Total liabilities 3,465,570 8,543,900
Stockholders' equity:
Preferred stock, 10,000,000 shares
authorized and undesignated - -
Common stock, par value $.01 per share
-- 100,000,000 shares authorized;
13,996,950 shares issued and
outstanding 139,969 139,969
Additional paid in capital 63,931,555 63,931,555
Accumulated deficit (56,375,747) (60,089,412)
------------ -------------
Total stockholders' equity 7,695,777 3,982,112
------------ -------------
Total liabilities and
stockholders' equity $ 11,161,347 $ 12,526,012
============ ==============
Bankrate, Inc.
Condensed Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
Revenue: 2002 2001 2002 2001
------------------------ ------------------------
Online publishing $ 5,267,775 $ 3,393,437 $ 9,980,744 $ 7,354,353
Print publishing
and licensing 934,274 807,954 1,858,223 1,592,713
----------- ------------ ----------- ------------
Total revenue 6,202,049 4,201,391 11,838,967 8,947,066
----------- ------------ ----------- ------------
Cost of revenue:
Online publishing 934,968 727,907 1,817,065 1,676,268
Print publishing
and licensing 667,206 518,022 1,338,969 1,043,510
----------- ------------ ----------- ------------
Total cost of
revenue 1,602,174 1,245,929 3,156,034 2,719,778
----------- ------------ ----------- ------------
Gross margin 4,599,875 2,955,462 8,682,933 6,227,288
----------- ------------ ----------- ------------
Operating expenses:
Sales 944,433 714,466 1,795,317 1,572,999
Marketing 966,692 716,474 1,890,287 1,797,865
Product development 350,845 320,450 680,725 686,557
General and
administrative 1,243,169 1,242,943 2,377,396 2,630,566
Depreciation and
amortization 123,286 187,105 266,993 381,570
----------- ------------ ----------- ------------
3,628,425 3,181,438 7,010,718 7,069,557
----------- ------------ ----------- ------------
Income (loss)
from operations 971,450 (225,977) 1,672,215 (842,270)
Other income
(expense), net 30,492 (22,566) 19,658 (30,941)
Gain on early
extinguishment of
debt - - 2,021,792 -
----------- ------------ ----------- ------------
Income (loss)
before income
taxes 1,001,942 (248,543) 3,713,665 (873,211)
Income taxes - - - -
----------- ------------ ----------- ------------
Net income
(loss) $ 1,001,942 $ (248,543) $ 3,713,665 $ (873,211)
=========== ============ =========== ============
Basic and diluted net
income (loss) per
share:
Basic $ 0.07 $ (0.02) $ 0.27 $ (0.06)
=========== ============ =========== ============
Diluted $ 0.07 $ (0.02) $ 0.26 $ (0.06)
=========== ============ =========== ============
Weighted average
common shares
outstanding:
Basic 13,996,950 13,996,950 13,996,950 13,996,950
Diluted 14,375,393 13,996,950 14,261,815 13,996,950
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