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Company Reports Q3 Revenue up 58% to $19.5 million Delivers GAAP DILUTED EPS of $0.07 and NON-GAAP(1) DILUTED EPS of $0.21
NEW YORK, Oct. 26 /PRNewswire-FirstCall/ -- Bankrate, Inc. (Nasdaq: RATE), today reported financial results for the third fiscal quarter ended September 30, 2006. Total revenue increased by 58% to $19.5 million over the $12.4 million reported in the third quarter of 2005. GAAP earnings per diluted share ("EPS") were $0.07 for the third quarter 2006 compared to $0.16 in the third quarter 2005. Current results include a $0.09 per share charge attributable to the American Interbanc, LLC settlement and a $0.05 per share expense for stock compensation. Non-GAAP EPS for the quarter, excluding the $1.7 million stock compensation expense and $3.0 million legal settlement charge, were $0.21 for the current quarter compared to $0.16 in the third quarter 2005. Included in both the GAAP and non-GAAP EPS results for the quarter is a legal expense of $675,000, which represents a $0.02 per share.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040122/FLTHLOGO)
Earnings before interest, taxes, depreciation and amortization ("EBITDA") on a GAAP basis, including the legal settlement charge and stock compensation expense, were $1.5 million compared to $4.2 million in the third quarter of 2005. EBITDA on a non-GAAP basis, excluding the $3.0 million legal settlement charge and $1.7 million stock compensation expense, were $6.2 million, an increase of 48% over the $4.2 million reported in the third quarter 2005. Third quarter 2006 GAAP and non-GAAP EBITDA results also include the $675,000 in legal expense.
"Our core business remained strong during the quarter, performing in line with our expectations," said Thomas R. Evans, President and CEO of Bankrate, Inc. "With the exception of FastFind, we continue to demonstrate the elasticity and leverage of our business model. We are working to improve this part of our business and remain confident that it will provide a meaningful contribution in 2007," added Mr. Evans.
The Company recorded a charge of $3.0 million during the quarter attributable to settlement of the 2002 American Interbanc lawsuit. The Company admitted no wrongdoing in connection with the settlement and chose to settle the lawsuit rather to avoid an expensive and prolonged trial that would divert management's attention from operating the business.
Third Quarter Financial Results
Total revenue for the quarter was $19.5 million, an increase of 58%, or $7.1 million, over the $12.4 million reported in the corresponding period last year.
EBITDA on a GAAP basis for the third quarter was $1.5 million, including the $3.0 million legal settlement charge and $1.7 million stock compensation expense, compared to $4.2 million for the third quarter of 2005. EBITDA on a non-GAAP basis for the third quarter, excluding stock compensation expense and the legal settlement charge, was $6.2 million, an increase of 48% over the $4.2 million for the third quarter of 2005.
Net income on a GAAP basis for the third quarter was $1.2 million, or $0.07 per diluted share, including a $0.09 per diluted share legal settlement charge and $0.05 per diluted share expense for stock compensation, compared to $2.7 million, or $0.16 per diluted share in the same quarter in 2005. Net income on a non-GAAP basis, excluding stock compensation expense and the legal settlement charge, was $4.0 million or $0.21 per diluted share, representing an increase of $0.05 per share over the third quarter 2005 results of $2.7 million or $0.16 per diluted share.
Revised 2006 Guidance
Due to the performance of FastFind, the Company has lowered its 2006 guidance. The Company now expects revenue for the year to be between $79 and $80 million, and expects EBITDA, excluding non-cash stock compensation expense and the American Interbanc legal settlement of $3.0 million, to be between $27 and $28 million. The non-cash stock compensation expense charge is expected to be approximately $8.9 million dollars for the year.
Recent Company Highlights
October 26, 2006 Conference Call Interactive Dial-In and Webcast Information:
To participate in the teleconference please call: 800-299-0433 Passcode: 87156571. International participants may dial: 617-801-9712 Passcode: 87156571. Please access at least 10 minutes prior to the time the conference is set to begin.
This call is being Webcast by CCBN and can be accessed at Bankrate's Web site at www.bankrate.com/investor-relations/. The Webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.fulldisclosure.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com).
Replay Information:
A replay of the conference call will be available beginning October 26, 2006, 1:00 p.m. ET/ 10:00 a.m. PT through November 2, 2006. To listen to the replay, call 888-286-8010 and enter 43743741.
Non-GAAP Measures
To supplement the Company's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), Bankrate uses non-GAAP measures of certain components of financial performance, including EBITDA, income from operations, income before income taxes, and net income, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. In addition, because the Company has historically reported certain non-GAAP results to investors, the Company believes the inclusion of non-GAAP measures provides consistency in its financial reporting. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.
About Bankrate, Inc.
Bankrate, Inc. (Nasdaq: RATE) owns and operates Bankrate.com, a leading Internet consumer banking marketplace. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. It is the leading aggregator of more than 300 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 reviews more than 4,800 financial institutions in 575 markets in 50 states. In 2005, Bankrate.com had over 46 million unique visitors. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (Nasdaq: YHOO), America Online (NYSE: TWX), The Wall Street Journal (NYSE: DJ) and The New York Times (NYSE: NYT). Bankrate.com's information is also distributed through more than 400 national and state publications. In addition to Bankrate.com, Bankrate, Inc. also owns and operates FastFind, an internet lead aggregator and MMIS/Interest.com, which publishes mortgage guides and financial rates and information.
Certain matters included in the discussion above may be considered to be "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. 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: our success depends on Internet advertising revenue, interest rate volatility, establishing and maintaining distribution arrangements, and increased acceptance of the Internet by consumers as a medium for obtaining financial product information; changes in, or interpretations of, accounting rules and regulations, such as expensing of stock options, could result in unfavorable accounting charges; changes in, or interpretations of, tax rules and regulations may adversely impact our effective tax rate; we use barter transactions which do not generate cash; 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 is uncertain and subject to change; we may be limited or restricted in the way we establish and maintain our online relationships by laws generally applicable to our business; our ownership is heavily concentrated; our success may depend on management and key employees; we may encounter difficulties with future acquisitions; our results of operations may fluctuate significantly; our stock price may be particularly volatile because of the industry we are in; and, if our common stock price drops significantly, we may be delisted from the Nasdaq National Market, which could eliminate the trading market for our common stock. These and additional important factors to be considered are set forth under "Item 1. Business - Risk Factors," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the other sections of our Annual Report on Form 10-K for the year ended December 31, 2005, as amended, 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.
-Financial Statements Follow-
(1) Earnings before interest, taxes, depreciation and amortization,
excluding stock compensation expense and the legal settlement charge.
For more information contact:
Edward J. DiMaria
SVP, Chief Financial Officer
edimaria@bankrate.com
(917) 368-8608
Bruce J. Zanca
SVP, Chief Communications/Marketing Officer
bzanca@bankrate.com
(917) 368-8648
Bankrate, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2006 2005
Assets
Cash and cash equivalents $103,218,730 $3,479,609
Accounts and notes receivable, net
of allowance for doubtful
accounts of approximately
$2,130,000 at September 30, 2006
and $1,630,000 at December 31,
2005, respectively 13,994,299 8,838,879
Deferred income taxes, current
portion 4,053,988 6,445,636
Insurance claim receivable - 85,575
Prepaid expenses and other current
assets 1,081,391 481,677
Total current assets 122,348,408 19,331,376
Furniture, fixtures and equipment,
net 1,505,097 1,063,307
Deferred income taxes 1,371,851 28,769
Intangible assets, net 14,884,993 11,652,161
Goodwill 30,084,434 30,035,399
Other assets 783,343 442,211
Total assets $170,978,126 $62,553,223
Liabilities and Stockholders'
Equity
Liabilities:
Accounts payable $1,989,833 $3,215,645
Accrued expenses 6,776,387 5,093,187
Deferred revenue 294,303 1,176,119
Other current liabilities 21,697 37,187
Total current liabilities 9,082,220 9,522,138
Other liabilities 209,256 178,133
Total liabilities 9,291,476 9,700,271
Stockholders' equity:
Preferred stock, 10,000,000
shares authorized and
undesignated - -
Common stock, par value $.01
per share-- 100,000,000 shares
authorized; 18,114,848 and
15,857,877 shares issued and
outstanding at September 30,
2006 and December 31, 2005,
respectively 181,148 158,579
Additional paid in capital 173,684,781 70,981,544
Accumulated deficit (12,179,279) (18,287,171)
Total stockholders' equity 161,686,650 52,852,952
Total liabilities and
stockholders' equity $170,978,126 $62,553,223
Bankrate, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
Revenue: 2006 2005 2006 2005
Online publishing $15,777,141 $11,214,265 $46,858,127 $31,684,841
Print publishing
and licensing 3,709,277 1,157,758 12,083,093 3,474,061
Total revenue 19,486,418 12,372,023 58,941,220 35,158,902
Cost of revenue (1):
Online publishing 2,648,944 1,902,520 8,356,396 5,365,122
Print publishing
and licensing 3,358,281 1,116,943 10,673,649 3,295,487
Total cost of
revenue 6,007,225 3,019,463 19,030,045 8,660,609
Gross margin 13,479,193 9,352,560 39,911,175 26,498,293
Operating expenses (1):
Sales 1,392,424 943,594 3,728,615 2,756,038
Marketing 1,397,575 1,376,988 3,437,836 4,609,621
Product
development 936,539 696,755 2,766,235 1,711,638
General and
administrative 5,300,233 2,160,743 16,734,800 6,296,676
Legal settlement 3,000,000 - 3,000,000 -
Depreciation and
amortization 631,573 180,811 1,753,988 578,385
12,658,344 5,358,891 31,421,474 15,952,358
Income from
operations 820,849 3,993,669 8,489,701 10,545,935
Other income:
Interest income 1,075,351 301,888 1,720,656 655,295
Insurance recovery
in excess of costs
and expenses - - - 220,705
Total other
income 1,075,351 301,888 1,720,656 876,000
Income before
income taxes 1,896,200 4,295,557 10,210,357 11,421,935
Provision for income
taxes 656,116 1,632,312 4,102,465 4,340,336
Net income $1,240,084 $2,663,245 $6,107,892 $7,081,599
Basic and diluted
net income per
share:
Basic $0.07 $0.17 $0.36 $0.45
Diluted $0.07 $0.16 $0.35 $0.42
Weighted average
common shares
outstanding:
Basic 18,112,909 15,815,057 17,050,167 15,802,409
Diluted 18,238,675 17,109,385 17,552,836 16,762,149
(1) Includes stock
compensation
expense as
follows:
Cost of revenue:
Online
publishing $289,546 $- $786,542 $-
Print publishing
and licensing 39,984 - 107,806 -
Other expenses:
Sales 215,980 - 543,017 -
Product
development 111,644 - 358,276 -
General and
administrative 1,085,803 - 4,909,810 -
$1,742,957 $- $6,705,451 $-
Bankrate, Inc.
Non-GAAP Condensed Consolidated
Statements of Income
(Unaudited)
Three Months Ended
September 30,
Revenue: 2006 2005
Online publishing $15,777,141 $11,214,265
Print publishing and licensing 3,709,277 1,157,758
Total revenue 19,486,418 12,372,023
Cost of revenue:
Online publishing 2,359,398 1,902,520
Print publishing and licensing 3,318,297 1,116,943
Total cost of revenue 5,677,695 3,019,463
Gross margin 13,808,723 9,352,560
Operating expenses:
Sales 1,176,444 943,594
Marketing 1,397,575 1,376,988
Product development 824,895 696,755
General and administrative 4,214,430 2,160,743
Legal settlement (1) 3,000,000 -
Stock compensation expense (1) 1,742,957 -
Depreciation and amortization 631,573 180,811
12,987,874 5,358,891
Income from operations 820,849 3,993,669
Other income:
Interest income 1,075,351 301,888
Insurance recovery in excess of
costs and expenses - -
Total other income 1,075,351 301,888
Income before income taxes 1,896,200 4,295,557
Provision for income taxes 656,116 1,632,312
Net income $1,240,084 $2,663,245
Basic and diluted net income per
share:
Basic $0.07 $0.17
Diluted $0.07 $0.16
Basic and diluted net income per
share excluding stock compensation
expense and legal settlement (1):
Basic $0.22 $0.17
Diluted $0.21 $0.16
Weighted average common shares
outstanding:
Basic 18,112,909 15,815,057
Diluted 18,238,675 17,109,385
(1) See reconciliation of GAAP to Non-GAAP Measures.
Bankrate, Inc.
Non-GAAP Condensed Consolidated
Statements of Income
(Unaudited)
Nine Months Ended
September 30,
Revenue: 2006 2005
Online publishing $46,858,127 $31,684,841
Print publishing and licensing 12,083,093 3,474,061
Total revenue 58,941,220 35,158,902
Cost of revenue:
Online publishing 7,569,854 5,365,122
Print publishing and licensing 10,565,843 3,295,487
Total cost of revenue 18,135,697 8,660,609
Gross margin 40,805,523 26,498,293
Operating expenses:
Sales 3,185,597 2,756,038
Marketing 3,437,836 4,609,621
Product development 2,407,959 1,711,638
General and administrative 11,824,990 6,296,676
Legal settlement (1) 3,000,000 -
Stock compensation expense (1) 6,705,452 -
Depreciation and amortization 1,753,988 578,385
32,315,822 15,952,358
Income from operations 8,489,701 10,545,935
Other income:
Interest income 1,720,656 655,295
Insurance recovery in excess of
costs and expenses - 220,705
Total other income 1,720,656 876,000
Income before income taxes 10,210,357 11,421,935
Provision for income taxes 4,102,465 4,340,336
Net income $6,107,892 $7,081,599
Basic and diluted net income per
share:
Basic $0.36 $0.45
Diluted $0.35 $0.42
Basic and diluted net income per
share excluding stock compensation
expense and legal settlement (1):
Basic $0.70 $0.45
Diluted $0.65 $0.42
Weighted average common shares
outstanding:
Basic 17,050,167 15,802,409
Diluted 17,552,836 16,762,149
(1) See reconciliation of GAAP to Non-GAAP Measures.
Three Months Ended Nine Months Ended
September 30, September 30,
Non-GAAP Measures
Reconciliation
(Unaudited): 2006 2005 2006 2005
EBITDA-
Income from
operations $820,849 $3,993,669 $8,489,701 $10,545,935
Depreciation and
amortization 631,573 180,811 1,753,988 578,385
EBITDA $1,452,422 $4,174,480 $10,243,689 $11,124,320
EBITDA excluding
stock compensation
expense and legal
settlement-
Income from
operations $820,849 $3,993,669 $8,489,701 $10,545,935
Stock compensation
expense 1,742,957 - 6,705,452 -
Legal settlement 3,000,000 - 3,000,000 -
Depreciation and
amortization 631,573 180,811 1,753,988 578,385
EBITDA excluding
stock compensation
expense and legal
settlement $6,195,379 $4,174,480 $19,949,141 $11,124,320
Net income
excluding stock
compensation
expense and legal
settlement-
Net income $1,240,084 $2,663,245 $6,107,892 $7,081,599
Stock compensation
expense, net of
tax 943,410 - 4,041,593 -
Legal settlement,
net of tax 1,800,000 - 1,800,000
Net income
excluding stock
compensation
expense and legal
settlement $3,983,494 $2,663,245 $11,949,485 $7,081,599
Per basic share $0.22 $0.17 $0.70 $0.45
Per diluted share $0.21 $0.16 $0.65 $0.42
Net income
excluding stock
compensation
expense, legal
settlement,
and fees related
to legal
settlement
Net income $1,240,084
Stock compensation
expense, net of
tax 943,410
Legal settlement,
net of tax 1,800,000
Legal settlement
fees, net of tax 405,000
Net income
excluding stock
compensation
expense and legal
settlement $4,388,494
Per basic share $0.24
Per diluted share $0.23
Weighted average
common shares
outstanding:
Basic 18,112,909 15,815,057 17,050,167 15,802,409
Diluted 18,238,675 17,109,385 17,552,836 16,762,149
Impact of
applying SFAS
No. 123R 1,155,567 - 960,948 -
Diluted shares
excluding impact
of applying SFAS
No 123R 19,394,242 17,109,385 18,513,784 16,762,149
Bankrate, Inc.
Condensed Consolidated Statements of Income
Reconciliation of GAAP to Non-GAAP Operating Results
(Unaudited)
Three Months Ended
September 30, 2006
Adjust-
Revenue: GAAP ments(2) Non-GAAP
Online publishing $15,777,141 $- $15,777,141
Print publishing and licensing 3,709,277 - 3,709,277
Total revenue 19,486,418 - 19,486,418
Cost of revenue:
Online publishing 2,648,944 (289,546) 2,359,398
Print publishing and licensing 3,358,281 (39,984) 3,318,297
Total cost of revenue 6,007,225 (329,530) 5,677,695
Gross margin 13,479,193 329,530 13,808,723
Operating expenses:
Sales 1,392,424 (215,980) 1,176,444
Marketing 1,397,575 - 1,397,575
Product development 936,539 (111,644) 824,895
General and administrative 5,300,233 (1,085,803) 4,214,430
Legal settlement 3,000,000 - 3,000,000
Stock compensation expense - 1,742,957 1,742,957
Depreciation and amortization 631,573 - 631,573
12,658,344 329,530 12,987,874
Income from operations 820,849 - 820,849
Other income:
Interest income, net 1,075,351 - 1,075,351
Insurance recovery in excess of
costs and expenses - - -
Total other income 1,075,351 - 1,075,351
Income before income taxes 1,896,200 - 1,896,200
Provision for income taxes 656,116 - 656,116
Net income $1,240,084 $- $1,240,084
Basic and diluted net income per
share:
Basic $0.07 $- $0.07
Diluted $0.07 $- $0.06
Weighted average common shares
outstanding:
Basic 18,112,909 - 18,112,909
Diluted 18,238,675 1,155,567 19,394,242
(2) Adjustments for the impact of applying SFAS No. 123R
Bankrate, Inc.
Condensed Consolidated Statements of Income
Reconciliation of GAAP to Non-GAAP Operating Results
(Unaudited)
Nine Months Ended
September 30, 2006
Adjust-
Revenue: GAAP ments(2) Non-GAAP
Online publishing $46,858,127 $- $46,858,127
Print publishing and licensing 12,083,093 - 12,083,093
Total revenue 58,941,220 - 58,941,220
Cost of revenue:
Online publishing 8,356,396 (786,542) 7,569,854
Print publishing and licensing 10,673,649 (107,806) 10,565,843
Total cost of revenue 19,030,045 (894,348) 18,135,697
Gross margin 39,911,175 894,348 40,805,523
Operating expenses:
Sales 3,728,615 (543,017) 3,185,598
Marketing 3,437,836 - 3,437,836
Product development 2,766,235 (358,276) 2,407,959
General and administrative 16,734,800 (4,909,810) 11,824,990
Legal settlement 3,000,000 3,000,000
Stock compensation expense - 6,705,451 6,705,451
Depreciation and amortization 1,753,988 - 1,753,988
31,421,474 894,348 32,315,822
Income from operations 8,489,701 - 8,489,701
Other income:
Interest income, net 1,720,656 - 1,720,656
Insurance recovery in excess of
costs and expenses - - -
Total other income 1,720,656 - 1,720,656
Income before income taxes 10,210,357 - 10,210,357
Provision for income taxes 4,102,465 - 4,102,465
Net income $6,107,892 $- $6,107,892
Basic and diluted net income per
share:
Basic $0.36 $- $0.36
Diluted $0.35 $- $0.33
Weighted average common shares
outstanding:
Basic 17,050,167 - 17,050,167
Diluted 17,552,836 960,948 18,513,784
(2) Adjustments for the impact of applying SFAS No. 123R
SOURCE Bankrate, Inc.
CONTACT: Edward J. DiMaria, SVP, Chief Financial Officer,
+1-917-368-8608, or edimaria@bankrate.com, or Bruce J. Zanca, SVP, Chief
Communications-Marketing Officer, +1-917-368-8648, or bzanca@bankrate.com,
both of Bankrate, Inc.