Bankrate Announces Fourth Quarter and Full Year 2004 Financial Results

Bankrate Announces Fourth Quarter and Full Year 2004 Financial Results

NEW YORK, Feb. 3 /PRNewswire-FirstCall/ -- Bankrate, Inc. (NASDAQ:RATE), the Internet's leading consumer banking marketplace, today reported total revenue of $9.3 million for the quarter ended December 31, 2004, an increase of 3% over the $9.1 million reported in the same quarter in 2003. Net income in Q4 2004 was $6.8 million, or $0.42 per diluted share, compared to $5.1 million, or $0.32 per diluted share, in Q4 2003. Bankrate's Q4 2004 results include a legal settlement charge of $120,000, and a non-cash income tax benefit of $4.8 million related to the recognition of a deferred tax asset on the remaining portion of the Company's net operating loss benefits. The Company's Q4 2003 results include a non-cash tax benefit of $3.1 million related to the recognition of a deferred tax asset of a portion of its net operating loss benefits. Net income for the quarter ended December 31, 2004, excluding these items, of $2.2 million, or $0.13 per diluted share, was 8% better than the net income of $2.0 million, or $0.13 per diluted share, for the same period in 2003.

(Logo: http://www.newscom.com/cgi-bin/prnh/20040122/FLTHLOGO )

For the full year, total revenue of $39.2 million was $2.6 million, or 7%, higher than the $36.6 million reported for 2003. Net income for 2004 was $13.4 million or $0.84 per diluted share, compared to $12.1 million, or $0.79 per diluted share, in 2003. Net income for 2004, excluding the legal settlement charges, the severance charge and income tax benefit, of $9.4 million, or $0.58 per diluted share, was 4% higher than the $9.0 million, or $0.59 per diluted share, reported for 2003.

"We are pleased with our results," said Thomas R. Evans, President and CEO of Bankrate, Inc. "Our 2004 financial performance is in line with the guidance we gave last summer," said Mr. Evans.

Online publishing revenue for the three months ended December 31, 2004, included barter revenue of $693,000, or 7% of total revenue, compared to $852,000, or 9% of total revenue for the same period in 2003. Online publishing revenue for the year ended December 31, 2004 included barter revenue of $3,088,000, or 8% of total revenue, compared to $3,164,000, or 9% of total revenue for the year ended December 31, 2003.

Recent company highlights, include the following:

* NYTimes.com Renewal: On January 24, 2005, Bankrate announced the
renewal of its ongoing agreement with NYTimes.com. The two companies
produce co-branded Web pages providing users with personal finance
editorial content and interest rate table listings accessed from the
Business, Real Estate, and Home & Garden sections of NYTimes.com. The
renewed marketing and content agreement, which runs through January
2006, continues a relationship the two companies have had in place
since 2003.

* Aggregators RFP Award: On January 28, 2005, Bankrate announced it had
signed agreements with LowerMyBills.com and iHomeowners. In November
2004, Bankrate issued a Request for Proposal (RFP) to seven mortgage
lead aggregators. After analyzing and considering the submitted
proposals, LowerMyBills.com and iHomeowners were awarded contracts.
Under these agreements, Bankrate will run graphic advertisements from
the two companies on the home page, mortgage and refinance channels,
calculators, and other areas of the Bankrate Web site on a category-
exclusive basis. Bankrate may also participate in a performance-based
revenue sharing opportunity with each of the two companies.

* Yahoo! Finance Renewal: On January 28, 2005, the Company renewed its
agreement to produce personal finance editorial content and rate table
listings of banking products such as mortgage loans, auto loans and CD
yields for the Yahoo! personal finance channel. The new agreement,
which runs through 2006, continues an arrangement the two Internet
companies have had in place since 1997. Bankrate has similar
agreements with 78 media companies. Bankrate surveys more than 4,800
financial institutions in more than 400 markets in 50 states. The
company gives consumers interest rate and yield data on over 300
financial product categories.

* Steven L. Horowitz Appointment: During Q4 2004, the Company announced
the appointment of Steven L. Horowitz as Vice President and Publisher
of Bankrate, a newly created position. Mr. Horowitz joins Bankrate
from America Online, where he was Vice President, eCommerce
Classifieds. Previously, Mr. Horowitz worked at Yahoo!, Inc and
GeoCities.com. Mr. Horowitz is leading the company's efforts in
redesigning its Web site.




February 3, 2005 Conference Call Interactive Dial-In and Webcast Information:

To participate in the teleconference please call: 800-638-5495 Passcode: 72627520

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 http://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.comor 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 February 3, 2005, 1:00 p.m. ET/ 10:00 a.m. PT through March 3, 2005. To listen to the replay, call 888-286-8010 and enter 76235900.

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 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 investor's 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, the Internet's leading consumer banking marketplace. Bankrate.com had over 38 million unique visitors in 2004, according to comScore Media Metrix. Bankrate.com reviews more than 4,800 financial institutions in more than 400 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 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 provides financial applications and information to a network of more than 75 partners, including Yahoo!, America Online (NYSE:AOL), The Wall Street Journal (NYSE:DJ) and The New York Times (NYSE:NYT). Bankrate.com's information is also distributed through more than 100 national and state publications.

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; we have a history of losses; 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, 2003, 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.
Balance Sheets

December 31, December 31,
2004 2003
Assets

Cash and cash equivalents $27,735,267 $20,874,482
Accounts and notes receivable, net
of allowance for doubtful
accounts of $400,000 and $300,000 at
December 31, 2004 and 2003,
respectively 4,343,747 3,031,882
Deferred income taxes, current portion 7,106,288 3,400,000
Insurance claim receivable 241,015 -
Other current assets 369,572 343,311
Total current assets 39,795,889 27,649,675

Furniture, fixtures and equipment, net 1,275,605 796,928
Deferred income taxes 4,300,291 -
Intangible assets, net 205,656 73,201
Other assets 429,079 463,463

Total assets $46,006,520 $28,983,267

Liabilities and Stockholders' Equity

Liabilities:
Accounts payable $1,386,164 $1,227,463
Accrued expenses 1,749,058 2,226,905
Deferred revenue 192,357 181,110
Other current liabilities 93,352 116,551
Total current liabilities 3,420,931 3,752,029

Other liabilities 251,391 306,274

Total liabilities 3,672,322 4,058,303

Stockholders' equity:
Preferred stock, 10,000,000
shares authorized and undesignated - -
Common stock, par value $.01
per share-- 100,000,000 shares
authorized; 15,780,811 and
15,114,371 shares issued and
outstanding at December 31,
2004 and 2003, respectively 157,808 151,144
Additional paid in capital 70,137,462 66,091,014
Accumulated deficit (27,961,072) (41,317,194)
Total stockholders' equity 42,334,198 24,924,964

Total liabilities and
stockholders' equity $46,006,520 $28,983,267


Bankrate, Inc.
Statements of Operations

Three Months Ended
December 31,
Revenue: 2004 2003
Online publishing $8,107,045 $7,722,900
Print publishing and licensing 1,242,502 1,338,971
Total revenue 9,349,547 9,061,871
Cost of revenue:
Online publishing 1,353,429 1,432,719
Print publishing and licensing 1,050,536 1,041,496
Total cost of revenue 2,403,965 2,474,215

Gross margin 6,945,582 6,587,656

Operating expenses:
Sales 897,567 985,432
Marketing 1,444,688 1,488,870
Product development 581,586 560,319
General and administrative 1,772,617 1,446,349
Legal settlements 120,000 (a) -
Severance charge - -
Depreciation and amortization 190,161 165,341
5,006,619 4,646,311
Income from operations 1,938,963 1,941,345

Other income, net 118,188 76,160
Gain on early extinguishment of debt - -
Income before income taxes 2,057,151 2,017,505

Income tax benefit 4,765,660 3,100,000

Net income $6,822,811 $5,117,505

Basic and diluted net income per share:
Basic $0.43 $0.34
Diluted $0.42 $0.32
Weighted average common shares outstanding:
Basic 15,732,686 15,090,378
Diluted 16,288,812 15,857,834

(a) Legal settlement charges.
(b) One-time severance charge.


Bankrate, Inc.
Statements of Operations

Year Ended December 31,
Revenue: 2004 2003 2002
Online publishing $33,942,241 $31,368,392 $22,651,216
Print publishing and
licensing 5,262,020 5,253,099 3,919,815
Total revenue 39,204,261 36,621,491 26,571,031
Cost of revenue:
Online publishing 5,534,456 4,514,023 3,812,765
Print publishing and
licensing 4,359,444 4,043,970 2,862,338
Total cost of
revenue 9,893,900 8,557,993 6,675,103

Gross margin 29,310,361 28,063,498 19,895,928

Operating expenses:
Sales 4,186,799 5,039,892 4,275,826
Marketing 6,357,424 5,495,810 3,477,379
Product development 2,405,676 2,271,124 1,422,206
General and administrative 6,667,448 5,813,297 5,536,774
Legal settlements 510,000 (a) - -
Severance charge 260,000 (b) - -
Depreciation and amortization 742,659 680,826 621,458
21,130,006 19,300,949 15,333,643
Income from
operations 8,180,355 8,762,549 4,562,285

Other income, net 410,107 242,759 82,833
Gain on early extinguishment
of debt - - 2,021,792
Income before income taxes 8,590,462 9,005,308 6,666,910

Income tax benefit 4,765,660 3,100,000 -

Net income $13,356,122 $12,105,308 $6,666,910

Basic and diluted net income
per share:
Basic $0.87 $0.84 $0.48
Diluted $0.84 $0.79 $0.46
Weighted average common
shares outstanding:
Basic 15,438,097 14,473,151 13,997,168
Diluted 15,975,382 15,299,734 14,609,359

(a) Legal settlement charges.
(b) One-time severance charge.


Bankrate, Inc.
Reconciliation of Net Income

Three Months Ended December 31, 2004
Adjusting
Reported Entries Adjusted
Revenue:
Online publishing $8,107,045 $- $8,107,045
Print publishing and
licensing 1,242,502 - 1,242,502
Total revenue 9,349,547 - 9,349,547
Cost of revenue:
Online publishing 1,353,429 - 1,353,429
Print publishing and
licensing 1,050,536 - 1,050,536
Total cost of
revenue 2,403,965 - 2,403,965

Gross margin 6,945,582 - 6,945,582

Operating expenses:
Sales 897,567 897,567
Marketing 1,444,688 - 1,444,688
Product development 581,586 - 581,586
General and administrative 1,772,617 - 1,772,617
Legal settlements 120,000 (120,000)(a) -
Severance charge - - -
Depreciation and
amortization 190,161 - 190,161
5,006,619 (120,000) 4,886,619
Income from
operations 1,938,963 120,000 2,058,963

Other income, net 118,188 - 118,188
Income before income taxes 2,057,151 120,000 2,177,151

Income tax benefit 4,765,660 (4,765,660)(b) -

Net income $6,822,811 $(4,645,660) $2,177,151

Basic and diluted net income
per share:
Basic $0.43 $0.14
Diluted $0.42 $0.13
Weighted average common shares
outstanding:
Basic 15,732,686
Diluted 16,288,812

Notes:
(a) Legal matter settled in January 2005.
(b) Income tax benefit from reversal of allowance for deferred income
taxes, net of current year provision.

Bankrate, Inc.
Reconciliation of Net Income

Three Months Ended December 31, 2003
Adjusting
Reported Entries Adjusted
Revenue:
Online publishing $7,722,900 $- $7,722,900
Print publishing and
licensing 1,338,971 - 1,338,971
Total revenue 9,061,871 - 9,061,871
Cost of revenue:
Online publishing 1,432,719 - 1,432,719
Print publishing and
licensing 1,041,496 - 1,041,496
Total cost of
revenue 2,474,215 - 2,474,215

Gross margin 6,587,656 - 6,587,656

Operating expenses:
Sales 985,432 - 985,432
Marketing 1,488,870 - 1,488,870
Product development 560,319 - 560,319
General and administrative 1,446,349 - 1,446,349
Legal settlements - - -
Severance charge - - -
Depreciation and
amortization 165,341 - 165,341
4,646,311 - 4,646,311
Income from
operations 1,941,345 - 1,941,345

Other income, net 76,160 - 76,160
Income before income taxes 2,017,505 - 2,017,505

Income tax benefit 3,100,000 (3,100,000)(b) -

Net income $5,117,505 $(3,100,000) $2,017,505

Basic and diluted net income
per share:
Basic $0.34 $0.13
Diluted $0.32 $0.13
Weighted average common shares
outstanding:
Basic 15,090,378
Diluted 15,857,834

Notes:
(a) Legal matter settled in January 2005.
(b) Income tax benefit from reversal of allowance for deferred income
taxes, net of current year provision.


Bankrate, Inc.
Reconciliation of Net Income

Year Ended December 31, 2004
Adjusting
Reported Entries Adjusted
Revenue:
Online publishing $33,942,241 $- $33,942,241
Print publishing and
licensing 5,262,020 - 5,262,020
Total revenue 39,204,261 - 39,204,261
Cost of revenue:
Online publishing 5,534,456 - 5,534,456
Print publishing and
licensing 4,359,444 - 4,359,444
Total cost of
revenue 9,893,900 - 9,893,900

Gross margin 29,310,361 - 29,310,361

Operating expenses:
Sales 4,186,799 - 4,186,799
Marketing 6,357,424 - 6,357,424
Product development 2,405,676 - 2,405,676
General and administrative 6,667,448 - 6,667,448
Legal settlements 510,000 (510,000)(a) -
Severance charge 260,000 (260,000)(b) -
Depreciation and
amortization 742,659 - 742,659
21,130,006 (770,000) 20,360,006
Income from
operations 8,180,355 770,000 8,950,355

Other income, net 410,107 - 410,107
Income before income taxes 8,590,462 770,000 9,360,462

Income tax benefit 4,765,660 (4,765,660)(c) -

Net income $13,356,122 $(3,995,660) $9,360,462

Basic and diluted net income
per share:
Basic $0.87 $0.61
Diluted $0.84 $0.59
Weighted average common
shares outstanding:
Basic 15,438,097
Diluted 15,975,382

Notes:
(a) Legal matters settled in October 2004 and January 2005.
(b) Severance charge related to former President & CEO.
(c) Income tax benefit from reversal of allowance for deferred income
taxes, net of current year provision.


Bankrate, Inc.
Reconciliation of Net Income

Year Ended December 31, 2003
Adjusting
Reported Entries Adjusted
Revenue:
Online publishing $31,368,392 $- $31,368,392
Print publishing and
licensing 5,253,099 - 5,253,099
Total revenue 36,621,491 - 36,621,491
Cost of revenue:
Online publishing 4,514,023 - 4,514,023
Print publishing and
licensing 4,043,970 - 4,043,970
Total cost of
revenue 8,557,993 - 8,557,993

Gross margin 28,063,498 - 28,063,498

Operating expenses:
Sales 5,039,892 - 5,039,892
Marketing 5,495,810 - 5,495,810
Product development 2,271,124 - 2,271,124
General and administrative 5,813,297 - 5,813,297
Legal settlements - - -
Severance charge - - -
Depreciation and
amortization 680,826 - 680,826
19,300,949 - 19,300,949
Income from
operations 8,762,549 - 8,762,549

Other income, net 242,759 - 242,759
Income before income taxes 9,005,308 - 9,005,308

Income tax benefit 3,100,000 (3,100,000)(c) -

Net income $12,105,308 $(3,100,000) $9,005,308

Basic and diluted net income
per share:
Basic $0.84 $0.62
Diluted $0.79 $0.59
Weighted average common
shares outstanding:
Basic 14,473,151
Diluted 15,299,734

Notes:
(a) Legal matters settled in October 2004 and January 2005.
(b) Severance charge related to former President & CEO.
(c) Income tax benefit from reversal of allowance for deferred income
taxes, net of current year provision.

For more information contact:

Robert J. DeFranco
Senior Vice President
Chief Financial Officer
http://www.bankrate.com/investor-relations/bdefranco@bankrate.com
(561) 630-1230

Bruce J. Zanca
Senior Vice President
Chief Communications/Marketing Officer
bzanca@bankrate.com
(917) 368-8648


Photo: http://www.newscom.com/cgi-bin/prnh/20040122/FLTHLOGO
Source: Bankrate, Inc.

CONTACT: Robert J. DeFranco, Senior Vice President, Chief Financial
Officer, +1-561-630-1230, bdefranco@bankrate.com, or Bruce J. Zanca, Senior
Vice President, Chief Communications/Marketing Officer, +1-917-368-8648,
bzanca@bankrate.com, both of

Web site: http://www.bankrate.com/


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