In a press release that was distributed by the company on October 15, 2012, Thomas R. Evans, President and CEO of Bankrate, Inc. stated, "We felt the need to be even more aggressive about cutting back our insurance lead volume as we received more disposition data and feedback, thereby reducing revenue in that area. We have seen meaningful improvements in quality and conversion, which we believe will result in better monetization in 2013. Although credit card traffic remains strong, we have seen no change or improvement in approvals. The core Bankrate mortgage and deposit business has been very strong in Q3 and for the year.”
2012 Guidance Reaffirmed
Bankrate reaffirms the company’s previously stated guidance provided on October 15, 2012. Bankrate expects revenue growth for the full year to be between 8 percent and 12 percent and the Adjusted EBITDA margin to be in the high 20 percent range. "The additional adjustments we have made in our insurance leads business to aggressively cut back on sources to drive higher conversion and quality has resulted in a short term reduction to our results and guidance," Mr. Evans stated. "We will continue to execute on our strategy to move our insurance leads platform to higher quality, higher converting traffic which we believe will drive higher value and open up new product opportunities to drive growth in 2013," Mr. Evans commented.
Third Quarter 2012 Financial Highlights
- Total revenue for the quarter was $116.8 million, an increase of 3%, or $3.9 million from the $112.9 million in the same period last year.
- Gross margin increased by approximately 140 bps. to 67.7% in the third quarter compared to the same period last year – helped by pricing initiatives as well as the Company’s initiative to transition to a higher conversion lead model with a greater percentage of owned and operated traffic from a high volume third party affiliate lead model.
- Adjusted EBITDA of $29.8 million in the third quarter was 17% or $6.2 million lower compared to the third quarter of 2011.
- Display advertising or CPM revenue in the third quarter was 31% higher compared to the same period last year.
- Hyperlink or CPC revenue for the quarter was 56% higher compared to the same period last year.
- Lead generation revenue, which consists of CPA and CPL revenue, was 11% lower compared to the third quarter 2011 as the Company continues to transition its insurance business to higher quality, higher converting volume and to reduce lesser converting lead sources. In addition, marketing by credit card issuers on the company’s platform was significantly lower compared to the outstanding Q3 2011 levels.
- At the end of the third quarter, the company’s leverage ratio was 0.9x on a net debt basis based on the company’s trailing twelve month Adjusted EBITDA of $143.7 million compared to 0.8x at the end of the second quarter of 2012.