|
We are pleased to report that 2003 was another banner year for Bankrate,
Inc. We achieved record results in revenue and earnings, and increased
our shareholder value.
At year-end, we achieved two consecutive years of profitable growth
and 11 consecutive quarters of positive cash flow. Total revenue
for the year ended December 31, 2003 increased 38% to $36.6 million
from $26.6 million in 2002. Net income for 2003 was $12.1 million,
or $0.79 per share on a diluted basis, compared to $6.7 million,
or $0.46 per share on a diluted basis, for 2002.
The results for 2003 included a non-cash income tax credit of $3.1
million in the fourth quarter related to the recognition of a deferred
tax asset on a portion of our net operating loss benefits. In 2002,
we recorded a non-cash gain on early extinguishment of debt of $2.0
million. Excluding these items, net income for the year ended December
31, 2003 nearly doubled to $9.0 million, or $0.59 per share on a
diluted basis, compared to $4.6 million, or $0.32 per share on a
diluted basis, in 2002. We ended the year with virtually no debt
and a cash position of $21 million, nearly double the $11 million
in cash we had at year-end 2002.
Our industry position as the leading consumer banking site on the
Internet during 2003 attracted a record number of consumers to our
Web site. We averaged over 4 million unique visitors per month in
2003 according to comScore Media Metrix, which ranked us first in
the Financial Information and Advice category. Visitors to Bankrate.com
are interested in vital personal finance education and finding the
best rates and information available for more than 250 consumer
banking products offered by over 4,800 financial institutions across
the country. Consumers look to Bankrate for the most meaningful
and comparable rates available for their new mortgage, mortgage
refinancing, auto loan, home equity loan, CD and other personal
banking needs. Our brand has earned consumers' trust because our
information is completely objective, categorized, interpreted and
is not influenced by whether or not the financial institution advertises
on Bankrate.
Working with leading partners has helped us to continue to build
recognition of the Bankrate brand as the gold standard for consumers
seeking objective data and education for their most important banking
needs. Early in the year, we launched a number of new partnership
initiatives, notably making Bankrate data available to subscribers
of The Wall Street Journal Online, the Associated Press Radio Network's
new syndication of Bankrate.com's "The Personal Finance Minute",
our first project in radio, and importantly, the release of our
annual Financial Literacy benchmark survey conducted by RoperASW.
The survey is often the first step consumers take in finding out
just how much or how little they know about their most important
personal finance needs and continues to be one of the most popular
offerings on Bankrate.com.
Since we have primary eye share, Bankrate's strong brand recognition
and quality lead generation for our advertisers has increased the
value of our site. A key factor in understanding our business success
is our core strategy of creating a profitable media business on
the Internet. Our media model enables us to expand content in a
timely, low cost/low risk manner. We are the central marketplace
for brick and mortar financial institutions to acquire customers.
We have a high quality, poised-to-transact audience that has been
educated by Bankrate and is ready to do business with our advertisers.
Part of the reason for our success is our sales force, which is
the best on the Internet, focused on financial institutions. Our
field salespeople visit financial institutions and provide highly
consultative relationship selling. Unlike others who contracted
their sales force in the down years, we have doubled the size of
our sales team in the past four years. This strategy has paid off
with substantial revenue growth and more than triple the number
of advertisers in the same period.
Strong advertising revenue growth combined with a stable expense
base has resulted in more of our advertising revenue flowing directly
to the bottom line. We are also extremely pleased with the continuing
growth of licensing income from our print publishing business. Today,
more than 100 newspapers, including eight of the nation's top 10,
distribute our rate information. Our print customers include The
Wall Street Journal, The New York Times, USA Today and numerous
other national and regional publications. Our distribution partners,
including America Online, Yahoo!, and USA Today have also played
a key role in building recognition for the Bankrate brand as many
consumers first visit our site through one of the major portals.
With more than 75 online partners, Bankrate.com has become the preferred
channel of distribution for consumer banks and other financial institutions
on the Web.
Bankrate's robust business expansion and financial growth were accompanied
by key milestones that spurred a substantial increase in shareholder
value during the year. We:
- Became listed on the Nasdaq Small Cap Market in
January and regained our Nasdaq National Market listing in August
2003.
- Presented for the first time at institutional investor
conferences.
- Attracted both institutional and individual investors
as Bankrate's market capitalization grew steadily throughout the
year.
- Received our first stock research coverage.
- Saw our stock added to the widely followed Russell
2000 and Russell 3000 indices
Low interest rates spurred the growth of advertising
for mortgage refinancing products on Bankrate.com through the first
half of the year. In the second half of 2003, mortgage rates began
to rise. At the same time, we began to see a return to the traditional
holiday season traffic pattern, which is historically the slowest
period of the year. Despite spikes in interest rates and seasonal
downturns in traffic, we have demonstrated over the years our ability
to grow our revenue. Bankrate is poised to profit during periods
of both rising and declining interest rates.
As American consumers take a more active role in managing their
money, the need for Bankrate's neutral marketplace that brings buyers
and sellers together becomes ever more important. We see strong
possibilities for market growth as financial institutions are still
in a very early stage of adopting the Internet for advertising products
that have become personal finance essentials for Americans.
We remain deeply committed to serving the needs of consumers and
strengthening our position as a must buy for advertisers. With the
continuing efforts of the very talented and enthusiastic Bankrate
team and the wise counsel of our board of directors, we are looking
forward with optimism to the year ahead and beyond. We wish to take
this opportunity to thank our shareholders for their continued support.
 |
Sincerely,
Elisabeth DeMarse
President and Chief Executive Officer
Peter C. Morse
Chairman of the Board of Directors
|
| |
|
|
