Bankrate Shares Drop 6% As Q3 Profit Miss Estimates, But Revenues Top

(RTTNews) - Shares of Bankrate, Inc. (RATE) dropped more than six in extended trading on Wednesday after the online financial information service provider reported adjusted profit for the third quarter that missed analysts' expectations.

However, the company reported a net loss for the quarter compared to a profit last year, hurt by loss on extinguishment of debt and lower margins. The company also provided revenue growth guidance for the fourth quarter.

"The improvement of the business has continued into the second half of the year with both the insurance and credit card verticals gaining momentum. Our insurance business continues to be on a great trajectory and credit card issuers are back marketing aggressively. While the mortgage re-fi business has slowed down, the deposit business is showing signs of improvement," President and CEO Thomas Evans said in a statement.

The company also announced that Evans will resign as president and CEO as well as a director at year end, with COO Kenneth Esterow being promoted to the positions and as a director, effective January 1, 2014. Esterow joined the company in September as the COO. Meanwhile, Evans has agreed to continue as an adviser to the Board.

The North Palm Beach, Florida-based publisher of personal finance content on the Internet reported a net loss of $7.75 million or $0.08 per share for the third quarter, compared to net income of $2.56 million or $0.03 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter was $13.52 million or $0.13 per share, compared to $12.65 million or $0.13 per share in the year-ago quarter.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter grew 4 percent to $121.18 million from $116.78 million in the same quarter last year, and topped nine Wall Street analysts' consensus estimate of $119.58 million.

Display advertising, or CPM revenue, for the quarter increased 5 percent, and lead generation revenue, which consists of CPA (credit card products) and CPL (insurance products) revenues, also grew 11 percent from last year. Meanwhile, Hyperlink, or CPC revenue, for the quarter declined 13 percent from a year ago.

Gross margin for the quarter contracted 100 basis points to 67 percent from last year's 68 percent. Loss on extinguishment of debt for the quarter was $17.18 million.

The company noted that it recently completed the mobile optimization of Bankrate.com, as well as other owned and operated sites, which are now responsive to fit smaller mobile screen sizes.

Looking ahead to the fourth quarter, Bankrate expects to show an overall revenue increase in the mid to upper 20 percent range. Street is currently looking for revenues of $123.19 million for the quarter.

"We're confident with our position on revenue and EBITDA guidance as we are seeing our initiatives pay off in our insurance vertical and with higher than expected margins and strong growth in our credit card business," Evans added.

RATE closed Wednesday's regular trading session at $20.94, down $0.67 or 3.10% on a volume of 0.67 million shares. The stock lost a further $1.34 or 6.40% in after-hours trading.