Bankrate Inc. Q1 2009 Earnings Call Transcript

Bankrate Inc. (RATE)

Q1 2009 Earnings Call

May 7, 2009 4:30 pm ET

Executives

Bruce Zanca - SVP, Chief Communications and Marketing Officer

Tom Evans - President and CEO

Ed DiMaria - SVP and CFO

Analysts

Mark Mahaney - Citigroup

Youssef Squali - Jefferies

John Blackledge - Credit Suisse

Ross Sandler - RBC Capital Markets

Carter Malloy - Stephens Inc.

Heath Terry - FBR Capital Markets

Christa Quarles - Thomas Weisel Partners

Andrew Jeffery - SunTrust

William Morrison - ThinkEquity

Presentation

Operator

Good day, and welcome to the Bankrate Incorporated First Quarter 2009 Conference Call. Today's conference is being recorded.

At this time for opening remarks and introductions, I would like to turn the conference over to Mr. Bruce Zanca, Senior Vice President. Please go ahead, sir.

Bruce Zanca

Thanks, operator. With me here in our New York office is our President and CEO, Tom Evans and our SVP and Chief Financial Officer, Ed DiMaria. In a minute I will here from both Tom and Ed, and then have time for Q&A.

During the Q&A period today, we ask that you limit yourself to one question and one follow-up. So we can get to as many as folks as we can. But before we begin, let me take care of the legal prerequisites. Some of the information presented in this conference call today may contain forward-looking statements as defined by various security laws and regulations. These forward-looking statements are subject to risks and uncertainties, and Bankrate's actual results could differ materially from the views expressed today. We encourage everyone to read the risk factor sections of our periodic filings of the Securities & Exchange Commission and also refer to you the Safe Harbor language distributed with our press release earlier this afternoon.

So with that being taken take care, let me introduce you to Tom Evans, our President and CEO, Bankrate, Tom?

Tom Evans

Great. Thanks, Bruce. Good afternoon, everyone, and thanks for joining us today. As you could see from the press release we put out a few minutes ago, revenue for the quarter at over 38.3 million was down just under 10% from the first quarter of last year and down 4.6% from the last quarter in 2008.

Adjusted EBITDA for the quarter was slightly over 13.1 million, an 18% decline from the same quarter in 2008 and basically flat with our last quarter.

Traffic at our over 199 million page views for the quarter was actually down from the record-setting 214 page views that we generated in Q1 of 2008, but up 21% sequentially over Q4.

I'd also like to point out that organic traffic was actually up in the Q1 over last year. Organic traffic hit the highest level ever and it's 23.2 million. Unique visitors to the site were up 2% over last year's record and 21% better than Q4.

Given the challenges that our advertisers face during the quarter, we felt we fared pretty well. We are certainly pleased with the traffic performance in the quarter. The fact is, the consumer traffic to the Bankrate site continue to be very strong and I guess that's not a surprise. There is obviously great interest in personal finance on the part of the consumer and it points to one of the core strengths of our business.

We said before that we believe the personal finance has gone for being a spectator sport to participatory sport, and no one that been more evident than was our traffic unique visitor numbers. Consumers are more concerned and engaged about the financial well being than ever before and they are turning to Bankrate for help and advice.

Direct organic traffic for site was at strongest level ever. Fully 86% of our traffic came to us directly, while 7% came through partners and 7% came via paid search. The increase in organic traffic is obviously a great trend and will pay off for us when the advertising environment improves.

However, as you know, the advertising environment has been difficult. After a strong January, we really didn't see the advertising demand get dramatically slower in February in particular. As we all know, the worldwide recession has had a dramatic impact on display advertising, but nowhere stronger than the impact on the advertising of financial institutions.

However, in the bright side, we have actually seen the ad demand pick up somewhat. There have been some new display campaigns launched. Starting this month, our rate tables have fallen now than they had been in a couple of months.

In display advertising, volume declined as did our sell-through rate in Q1. Some of the business we booked during the quarter got cancelled and/or deferred. Some of the Group business we thought would run just never materialized. It was pretty good hard time. However, we are cautiously optimistic as it's picked up recently.

Those of you who watch the site regularly have seen some new campaigns get launched in the past few weeks. As we've said earlier, the rate tables are more robust than they have been in the few months. It does feel [as though] it's taken a slight turn from the better off. Although, here on the site have cautioned by not declaring an end of the recession and it's too early to tell whether we are out of the woods yet.

Let me make a few comments about how business is for a different product categories we deal with, particularly our mortgage deposit, insurance and credit cards channels. You can have a better understanding of the influences on our business.

Mortgage has really been both in best of time and the worst of time. There is no doubt that the reduction in interest rates has set off a refinance boom. By the way, the good news is that the vendors we speak would think this will last for the next 12 to 24 months presuming net interest rates stay relatively low.

Consumers are coming to the site in large numbers looking for opportunities to refinance. So that's the good news. They are calling their banks, calling lenders. In fact, most lenders have developed the pipeline of customers. Unfortunately, for us, volume was strong enough in the first quarter but many didn't have to be marketing to drive volume.

Many lenders have reduced staffs over the past couple years and don't have the capacity they once had. So high demand and inadequate staffing have, obviously, caused a lot of jam. We are still [with the] lending capacity in terms of dollars has not kept up with consumer demand. There is still simply not enough capital flowing through the systems to satisfy even close to the level demand that exists.

Now I am not talking about people who are at marginal credit risk being the people who can't get funded. I am talking about many of the best ones. The system is clogged by not enough capital to meet the demand of the best qualified customers. As a result, lenders just haven't been spending to market to consumers if they can't get funding for. It's a problem that seems to be easing up a bit recently. A few of our customers report getting access to more capital in the past few weeks. Several are also hiring again, staffing up to take advantage of the boom they believe is going to last a while.

We have recently seen several advertisers return to the rate tables and increase their spending. But it was really frustrating in Q1 to have so much consumers demand that we weren't able to monetize.

A pleasant surprise has been the consistency of the deposit business. It was our regional premise that if interest rates declined, we'd see less demand from consumers for our CD and money market products, but that hasn't been the case. People have been flocking to safe and secure deposit products.

After a little while in the middle of Q1, banks have continued to seek deposits to build up their capital bases. Bankrate is a great platform, where consumer demand is meeting with institutional demand and continues to work for both parties. Banks get deposit capital and new customers, while consumers find attractive rates and safe government insured instruments.

In the insurance area, our business continues to be very strong and that makes a lot of sense. Particularly in the current economic environment, consumers are interested in finding the best rates for their auto, life, health and home insurance.

According to a report by AM Best in 2008, people using the interne to shop for insurance product increased by 36% and of survey by JD Power reported that 40% of new consumers used an online system to research or apply for quotes. Powers also reports that in 2008, sales transactions via the web accounted for 21% of all new consumer personal insurance sales.

So not surprisingly, we have seen an increase in the number of carriers and agents who are looking to find consumers and active leads online as well. Again, the traditional way that the insurance business had been conducted is shifting to the internet. We believe that will continue. As a result, we have seen lead volume increase and we have expended our agent base, which has resulted in increased revenue and margins, and we're confident that trend will continue.

If you come as no surprise that our credit card business is currently at the challenging environment. As card issuers have seen their delinquency rates climb, they have cut back on the number of cards they are marketing, have cut back on number of consumer offers and are approving fewer people for cards.

The number of active cards offers that we have online declined approximately 40% in Q1 versus what we had on the site that heightened in October. Obviously, issuers are attempting to get their arms around the quality, their portfolios and it's having a direct impact on our business.

Remember, this is one business where we get paid a fee per approved application. So when the card issuer are screening through fewer people, it has a negative impact on our business.

Interestingly, now consumer demand remains high. Consumers are still looking for credit card products during the first quarter as cards search queries were up 5%. However, issuers were simply looking for fewer new customers and they were trying to level set the proper credit limit and interest rates for their current customers.

Our suspicion is that card companies are going to take a lot of work through this and how quickly it recovers is going to be determined by things like whether there are further increases in unemployment rate and how quickly the economy stabilizes and improves.

The good news, though, has been that we've been able to improve our margins on this business. Because an increasingly larger part of our business comes to us organically, we have been able to improve the margins significantly over the 16 months that we've owned in NCS. From the mid-teens to the mid-30s, very much the way we predicted it would go. So the EBITDA performance in this business has been better than the revenue trajectory.

I suspect most of you've seen the newly redesigned bankrate.com website that we've been working on for the better part of the year. The site is better organized, faster and easier to navigate. Response to the site from both consumers and advertisers has been overwhelmingly positive and will provide the flexibility and platform to add important features and functionality going forward.

We're really pleased with the new site, very excited about the improvements that we believe we will make in our business, especially as the advertising environment improves. We look forward to telling you more about additional features as we roll them out and we're sure, its impact in our business will be over time.

Now let me spend a few minutes on looking ahead, since I am sure that's really what most of you want to hear about. This is the hardest part because while we've never felt better about our positioning and our prospects, the market reality, the pressure on our banking customers and the current advertising environment have been providing a lot of headwind.

Once again, we will tell you that we have very little visibility on the business going forward. We believe that while we have seen some improvements, Q2 will look a lot like Q1. However, there will some things that give us hope, (inaudible) lots of things give us hope in the second half of the year that things are getting better.

First, it seems that the stimulus money that was supposed to be making its way to the consumers and has not being yet, but there are signs of life. Any improvement in liquidity will be good for our mortgage-related business.

Second, the continuing need for banks to raise deposit capital should be in a continuation of the interest in CDs, both from consumers and banks.

Third, we have seen more activity recently in display advertising. It's not a tsunami, but its beginning and you'll able to see that in our site now and this month.

We believe that credit card business may take longer to improve. However, as I said, the good new is the organic portions of that business has held up quite well and we have taken that business from business that we ran on an EBITDA basis in the mid-teens, more than a year ago to one that's now in the mid-30s. So any improvement in the volume of that business will have an immediate impact on our bottom line.

So with that said and really realizing that and it reconciled in Q1, let me be more cautious about what I said in our last earnings call that, that we'd still grow the business in double digits this year. In the month of February, the first part of March was a rude awakening on that call. The honest answer is that we really don't know, where we'll end up this year, at least until we get further into the year and get a better feel for effects.

It has improved recently, but we really want to monitor things month-to-month before we get a sense of where we believe the year will net out. We believe again, Q2 should look similar to Q1. Then we believe, there will be some improvement in the second half. The good news is that it does seem to be getting better, but we just have to grind it out.

Having said that, I'll say it over again. We love our platform, consumer interest continues to be solid. We believe that we're in a great position to benefit dramatically when the environment improves.

On last comment. On the M&A front, we continue to be active, where we continue to look at M&A opportunities interactively looking in the number of areas. Whether anything will play out is unknown at this time. But as we've said in the past, we continue to think there are opportunities to grow our business through acquisition as well as organic growth. We think this is good time to be doing so.

So now, why don't we turn it over to Ed and he can review the financials for the quarter.

Ed DiMaria

Okay, thanks, Tom. As Tom just mentioned, we delivered 38.3 million in revenues for the quarter, off just under 10% from the prior quarter and off just 4.6% from Q4 2008. Given the environment we are currently operating in, this performance is actually very solid. Of course, we are not happy that we are off last year, but given the situation on advertising basis dealing with, we have fared really well. I think (inaudible) just outside of the Bankrate model is and the quality consumer audience we have.

Also, I want to remind you that during the first quarter of 2008, we have an unusually high January where we saw flooded traffic. This added over 3 million in incremental online revenue last January. Factoring out the unusually high January volume last year, online revenues were only down slightly.

Adjusted EBITDA came in at 13.1 million, down 3 million or 18% from the 16.1 million reported in Q1 2008, and just under the 13.2 million we reported in the fourth quarter of 2008.

EPS came in at $0.25 per diluted share compared to $0.35 in Q1 2008 and $0.14 in the fourth quarter 2008. Excluding stock compensation expense, EPS came in at $0.31 compared to $0.46 in Q1 2008 and $0.33 in Q4, 2008. That's excluding the impairment charge in the fourth quarter.

Looking at revenue in more detail, online revenues for Q1 2009 were 36.5 million, down 3.5 million or 9% over the 40 million reported in Q1 2008.

The display and lead generation component of online revenues were 25.4 million for the quarter, down 1 million from the 26.4 million we posted for Q1, 2008, while we were actually up slightly from the 25.3 million for Q4, 2008.

The net decline from Q1 2008 was driven by credit card display advertising and Bankrate Select mortgage lead generation revenue partially offset by growth in the insurance business. The credit card business is not surprises, as we have talked about this last quarter.

We are seeing fewer offers available from credit card companies and tighter credit overall. This has affected our affiliate channel much more than organic Bankrate CreditCardGuide and Bankaholic. But nevertheless, it still had a pretty big impact.

We were, however, able to increase the margin percentage on this business with the continuous growth in organic traffic. Overall, we remain confident in the credit card business over the longer term, as we know that our offering is the highly efficient platform to find quality consumers. On the positive side, our insurance lead generation business is off to a really solid start this year.

We believe that our display advertising business reached bottom during Q1, as we have seen this business begin to show signs of growth recently. Volume for the second half of Q2 and Q3 appeared to be finally moving in a positive direction. As you know, this business is a cash machine for us. We have plenty of available inventory and with our huge organic traffic footprint, as this business recovers over 85% of the incremental revenue, will go straight to the EBITDA line.

The trend seemed to be finally turning positive. So the back half of 2009 should be better than the front half and we believe this business will show significant growth in 2010. Again, the insurance lead generation business performed well during Q1, which we expect to continue.

The Hyperlink business decreased by 19% during the quarter from 13.6 million in Q1 2008 to 11 million in Q1 2009. The decrease, again, was primarily the result of the huge flood of traffic in January last year, where we saw over 3 million in incremental revenue in January 2008. Also, we did not monetize the traffic as well this year due to the huge volume of organic leads in the marketplace. So vendors have been overwhelmed with volume and have had less of a need to be out there marketing.

Deposit CPC revenue, however, increased over Q1 2008 levels. 64% of Hyperlink revenues were from deposit during the quarter, while 34% were derived from mortgage and 2% other.

Our print publishing and licensing revenue was 1.9 million for the quarter, representing a decrease of 23% from the first quarter of 2008 revenue of 2.5 million. Print revenues were flat with the fourth quarter of 2008.

Looking at margins, our overall gross margin percentage on revenue for the first quarter 2009 was 60.9% compared to 61.4% in the first quarter 2008. As you can see, despite a 10% drop in revenue, we only saw a slight dip in margin. This is because we made progress increasing margins for the credit card and insurance lead generation businesses by increasing organic traffic. As I mentioned we have made progress on this even during Q1 despite the revenue hit.

The adjusted EBITDA margin for the business was 34% in Q1 2009. We actually produced nearly same EBITDA dollars in Q1 2009 as we did in Q4 2008, despite 1.8 million in lower revenues. This is because we ran lower marketing expense given the strength and organic traffic. So we did a good job managing these expenses.

Operating expenses for the quarter were down approximately 200,000 at 15.8 million for Q1 2008 compared to 15.6 million for Q1 2009. Cash operating expenses, and that's excluding depreciation and stock compensation, were flat at approximately 10.6 million.

Stock compensation expense was lower by 1.4 million versus Q1 2008 and some awards becoming fully vested. Also, we had some stock compensation expense that was reversed for awards that were forfeited prior to vesting. For your modeling purposes, we have now expect stock compensation to be in the 10.5 to 11 million range for the year.

Depreciation and amortization was higher by 1.2 million as a result of the amortization intangible assets related to CCG Bankaholic and InsureMe acquisition. Also please note, that amortization of these intangibles does increase each year, as the expense for intangibles is not straight lined, but rather tied to expected cash flows.

Also, with our new website launch, we started depreciating it over three-year starting in April 2009. For your modeling purposes, we expect depreciation and amortization to be in the 12.5 to 13.5 million range for the year.

We ended the quarter with 47 million in cash and cash equivalent. We generated 14.4 million in cash flow from operations during the quarter. We used 11.8 million for earn-out payments and used 1.6 million on capital expenditures stock repurchases and other activity.

The new thing about this was that we funded this year's entire earn-out payment for InsureMe and NCS with less than one quarter's cash flow. Also, cash flow for the rest of the year should include in the balance sheet, as we do not expect there to be any additional earn-out payment due for remainder of the year.

Recapping revenue for the quarter was 38.3 million, EBITDA was 13.1 million and EPS, excluding stock compensation expense, was $0.31.

Okay, Tom will now wrap up and then we will take you question.

Thomas R. Evans, President and Chief Executive Officer

Thanks Ed. Yeah, just to wrap it up. Again, we feel strongly that we're set up very well and ideally positioned for any improvement in the economy. We have a redesign site. It has been widely praised by advertisers and consumers. We continue to have strong traffic of in market consumer coming to the site.

Our strong advertiser ROI will serve us well and display advertising market improves. In that we believe advertisers will be more focused and much more aggressively concerned about performance-based metrics, and that should be great for a site like Bankrate it does perform so well for advertisers.

We don't want to be (inaudible), but we are confident that we are very well-positioned. Advertisers will seek out premium content and contextually relevant environments like our will do well because of strong performance.

So with that let us your questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). We'll take our first question from Mark Mahaney with Citigroup.

Mark Mahaney - Citigroup

A little color on that display advertising improvement that you've seen. Is that all endemic display advertising? Have you seen any rebound in interest or demand from non-endemic, non-financial advertisers?.

Tom Evans

Yeah, most of it, Mark, is coming from on the endemic side. I mean if you look at the site today, there is a couple of non-endemics that are on the site today, that are running new campaigns. But there's a couple of big endemics that are running campaigns as well, which are relatively recent. So, the stuff we blew really talking about in terms of the improvements we've seen is some of our larger bigger advertisers coming back and spending money again in May.

Again, they are not making 12-month commitments or rest of the year commitments, but we certainly feel the intention is to continue – or actually a couple of have had made longer term commitments. But we are just seeing a return of some of the guys that have been out for a while and that's an encouraging sign.

Mark Mahaney - Citigroup

Tom, any quick thoughts on buyback here?

Tom Evans

As I said earlier about looking at opportunities, nothing to announce. We got a buyback in place anytime. We think it's opportunistic to do so. We are also very active on the outlooking at opportunities right now, because we think it's a good time to be doing so.

We really like the acquisitions that we made in the past 18 months. They have done very well. We are really pleased about the way we have been able to integrate them. The teams that we've got in place are managing those businesses well. So if there is something out there that's actionable and to fit with us, we think that's probably a pretty good use for our cash as well.

Operator

We'll take our next question from Youssef Squali with Jefferies.

Youssef Squali - Jefferies

Let's start with Tom. On the fourth quarter call, you talked about double-digit growth in EBITDA year-on-year. Do you still think that's still in the cards considering all the cost elements that you've been taking out of the system? Or I guess, in other words, how hard do you think you can get your EBITDA margins to be considering what you know today and a little over top line?

Tom Evans

Well, the EBITDA margins come directly from just volume. As Ed said, any improvement in display throws 85% plus of that amount to the EBITDA line. So when display is down and has an impact on our margins, when display is up is has an immediate impact on our margins, so it's really going to depend upon how the display environment improves. It's exactly the same thing with CPC. The incremental dollar in CPC and incremental dollar in display flow right to the bottom line.

So it really is a matter if we pick up volume and if we get any momentum, we certainly think that that's going to be possible to continue to improve the margins. In terms of the overall growth, as I said we backed off the double-digit. We got off to a good start in January. We are feeling very good about January. January's traffic was good. I mean when we had our call on February 5th, we're coming off the strong January, traffic was good, the insurance business was good.

February just turned to be a very tough month. We saw mortgage advertisers pulling back. Just because they were getting so much volume, they didn't need to be marketing. Deposit advertisers were pulling back a little bit too. And again, those are come back on both side of that.

Deposit thing sort of confuses more than everything else, but I think there was so much chaos in the market. There were so many things going on that I think most financial institutions just sort of took a breather for a while. So that's why we thought the first quarter was a little bit softer than where we saw we were going to be initially given January. Then why were being cautious about where we are today.

Youssef Squali - Jefferies

All right. Then just a quick clarification. In the P&L, there is $1.6 million in charges, which if you exclude, you get to normalized EPS of $0.39. Can you clarify what the $1.6 million was for?

Ed DiMaria

You mean the 39% on operating EPS?

Youssef Squali - Jefferies

No, no. If I just take your net income, take out your stock-based comp, there was an additional $1.6 million in charges.

Tom Evans

Amortization of the...

Ed DiMaria

Yeah.

Youssef Squali - Jefferies

Was that just the amortization of the....

Ed DiMaria

Yes.

Youssef Squali - Jefferies

Okay. So that was part of the $2.9 million for [both] D&A?

Ed DiMaria

Correct.

Operator

We'll take our next question from John Blackledge with Credit Suisse.

John Blackledge - Credit Suisse

I think you said credit card offers were down 40% in the first quarter. Just wondering if applications and/or approvals are down a similar amount.

Just secondly on M&A, I know you mentioned that, if there are any businesses out there that, as private market multiples are down that you would look to maybe acquire over the course of the year and kind of fill in around from your existing businesses. Thank you.

Tom Evans

Yeah, I'd take the, sort of the second one first on M&A. Yeah, I mean we do think that there are some opportunities out there. We continue to look at companies and most are sort of in the sweet spot that you would be surprised that Bankrate would be interested in things that are in the broader-based financial service area. We think there are some attractive opportunities. If they are not attractive, they are not exitable.

You either go look at something else or you wait for a better opportunity. We're surely not going to do anything that we would consider to be a stupid or too expensive. But we think some private company multiples have come in because they are reasonable, others think that they completely run contrary to what the public markets are saying about valuations in multiples and growth rate. So, we'll continue to look in. As I said earlier, we think it's a good time to be doing so.

On the credit card side of it, no, there are few offers which just means when the consumer comes to the platform, that fewer choice just means fewer times they are going click or covert. The biggest, the biggest (inaudible) on them, John, is that the credit card company is just screening through fewer people. You know that they have raised the bar of the people that qualify and that's why on the Bankrate CreditCardGuide and Bankaholic channel, that's held up pretty well.

On the affiliate channel, our business is 50-50 now. When bought NCS, it was a 100% affiliate with the integration of the Bankrate Credit Card Channel, with the integration of CreditCardGuide and Bankaholic were in the 45 to 50% organic level. That volume has held up pretty well. The affiliate channel has been challenged. So, nowhere near they would be commensurate with, as I mentioned the 40% of the number of card offers get around the platform in terms of the decline in volume and much less of an impact on EBITDA.

Operator

We will take our next question from Ross Sandler with RBC Capital Markets.

Ross Sandler - RBC Capital Markets

First on the Hyperlink business, if we look at the deposits side, Tom, you mentioned a little bit of low in February. If my math is right, I think it grew about 8% year-over-year. You kind of laped the July price increase and the January price increase. So is there a traffic or a clicks issue going on on that site or is it more on the coverage side? Did you exit the quarter at a run rate that's more normal than what you saw in February? Then I have got one follow-up?

Tom Evans

Yes, February, it was more of a conversion impact than it was a traffic impact. It was a coverage issue. When you have got some of the biggest guys with the best rates taking a little bit of a break, it does have an impact. Yes, so I mean if you look at the tables today, we have seen it improve.

So the current environment is better than where it was. But I mean that that February instead of early March period was a little bit chaotic. It was not – it wasn't a traffic. But if consumers go to the site and then they are on the tables and we have a either not very attractive rates or not that many lengthy advertisers, it certainly does have an impact. But some of the big guys are back recently and that certainly has a positive impact.

Ross Sandler - RBC Capital Markets

Okay. Then, Ed, I may have missed this, but the cash balance was relatively flattish Q-over-Q. Can you help reconcile that with what was cash flow from options? Was there anything else that went below the cash flow from Ops line that was a negative one-time in the quarter?

Ed DiMaria

Yeah, it was all. Cash flow from Ops is 14.4 million for the quarter. So we generated great cash flow from operations. The big payment was, we had the earn-out payments due,11.8 million. So that sucked up a big portion of the cash flow. Then the continuation of the website and some stock repurchases accounted for another 1.6 million in cash flows. Those are the main items for us.

Ross Sandler - RBC Capital Markets

Okay. Thanks. One last thing on the Hyperlink. Your other Hyperlink revenue, non-mortgage, non-deposit, that also dropped off a bit more than we were looking for. What exactly is that? Is that kind of one-time issue or is there anything to read into there?

Ed DiMaria

Yeah, I mean in the first quarter of 2008, there was certainly some home equity still out there. Most of that dropped off also some auto, that we had last year that dropped off. But it was talking about for the other, its still relatively small compared to obviously, deposits or mortgage so. But those are the areas that we saw the drop-off from last year. Didn't see much of a drop-off at all from the fourth quarter though.

Tom Evans

Just as sort of follow-up on what Ed said. We expect the cash flow, I mean that was a one-time. The 13.4 million that we spent on the acquisitions and the other items, we think will be a one-time. So the cash flow for the rest of the year should pretty much flow right to the bottom or into the company.

Operator

We'll take our next question from Carter Malloy with Stephens Inc.

Carter Malloy - Stephens Inc.

Can you talk a little bit about the new site and the monetization lift you are seeing there, now that its well lossened for a while? Also, maybe any effect on the average length of visit or site traffic behavior changes you've seen?

Tom Evans

Yeah. Thanks, Carter. Well, we're really pleased with the new site. It was a long time coming. We did a lot of testing to get it to where it is and we're really please with. One other things that we are trying to do with the new site is not only make it clear to the people who come to the site where they are on Bankrate, but get them faster to the high value places on the site. So we'd really reduce the rate table. It used to be five or six clicks and five or six pages to get to rate table now.

So it's clearly getting people faster. It's a visit to rate table ratio has improved. Depending upon how robust the tables are on any given day, it has done a good job of rate table visit to click improvements from monetization standpoint. Again, particularly, as the environment gets better, we should see that panning out very well. The one thing I'll caution folks in advance, the one thing that may change, we probably won't be as focused on counting page views as a metric.

It will probably more be in line with unique visitors and visitors to rate tables and things like that. Because as I said that we've taken out 70% of the page views in a rate table search to get people faster to those tables and allow them to be on the table, and compare, and do some of things that we have now integrated into the tables, and will be integrating into the tables. Time that it takes people to get there and the numbers of pages won't be as important a metric.

In an environment, I mean one of the reasons why we did that in past was that we had such a high demand on the display inventory that we used it, sort of, to create more inventory for our display advertisers. Now that there is not as much pressure on display, obviously we want to get people faster to the table. So it's working well. We are really pleased.

The other thing that we are seeing work well is just the flux units. We've designed the site now. We've got the site that accommodates the advertiser creative and the advertiser, the kind of ad that they want to run. Whether it be a skyscraper or what we used to call poster, it accommodates their need rather than sort of being template-based in what we had available. So it's much more flexible. It's much more nimble. It can reformat on the [site].

We can serve 100% one kind of ad unit or none of those ad units. We've got some new ad units with our new pencil ads and some of those things that are performing well. So it's really been sort of exciting to watch advertisers seem pleased and we are really pleased with the performance in early since April 1. So as we get more visibility on that and exactly how it's performing. But I would say so far so good. I got to tell you, the advertiser and consumer reaction has been almost 100% positive.

Carter Malloy - Stephens Inc.

Okay. I just understand where the modernization lift would be better in better times. But I am just curious to know have you any seen an absolute, just a yes or no, modernization lifts from the new site.

Tom Evans

In certain areas, sure. I mean, the rate table visits and then visit to click ratios, yes.

Carter Malloy - Stephens Inc.

Okay. Great.

Tom Evans

Yeah.

Carter Malloy - Stephens Inc.

Thanks for the answer there. On the conversion ratio on the back end for your Hyperlink advertisers, specifically in mortgage, I would expect that there is probably more window shopping now with refi and with rates. Have you seen any pushback because of a decrease conversion?

Tom Evans

No, in fact, we've almost sort of the opposite. There is a huge amount of volume. What I think lenders were able do in some cases is cherry-pick. I mean cherry-pick the best customers, cherry-pick the guys with the best FICO scores, the highest loan amounts and really be able to pick those guys that they really want and may know they can close. So it's such a high quality consumer that we have (inaudible) and anything about decline in the quality of consumer effects just the opposite.

Operator

We'll take our next question from Heath Terry, FBR Capital Markets.

Heath Terry - FBR Capital Markets

I was wondering if you could update us on what percentage of traffic was organic in the quarter. Then if could also just give us some insight, some additional insight into the traffic patterns at the non-Bankrate site. How much are they contributing to total traffic and how much are they driving growth now?

Tom Evans

Yeah, actually the organic traffic to the site was 86% in the quarter very, very strong. I can tell you, it was 88% in April, for example. So, the numbers compared to a year ago, the first quarter the organic traffic was 78%. So, it's the highest uniques we've ever had, the highest organic traffic level we've ever had. So from that standpoint, we are very possessive. 7% came through our partners and 70% came through paid search. In terms of the non-Bankrate traffic, it's still relatively small. It tends to be 10%...

Ed DiMaria

Yeah.

Tom Evans

...in that range. But it tends to be almost when you call search-oriented. That people who are on the CCG site or the Bankaholic site, they are just banging right through to the table. In some cases, for example, those tables reside on Bankrate, so they are getting people into the Bankrate sites for the rate table site.

Heath Terry - FBR Capital Markets

So due to the integrations, it's gets more difficult to look at them individually?

Tom Evans

Yeah. It sometimes.

Heath Terry - FBR Capital Markets

Okay. You've talked in the past about using some other channels, given how high organic traffic is for you using some of the other channels to drive incremental traffic or we had a point just given where the economic environment is that it's just not economically effective to try and use some of these other channels or something else leaving you away from them?

Tom Evans

No. It's the first time it just isn't bid. There just isn't enough demand. I mean first and foremost, what we want to do is we want to sell out the inventory on Bankrate, because it's the highest performing and that's what we get the most money for. It's the most end market consumer.

To be able to do some things, other than that are (inaudible) from an economic standpoint (inaudible) is appealing in this environment as is just optimizing the Bankrate environment. As I said the good news, bad news. The bad news about the first quarter was that we're so under optimized and so under monetized the traffic of the consumer that we have, that it was really this point because organic traffic was so strong.

So again, it's something we are working hard on. It's something that we think, as I said earlier, any improvement in the advertising environment is going to have a huge impact on our business. While we are doing okay. I mean we are not thrilled. We are not bumped out given the environment, and particularly the challenge that there are core advertising base faces.

We really are just trying to set up all our blocks. So they don't have to be fabulous, but just a decent environment. We're really in a position to take off with all the assets we have in place with the monetization opportunities that we built with the new site, the things we are doing with our other sites. We just think we're perfectly positioned to take advantage of that, so that's really what we're focused on in the near term.

Operator

We'll take our next question from Christa Quarles with Thomas Weisel Partners.

Christa Quarles - Thomas Weisel Partners

I wanted to flush out a little bit of stability and potentially second half recovery commentary. One, I guess is that directly related to the display side and not Hyperlinks. (Inaudible) some pretty challenging comps in Hyperlinks in the second half, since you could kind of discuss that?

Then two, are you finding that budgets have been getting released as it relates to obviously we've had an improvement in the stock market? Are you seeing just optimism on the part of some of your partners? You also mentioned that volume and sell-through off, does that mean that we should be expecting stability on the CPM side, if you can make some pricing comments?

Then anything around non-financial advertisers, so to the extent that autos or other categories like that, what percentage of the mix are they and are they any source of optimism? Thanks.

Tom Evans

Sure. As I'd take those one at a time. When we talk about the improvement, we're really talking about bulk and surprisingly, there is not as greater separation at times on the display and CPC stuff as you might think. Some of the programs are integrated. Some of the people run sort of concurrently. I think today if you look at the site the next couple of weeks, you'll see some of the larger guys that we were talking about being back doing both.

So they are really looking at trying to raise deposit cap or drive loans. How do we kind of use both the display environment and the CPC environment to do it? So when I commented, it was getting better. It really is both. The tables are more robust than they were and the display is better. In terms of the question about releasing budgets, yeah, the stuff has been booked. We've got more stuff booked right now for the rest of the quarter than we did sitting on February for the first quarter.

So we are feeling better about that. Several of the commitments run over the second quarter to the third. A couple of them are for the rest of the year. CPMs are holding up pretty well. This is not a pricing issue that we're experiencing. It's really a volume issue. It's whether guys are supporting particular products. It's whether they are marketing. It's about how much volume they want to do. It's not at a certain price we do a lot more. In this environment, that's not the discussion we are having.

The non-financial, we have got a number of non-financial advertisers. I mean I am looking at a list of 15 new non-financial advertisers. If they are not of the size that our financial advertisers are. Quite frankly, they don't pay the CPMs. It's why we didn't have a lot of non-endemic on the site for a long time when the site was in a position where we didn't have a lot of available inventory.

Because they just couldn't afford to get on. But it's a $20,000 campaign versus the $200,000 campaign that our bigger guys run. So there are bunch of non-financial advertisers. We love to have them on the site, but that's not where the real impact and the business comes from.

Christa Quarles - Thomas Weisel Partners

Got it. Just one quick follow-up.

Tom Evans

Sure.

Christa Quarles - Thomas Weisel Partners

Just anything on sort of countercyclical or debt release products and/or is there anything to do on the debit card side?

Tom Evans

Well, we do have debit cards on our platform. We do have debit cards on the credit card platform. The debit cards from a bounding standpoint don't pay anywhere near what credit cards do. So that's an active part of the business. But the real impact on the business is having the credit card guys and then back to marketing in a more normal environment.

Operator

We take our next question from Andrew Jeffery with SunTrust.

Andrew Jeffery - SunTrust

Tom, when you think about the business coming back, whenever that maybe, showing tentative signs of recovery now or threats in 2010. How do you envision it from sustainable top and bottom line growth standpoint? What gives you comfort given the likelihood that we're never going to see the kind of spreads and mortgage that we did in last cycle or maybe the level of profitability in the credit card business? How do you think in a sort of normalized environment you grow and what your margins are like?

Tom Evans

Well, first of all, there is just lots of available inventory, lots of opportunities and the consumer is still coming to the site looking for financial products. Financial institutions are not going to stop competing for customers whether they be mortgage customers, deposit customers, or credit card customers, or insurance customers. Given that, our cost structure is such that the incremental person who comes to the Bankrate site costs us nothing and the incremental dollar that are display advertisers or CPC advertisers would spent to us is 85%, that falls to the bottom line.

From a margin standpoint, we think we can get back to growing dramatically. I mean now there is no doubt in mind in a more normal environment. Again, I am not talking about everything being flat out fabulous, I am just talking about anything but a crummy environment. I think we get the company back above 40% margin. I mean, we said a year ago, when we made the acquisitions that we did, that we were going to go from, I think, 44% EBITDA margins down to mid-30s and then we'd be able to grow those over time. We certainly didn't see this economic environment that we are living in, but we are still hanging in there at mid-30s.

$10 million in incremental display advertising would throw 8, $9 million to the bottom line. So I think that how big that gets, we certainly got the capacity. We've certainly got the inventory. We've certainly got the consumer demand. We just need the advertising dollar to come back. We are the number two player in the online insurance business. We are the number two guy in the online credit card business. We're looking to grow both of those businesses.

Andrew Jeffery - SunTrust

Okay. So to say it other way, it doesn't sound like you feel as though you need a recovery in end markets or advertiser demand, or monetization, or pricing. How you are going to look at it? You don't need the magnitude of recovery that we saw at the top of last cycle, you get the business back above a 40% EBITDA margin.

Tom Evans

Goodness, it's not even close.

Ed DiMaria

Okay. I mean, I think we're just looking for people to get sort of back to that equilibrium and then spending at normal levels. We're going to see a huge impact from that. So I don't think you need to see anything like what some of those highs were. As Tom said, the traffic footprint we have today and the quality consumer that we have and the available inventory, just sort of a normal recovery is going to provide a pretty big top to the bottom line.

Operator

Ladies and gentlemen, we have time for one final question today. It does come from William Morrison with ThinkEquity.

William Morrison - ThinkEquity

Tom, I was wondering if you could provide a little bit more color on the breakout within graphical ads like possibly give us percentages of the different segments within that Group, kind of like you do for Hyperlinks. So, for instance, what percent was in like the insurance channel, credit cards, bankrate.com, et cetera, within graphical? Or if you don't want to do that, maybe some sense of the relative growth rates of those businesses.

Tom Evans

We don't break it out for a couple of reasons. First of all, it's hard to do at times. It gotten to break that out. Clearly, the display mortgage business was down, was poor. The deposit display business held up okay. The positive display businesses is improving. We expect some mortgage displays stuff to be coming back relatively soon and then watch the site and probably see some of that.

The insurance display stuff and the credit card display stuff has been sporadic. We haven't really gone hard after carriers because informative from a display advertising standpoint, although there are several. We're really trying to push those people on to the InsureMe platform and monetize those consumers that way rather than through display. So it's mostly been the traditional mortgage, general banking deposit and sort of branding stuff that's continued on the site. As I said, mortgage has been really soft from a display standpoint, deposits is okay.

Tom Evans

Thank you. Well, thanks everybody. Appreciate it. I think what we've always tried to reinforce is that overall, we are pleased [how] the business has held up as well it has. Even more important, we really believe that we're well-positioned for any improvement in the economic environment. If there is any improvement to display advertising environment, we will be impacted in a very positive way, pretty dramatically.

So the good news is traffic has held up well and the value of the Bankrate consumer, we believe is still among the highest available. So we are confident. As I am sure, you all were little tired of the current economic environment and would improve it. As I said, it doesn't have to get great, but it surely would be nice to have to see it get a little bit better for our customers and for the consumers out there.

So with that, I appreciate your joining us and thanks a lot. We'll report our progress in the months and quarters ahead. So thanks very much everybody.

Operator

This does conclude today's conference call. We appreciate your participation. You may disconnect at this time.

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