Certain statements contained in this Management's Discussion and Analysis of Financial Conditions and Results of Operations ("MD&A") constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements about our beliefs, plans, objectives, goals, expectations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "target," "goal," and similar expressions are intended to identify forward-looking statements.

All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in our forward-looking statements. Please see the Introductory Note and Item 1A. Risk Factors in our 2007 Annual Report on Form 10-K, as updated in our subsequent reports filed on Form 10-Q, and in our other filings made from time to time with the SEC after the date of this report, for a more detailed discussion of factors that could cause our actual results to differ materially from those in the forward-looking statements. However, factors other than those discussed in the Introductory Note, in Items 1A. Risk Factors or elsewhere in this Quarterly Report or our 2007 Annual Report on Form 10-K also could adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by us or on our behalf speak only as of the date they are made. We do not undertake to update any forward-looking statement, except as required by applicable law.

The MD&A is divided into sections entitled "Executive Summary," "Accounting Policies", "Results of Operations," "Liquidity and Capital Resources," and "Off Balance Sheet Arrangements." Information therein should help provide a better understanding of the major factors and trends that affect our earnings performance and financial condition, and how our performance during 2008 compares to prior years.

EXECUTIVE SUMMARY

Overview

Bankrate, Inc. and its subsidiaries (the "Company", "Bankrate," "we", "us," "our") own and operate an Internet-based consumer banking and personal finance network. Our flagship web site, Bankrate.com, is one of the web's leading aggregators of information on more than 300 financial products and fees, including mortgages, credit cards, automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans, online banking fees, insurance products, credit cards, college finance and other financial products. Through our recent acquisitions in the fourth quarter of 2007 and first quarter of 2008, we also market a comprehensive line of consumer and business credits cards; we offer consumers competitive insurance rates for auto, home life, health and long-term care; we maintain an open marketplace to break down complicated vendor fees associated the mortgage loan process, empowering consumers with comprehensive information to make informed decisions and reduce their real estate and mortgage transaction costs; and we offer editorial listings and other products that assist consumers and financial professionals learn more about options for college financing. Additionally, we provide financial applications and information to a network of online distribution partners and national, regional and local publications. Through our Online Network, which includes Bankrate.com, Interest.com, Nationwidecardservices.com, creditcardsearchengine.com, Insureme.com, Savingforcollege.com, Mortgage-calc.com, Feedisclosure.com, and Bankrate.com.cn
(China), as well as co-branded web sites hosted by our network of online distribution partners, we provide the tools and information via a suite of products and services that can help consumers make better informed financial decisions. Our Online Network also includes operations of Bankrate Select, our mortgage loan lead generator partnership.

In addition to our Online Network, we also produce traditional print products, including the Mortgage Guide and the Deposit Guide, as well as three newsletters. We also syndicate our original editorial content to major print publications such as The Wall Street Journal, The New York Times, USA Today and others.

We operate a traditional media business on the Internet. We believe we have a high quality, informed audience who stand ready to transact with our advertisers. Bankrate.com is one of the leading web sites for financial information and advice according to comScore Media Metrix.

We regularly survey more than 4,800 financial institutions in more than 575 markets in all 50 states to compile the most current, objective, and unbiased information. Because we have developed a reputation of providing current, objective, and unbiased information, hundreds of print and online partner publications have come to depend on us as their trusted source for financial rates and information.

We believe that an important component of our success has resulted from being recognized as the leader in providing fully researched, comprehensive, independent, objective financial content and data. As a result, we continue to maximize distribution of our research to gain brand recognition as a research authority. We continue to build greater brand awareness of our Online Network and to reach a greater number of online users. Bankrate.com had nearly 53 million unique visitors for the year ended December 31, 2006, nearly 60 million unique visitors for the year ended December 31, 2007, and nearly 39 million unique visitors in the first half of 2008, according to Omniture, a web analytics tool.

We market to advertisers targeting a specific audience in a city or state and also to national advertisers targeting the entire country. Financial institutions that are listed in our rate tables have the opportunity to hyperlink their listings. By clicking on the hyperlink, users are taken to the institution's web site. We sell our hyperlinks on a cost-per-click ("CPC") pricing model. Under this arrangement, advertisers pay Bankrate a specific, pre-determined cost each time a consumer clicks on that advertiser's hyperlink or phone icon (usually found under the advertiser's name in the rate table listings). All clicks are screened for fraudulent characteristics by an independent third party vendor and then charged to the advertiser's account.

Our most common graphic advertisement sizes are leader boards (728 x 90 pixels) and banners (486 x 60 pixels), which are prominently displayed at the top or bottom of a page, skyscrapers (160 x 600 or 120 x 600 pixels), islands (250 x 250 pixels), and posters (330 x 275 pixels). Posters are oversized advertisements that contain more information than traditional banner advertisements. These advertisements are sold according to the cost-per-thousand impressions ("CPM") the advertiser receives, and in fixed-billed campaigns. With the launch of the new re-designed web site in 2008, we plan to accommodate additional advertisement configurations including video. The new re-designed web site will also provide dynamic page reformatting to help optimize the monetization of the site. These advertisements can be targeted to specific areas of our Online Network or on a general rotation basis. In addition, we offer product specific issues that are available for single sponsorships. Rates for product special issues are based on expected impression levels and additional content requirements. Advertising rates may vary depending upon the product areas targeted (home equity has a higher CPM than auto), geo-targeting (a premium for targeting advertisements to a specific state), the quantity of advertisements purchased by an advertiser, and the length of time an advertiser runs an advertisement on our Online Network.

We also generate revenue through the sale of leads in the mortgage, credit card and insurance channels. Through Bankrate Select and FastFind, Nationwide Card Services, and InsureMe, we sell leads to mortgage lenders and brokers, to credit card issuers, and to insurance agents, respectively. In the mortgage and insurance categories, we receive revenue on a cost-per-lead ("CPL")basis, while credit card issuers pay us on a per approved application basis. Leads are generated through the various affiliate networks, via co-brands, and through display advertisements.

The key drivers of our business include the content we produce, the number of in-market consumers visiting our Online Network, the number of page views they generate, and the demand of our Online Network advertisers. Since 2001, the number of advertisers on our web sites has grown steadily. Annual unique visitors and page views have grown from approximately 40 million and 237 million, respectively, in 2001, to almost 60 million and 554 million, respectively, in 2007. Page views for the quarter ended June 30, 2008 were 147.9 million compared to 136.1 million for the same period in 2007; and were 362.3 million for the six months ended June 30, 2008 compared to 279.3 million for the same period in 2007.

Our gross margin as a percentage of revenue averaged 75% from 2002 to 2005. Our gross margin percentage decreased for the year ended December 31, 2006 to 69%, due to the inclusion of the results of FastFind, MMIS and Interest.com, which we acquired in the fourth quarter of 2005, and increased to 73% for the year ended December 31, 2007. The newspaper rate table business gross margin percentage has averaged 11% over the last two years, and we expect margins for this business to be in the 7% to 10% range for fiscal 2008. As online publishing revenue continued to grow as a percentage of total revenue, our overall gross margin percentage expanded. Through the end of 2007, online revenue represented 88% of total revenue and 98% of gross margin dollars, compared to 80% of total revenue and 97% of gross margin dollars for the year ended December 31, 2006. For the six months ended June 30, 2008, online revenue represented 94% of total revenue and 99% of gross margin dollars. With the addition of Nationwide Card Services ("NCS"), and InsureMe, Inc. ("InsureMe"), whose legacy "affiliate driven" business models operate at significantly lower gross margins than our online publishing business, our gross margin declined to 59% for the six months ended June 30, 2008. We believe we can improve NCS's and InsureMe's business margins by driving Bankrate traffic to these products, through our advertising efforts, our content sharing and other products. Also contributing to the gross margin decline in 2008 was a $2.9 million, or 21%, sequential drop in hyperlink revenue in the second quarter due to a 66.5 million, or 31%, decline in page views (see Results of Operations - Online Publishing Revenue below). We expect our online publishing revenue to continue to grow and command a larger percentage of revenue in the future while print publishing and licensing revenue remains flat or decreases.

We have steadily reduced operating expenses as a percentage of total revenue from 58% in 2002, to 44% in 2007, and to 40% in the second quarter of 2008, up from 36% in the first quarter of 2008 due to a sequential decline in online revenue (see Results of Operations - Online Publishing Revenue below). We generated just over $18.7 million in cash from operations in the first six months of 2008 and our cash balance was $75.2 million as of June 30, 2008 after spending an aggregate of approximately $97.7 million for acquisitions in the fourth quarter of 2007 and first quarter of 2008.

              Operating Expenses as a Percentage of Total Revenue




(In thousands)                     Q2 08        Q1 08         2007         2006         2005         2004         2003
Total revenue                     $ 40,193     $ 42,463     $ 95,592     $ 79,650     $ 49,049     $ 39,204     $ 36,621
Operating expenses                  16,038       15,195       42,099       40,749       21,993       21,130       19,301
Operating expenses as a
percentage of total revenue             40 %         36 %         44 %         51 %         45 %         54 %         53 %

Significant Developments

On February 5, 2008, we completed the acquisition of certain assets and liabilities of InsureMe, Inc., a Colorado corporation ("InsureMe"), for $65 million in cash with an additional $20 million in potential cash earn-out payments based on achieving certain performance metrics over the next two years. InsureMe, based in Englewood, Colorado, operates a web site and a network of hundreds of affiliates that offer consumers competitive insurance rates for auto, home, life, health and long-term care. We paid $58.5 million on February 5, 2008, and $6.5 million was placed in escrow to satisfy certain indemnification obligations of the InsureMe shareholders, utilizing cash on hand. The acquisition was accounted for as a purchase and the results of operations of InsureMe for the period from February 1, 2008 to March 31, 2008 are included in our condensed consolidated financial statements. Approximately $40.3 million in goodwill was recorded by us, which reflects the adjustments necessary to allocate the purchase price to the fair value of the assets acquired and the liabilities assumed.

Also on February 5, 2008, we acquired certain assets and liabilities of Lower Fees, Inc., a California corporation d/b/a "Fee Disclosure" ("Fee Disclosure"), for $2.85 million in cash and an additional amount in potential cash earn-out payments based on the achievement of certain financial performance metrics over the next five years. Fee Disclosure, based in Westlake Village, California, has developed a patent pending online portal to create an open marketplace to break down complicated vendor fees associated with the mortgage process. Fee Disclosure empowers consumers with comprehensive information to make informed real estate decisions and reduce their real estate and mortgage transaction costs. We paid $2.85 million on February 5, 2008 utilizing cash on hand. The acquisition was accounted for as a purchase and the results of operations of InsureMe for the period from February 1, 2008 to March 31, 2008 are included in our condensed consolidated financial statements. Approximately $635,000 in goodwill was recorded by us, which reflects the adjustments necessary to allocate the purchase price to the fair value of the assets acquired and the liabilities assumed.

On December 7, 2007, we acquired certain assets and liabilities of Nationwide Card Services, Inc. ("NCS") for $27.4 million in cash. We paid $23.9 million in cash to the sellers and $3.5 million was placed in escrow to satisfy certain indemnification obligations of the NCS sellers. Section 2.9 of the NCS Agreement calls for potential Earn-Out Payments of up to $7 million through December 31, 2009 based on the achievement of certain financial performance metrics. NCS, based in Memphis, Tennessee, markets a comprehensive line of consumer and business credit cards via the Internet. The acquisition was accounted for as a purchase and NCS's results of operations are included in our condensed consolidated financial statements. Approximately $13.2 million in goodwill was recorded by us, which reflects the adjustments necessary to allocate the purchase price to the fair value of the assets acquired and the liabilities assumed.

On December 5, 2007, we acquired certain assets and liabilities of Savingforcollege.com, LLC a New York limited liability company ("SFC"), for $2.3 million in cash. We paid $1.9 million to the SFC sellers and $400,000 was placed in escrow to satisfy customary indemnification provisions in the SFC Agreement.
Section 2.9 of the SFC Agreement calls for potential Earn-Out Payments of up to $2 million through December 31, 2010 based on the achievement of certain financial performance metrics. This acquisition strengthened our editorial offerings on assisting consumers and financial professionals learn more about options for college financing. The acquisition was accounted for as a purchase and SFC's results of operations are included in our condensed consolidated financial statements. Approximately $521,000 in goodwill was recorded by us, which reflects the adjustments necessary to allocate the purchase price to the fair value of the assets acquired and the liabilities assumed.

The acquisitions described above affect the comparability of our results of operations for the three and six-month periods ended June 30, 2008 to the comparable periods in 2007 since the results of operations of these acquired companies are not included in those periods.

In April 2008, we launched the Bankrate China web site (Bankrate.com.cn). Bankrate China provides Chinese consumers with the same type of financial education programs that Bankrate.com provides to the United States consumer with our financial basics, guides, calculators, product comparisons, and rate information. To date, no material revenues have been generated by Bankrate China.

Legal Proceedings

BanxCorp Litigation

On July 20, 2007, BanxCorp, a privately held company located in White Plains, New York, filed a complaint against us in the United States District Court for the District of New Jersey. The complaint alleges that we engaged in a plan of misconduct that has unreasonably restrained trade and substantially lessened competition in the marketplace, thereby monopolizing trade and commerce. BanxCorp alleges that we engaged in predatory pricing, vendor lock-in, exclusionary product and distribution bundling and tie-in arrangements, anticompetitive acquisitions and market division agreements.

The action brought by the complaint is for unspecified equitable and monetary relief under the Sherman and Clayton Acts, including treble damages, and under state statutes, including the New Jersey Antitrust Act.

We believe that the allegations in the complaint are without merit and intend to vigorously defend against them. On October 19, 2007, we filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted. On July 7, 2008, the Court issued an opinion in which it found that the complaint failed to state claims under the Sherman Act, but denied the motion to dismiss and directed the plaintiff to file an amended complaint providing greater detail regarding the Sherman Act claims and certain other claims. The amended complaint is due on or before August 21, 2008.

Because the outcome of the suit is uncertain at this time, we cannot estimate the amount of loss, if any, that could result from an adverse resolution of this matter.

ACCOUNTING POLICIES

Critical Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenue and expenses during the period. We base our judgments, estimates and assumptions on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We evaluate our judgments, estimates and assumptions on a regular basis and make changes accordingly. We believe that the judgments, estimates and assumptions involved in the accounting for income taxes, the allowance for doubtful accounts receivable, share-based compensation, and goodwill impairment, have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. There have been no significant changes in our critical accounting policies or estimates during the six months ended June 30, 2008 as compared to the critical accounting policies and estimates disclosed in Management's Discussion and Analysis of Financial Condition and results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2007.

RESULTS OF OPERATIONS

The following is our analysis of the results of operations for the periods covered by our financial statements, including a discussion of the accounting policies and practices (income taxes, allowance for doubtful accounts, share-based compensation, and goodwill impairment) that we believe are critical to an understanding of our results of operations and to making the estimates and judgments underlying our financial statements. This analysis should be read in conjunction with our interim condensed consolidated financial statements, including the related notes thereto. Other accounting policies are contained in Note 2 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data in our 2007 Annual Report on Form 10-K. A detailed discussion of our accounting policies and procedures is set forth in the applicable sections of this analysis.

Results of Operations

Revenue

                                 Total Revenue




 (In thousands)                    Q2 08      Q1 08      Q4 07      Q3 07      Q2 07      Q1 07
 Online publishing                $ 37,814   $ 40,005   $ 22,779   $ 21,624   $ 20,240   $ 19,052
 Print publishing and licensing      2,379      2,458      2,453      3,229      3,039      3,176

                                  $ 40,193   $ 42,463   $ 25,232   $ 24,853   $ 23,279   $ 22,228

Online Publishing Revenue

We sell graphic advertisements on our Online Network consisting primarily of leaderboards, banners, badges, islands, posters and skyscraper advertisements. These advertisements are sold to advertisers according to the cost-per-thousand impressions ("CPM") or cost-per-lead ("CPL") the advertiser receives, and in fixed-billed campaigns. The amount of advertising we sell is a function of
(1) the number of visitors to our Online Network, (2) the number of ad pages we serve

to those visitors, (3) the click through rate of our visitors on hyperlinks,
(4) the number of advertisements per page, (5) the rate at which consumers apply for financial product offerings, and (6) advertiser demand. Advertising sales are invoiced monthly at amounts based on specific contract terms. When the number of impressions over the contract term is guaranteed, the monthly invoiced amount is based on the monthly contractual number of impressions delivered at the contractual price or CPM. Revenue is recognized monthly based on the actual number of impressions delivered, and the revenue corresponding to any under-delivery is deferred as unearned income on the balance sheet and is recognized later when the under-delivery is served. When the number of impressions over the contract term is not guaranteed, the monthly invoiced amount is determined and revenue is recognized based on the actual number of impressions delivered at the contractual price or CPM. We also recognize revenue based on the actual number of leads generated in the month the lead is approved. Additionally, we generate revenue on a "per action" basis (i.e., a purchase or completion of an application) when a visitor to our Online Network transacts with one of our advertisers after viewing an advertisement. Revenue is recognized monthly based on the number of actions reported by the advertiser, subject to our verification. We are also involved in revenue sharing arrangements with our online partners where the consumer uses co-branded sites hosted by us. Revenue is effectively allocated to each partner based on the revenue earned from each site. The allocated revenue is shared according to distribution agreements. Revenue is recorded at gross amounts and partnership payments are recorded in cost of revenue, pursuant to the provisions of Emerging Issues Task Force ("EITF") Issue No. 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent. We also sell hyperlinks (interest rate table listings) on our Online Network on a cost-per-click, or CPC basis. Advertisers pay us each time a visitor to our Online Network clicks on a rate table listing, net of invalid clicks. We also sell text links on our rate pages to advertisers on a CPC basis. Advertisers enter an auction bidding process on a third-party web site for placement of their text link based on the amount they are willing to pay for each click through to their web site. We recognize revenue monthly for each text link based on the number of clicks at the CPC contracted for during the auction bidding process.

                      Quarterly Online Publishing Revenue




(In thousands)                     Q2 08      Q1 08      Q4 07      Q3 07      Q2 07      Q1 07
Graphic ads and lead generation   $ 27,139   $ 26,445   $ 12,503   $ 11,747   $ 12,040   $ 10,472
Hyperlinks                          10,675     13,560     10,276      9,877      8,200      8,580

                                  $ 37,814   $ 40,005   $ 22,779   $ 21,624   $ 20,240   $ 19,052

Online publishing revenue of $37,814,000 for the three months ended June 30, 2008 was approximately $17,574,000, or 87%, higher than the $20,240,000 reported for the same period in 2007. This increase was due to a $15,098,000, or 125%, increase in graphic ad and lead generation revenue, and a $2,476,000, or 30%, increase in hyperlink revenue.

Page views for the quarter ended June 30, 2008 were 147.9 million and were 11.8 million, or 9%, higher than the 136.1 million reported in the same period in 2007.

The 125% increase in graphic ad and lead generation revenue during the quarter ended June 30, 2008 was driven by an increase in advertiser demand for our Bankrate Select lead generation products, and the new credit card and insurance product revenue from our fourth quarter 2007 and first quarter 2008 acquisitions, offset by a decline in graphic ad network revenue. The graphic ad revenue decline was a result of the global problems in the banking and financial sectors which directly impacted display advertising volumes from several of our largest financial advertisers. While we do not believe that the display advertising environment is further deteriorating, we believe we can drive more traffic to higher value areas of our Online Network including search results and lead generation to offset the declines in display advertising.

The increase in hyperlink revenue of 30% for the quarter ended June 30, 2008 compared to the same period in 2007 was driven by an increase in revenue per click as well as an increase in the total amount of clicks processed.

Online publishing revenue of $77,819,000 for the six months ended June 30, 2008 was approximately $38,527,000, or 98%, higher than the $39,292,000 reported for the same period in 2007. This increase was due to a $30,930,000, or 137%, increase in graphic ad and lead generation revenue, and a $7,597,000, or 46%, increase in hyperlink revenue.

. . .