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29.10.2008 20:04:00
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TheStreet.com Reports Third-Quarter Financial Results
TheStreet.com, Inc. (Nasdaq: TSCM), a leading financial media company, reported financial results for its third quarter and nine months ended September 30, 2008.
Third-Quarter and Year-to-Date 2008 Results
For the quarter ended September 30, 2008, TheStreet.com reported revenue of $16.7 million, an increase of 4% over revenue of $16.1 million for the third quarter of 2007.
TheStreet.com reported a third-quarter net loss of $1.1 million, or $0.04 per basic and diluted share, as compared to net income of $3.8 million (excluding the impact of a non-cash income tax benefit of $16 million taken in the third quarter of 2007), or $0.13 per basic and diluted share, in the third quarter of 2007. Net loss attributable to common stockholders for the third quarter of 2008, after deducting preferred stock dividends of $0.1 million, was $1.2 million, or $0.04 per fully diluted share.
Earnings before interest, taxes, depreciation and amortization, excluding stock compensation of $1.0 million ("Adjusted EBITDA”), was $1.2 million, a decrease of 74% over Adjusted EBITDA of $4.5 million in the third quarter of 2007, exclusive of $0.5 million of stock compensation.
"Our quarterly results reflect the revenue impact of the weakened online advertising market,” said Thomas J. Clarke, Jr., chief executive officer of TheStreet.com. "While we remain committed to investing in our growth initiatives, we are reviewing our cost structure, as is prudent, in this difficult environment. Our strong balance sheet, with $80 million in cash and no bank debt, ensures we are particularly well positioned to navigate these headwinds.”
For the nine months ended September 30, 2008, TheStreet.com reported revenue of $55.4 million, an increase of 22% over revenue of $45.5 million for the same period of 2007.
The Company reported net income of $3.7 million for the nine months ended September 30, 2008, as compared to $10.3 million (excluding the impact of a non-cash income tax benefit of $16 million taken in the third quarter of 2007) reported in the same period of 2007. Net income attributable to common stockholders for the first nine months of 2008, after deducting preferred stock dividends of $0.3 million, was $3.4 million, or $0.11 per fully diluted share.
Earnings before interest, taxes, depreciation and amortization, excluding stock compensation of $2.6 million ("Adjusted EBITDA”), was $9.6 million, a decrease of 20% over Adjusted EBITDA of $11.9 million for the same period of 2007, exclusive of $1.6 million of stock compensation.
Third-Quarter Financial Highlights
- Marketing services revenue totaled $6.5 million for the third quarter of 2008, a decrease of 7% over revenue of $6.9 million for the third quarter of 2007.
| -- Advertising revenue totaled $5.4 million, an increase of 18% over revenue of $4.6 million in the quarter one year ago. |
| -- Interactive marketing services revenue, derived from Promotions.com, which was acquired on August 2, 2007, totaled $1.0 million. |
- Paid services revenue totaled $10.2 million for the third quarter of 2008, an increase of 11% over revenue of $9.2 million for the third quarter of 2007.
| -- Subscription revenue, excluding the impact of subscription revenue from TheStreet.com Ratings Print Directory business, which was outsourced in the second quarter of 2007, was $7.4 million, a decrease of 8% from $8.1 million in the year-ago quarter. |
| -- Syndication, licensing and information services revenue totaled $2.8 million, an increase of 231% over revenue of $0.8 million in the quarter one year ago, primarily resulting from the acquisition of Bankers Financial Products Corp. in November 2007. |
- During the quarter, the Company’s cash flow from operations totaled $1.8 million, with a negative free cash flow of $0.1 million.
- Interest income in the third quarter decreased $0.2 million, or 39%, year over year, as the effective yield on our cash balances declined to 1.71%, as compared to 5.12% in the year-ago quarter.
- The board of directors declared the Company's quarterly cash dividend, payable to all shareholders of record at the close of business on September 15, 2008. The cash dividend of $0.025 per share was paid September 30, 2008.
- As of September 30, 2008, cash, cash equivalents, marketable securities and restricted cash was $80.1 million. The Company has no bank debt.
Recent Company Highlights
- The Board of TheStreet.com has separated the positions of Chairman of the Board and Chief Executive Officer. Co-founder James J. Cramer has been appointed Chairman of the Board. This separation will allow Mr. Clarke to focus more of his efforts as Chief Executive Officer on navigating the company through this difficult economic environment.
- Earlier this month, TheStreet.com introduced performance-based advertising to its network of properties. This new revenue model debuted on BankingMyWay.com, through a partnership with Informa Research Services, and on Geezeo, with the launch of its Product Marketplace, where users can shop for custom-fit financial products.
- TheStreet.com remains the go-to network in challenging economic conditions, delivering year-over-year unique visitor growth of 27% and reaching an all-time high of 8 million average unique visitors per month during the quarter.
- TheStreet.com expanded its library of premium subscription products with the launch of BioTech Select in early September, a newsletter devoted to providing key insights into the biotechnology sector. Written by senior correspondent Adam Feuerstein, formerly a buy-side analyst and now the portfolio manager of Biotech Select, it leverages his long-time experience in analyzing the biotech space.
- TheStreet.com continued to aggressively pursue its mobile strategy during the quarter.
| -- In September, TheStreet.com began providing BlackBerry(R) smartphone users with automatic and free access to the latest stock market news, investing advice, stock picks and quotes. Features include: categorized content sections such as Latest News, Jim Cramer, Winners & Losers, Analyst Upgrades & Downgrades; personalized stock watch lists; quotes of the major indexes; and home-screen notification of new stories and updated content. The application, developed by mobile technology leader Polar Mobile, is available for download on a range of BlackBerry smartphones from Research In Motion. |
| -- Leading mobile TV service provider MobiTV selected TheStreet.comTV to join its new business video product, Mobi4Biz, which combines live TV and Video-on-Demand content. Mobi4Biz also features user-driven programming, where the consumer creates a watch list, and all content discovery within the application is related to that list. |
- TheStreet.comTV expanded on its previous relationship with Google’s YouTube by entering into an agreement last month to provide content to YouTube’s newly created branded channels, including Your Money. TheStreet.comTV’s video is syndicated and featured on a YouTube-hosted carousel of financial news and analysis videos running through December of this year.
- On October 25th, TheStreet.com hosted an investment conference, 2009 Money Making Strategies. Geared towards active investors, experts from a number of TheStreet.com’s subscription services provided insights on how to handle the recent unprecedented market volatility along with investment ideas for the coming year. This conference is the first in a series slated for 2009 that is designed to help investors prosper.
TheStreet.com will conduct a conference call today, October 29, 2008, at 4:30 p.m. ET to discuss these results. To participate in the call, dial 866.202.3048 (domestic) or 617.213.8843 (international). The passcode for the call is 93391485.
To access the Web cast of the call please visit:
http://www.thestreet.com/investor-relations/index.html?detail
About TheStreet.com, Inc.
TheStreet.com is a leading financial media company. It engages audiences on video and digital platforms through some of the Web’s best known sites: TheStreet.com, RealMoney.com, Stockpickr.com, BankingMyWay.com, MainStreet.com, Rate-Watch.com and Promotions.com. Through this network, the company produces and distributes content in all areas where life and money intersect to inform, engage and activate one of the most affluent, influential audiences on the Web today. For more information, please visit www.thestreet.com.
| THESTREET.COM, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| September 30, 2008 | December 31, 2007 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 52,886,994 | $ | 79,170,754 | ||||
| Marketable securities | 24,671,292 | - | ||||||
| Accounts receivable, net of allowance for doubtful | ||||||||
| accounts of $649,279 at September 30, 2008 and $242,807 at | ||||||||
| December 31, 2007 | 12,466,670 | 11,133,957 | ||||||
| Other receivables | 1,092,588 | 1,227,144 | ||||||
| Deferred taxes | 5,800,000 | 5,800,000 | ||||||
| Prepaid expenses and other current assets | 1,861,873 | 1,652,608 | ||||||
| Total current assets | 98,779,417 | 98,984,463 | ||||||
| Property and equipment, net of accumulated depreciation | ||||||||
| and amortization of $19,801,825 at September 30, 2008 | ||||||||
| and $17,493,847 at December 31, 2007 | 9,733,913 | 7,730,922 | ||||||
| Marketable securities | 1,917,942 | - | ||||||
| Long term investment | 1,392,976 | - | ||||||
| Other assets | 206,110 | 328,117 | ||||||
| Goodwill | 40,001,665 | 40,245,413 | ||||||
| Other intangibles, net | 16,645,526 | 18,368,792 | ||||||
| Deferred taxes | 10,200,000 | 10,200,000 | ||||||
| Restricted cash | 618,660 | 576,951 | ||||||
| Total assets | $ | 179,496,209 | $ | 176,434,658 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 3,371,859 | $ | 2,189,259 | ||||
| Accrued expenses | 3,050,873 | 5,006,635 | ||||||
| Deferred revenue | 16,068,563 | 16,240,008 | ||||||
| Other current liabilities | 376,424 | 214,654 | ||||||
| Current liabilities of discontinued operations | 227,003 | 232,242 | ||||||
| Total current liabilities | 23,094,722 | 23,882,798 | ||||||
| Other liabilities | 90,473 | 90,105 | ||||||
| Total liabilities | 23,185,195 | 23,972,903 | ||||||
| Stockholders' Equity: | ||||||||
| Preferred stock; $0.01 par value; 10,000,000 shares | ||||||||
| authorized; 5,500 shares issued and 5,500 shares | ||||||||
|
outstanding at September 30, 2008 and December 31, 2007; |
||||||||
| the aggregate liquidation preference totals $55,000,000 as of | ||||||||
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September 30, 2008 and $55,096,424 as of December 31, 2007 |
55 | 55 | ||||||
| Common stock; $0.01 par value; 100,000,000 shares | ||||||||
| authorized; 36,262,546 shares issued and 30,482,949 | ||||||||
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shares outstanding at September 30, 2008, and 36,006,137 |
||||||||
| shares issued and 30,254,137 shares outstanding | ||||||||
| at December 31, 2007 | 362,625 | 360,061 | ||||||
| Additional paid-in capital | 271,244,914 | 270,752,308 | ||||||
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Treasury stock at cost; 5,779,597 shares at September 30, 2008 |
||||||||
| and 5,752,000 shares at December 31, 2007 | (9,359,200 | ) | (9,033,471 | ) | ||||
| Accumulated deficit | (105,937,380 | ) | (109,617,198 | ) | ||||
| Total stockholders' equity | 156,311,014 | 152,461,755 | ||||||
| Total liabilities and stockholders' equity | $ | 179,496,209 | $ | 176,434,658 | ||||
| Note: Cash and cash equivalents is primarily comprised of a JP Morgan money market fund that invests exclusively in U.S. Treasury bills, notes and other obligations issued or guaranteed by the U.S. Treasury, and repurchase agreements collateralized by such obligations. Current marketable securities represents a direct purchase of one year U.S. Treasury bills, while noncurrent marketable securities represents an investment in two municipal auction rate securities. Additionally, the Company has pledged cash as a security deposit for operating leases, and this cash is therefore classified as restricted. |
| September 30, 2008 | December 31, 2007 | |||||
| Cash and cash equivalents | $ | 52,886,994 | $ | 79,170,754 | ||
| Current marketable securities | 24,671,292 | - | ||||
| Noncurrent marketable securities | 1,917,942 | - | ||||
| Noncurrent restricted cash | 618,660 | 576,951 | ||||
|
Total cash and cash equivalents, marketable securities, and restricted cash |
$ | 80,094,888 | $ | 79,747,705 | ||
| THESTREET.COM, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
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For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Net revenue: | ||||||||||||||||
| Paid services | $ | 10,244,212 | $ | 9,188,329 | $ | 31,293,620 | $ | 28,031,229 | ||||||||
| Marketing services | 6,478,367 | 6,930,030 | 24,065,875 | 17,493,982 | ||||||||||||
| Total net revenue | 16,722,579 | 16,118,359 | 55,359,495 | 45,525,211 | ||||||||||||
| Operating expense: | ||||||||||||||||
| Cost of services | 8,405,002 | 6,509,157 | 24,427,285 | 17,780,664 | ||||||||||||
| Sales and marketing | 3,550,363 | 2,619,286 | 10,944,352 | 9,004,490 | ||||||||||||
| General and administrative | 4,589,851 | 3,064,728 | 13,024,218 | 8,537,882 | ||||||||||||
| Depreciation and amortization | 1,481,670 | 654,397 | 4,330,054 | 1,469,539 | ||||||||||||
| Total operating expense | 18,026,886 | 12,847,568 | 52,725,909 | 36,792,575 | ||||||||||||
| Operating (loss) income | (1,304,307 | ) | 3,270,791 | 2,633,586 | 8,732,636 | |||||||||||
| Net interest income | 345,675 | 571,121 | 1,432,112 | 1,796,820 | ||||||||||||
| (Loss) income from continuing operations before income taxes | (958,632 | ) | 3,841,912 | 4,065,698 | 10,529,456 | |||||||||||
|
(Provision) benefit for income taxes |
(106,364 | ) | 15,923,174 | (377,985 | ) | 15,789,445 | ||||||||||
| (Loss) income from continuing operations | (1,064,996 | ) | 19,765,086 | 3,687,713 | 26,318,901 | |||||||||||
| Discontinued operations: | ||||||||||||||||
| Loss on disposal of discontinued operations | (3,079 | ) | (569 | ) | (7,895 | ) | (1,692 | ) | ||||||||
| Loss from discontinued operations | (3,079 | ) | (569 | ) | (7,895 | ) | (1,692 | ) | ||||||||
| Net (loss) income | (1,068,075 | ) | 19,764,517 | 3,679,818 | 26,317,209 | |||||||||||
| Preferred stock cash dividends | 96,424 | - | 289,272 | - | ||||||||||||
| Net (loss) income attributable to common stockholders | $ | (1,164,499 | ) | $ | 19,764,517 | $ | 3,390,546 | $ | 26,317,209 | |||||||
| Basic net (loss) income per share: | ||||||||||||||||
| (Loss) income from continuing operations | $ | (0.04 | ) | $ | 0.68 | $ | 0.12 | $ | 0.92 | |||||||
| Loss on disposal of discontinued operations | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||||
| Net (loss) income | (0.04 | ) | 0.68 | 0.12 | 0.92 | |||||||||||
| Preferred stock cash dividends | (0.00 | ) | - | (0.01 | ) | - | ||||||||||
| Net (loss) income attributable to common stockholders | $ | (0.04 | ) | $ | 0.68 | $ | 0.11 | $ | 0.92 | |||||||
| Diluted net (loss) income per share: | ||||||||||||||||
| (Loss) income from continuing operations | $ | (0.04 | ) | $ | 0.67 | $ | 0.11 | $ | 0.91 | |||||||
| Loss on disposal of discontinued operations | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||||
| Net (loss) income | (0.04 | ) | 0.67 | 0.11 | 0.91 | |||||||||||
| Preferred stock cash dividends | (0.00 | ) | - | - | - | |||||||||||
| Net (loss) income attributable to common stockholders | $ | (0.04 | ) | $ | 0.67 | $ | 0.11 | $ | 0.91 | |||||||
| Weighted average basic shares outstanding | 30,482,949 | 29,085,700 | 30,442,955 | 28,488,315 | ||||||||||||
| Weighted average diluted shares outstanding | 30,482,949 | 29,544,323 | 34,713,061 | 28,936,043 | ||||||||||||
To supplement the Company's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), TheStreet.com uses non-GAAP measures of certain components of financial performance, including "EBITDA", "Adjusted EBITDA” and "free cash flow". EBITDA is adjusted from results based on GAAP to exclude interest, taxes, depreciation and amortization. This non-GAAP measure is provided to enhance investors' overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes that the non-GAAP EBITDA results are an important indicator of the operational strength of the Company’s business and provide an indication of the Company’s ability to service debt and fund capital expenditures. EBITDA eliminates the uneven effect of considerable amounts of noncash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations. Adjusted EBITDA further eliminates the impact of noncash stock compensation expense. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s businesses. Management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets and investment spending levels. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measure included in this press release has been reconciled to the nearest GAAP measure.
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For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Adjusted EBITDA | $ | 1,160,360 | $ | 4,507,493 | $ | 9,594,953 | $ | 11,934,806 | ||||||||
| Less stock compensation | (986,076 | ) | (536,898 | ) | (2,639,208 | ) | (1,608,479 | ) | ||||||||
| EBITDA | 174,284 | 3,970,595 | 6,955,745 | 10,326,327 | ||||||||||||
| Add net interest income | 345,675 | 571,121 | 1,432,112 | 1,796,820 | ||||||||||||
| Less taxes | (106,364 | ) | 15,877,198 | (377,985 | ) | 15,663,601 | ||||||||||
| Less depreciation and amortization | (1,481,670 | ) | (654,397 | ) | (4,330,054 | ) | (1,469,539 | ) | ||||||||
| Net (loss) income | $ | (1,068,075 | ) | $ | 19,764,517 | $ | 3,679,818 | $ | 26,317,209 | |||||||
"Free cash flow” means net (loss) income plus non-cash expenses less changes in working capital and capital expenditures. TheStreet.com believes that this non-GAAP financial measure is an important indicator of the Company's financial results because it gives investors a clear view of the Company's ability to generate cash. The presentation of this non-GAAP financial measure should be considered in addition to TheStreet.com's GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
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For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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| 2008 | 2007 | 2008 | 2007 | ||||||||||
| Free cash flow | $ | (93,202 | ) | $ | 805,819 | $ | 4,376,486 | $ | 5,903,160 | ||||
| Non-cash expenses | (2,838,490 | ) | 14,808,312 | (7,525,732 | ) | 12,892,142 | |||||||
| Changes in working capital | (18,574 | ) | 3,344,365 | 2,452,512 | 4,157,536 | ||||||||
| Capital expenditures | 1,882,191 | 806,021 | 4,376,552 | 3,364,371 | |||||||||
| Net (loss) income | $ | (1,068,075 | ) | $ | 19,764,517 | $ | 3,679,818 | $ | 26,317,209 | ||||
Statements contained in this news release not related to historical facts may be deemed forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties (described in the Company's SEC filings) that could cause actual results to differ.
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