TheStreet.com Reports Second-Quarter Financial Results Thursday, July 31, 2008 10:30 AM
Symbols: TSCM
Expanding Network Drives 32% Year-Over-Year Revenue Growth
Reminder: Conference Call Today at 11:00 a.m. ET
TheStreet.com, Inc. (Nasdaq: TSCM), a leading financial media company,
reported financial results for its quarter and half-year, ended June 30,
2008.
Second-Quarter and Year-to-Date 2008
Results
For the quarter ended June 30, 2008, TheStreet.com reported revenue of
$19.7 million, an increase of 32% over revenue of $14.9 million for the
second quarter of 2007.
TheStreet.com reported second-quarter net income of $2.3 million, or
$0.07 per basic and diluted share, as compared to $3.6 million, or $0.12
per basic and diluted share, in the second quarter of 2007. Net income
attributable to common stockholders for the second quarter of 2008,
after deducting preferred stock dividends of $0.1 million, was $2.2
million, or $0.07 per fully diluted share.
Earnings before interest, taxes, depreciation and amortization,
excluding stock compensation of $1.0 million (“Adjusted
EBITDA”), was $4.6 million, an increase of 16%
over Adjusted EBITDA of $3.9 million in the second quarter of 2007,
exclusive of $0.5 million of stock compensation.
“Our second-quarter results confirm that our
decision to position TheStreet.com network as the leading online
destination for ‘all things money’
continues to resonate with the advertising community,”
said Thomas J. Clarke, Jr., chairman and chief executive officer of
TheStreet.com. “With a record number of unique
visitors, the highest monetization rate in our history and our continued
strength with non-financial advertisers, we are well positioned to take
advantage of the opportunities before us.”
For the six months ended June 30, 2008, TheStreet.com reported revenue
of $38.6 million, an increase of 31% over revenue of $29.4 million for
the same period of 2007.
The Company reported net income of $4.7 million for the six months ended
June 30, 2008, as compared to $6.6 million reported in the same period
of 2007. Net income attributable to common stockholders for the first
half of 2008, after deducting preferred stock dividends of $0.2 million,
was $4.6 million, or $0.14 per fully diluted share.
Earnings before interest, taxes, depreciation and amortization,
excluding stock compensation of $1.7 million (“Adjusted
EBITDA”), was $8.4 million, an increase of 14%
over Adjusted EBITDA of $7.4 million for the same period of 2007,
exclusive of $1.1 million of stock compensation.
Second-Quarter Financial Highlights
-
Marketing services revenue totaled $9.4 million for the second quarter
of 2008, an increase of 71% over revenue of $5.5 million for the
second quarter of 2007.
-
Advertising revenue totaled $6.4 million for the current quarter,
an increase of 16% over revenue of $5.5 million in the quarter one
year ago.
-
Interactive marketing services revenue, derived from
Promotions.com, which was acquired on August 2, 2007, totaled $3.0
million for the second quarter.
-
Paid services revenue totaled $10.3 million for the second quarter of
2008, an increase of 9% over revenue of $9.4 million for the second
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 $7.6 million, a
decrease of 5% from the $8.0 million in the prior year.
-
Syndication, licensing and information services revenue totaled
$2.7 million for the current quarter, an increase of 217% 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.
-
Marketing services and paid services revenue in the second quarter of
2008 accounted for 48% and 52%, respectively, of total revenue. This
compares to a revenue mix of 37% for marketing services and 63% for
paid services in the second quarter of 2007.
-
TheStreet.com reported a 34% year-over-year increase in non-financial
advertising revenue in the quarter. Non-financial advertising revenue
represents 45% of total advertising revenue in the quarter, up from
39% in the second quarter of 2007.
-
During the quarter, the Company generated cash flow from operations of
$2.1 million, while free cash flow totaled $1.0 million.
-
As of June 30, 2008, cash, cash equivalents and restricted cash stood
at $81.1 million. The Company has no bank debt.
-
Interest income in the second quarter decreased 34% year over year, as
the effective yield on our cash balances declined to 1.92%, as
compared to 5.23% in the prior year.
-
The board of directors declared the Company's quarterly cash dividend,
payable to all shareholders of record at the close of business on June
24, 2008. The cash dividend of $0.025 per share was paid on June 30,
2008.
Recent Company Highlights
-
TheStreet.com entered into a content distribution agreement with
Internet Broadcasting Systems to provide articles and videos from its
network of properties to the Web sites of local television stations
included in the IBS Network. Content from TheStreet.com,
Stockpickr.com and TheStreet.com TV join content from MainStreet.com,
which was already a featured content provider to the Internet
Broadcasting Local Network.
-
TheStreet.com continued to expand its relationship with Google’s
YouTube. TheStreet.com TV became a premium content partner with
YouTube, entering into a content licensing agreement that will create
an ad-supported TSC channel within YouTube. The ad-supported channel
will feature greater TSC network branding, including links to www.mainstreet.com
and an increase in video content delivered daily. The TSC YouTube
Channel will be monetized through Google advertising programs and
deliver to YouTube viewers an enhanced Street.com TV experience when
visiting the Channel.
-
TheStreet.com launched two new subscription newsletter products in the
second quarter:
-
“Nails on the Numbers”
was launched in partnership with long-time and popular contributor
Lenny “Nails”
Dykstra. As the exclusive home of Dykstra’s
“deep in the money calls,”
the product’s trading strategy focuses
on undervalued option prices for large, blue-chip companies.
-
TheStreet.com “InsiderInsights”
was also launched. Researched and written by Jonathan Moreland,
who has been tracking insider activity for nearly 15 years, “InsiderInsights”
focuses on bullish and bearish stock recommendations based on
insider buying and selling.
-
Promotions.com, along with its partner The Marketing Store, was
awarded the Webby People’s Voice Award in
the “Email Marketing”
category for the McDonald’s Monopoly
promotion, the largest online promotion in the world.
-
TheStreet.com and Dividend.com, the number one source for dividend
stock research, entered into a content sharing agreement that will
feature Dividend.com content prominently on TheStreet.com network of
sites. Dividend.com provides daily news updates and analysis on
dividend stocks. Dividend.com will be powered by TheStreet.com,
allowing the Company to sell advertising on its site.
-
TheStreet.com won two New York Press Club Awards. The Company captured
honors in the Best Business and Best Political coverage in the
Internet category.
TheStreet.com will conduct a conference call today July 31, 2008, at
11:00 a.m. EST to discuss these results. To participate in the call,
dial 866.761.0749 (domestic) or 617.614.2707 (international).
The passcode for the call is 30947627.
To access the Web cast of the call please visit:
http://www.thestreet.com/investor-relations/index.html?detail
Include=IROL-IRhome (Due to its length, this URL may need to be
copied/pasted into your Internet browser's address field. Remove the
extra space if one exists.)
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
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
December 31, 2007
|
|
ASSETS
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
80,445,570
|
|
|
$
|
79,170,754
|
|
|
Accounts receivable, net of allowance for doubtful
accounts
of $362,936 at June 30, 2008 and $242,807
at December 31,
2007
|
|
|
|
|
|
|
|
12,418,910
|
|
|
|
11,133,957
|
|
|
Other receivables
|
|
|
1,227,468
|
|
|
|
1,227,144
|
|
|
Deferred taxes
|
|
|
5,800,000
|
|
|
|
5,800,000
|
|
|
Prepaid expenses and other current assets
|
|
|
2,573,372
|
|
|
|
1,652,608
|
|
|
Total current assets
|
|
|
102,465,320
|
|
|
|
98,984,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation
and
amortization of $18,982,016 at June 30, 2008
and $17,493,847
at December 31, 2007
|
|
|
|
|
|
|
|
8,671,531
|
|
|
|
7,730,922
|
|
|
Long term investment
|
|
|
1,392,976
|
|
|
|
-
|
|
|
Other assets
|
|
|
222,927
|
|
|
|
328,117
|
|
|
Goodwill
|
|
|
40,001,665
|
|
|
|
40,245,413
|
|
|
Other intangibles, net
|
|
|
17,334,670
|
|
|
|
18,368,792
|
|
|
Deferred taxes
|
|
|
10,200,000
|
|
|
|
10,200,000
|
|
|
Restricted cash
|
|
|
618,660
|
|
|
|
576,951
|
|
|
Total assets
|
|
$
|
180,907,749
|
|
|
$
|
176,434,658
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,265,764
|
|
|
$
|
2,189,259
|
|
|
Accrued expenses
|
|
|
3,470,673
|
|
|
|
5,006,635
|
|
|
Deferred revenue
|
|
|
17,199,950
|
|
|
|
16,240,008
|
|
|
Other current liabilities
|
|
|
390,418
|
|
|
|
214,654
|
|
|
Current liabilities of discontinued operations
|
|
|
223,925
|
|
|
|
232,242
|
|
|
Total current liabilities
|
|
|
23,550,730
|
|
|
|
23,882,798
|
|
|
Other liabilities
|
|
|
91,813
|
|
|
|
90,105
|
|
|
Total liabilities
|
|
|
23,642,543
|
|
|
|
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 June 30,
2008 and December 31, 2007;
the aggregate liquidation
preference totals $55,000,000 as of
June 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
shares outstanding
at June 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
|
|
|
271,131,031
|
|
|
|
270,752,308
|
|
|
Treasury stock at cost; 5,779,597 shares at June 30, 2008
and
5,752,000 shares at December 31, 2007
|
|
|
(9,359,200
|
)
|
|
|
(9,033,471
|
)
|
|
Accumulated deficit
|
|
|
(104,869,305
|
)
|
|
|
(109,617,198
|
)
|
|
Total stockholders' equity
|
|
|
157,265,206
|
|
|
|
152,461,755
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
180,907,749
|
|
|
$
|
176,434,658
|
|
|
|
|
|
|
|
|
Note: The Company has pledged cash as a security deposit for
operating leases. Accordingly, this cash is classified as restricted
cash, and our cash is classified in several places on the above
balance sheet.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
December 31, 2007
|
|
Cash and cash equivalents
|
|
$
|
80,445,570
|
|
|
$
|
79,170,754
|
|
|
Noncurrent restricted cash
|
|
|
618,660
|
|
|
|
576,951
|
|
|
Total cash and cash equivalents and noncurrent restricted cash
|
|
$
|
81,064,230
|
|
|
$
|
79,747,705
|
|
|
THESTREET.COM, INC.
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
June 30,
|
|
For the Six Months Ended
June 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Paid services
|
|
$
|
10,289,939
|
|
|
$
|
9,404,349
|
|
$
|
21,049,408
|
|
|
$
|
18,842,900
|
|
|
Marketing services
|
|
|
9,398,992
|
|
|
|
5,494,939
|
|
|
17,587,508
|
|
|
|
10,563,952
|
|
|
Total revenue
|
|
|
19,688,931
|
|
|
|
14,899,288
|
|
|
38,636,916
|
|
|
|
29,406,852
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
8,366,156
|
|
|
|
5,645,418
|
|
|
16,022,283
|
|
|
|
11,271,507
|
|
|
Sales and marketing
|
|
|
3,630,394
|
|
|
|
3,055,464
|
|
|
7,393,989
|
|
|
|
6,385,204
|
|
|
General and administrative
|
|
|
4,078,822
|
|
|
|
2,765,133
|
|
|
8,434,367
|
|
|
|
5,473,154
|
|
|
Depreciation and amortization
|
|
|
1,584,780
|
|
|
|
435,935
|
|
|
2,848,384
|
|
|
|
815,142
|
|
|
Total operating expense
|
|
|
17,660,152
|
|
|
|
11,901,950
|
|
|
34,699,023
|
|
|
|
23,945,007
|
|
|
Operating income
|
|
|
2,028,779
|
|
|
|
2,997,338
|
|
|
3,937,893
|
|
|
|
5,461,845
|
|
|
Net interest income
|
|
|
400,243
|
|
|
|
625,042
|
|
|
1,086,437
|
|
|
|
1,225,699
|
|
|
Income from continuing operations before income taxes
|
|
|
2,429,022
|
|
|
|
3,622,380
|
|
|
5,024,330
|
|
|
|
6,687,544
|
|
|
Provision for Income taxes
|
|
|
125,693
|
|
|
|
72,454
|
|
|
271,621
|
|
|
|
133,729
|
|
|
Income from continuing operations
|
|
|
2,303,329
|
|
|
|
3,549,926
|
|
|
4,752,709
|
|
|
|
6,553,815
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
(Loss) income on disposal of discontinued operations
|
|
|
(2,085
|
)
|
|
|
262
|
|
|
(4,816
|
)
|
|
|
(1,123
|
)
|
|
Net income
|
|
|
2,301,244
|
|
|
|
3,550,188
|
|
|
4,747,893
|
|
|
|
6,552,692
|
|
|
Preferred stock cash dividends
|
|
|
96,424
|
|
|
|
-
|
|
|
192,848
|
|
|
|
-
|
|
|
Net income attributable to common stockholders
|
|
$
|
2,204,820
|
|
|
$
|
3,550,188
|
|
$
|
4,555,045
|
|
|
$
|
6,552,692
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
$
|
0.16
|
|
|
$
|
0.23
|
|
|
(Loss) income on disposal of discontinued operations
|
|
|
(0.00
|
)
|
|
|
0.00
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
Preferred stock cash dividends
|
|
|
(0.00
|
)
|
|
|
-
|
|
|
(0.01
|
)
|
|
|
-
|
|
|
Net income attributable to common stockholders
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
$
|
0.15
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
$
|
0.14
|
|
|
$
|
0.23
|
|
|
(Loss) income on disposal of discontinued operations
|
|
|
(0.00
|
)
|
|
|
0.00
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
Preferred stock cash dividends
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
Net income attributable to common stockholders
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
$
|
0.14
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares outstanding
|
|
|
30,452,497
|
|
|
|
28,422,332
|
|
|
30,422,738
|
|
|
|
28,184,671
|
|
|
Weighted average diluted shares outstanding
|
|
|
34,597,480
|
|
|
|
28,651,451
|
|
|
34,647,940
|
|
|
|
28,388,565
|
|
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.
|
|
|
For the Three Months Ended
June 30,
|
|
For the Six Months Ended
June 30,
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Adjusted EBITDA
|
|
$
|
4,563,508
|
|
|
$
|
3,945,422
|
|
|
$
|
8,434,592
|
|
|
$
|
7,427,312
|
|
|
Less stock compensation
|
|
|
(952,034
|
)
|
|
|
(477,644
|
)
|
|
|
(1,653,131
|
)
|
|
|
(1,071,581
|
)
|
|
EBITDA
|
|
|
3,611,474
|
|
|
|
3,467,778
|
|
|
|
6,781,461
|
|
|
|
6,355,731
|
|
|
Add net interest income
|
|
|
400,243
|
|
|
|
625,042
|
|
|
|
1,086,437
|
|
|
|
1,225,699
|
|
|
Less taxes
|
|
|
(125,693
|
)
|
|
|
(106,697
|
)
|
|
|
(271,621
|
)
|
|
|
(213,596
|
)
|
|
Less depreciation and
amortization
|
|
|
(1,584,780
|
)
|
|
|
(435,935
|
)
|
|
|
(2,848,384
|
)
|
|
|
(815,142
|
)
|
|
Net income
|
|
$
|
2,301,244
|
|
|
$
|
3,550,188
|
|
|
$
|
4,747,893
|
|
|
$
|
6,552,692
|
|
“Free cash flow”
means net 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.
|
|
|
For the Three Months Ended
June 30,
|
|
For the Six Months Ended
June 30,
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Free cash flow
|
|
$
|
993,061
|
|
|
$
|
2,311,329
|
|
|
$
|
4,469,688
|
|
|
$
|
5,097,341
|
|
|
Non-cash expenses
|
|
|
(2,641,428
|
)
|
|
|
(907,300
|
|