July 31, 2008
TheStreet.com, Inc. (Nasdaq: TSCM), 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 For the Six Months Ended
June 30, 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 For the Six Months Ended
June 30, 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 For the Six Months Ended
June 30, 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) (4,687,242) (1,916,170)
Changes in
working capital 2,845,591 518,927 2,471,086 813,171
Capital
expenditures 1,104,020 1,627,232 2,494,361 2,558,350
-------------- ----------- ------------ ------------
Net income $ 2,301,244 $3,550,188 $ 4,747,893 $ 6,552,692
============== =========== ============ ============
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.
CONTACT: TheStreet.com, Inc.
Rebecca Updegraph, 212-321-5008
Investor Relations
IR@TheStreet.com
SOURCE: TheStreet.com, Inc.
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.