TheStreet Reports Second Quarter 2015 Results

Aug 06, 2015, 16:01 ET from TheStreet, Inc.

NEW YORK, Aug. 6, 2015 /PRNewswire/ -- TheStreet, Inc. (NASDAQ: TST), a leading digital financial media company, today reported financial results for the second quarter 2015. The Company reported revenue of $17.1 million, net loss of ($671) thousand and Adjusted EBITDA(1) of $1.1 million.

Revenue in the second quarter of 2015 was $17.1 million, an increase of 16% from $14.8 million in the prior year period. Subscription Services revenue in the second quarter was $14.0 million, an increase of 21% compared to the prior year period primarily due to revenue from BoardEx which was acquired on October 31, 2014. Media revenue in the second quarter was $3.2 million, a decrease of 2% compared to the prior year period. The decrease was expected since the Company is reducing available inventory for advertising as we focus on enhancing user experience on our free sites.

"The second quarter saw continued downward pressure on ad media and business-to-consumer subscription revenue lines as experienced by the industry as a whole. We are however very pleased with our progress in executing on our strategic plan, focusing on growth opportunities in business-to-business subscription revenues," said Elisabeth DeMarse, Chairman, President and Chief Executive Officer.   

"As we continue to transform TheStreet, Inc., following our successful acquisition of BoardEx, we remain committed to look for new market opportunities that expand our revenue as well as customer base," concluded DeMarse.

Operating expenses for second quarter were $17.5 million, an increase of 14% compared to the prior year period primarily due to including BoardEx specific operating expenses.

Net loss for the second quarter was ($671) thousand, compared to ($641) thousand in the prior year period. The Company reported basic and diluted net loss per share attributable to common stockholders of ($0.02) for the second quarter, the same as reported in the prior year period. Adjusted EBITDA for the second quarter was $1.1 million, compared to $502 thousand for the prior year period.

The company generated $757 thousand in operating cash flow during the first six months of the year and ended the second quarter with cash and cash equivalents, restricted cash and marketable securities of $34.0 million.

Selected Operating Metrics

  • For total Subscription Services:
    • Bookings were $13.9 million for the second quarter, which includes the impact of BoardEx, an increase of 12% from the prior year period.
    • Bookings for the trailing four quarters were $52.9 million, compared to $47.0 million in the prior year period, an increase of 13%. 
  • For Subscription Newsletters(2):
    • The number of paid subscriptions at the end of the period was 80,500, a decrease of 2% from the prior year period, and 4% sequentially. The decrease was expected following last year's new book promotions.
    • Average revenue per user for the second quarter was flat when compared to the prior year period and sequentially. 
    • Average monthly churn was 5% for the second quarter, compared to 4% in the prior year period and 5% sequentially(3). This increase was the result of higher than normal cancellations due to last year's new book promotions. We expect this high churn rate to stabilize at a lower rate.

Conference Call Information

TheStreet will discuss its financial results for the second quarter today at 4:30 p.m. ET.

To participate in the call, please dial (888) 430-8701 (domestic) or (719) 325-2104 (international).  The Conference ID number is 7379296. This call is being webcast and can be accessed in the Investor Relations section of TheStreet website at http://investor-relations.thestreet.com/events.cfm.  A replay of the webcast will be available on our website.

About TheStreet

TheStreet, Inc. (www.t.st) is a leading independent digital financial media company providing business and financial news, investing ideas and analysis to personal and institutional investors worldwide.  The Company's portfolio of business and personal finance brands includes: TheStreet, RealMoney, Action Alerts PLUS and MainStreet. To learn more, visit www.thestreet.com.  The Deal, the Company's institutional business, provides intraday coverage of mergers and acquisitions and all other changes in corporate control and through its BoardEx product, director and officer profiles. To learn more, visit www.thedeal.com and www.boardex.com. RateWatch, the Company's business unit, provides rate and fee data from banks and credit unions across the U.S. for a wide variety of banking products. To learn more, visit www.rate-watch.com.

Non-GAAP Financial Information

(1) To supplement the Company's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company 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, income 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 acquisitions and capital expenditures.  EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations.  Adjusted EBITDA further eliminates the impact of non-cash stock compensation, restructuring, transaction related costs and other charges affecting comparability.  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.  "Free cash flow" means net loss plus non-cash expenses net of gains/losses on dispositions of assets, less changes in operating assets and liabilities and capital expenditures.  The Company believes that this non-GAAP financial measure is an important indicator of the Company's financial results because it gives investors a view of the Company's ability to generate cash.

(2) Subscription newsletters includes investing newsletters and excludes subscriptions from The Deal, DealFlow Media, BoardEx and Rate Watch.

(3) Average monthly churn rate is defined as subscriber terminations/expirations in the quarter divided by the sum of the beginning subscribers and gross subscriber additions for the quarter, then divided by three.  Subscriptions that are on a free-trial basis are not regarded as added or terminated unless the subscription is active at the end of the free-trial period.

Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include statements regarding the recent acquisition of BoardEx, growth initiatives and expectations for 2015.  Such forward-looking statements are subject to risks and uncertainties, including those described in the Company's filings with the Securities and Exchange Commission ("SEC") that could cause actual results to differ materially from those reflected in the forward-looking statements.  Factors that might contribute to such differences include, among others, economic downturns and the general state of the economy, including the financial markets and mergers and acquisitions environment, our ability to drive revenue, and increase or retain current subscription revenue, our ability to improve the user experience and optimize our free sites and generate new subscription revenue; our ability to successfully integrate BoardEx and other acquisitions; our ability to develop new products; competition and other factors set forth in our filings with the SEC, which are available on the SEC's website at www.sec.gov.  All forward-looking statements contained herein are made as of the date of this press release.  Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results or occurrences.  The Company disclaims any obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise.

Contacts: John Ferrara Chief Financial Officer TheStreet, Inc. ir at thestreet.com

John Evans Investor Relations PIR Communications ir at thestreet.com

 

THESTREET, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS

June 30, 2015

December 31, 2014

(unaudited)

Current Assets:

Cash and cash equivalents

$              31,341,423

$              32,459,009

Marketable securities

-

2,009,240

Accounts receivable, net of allowance for doubtful 

   accounts of $316,728 at June 30, 2015 and $318,141 at

   December 31, 2014

4,316,856

5,103,899

Other receivables

496,432

549,933

Prepaid expenses and other current assets

1,206,180

987,693

Restricted cash

500,000

639,750

      Total current assets

37,860,891

41,749,524

Property and equipment, net of accumulated depreciation

   and amortization of $4,319,226 at June 30, 2015

   and $4,003,538 at December 31, 2014

3,261,646

2,926,825

Marketable securities

1,540,000

1,560,000

Other assets

359,700

77,052

Goodwill

44,265,776

44,810,467

Other intangibles, net of accumulated amortization of $14,355,277

   at June 30, 2015 and $12,896,782 at December 31, 2014

19,617,815

20,147,209

Restricted cash

661,250

661,250

      Total assets

$            107,567,078

$            111,932,327

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$               2,520,577

$               2,474,737

Accrued expenses

4,266,659

6,279,082

Deferred revenue 

27,409,460

26,427,816

Other current liabilities

934,701

1,241,508

      Total current liabilities

35,131,397

36,423,143

Deferred tax liability

1,095,017

728,899

Other liabilities

6,922,736

6,910,175

      Total liabilities

43,149,150

44,062,217

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, 2015 and December 31, 2014;

   the aggregate liquidation preference totals $55,000,000 as of

   June 30, 2015 and December 31, 2014

55

55

Common stock; $0.01 par value; 100,000,000 shares

   authorized; 42,096,722 shares issued and 34,852,123

   shares outstanding at June 30, 2015, and 41,967,369

   shares issued and 34,727,641 shares outstanding at

   December 31, 2014

420,967

419,674

Additional paid-in capital

270,692,680

271,943,049

Accumulated other comprehensive loss

(771,533)

(227,476)

Treasury stock at cost; 7,244,599 shares at June 30, 2015

   and 7,239,728 shares at December 31, 2014

(12,919,920)

(12,908,943)

Accumulated deficit

(193,004,321)

(191,356,249)

      Total stockholders' equity

64,417,928

67,870,110

      Total liabilities and stockholders' equity

$            107,567,078

$            111,932,327

 

 

THESTREET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2015

2014

2015

2014

Net revenue:

Subscription services

$            13,983,871

$            11,557,413

$            28,080,933

$            23,007,280

Media

3,153,048

3,204,841

5,946,035

6,144,052

   Total net revenue

17,136,919

14,762,254

34,026,968

29,151,332

Operating expense:

Cost of services

8,585,978

7,676,619

16,909,669

15,414,584

Sales and marketing

4,113,677

3,758,584

8,624,766

7,859,869

General and administrative

3,683,619

3,278,484

7,471,490

6,257,054

Depreciation and amortization

1,137,442

721,511

2,115,678

1,457,372

     Total operating expense

17,520,716

15,435,198

35,121,603

30,988,879

     Operating loss

(383,797)

(672,944)

(1,094,635)

(1,837,547)

Net interest (expense) income

(32,872)

31,457

(66,405)

69,935

Net loss before income taxes

(416,669)

(641,487)

(1,161,040)

(1,767,612)

Provision for income taxes

254,591

-

487,032

-

Net loss

(671,260)

(641,487)

(1,648,072)

(1,767,612)

Preferred stock cash dividends

96,424

96,424

192,848

192,848

Net loss attributable to common stockholders

$               (767,684)

$               (737,911)

$            (1,840,920)

$            (1,960,460)

Basic and diluted net loss per share:

     Net loss attributable to common stockholders

$                    (0.02)

$                    (0.02)

$                    (0.05)

$                    (0.06)

Cash dividends declared and paid per common share

$                   0.025

$                   0.025

$                   0.050

$                   0.050

Weighted average basic and diluted shares outstanding

34,848,571

34,367,669

34,814,060

34,287,410

Reconciliation of net loss to adjusted EBITDA - see note (1):

Net loss

$               (671,260)

$               (641,487)

$            (1,648,072)

$            (1,767,612)

Provision for income taxes

254,591

-

487,032

-

Net interest expense (income)

32,872

(31,457)

66,405

(69,935)

Depreciation and amortization

1,137,442

721,511

2,115,678

1,457,372

EBITDA

753,645

48,567

1,021,043

(380,175)

Stock based compensation

367,755

417,429

741,145

864,059

Recovery of previously impaired investment

(48,996)

-

(97,401)

-

Transaction related costs

21,629

35,656

21,629

35,656

Adjusted EBITDA

$              1,094,033

$                501,652

$              1,686,416

$                519,540

 

 

THESTREET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

For the Six Months Ended June 30,

2015

2014

Cash Flows from Operating Activities:

Net loss

$          (1,648,072)

$          (1,767,612)

Adjustments to reconcile net loss to net cash provided by

   operating activities:

Stock-based compensation expense

741,145

864,059

Provision for doubtful accounts

95,546

(22,284)

Depreciation and amortization

2,115,678

1,457,372

Deferred taxes

360,882

-

Deferred rent

(163,899)

(162,573)

Changes in operating assets and liabilities:

    Accounts receivable 

695,408

(194,955)

    Other receivables

53,501

(81,422)

    Prepaid expenses and other current assets

(217,295)

(77,543)

    Other assets

(81,259)

12,620

    Accounts payable

45,008

(165,429)

    Accrued expenses

(2,103,315)

(239,147)

    Deferred revenue

1,299,920

2,627,428

    Other current liabilities 

(396,373)

(223,843)

    Other liabilities

(39,585)

-

          Net cash provided by operating activities

757,290

2,026,671

Cash Flows from Investing Activities:

Sale and maturity of marketable securities

2,005,484

5,356,309

Adjustment to purchase of Management Diagnostics Limited

50,494

-

Capital expenditures

(2,091,654)

(801,474)

          Net cash (used in) provided by investing activities

(35,676)

4,554,835

Cash Flows from Financing Activities:

Cash dividends paid on common stock

(1,780,956)

(1,720,553)

Cash dividends paid on preferred stock

(192,848)

(192,848)

Proceeds from the exercise of stock options

839

147,827

Restricted cash

139,750

-

Shares withheld on RSU vesting to pay for withholding taxes

(10,977)

(35,632)

          Net cash used in financing activities

(1,844,192)

(1,801,206)

Effect of exchange rate changes on cash and cash equivalents

4,992

-

Net (decrease) increase in cash and cash equivalents

(1,117,586)

4,780,300

Cash and cash equivalents, beginning of period

32,459,009

45,443,759

Cash and cash equivalents, end of period

$          31,341,423

$          50,224,059

Reconciliation of net loss to free cash flow - see note (1):

Net loss

$          (1,648,072)

$          (1,767,612)

Noncash expenditures

3,149,352

2,136,574

Changes in operating assets and liabilities

(743,990)

1,657,709

Capital expenditures

(2,091,654)

(801,474)

Free cash flow

$          (1,334,364)

$            1,225,197

 

 

 

SOURCE TheStreet, Inc.



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