TheStreet.com Reports Third-Quarter and Nine-Month Financial Results
Company Achieves Record Revenue as Network Expansion Accelerates
NEW YORK, November 6, 2007 - TheStreet.com, Inc. (Nasdaq: TSCM), a leading provider of financial news and ratings, business and investment content and custom advertising solutions, today reported financial results for its third quarter and nine months ended September 30, 2007.
For the quarter ended September 30, 2007, TheStreet.com reported record revenue of $16.1 million, an increase of 24% over revenue of $12.9 million reported for the third quarter of 2006.
Net income, inclusive of a non-cash income tax benefit of $16.0 million related to the recognition of a deferred tax asset on a portion of the Company’s net operating loss benefits, was $19.8 million, or $0.67 per fully diluted share, as compared to $3.1 million, or $0.11 per fully diluted share, in the third quarter of 2006.
Excluding the impact of the non-cash income tax benefit, net income for the third quarter of 2007 was $3.8 million, or $0.13 per fully diluted share, an increase of 22% over the net income of $3.1 million, or $0.11 per fully diluted share, in 2006. Earnings per fully diluted share, excluding the impact of both deferred taxes and stock compensation expense totaling $0.5 million in the current quarter, were $0.15, compared to $0.13 per fully diluted share in the third quarter of 2006, exclusive of $0.5 million of stock compensation expense.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) totaled $4.0 million this quarter, an increase of 36% over EBITDA of $2.9 million in the third quarter of 2006. EBITDA, excluding stock compensation expense (“Adjusted EBITDA”), was $4.5 million, an increase of 32% over Adjusted EBITDA of $3.4 million in the third quarter of 2006.
“We had a record quarter where our total revenue grew 24% from the same period last year,” said Thomas J. Clarke Jr., chairman and chief executive officer of TheStreet.com. “With our recent acquisitions and the many other initiatives we have undertaken, TheStreet.com has dramatically altered and broadened the landscape of opportunities for the Company. I look forward to cohesively and profitably integrating these opportunities as we strive toward becoming the premier online destination for money.”
For the nine months ended September 30, 2007, TheStreet.com reported record revenue of $45.5 million, an increase of 25% over revenue of $36.5 million reported for the same period of 2006.
Net income, inclusive of the non-cash income tax benefit of $16.0 million, was $26.3 million, or $0.91 per fully diluted share, as compared to $8.9 million, or $0.33 per fully diluted share, for the nine months ended September 30, 2006.
Excluding the impact of the non-cash income tax benefit, net income for the nine months ended September 30, 2007 was $10.3 million, or $0.36 per fully diluted share, an increase of 16% over the net income of $8.9 million, or $0.33 per fully diluted share, in 2006. Earnings per fully
diluted share, excluding the impact of both deferred taxes and stock compensation expense totaling $1.6 million in the nine months ended September 30, 2007 were $0.41, compared to $0.37 per fully diluted share in the same period of 2006, exclusive of $1.3 million of stock compensation expense.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) totaled $10.3 million for the nine months ended September 30, 2007, an increase of 22% over EBITDA of $8.5 million for the same period of 2006. EBITDA, excluding stock compensation expense (“Adjusted EBITDA”), was $11.9 million, an increase of 22% over Adjusted EBITDA of $9.8 million in the same period of 2006.
Financial Highlights
| | | Total revenue for the quarter was $16.1 million, an increase of 24% over revenue of $12.9 million reported for the third quarter of 2006. |
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| | | Marketing services revenue, which is comprised of advertising and interactive marketing services revenue, totaled $6.9 million for the third quarter of 2007, an increase of 85% over revenue of $3.7 million for the third quarter of 2006. |
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| | | - - | Advertising revenue totaled $4.6 million for the current quarter, an increase of 23% over revenue of $3.7 million in the prior year. |
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| | | - - | Interactive marketing services revenue, derived from Promotions.com subsequent to the acquisition dated August 2, 2007, totaled $2.3 million. |
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| | | Paid services revenue, which is comprised of subscription and syndication and licensing revenue, totaled $9.2 million for the third quarter of 2007, essentially flat when compared to the third quarter of 2006. |
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| | | - - | Subscription revenue totaled $8.3 million for the current quarter, a decrease of 3% from subscription revenue of $8.6 million in the prior year. |
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| | | - | Syndication and licensing revenue totaled $0.9 million for the current quarter, an increase of 47% over revenue of $0.6 million in the prior year. |
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| | | Marketing services and paid services revenue in the third quarter of 2007 accounted for 43% and 57% of total revenue, respectively. This compares to a revenue mix of 29% for marketing services and 71% for paid services in the third quarter of 2006. For the nine months ending September 30, 2007, marketing services and paid services revenue accounted for 38% and 62%, respectively, as compared to 29% and 71% in 2006. |
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| | | TheStreet.com reported a 97% year-over-year increase in non-financial advertising revenue in the quarter. Non-financial advertising revenue represents 49% of total advertising revenue in the quarter, up from 30% in the third quarter |
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| | | of 2006. |
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| | | As of September 30, 2007, cash and cash equivalents and restricted cash stood at$38.9 million. The Company has no bank debt. During the quarter, the companygenerated cash flow from operations of $1.5 million, while free cash flow totaled$0.8 million. |
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| | • | The board of directors declared the Company's quarterly cash dividend, payableto all shareholders of record at the close of business on September 14, 2007. Thecash dividend of $0.025 per share was paid on September 28, 2007. |
Recent Company Highlights
| | • | The Company made an accretive content acquisition to provide the best bank ratesonline, and position itself as a leader in the consumer banking marketplace byacquiring Bankers Financial Products Corp., including BankingMyWay andRateWatch -- one of the nation’s largest providers of pricing solutions for banksand credit unions. The approximate purchase price was $25.0 million, consistingof approximately $16.9 million in cash (net of $3.9 million in debt repayment),636,081 shares of unregistered common stock of TheStreet.com and 175,600options at market. |
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| | • | The Company accelerated its shift to higher-margin advertising revenue when itacquired Corsis, a leading provider of custom solutions for advertisers, marketersand content publishers -- including Promotions.com, a full-service onlinepromotions agency that implements interactive promotions for some of the largestbrands in the world. The approximate purchase price was $20.7 million,consisting of approximately $12.5 million in cash (including approximately $3.3million in debt repayment) and 694,230 shares of unregistered common stock ofTheStreet.com. |
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| | • | To increase brand awareness and traffic to TheStreet.com network, the Companybegan a content sharing relationship with AOL to include certain posts by JimCramer on AOL’s Money & Finance and Bloggingstocks.com Web pages. Storiesand analysis from TheStreet.com are also featured on AOL’s welcome page in theform of articles, slideshows and video, in addition to links to other TheStreet.comcontent. |
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| | • | The Company further positioned itself as a leader in the digital advertising spaceby entering into an agreement with Quigo to deploy a custom version of Quigo’sAdSonar platform across pages of www.thestreet.com, allowing advertisers to buyperformance-based, content-targeted advertising by clicking on contextualsponsored links throughout the Web site. |
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| | • | The Company launched mobile.thestreet.com, developed and powered by QuattroWireless, to expand TheStreet.com’s multimedia distribution and create exclusivesponsorship and advertising opportunities. The offering provides TheStreet.com’smost in-demand, real-time content to mobile devices, including content from thecategories: Life and Money, Opinion, Most Read Stories, Small Business andMarket Updates. |
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| | • | In August, 2007 The Company’s wholly owned subsidiary, Stockpickr.combecame the first financial social networking site to surpass 100,000 user-generated portfolios, making it the fastest growing financial social networkingWeb site. Today, the number of portfolios stands at more than 125,000, as trafficto the site continues to grow and drive to other Web sites in TheStreet.comnetwork. |
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| | • | The Company entered into an agreement with Brightcove to implement its videoplayer and service on www.thestreet.com. Viewers of TheStreet.com TV nowhave access to a more interactive and comprehensive interface, while advertiserson TheStreet.com TV benefit from much greater flexibility in the interactiveadvertising and sponsorships opportunities made possible by Brightcove’stechnology. |
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| | • | To broaden its reach to a younger audience and drive traffic to its network, theCompany entered into agreement with mtvU to distribute Personal Finance andEducational content to the College Publisher Network, which powers the Websites of more than 550 online college newspapers with a collective reach of morethan 5 million unique viewers. |
TheStreet.com will conduct a conference call today November 6, 2007, at 11:00 a.m. EST to discuss these results. To participate in the call, dial:866.831.6162(domestic) or,617.213.8852(international). The passcode for the call is76246890.
A replay of the call will be available until 11:59 pm on November 13, 2007 at: 888-286-8010(domestic)or,617-801-6888(international). The passcode for the replay of the call is63392758
To access the Web cast of the call please visit:http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=65508&eventID=1678574
About TheStreet.com, Inc.
TheStreet.com, Inc. (Nasdaq: TSCM) is a leading independent producer of financial news and ratings, business and investment content, and innovative custom advertising solutions. The Company meets a broad scope of consumer, professional, and advertiser demands through multimedia distribution of advertising supported content and services
and paid subscriptions. Founded in 1996, TheStreet.com, Inc. pioneered the electronic publishing of financial information on the Internet. Today, TheStreet.com’s proprietary network includes RealMoney.com, Stockpickr.com, TheStreet.com Ratings, BankingMyWay.com and Rate-Watch.com, TheStreet.com TV and Promotions.com, reaching one of the most affluent, influential audiences on the Web. TheStreet.com’s expanding interactive network is revolutionizing the way individuals make financial decisions and the way advertisers engage in online promotions.
THESTREET.COM, INC.
CONSOLIDATED BALANCE SHEETS
| | | | September 30, 2007 | | | | December 31, 2006 | |
| ASSETS | | | | | | | | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 38,276,451 | | | $ | 46,055,232 | |
| Accounts receivable, net of allowance for doubtful | | | | | | | | |
| accounts of $482,077 at September 30, 2007 and | | | | | | | | |
| $216,077 at December 31, 2006 | | | 9,263,383 | | | | 6,314,553 | |
| Other receivables | | | 485,899 | | | | 368,496 | |
| Deferred taxes | | | 5,800,000 | | | | - | |
| Prepaid expenses and other current assets | | | 1,792,202 | | | | 1,436,618 | |
| Total current assets | | | 55,617,935 | | | | 54,174,899 | |
| | | | | | | | | |
| Property and equipment, net of accumulated depreciation | | | | | | | | |
| and amortization of $16,006,976 at September 30, 2007 | | | | | | | | |
| and $14,420,638 at December 31, 2006 | | | 5,803,751 | | | | 3,018,132 | |
| Other assets | | | 376,765 | | | | 178,396 | |
| Goodwill | | | 23,352,429 | | | | 4,509,666 | |
| Other intangibles, net | | | 7,148,237 | | | | 2,188,500 | |
| Deferred taxes | | | 10,200,000 | | | | - | |
| Restricted cash | | | 576,951 | | | | 500,000 | |
| Total assets | | $ | 103,076,068 | | | $ | 64,569,593 | |
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| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Accounts payable | | $ | 1,302,578 | | | $ | 1,165,705 | |
| Accrued expenses | | | 4,114,834 | | | | 6,179,091 | |
| Deferred revenue | | | 13,556,333 | | | | 12,705,038 | |
| Current portion of note payable | | | - | | | | 22,146 | |
| Other current liabilities | | | 132,281 | | | | 83,800 | |
| Current liabilities of discontinued operations | | | 222,994 | | | | 222,425 | |
| Total current liabilities | | | 19,329,020 | | | | 20,378,205 | |
| Other liabilities | | | 41,138 | | | | - | |
| Total liabilities | | | 19,370,158 | | | | 20,378,205 | |
| | | | | | | | | |
| Stockholders' Equity: | | | | | | | | |
| Preferred stock; $0.01 par value; 10,000,000 shares | | | | | | | | |
| authorized; none issued and outstanding | | | - | | | | - | |
| Common stock; $0.01 par value; 100,000,000 shares | | | | | | | | |
| authorized; 35,190,993 shares issued and 29,438,993 | | | | | | | | |
| shares outstanding at September 30, 2007, and 33,606,835 | | | | | | | | |
| shares issued and 27,854,835 shares outstanding | | | | | | | | |
| at December 31, 2006 | | | 351,910 | | | | 336,068 | |
| Additional paid-in capital | | | 206,738,370 | | | | 193,556,899 | |
| Treasury stock at cost; 5,752,000 shares at September 30, 2007 | | | | | | | | |
| and December 31, 2006 | | | (9,033,471 | ) | | | (9,033,471 | ) |
| Accumulated deficit | | | (114,350,899 | ) | | | (140,668,108 | ) |
| Total stockholders' equity | | | 83,705,910 | | | | 44,191,388 | |
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| Total liabilities and stockholders' equity | | $ | 103,076,068 | | | $ | 64,569,593 | |
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.
| | | | September 30, 2007 | | | | December 31, 2006 | |
| Cash and cash equivalents | | $ | 38,276,451 | | | $ | 46,055,232 | |
| Noncurrent restricted cash | | | 576,951 | | | | 500,000 | |
| Total cash and cash equivalents and noncurrent restricted cash | | $ | 38,853,402 | | | $ | 46,555,232 | |
THESTREET.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | For the Three Months Ended | | | | For the Nine Months Ended | |
| | | | September 30, | | | | September 30, | |
| | | | 2007 | | | | 2006 | | | | 2007 | | | | 2006 | |
| Revenue: | | | | | | | | | | | | | | | | |
| Paid services | | $ | 9,188,329 | | | $ | 9,209,763 | | | $ | 28,031,229 | | | $ | 25,802,875 | |
| Marketing services | | | 6,930,030 | | | | 3,739,605 | | | | 17,493,982 | | | | 10,689,815 | |
| Total revenue | | | 16,118,359 | | | | 12,949,368 | | | | 45,525,211 | | | | 36,492,690 | |
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| Operating expense: | | | | | | | | | | | | | | | | |
| Cost of services | | | 6,509,157 | | | | 4,892,006 | | | | 17,780,664 | | | | 13,570,635 | |
| Sales and marketing | | | 2,619,286 | | | | 2,327,948 | | | | 9,004,490 | | | | 6,798,440 | |
| General and administrative | | | 3,064,728 | | | | 2,840,680 | | | | 8,537,882 | | | | 7,779,074 | |
| Depreciation and amortization | | | 654,397 | | | | 314,356 | | | | 1,469,539 | | | | 718,235 | |
| Total operating expense | | | 12,847,568 | | | | 10,374,990 | | | | 36,792,575 | | | | 28,866,384 | |
| Operating income | | | 3,270,791 | | | | 2,574,378 | | | | 8,732,636 | | | | 7,626,306 | |
| Net interest income | | | 571,121 | | | | 584,281 | | | | 1,796,820 | | | | 1,443,000 | |
| Income from continuing operations before income taxes | | | 3,841,912 | | | | 3,158,659 | | | | 10,529,456 | | | | 9,069,306 | |
| Benefit (provision) for Income taxes | | | 15,923,174 | | | | (63,162 | ) | | | 15,789,445 | | | | (181,622 | ) |
| Income from continuing operations | | | 19,765,086 | | | | 3,095,497 | | | | 26,318,901 | | | | 8,887,684 | |
| Discontinued operations: | | | | | | | | | | | | | | | | |
| (Loss) income on disposal of discontinued operations | | | (569 | ) | | | (549 | ) | | | (1,692 | ) | | | 11,774 | |
| (Loss) income from discontinued operations | | | (569 | ) | | | (549 | ) | | | (1,692 | ) | | | 11,774 | |
| Net income | | $ | 19,764,517 | | | $ | 3,094,948 | | | $ | 26,317,209 | | | $ | 8,899,458 | |
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| Basic net income (loss) per share: | | | | | | | | | | | | | | | | |
| Income from continuing operations | | $ | 0.68 | | | $ | 0.11 | | | $ | 0.92 | | | $ | 0.33 | |
| Income (loss) on disposal of discontinued operations | | | (0.00 | ) | | | (0.00 | ) | | | (0.00 | ) | | | 0.00 | |
| Income (loss) from discontinued operations | | | (0.00 | ) | | | (0.00 | ) | | | (0.00 | ) | | | 0.00 | |
| Net income | | $ | 0.68 | | | $ | 0.11 | | | $ | 0.92 | | | $ | 0.33 | |
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| Diluted net income (loss) per share: | | | | | | | | | | | | | | | | |
| Income from continuing operations | | $ | 0.67 | | | $ | 0.11 | | | $ | 0.91 | | | $ | 0.33 | |
| Income (loss) on disposal of discontinued operations | | | (0.00 | ) | | | (0.00 | ) | | | (0.00 | ) | | | 0.00 | |
| Income (loss) from discontinued operations | | | (0.00 | ) | | | (0.00 | ) | | | (0.00 | ) | | | 0.00 | |
| Net income | | $ | 0.67 | | | $ | 0.11 | | | $ | 0.91 | | | $ | 0.33 | |
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| Weighted average basic shares outstanding | | | 29,085,700 | | | | 27,337,453 | | | | 28,488,315 | | | | 26,807,231 | |
| Weighted average diluted shares outstanding | | | 29,544,323 | | | | 28,180,641 | | | | 28,936,043 | | | | 27,253,167 | |
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” 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 the non-GAAP EBITDA results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. In addition, because the Company has previously reported this non-GAAP result to investors, the Company believes that its inclusion provides consistency in its financial reporting. This measure 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 Nine Months Ended | |
| | | | | September 30, | | | | | September 30, | |
| | | | | 2007 | | | | | 2006 | | | | | 2007 | | | | | 2006 | |
| EBITDA | | | $ | 3,970,595 | | | | $ | 2,920,435 | | | | $ | 10,326,326 | | | | $ | 8,453,065 | |
| Add Net Interest Income | | | | 571,121 | | | | | 584,281 | | | | | 1,796,820 | | | | | 1,443,000 | |
| Less Taxes | | | | 15,877,198 | | | | | (95,412 | ) | | | | 15,663,602 | | | | | (278,372 | ) |
| Less Depreciation and | | | | (654,397 | ) | | | | (314,356 | ) | | | | (1,469,539 | ) | | | | (718,235 | ) |
| Amortization | | | | | | | | | | | | | | | | | | | | |
| Net Income | | | $ | 19,764,517 | | | | $ | 3,094,948 | | | | $ | 26,317,209 | | | | $ | 8,899,458 | |
“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 and profits.
| | | For the Three |
| | | Months Ended |
| | | September 30, 2007 |
| Free Cash Flow | | $ | 805,819 |
| Non-cash Expenses | | | 14,808,312 |
| Changes in Working Capital | | | 3,344,365 |
| Capital Expenditures | | | 806,021 |
| Net Income | | $ | 19,764,517 |
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.
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.
Chaela Volpe, Investor Relations Manager
Phone: 212-321-5008
Email:Chaela.volpe@thestreet.com
SOURCE: TheStreet.com, Inc.
