Thestreet, Inc. (TST)

[Drmicrocap]

TheStreet Reports Third Quarter 2013 Results

TheStreet, Inc. November 7, 2013 4:01 PM

NEW YORK, Nov. 7, 2013 /PRNewswire/ -- TheStreet, Inc. (TST), a leading digital financial media company, today reported financial results for the third quarter of 2013. The Company reported revenue of $13.6 million, a net loss of $1.2 million and Adjusted EBITDA(1) of $261 thousand for the quarter.

(Logo: http://photos.prnewswire.com/prnh/20130102/NY35868LOGO-b )

The Company generated $481 thousand in operating cash flow for the nine months ended September 30, 2013, compared to a use of $5.8 million in operating cash flow for the prior year period.

Revenue for the third quarter increased 17% compared to the same period last year and 1% sequentially. Subscription Services revenue was $11.2 million for the third quarter, an increase of 25% compared to the prior year period and 4% sequentially. The increase in revenue was the result of our acquisitions of The Deal and DealFlow Media properties, completed in September 2012 and April 2013, respectively. Media revenue was $2.4 million for the third quarter, a decrease of 9% compared to the prior year period and 11% sequentially.

"TheStreet's third quarter revenue growth of 17% is our second consecutive quarter with year-over-year revenue growth and reflects the continued execution of our strategy," said Elisabeth DeMarse, Chairman, President and Chief Executive Officer. "It's a very exciting time for TheStreet. We're growing our topline, generating cash, expanding our robust M&A pipeline and investing in great products with market appeal that can dominate", concluded DeMarse.

Operating expenses in the third quarter of 2013 were $14.8 million, a decrease of 7% as compared to the prior year period. Excluding restructuring charges, operating expenses increased by $1.9 million as the result of our acquisitions.

The Company's net loss was $1.2 million in the third quarter of 2013 compared to a net loss of $4.2 million in the prior year period. The Company reported basic and diluted net loss per share attributable to common stockholders of $0.03 in the third quarter of 2013, as compared to a net loss per share of $0.13 in the prior year period.

Adjusted EBITDA was $261 thousand in the third quarter of 2013 compared to $1.0 million in the prior year period.

The Company ended the third quarter of 2013 with cash and cash equivalents, restricted cash and marketable securities of $58.4 million.

Selected Operating Results of Third Quarter 2013
•The number of paid subscriptions at period end was 82,300, an increase of 11% from the prior year and 6% sequentially (2).
•Average monthly churn improved to 2.0% from 2.6% in the prior year period (2) (3).
•Average revenue per user decreased 6.2% as compared to the prior year period (2).

Conference Call Information

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

To participate in the call, please dial [phone] (domestic) or [phone] (international). The Conference ID number is 78042860. 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 approximately two hours after the conclusion of the call and remain available for approximately ninety calendar days.

About TheStreet

TheStreet, Inc. (www.t.st) is the 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, RealMoney Pro, Stockpickr, Action Alerts PLUS, Options Profits, MainStreet and RateWatch. 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. To learn more, visit www.thedeal.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) Excludes the impact of the acquisition of The Deal and DealFlow Media assets.

(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 impact of the Company's restructuring, growth initiatives and expectations for 2013. 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 optimize our free site and generate new subscription revenue; our ability to successfully integrate The Deal 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.
212-321-5234
[e-mail]

Erica Mannion
Investor Relations
Sapphire Investor Relations, LLC
415-471-2700
[e-mail]





THESTREET, INC.


CONSOLIDATED BALANCE SHEETS








ASSETS


September 30, 2013


December 31, 2012




(unaudited)




Current Assets:






Cash and cash equivalents


$ 39,625,879


$ 23,845,360


Marketable securities


9,576,760


18,096,091


Accounts receivable, net of allowance for doubtful






accounts of $194,537 as of September 30, 2013 and $165,291






as of December 31, 2012


4,275,053


5,750,753


Other receivables, net


367,618


1,134,142


Prepaid expenses and other current assets


1,608,459


1,450,742


Total current assets


55,453,769


50,277,088








Property and equipment, net of accumulated depreciation






and amortization of $15,599,302 as of September 30, 2013






and $14,633,037 as of December 31, 2012


4,679,286


5,672,000


Marketable securities


7,858,120


17,298,227


Other assets


12,197


69,957


Goodwill


27,997,286


25,726,239


Other intangibles, net of accumulated amortization of $7,912,147






as of September 30, 2013 and $6,699,283 as of December 31, 2012


11,085,143


11,190,557


Restricted cash


1,301,000


1,301,000


Total assets


$ 108,386,801


$ 111,535,068








LIABILITIES AND STOCKHOLDERS' EQUITY






Current Liabilities:






Accounts payable


$ 2,121,205


$ 3,813,955


Accrued expenses


4,110,176


5,921,152


Deferred revenue


23,300,954


21,080,759


Other current liabilities


783,462


632,618


Total current liabilities


30,315,797


31,448,484


Deferred tax liability


288,000


288,000


Other liabilities


4,087,449


4,340,749


Total liabilities


34,691,246


36,077,233








Stockholders' Equity:






Preferred stock; $0.01 par value; 10,000,000 shares






authorized; 5,500 shares issued and 5,500 shares






outstanding as of September 30, 2013 and December 31, 2012;






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






September 30, 2013 and December 31, 2012


55


55


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






authorized; 40,803,091 shares issued and 33,902,028






shares outstanding as of September 30, 2013, and 39,855,468






shares issued and 33,027,752 shares outstanding as of






December 31, 2012


408,031


398,555


Additional paid-in capital


273,341,774


270,943,151


Accumulated other comprehensive income


(164,968)


(128,994)


Treasury stock at cost; 6,901,063 shares as of September 30, 2013






and 6,827,716 shares as of December 31, 2012


(12,110,108)


(11,974,261)


Accumulated deficit


(187,779,229)


(183,780,671)


Total stockholders' equity


73,695,555


75,457,835








Total liabilities and stockholders' equity


$ 108,386,801


$ 111,535,068








THESTREET, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)














For the Three Months Ended September 30,


For the Nine Months Ended September 30,




2013


2012


2013


2012


Net revenue:










Subscription services


$ 11,169,084


$ 8,956,184


$ 32,179,403


$ 26,784,377


Media


2,415,644


2,641,571


7,469,905


10,110,361


Total net revenue


13,584,728


11,597,755


39,649,308


36,894,738












Operating expense:










Cost of services


7,460,950


5,699,275


20,607,534


17,834,336


Sales and marketing


3,525,520


2,717,794


10,644,273


10,076,902


General and administrative


2,755,016


3,143,160


9,230,616


10,242,852


Depreciation and amortization


883,760


1,295,197


2,762,283


3,740,649


Restructuring and other charges


-


3,046,104


385,610


6,039,797


Loss (gain) on disposition of assets


171,000


14,011


187,434


(205,989)


Total operating expense


14,796,246


15,915,541


43,817,750


47,728,547


Operating loss


(1,211,518)


(4,317,786)


(4,168,442)


(10,833,809)


Net interest income


32,053


91,271


169,884


295,216


Net loss


(1,179,465)


(4,226,515)


(3,998,558)


(10,538,593)


Preferred stock cash dividends


-


-


-


192,848


Net loss attributable to common stockholders


$ (1,179,465)


$ (4,226,515)


$ (3,998,558)


$ (10,731,441)












Basic and diluted net loss per share:










Net loss


$ (0.03)


$ (0.13)


$ (0.12)


$ (0.32)


Preferred stock cash dividends


-


-


-


(0.01)


Net loss attributable to common stockholders


$ (0.03)


$ (0.13)


$ (0.12)


$ (0.33)












Weighted average basic and diluted shares outstanding


33,892,790


32,848,076


33,654,044


32,648,487












Net loss


$ (1,179,465)


$ (4,226,515)


$ (3,998,558)


$ (10,538,593)


Net interest income


(32,053)


(91,271)


(169,884)


(295,216)


Depreciation and amortization


883,760


1,295,197


2,762,283


3,740,649


EBITDA


(327,758)


(3,022,589)


(1,406,159)


(7,093,160)


Restructuring and other charges


-


3,046,104


385,610


6,039,797


Stock based compensation


417,616


565,601


1,216,041


1,632,405


Loss (gain) on disposition of assets


171,000


14,011


187,434


(205,989)


Transaction related costs


-


443,318


141,118


518,647


Adjusted EBITDA


$ 260,858


$ 1,046,445


$ 524,044


$ 891,700








THESTREET, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited)










For the Nine Months Ended September 30,




2013


2012


Cash Flows from Operating Activities:






Net loss


$ (3,998,558)


$ (10,538,593)


Adjustments to reconcile net loss to net cash






provided by (used in) operating activities:






Stock-based compensation expense


1,216,041


1,632,405


Provision for doubtful accounts


3,730


100,887


Depreciation and amortization


2,762,283


3,740,649


Restructuring and other charges


393,195


1,396,695


Deferred rent


(241,899)


(239,968)


Noncash barter activity


20,000


126,940


Loss (gain) on disposition of assets


187,434


(205,989)


Changes in operating assets and liabilities:






Accounts receivable


1,773,584


2,058,490


Other receivables


865,159


(502,866)


Prepaid expenses and other current assets


(145,417)


(334,508)


Other assets


2,928


40,601


Accounts payable


(1,695,000)


(473,986)


Accrued expenses


(1,954,966)


(1,531,416)


Deferred revenue


1,375,369


(1,139,243)


Other current liabilities


(58,676)


113,626


Other liabilities


(24,001)


-


Net cash provided by (used in) operating activities


481,206


(5,756,276)








Cash Flows from Investing Activities:






Purchase of marketable securities


-


(41,151,130)


Sale and maturity of marketable securities


17,923,464


30,363,261


Purchase of assets from DealFlow Media, Inc.


(1,764,716)


-


Purchase of The Deal, LLC


-


(5,430,063)


Capital expenditures


(813,469)


(915,263)


Proceeds from the disposition of assets


71,881


222,300


Net cash provided by (used in) investing activities


15,417,160


(16,910,895)








Cash Flows from Financing Activities:






Cash dividends paid on common stock


-


(1,640,421)


Cash dividends paid on preferred stock


-


(192,848)


Proceeds from the sale of common stock


-


135,000


Proceeds from the exercise of stock options


18,000


-


Shares withheld on RSU vesting to pay for withholding taxes


(135,847)


(830,669)


Net cash used in financing activities


(117,847)


(2,528,938)


Net increase (decrease) in cash and cash equivalents


15,780,519


(25,196,109)


Cash and cash equivalents, beginning of period


23,845,360


44,865,191


Cash and cash equivalents, end of period


$ 39,625,879


$ 19,669,082








Noncash investing and financing activities:












Stock issued for business combination


$ 780,863


$ -








Net loss


$ (3,998,558)


$ (10,538,593)


Noncash expenditures


4,340,784


6,551,619


Changes in operating assets and liabilities


138,980


(1,769,302)


Capital expenditures


(813,469)


(915,263)


Free cash flow


$ (332,263)


$ (6,671,539)