TheStreet Posts Loss, Rise in Sales

NEW YORK (TheStreet) -- TheStreet(TSCM), the financial media group that publishes this Web site, posted a loss in the third quarter as investments to expand the business offset increases in revenue from both advertising and subscriptions.

For the period ended Sept. 30, TheStreet posted a net loss attributable to common shareholders of $1.93 million, or 6 cents a share, compared with a year-earlier loss of $1.39 million, or 5 cents a share.

Excluding business units that the company sold, EBITDA (earnings before interest, taxes, depreciation and amortization) came to a loss of $290,335. Total revenue from ongoing businesses improved 8% to $14.3 million in the quarter, reflecting a 9% jump in advertising sales and 8% growth in subscription revenue.

"We are particularly pleased to see year-over-year advertising growth during a quarter in which many of our brokerage clients have reported that overall trading activity has declined substantially and their business has slowed," Chief Executive Daryl Otte said in a press release, adding that TheStreet's subscription services business recorded its highest revenue in nine quarters.

Otte said the third-quarter loss reflects "the seasonal nature of our advertising business" and previously announced investments that consist mainly of costs for new staff in the sales, marketing and editorial departments -- hires that "helped to drive additional traffic to our ad-supported sites as well as develop new subscription products."

Operating expenses for TheStreet's ongoing businesses were $16.4 million in the quarter, a 12% increase from the year-earlier period. Spending was higher than normal in the recent quarter as the company renovated its headquarters in New York City and worked toward upgrading its technical infrastructure and content management systems.

When costs related to divested units are included in the comparisons, operating expenses actually decreased 2% year over year. The results from TheStreet's ongoing businesses exclude the company's 2009 shedding of its unprofitable marketing unit, Promotions.com, where accounting issues had forced it to restate financial results for 2008; revenue derived from the global research legal settlement that expired in July of last year; and revenue from the banking and insurance ratings business divested in May.