TheStreet.com First-Quarter Revenue Rises
Updated from 7:44 a.m. EDT
TheStreet.com Inc.
(TSCM)
, a financial-media company and the publisher of this Web site, said its revenue for the first quarter rose 31% from the same period a year earlier, driven by growth in revenue from interactive-marketing services, advertising and paid services.
Total revenue for the quarter ended March 31 was $18.9 million, up from $14.5 million in the first quarter of 2007. Net income decreased by 19% to $2.4 million, or 7 cents a share, from $3 million, or 11 cents a share, a year earlier.
Earnings before interest, taxes, depreciation and amortization, excluding stock compensation expenses, was $3.9 million, an increase of 11% from adjusted EBITDA of $3.5 million for the year-ago first quarter.
"We began 2008 delivering on key strategic initiatives -- the launch of the new TheStreet.com Web site and the launch of MainStreet.com -- to strengthen our position as the leading destination for 'all things money,'" said Thomas J. Clarke Jr., chairman and chief executive officer of TheStreet.com, in a press release Tuesday. "These initiatives have allowed us to capitalize on the growing opportunity in online advertising and enabled us to achieve record first-quarter revenue. While the initiatives had a short-term effect on our quarterly earnings, we are encouraged by the strong demand from advertisers across TheStreet.com's network of sites and services."
Marketing-services revenue, which comprises advertising and interactive-marketing services, totaled $8.2 million for the first quarter, an increase of 62% from $5.1 million the previous year. Advertising revenue for the quarter rose 18% year over year to $6 million. Interactive-marketing services revenue, derived from Promotions.com, which was acquired last August, was $2.2 million.
Paid-services revenue, which includes subscription, syndication, licensing and information-services revenue, totaled $10.8 million for the quarter and was up 14% from $9.4 million in the same period a year earlier.
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 $8 million, a decrease of 2% from the prior year.
TheStreet.com said syndication, licensing and information-services revenue totaled $2.7 million for the quarter, a gain of 290% from $700,000 in the same quarter one year ago, primarily because of the acquisition of Bankers Financial Products Corp. in November.
Marketing-services and paid-services revenue in the first quarter accounted for 43% and 57% of overall revenue, respectively. For the year-earlier period, marketing services accounted for 35% of revenue, and paid services made up 65% of the total.
TheStreet.com reported a 44% year-over-year increase in nonfinancial-advertising revenue in the quarter. Nonfinancial-advertising revenue represented 40% of total advertising revenue, up from 32% in the 2007 first quarter.
At the end of the quarter, cash, cash equivalents and restricted cash stood at $82.2 million. The company has no bank debt. During the quarter, TheStreet.com generated cash flow from operations of $4.9 million, while free cash flow was $3.5 million.
TheStreet.com, based in New York, operates a network of Web sites:
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Rate-Watch.com
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In early 2008, TheStreet.com launched MainStreet, a free Web site that presents original entertainment and celebrity news articles that illustrate a relevant personal finance topic. The multimedia editorial content is divided into sections corresponding with distinct life stages.
TheStreet.com also relaunched its flagship Web site after an extensive redesign. Stockpickr was redesigned to facilitate more seamless content integration with TheStreet.com and to support user-generated videos.
During a conference call for investors, Clarke said that "the current environment remains challenging" as the company heads into the second quarter. "We began the year with a very aggressive agenda," he added.
"To say we remain extremely confident of the long-term success of this business would be an understatement," Clarke said. "The enhancements to TheStreet.com Web site have been met with enthusiasm, and the site is delivering the superior visitor and advertiser experience we aimed to create when we began the redesign project a year ago."
Clarke said the rapid pace of growth was not accomplished without some short-term pain. "Our bottom line took a hit as we had to divert a portion of the revenue-producing capacity from the Promotions group to accomplish this," he said. Clark added that it was "critically important to deliver" the redesign before going into the second quarter.
Chief Financial Officer Eric Ashman said that Promotions.com was "impacted by our decision to focus the leadership and technical resources of that business on our internal strategic initiatives, which has impacted their own growth in the short term."
"We thought it was better to get it over with and get it done better," Clarke added. "We hurt their division ... but that's over. We see the pipeline building. We think the margins are going to go higher. Over time, that business will get back to that level of revenue. We certainly expect that business will come back very, very strong."
When asked about advertisement revenue growth going forward, considering the macroeconomic picture, Clarke said the company doesn't "use the environment as any type of excuse. We should have advertising revenue increasing. We're feeling pretty good about that."
In regards to Jim Cramer's new three-year contract signed earlier in April, Clarke said the negotiation was done at fair value.