Updated from 7:33 a.m. EDT
said Thursday morning that it had record first-quarter revenue on advertising growth of 56%.
The company, publisher of this Web site, reported net income of $3 million in the quarter, up from $2.6 million in the year-ago period on net revenue of $14.5 million, a 30% increase over $11.1 million from the first quarter of 2006. Earnings per share were 13 cents, against 11 cents in the year-earlier period.
"I am extremely pleased with our financial results as evidenced by our record revenue level," said Thomas. J. Clarke Jr., chairman and chief executive officer of TheStreet.com. "We came into the year focused on increasing the advertising portion of our overall revenue mix. Having delivered 56% growth in our advertising revenue in the first quarter, advertising now comprises 35% of our total revenue mix."
Clarke added that the acquisition of the remaining 50.1% in Stockpickr.com, announced
Wednesday evening, would enhance the company's efforts.
In addition to the growth in advertising revenue, the company saw subscription revenue increase by 15%, and other revenue, primarily syndication, increased 152% over 2006. Earnings before interest, taxes, depreciation and amortization totaled $2.9 million, an increase of 15% over EBITDA of $2.5 million in the prior year.
Cash, restricted cash and marketable securities stood at $49.3 million. TheStreet.com has no long-term debt.
On a conference call with analysts, Clarke said TheStreet.com remains focused on growing its advertising business, which enjoys higher profit margins than its subscription side. Last year, the company hired employees for its ad sales staff, as well as its editorial staff, in areas like video production and personal finance.
"The margins on the advertising business will be better than those of the subscription business," Clarke said. "We may not get the mix 100% right quarter to quarter, but in general we'll continue to grow in revenue. Right now, our focus is really on growth. We had a great year last year, and we look to emulate it this year."
When questioned about what the company has yielded from the expansion of the ad sales department, Clarke said that there is already a return resulting from the recent addition of staff.
"One of the goals this year was that we'd invest in the ad sales business," said Clarke. "As long as we're successful in producing content in areas where consumers are demanding it, it'll be an opportunity to add more salespeople. I'm confident in the strategy we have. I'm proud of the track record. With our team and our strategy, we'll get the desired results."
Clarke stated that investors should view TheStreet.com's first-quarter results as a reminder of the company's focus on growing total revenue, which will allow the company to be aggressive in building its own operation or as a buyer.
"We will continue to invest and expand with opportunities we may see," he said. "If we can be the consolidator in the space, I'm just as happy to do that. We want to be inquisitive in a way to broaden opportunities with the mass consumer market. Our emphasis is on the mass personal finance market. We are now in it, and we're going after it with a vengeance."
Stockpickr.com is already showing promise as a revenue generator through the monetization of page views, Clarke said.
"We have learned how to deliver value to our advertisers," he said. "We expect to monetize this site immediately. If you look at the number of portfolios that have been added to the Web site itself, it has grown from nothing from the end of January to just north of 50,000 now. It's growing in leaps and bounds."
The company didn't provide specific guidance for the coming year, although Clarke noted that page views for the second quarter, which can typically be affected by seasonality, may end up sequentially higher compared to the first quarter.
"We're only halfway through the quarter, but the start of the quarter has been strong," he said. "If it were to continue, we should be sequentially higher."
When questioned about the company's plans for its cash pile, Clarke said the company's board is always considering options like increasing its dividend payment or repurchasing shares. However, he stressed that TheStreet.com is currently focused on improving results.
"Both are on the table and we can do both, but we're really focused on growth," Clarke said. "My goal is to deliver. This quarter, we delivered record revenue growth. We've made a conscious decision in looking to diversify. We want to be a bigger player in the space, so we will go to where the bigger opportunity is. We're going to use our cash to grow the business."
However, Clarke added that should the stock price fall to a reasonable level, TheStreet.com does have the cash and can support a buyback.
When asked about a redesign of the company's Web site, Clarke acknowledged the need for one, and offered that a new design could be unveiled as soon as the end of 2007.
"We are planning to incorporate a new design of the site," said Clarke. "The current site has served us well, but for the newer advertising components we want to incorporate in order to engage users even more, we need to restructure it."