released its delayed earnings reports late Monday, showing a $1.4 million loss in the third quarter following a $300,000 profit in the second quarter. The company also issued a restatement of financial reports for all of 2008 following an accounting review related to the Promotions.com unit that was divested in December.
The report is a step toward returning to compliance with the rules of the
Nasdaq Stock Market
, which had granted the company until Feb. 8 to meet a listing requirement for timely filing of all required periodic financial results. TheStreet.com said it expects to file all outstanding financial reports with the
Securities and Exchange Commission
by the Feb. 8 deadline and regain Nasdaq compliance at that time.
TheStreet.com, the publisher of this Web site, reported a net loss of $1.4 million, or 5 cents per share attributable to common shareholders, in the third quarter of 2009, compared with a restated net loss of $700,000, or 3 cents a share, in the prior year period. Revenue declined 11% in the period to $15.2 million from a restated $17 million in the third quarter of 2008. For the second quarter, the company posted net income of $300,000, or 1 cent per share, compared with a restated $1.1 million profit, or 3 cents a share, in the year-earlier period. Revenue declined 19% to $15 million in the second quarter from a restated $18.4 million the year before.
The restatements correct errors related to the timing of reported revenue in the former Promotions.com unit, the company said. The adjustments will result in reduced revenue in certain quarters, increased revenue in others and reduced net income and net loss in other quarters. TheStreet.com noted that it maintained positive adjusted earnings before income tax, depreciation and amortization every quarter except the first, and even the first quarter was positive excluding Promotions.com. The divested unit lowered EBITDA by $2.2 million during the first nine months of 2009.
"We are pleased to have concluded the review of accounting in our former Promotions.com subsidiary and to resume reporting our results, as we have been enjoying favorable trends in the company's remaining businesses for the past couple of quarters," CEO Daryl Otte said in a statement.
TheStreet.com has not yet reported results for the fourth quarter, but expects to report paid services revenue of between $9.5 million and $9.7 million, vs. $9.9 million in the prior-year period. The company said it anticipates paid services bookings will rise 10% to 13% from the year-ago period. Paid services revenue was not affected by the restatement.
The company expects revenue from its advertising-supported Web sites and other marketing services, including Promotions.com through its divestiture in December, will be in the range of $6.7 million to $6.9 million, vs. a restated $7.5 million in the prior-year period. Advertising revenue, excluding Promotions.com, is expected to be between $5.5 million and $5.6 million in the fourth quarter vs. $5.3 million in the fourth quarter of 2008. Marketing services revenue, excluding Promotions.com, was not affected by the restatement.
TheStreet.com had no debt as of Dec. 31 and held cash, cash equivalents, restricted cash and marketable securities at Dec. 31 of approximately $82.7 million, an increase of $6.3 million from the prior year. The increase reflects operating cash flow, $1 million in cash from the sale of Promotions.com, payments and fees in connection with the acquisition of online subscription marketing firm Kikucall and the payment of $3.6 million in dividends.
Certain inaccuracies identified in the accounting review did affect TheStreet.com's 2007 financial results, but were not material, the company said. The law firm Skadden, Arps, Slate, Meagher & Flom and accounting firm AlixPartners conducted the review.
This article was written by a staff member of TheStreet.com.