TheStreet Trims Loss as Sales Grow

TheStreet reports a narrower loss in its first quarter compared with a year ago, citing a rebound in subscription bookings and advertising revenue.
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(TheStreet earnings story updated to provide management commentary from the company's first-quarter conference call.)

NEW YORK (

TheStreet

) --

TheStreet

(TSCM)

, the financial media group that publishes this Web site, reduced its first-quarter loss significantly as advertising and subscription bookings improved from the lows reached a year ago amid the financial crisis.

The results follow a year during which TheStreet shed its unprofitable marketing unit, Promotions.com, where accounting issues had forced the company to

restate financial results

for 2008.

For the period ended March 31, the company's net loss amounted to $1.4 million, or 5 cents a share. A year ago, TheStreet posted a loss of $46 million, or $1.51 a share, which included $2 million in restructuring costs, a $24 million asset impairment charge and $16.5 million in income tax provisions.

On the top line, revenue came to $13.5 million, flat with the year-ago period, due to the exclusion of Promotions.com revenue this year.

Excluding results from the divested Promotions.com, which TheStreet sold in December, the company's revenue rose 7% from $12.7 million in the first quarter of 2009, while its loss narrowed from $44.9 million.

Aggregate bookings for its subscription services and RateWatch businesses rose 18% year over year, the company said, while premium services revenue increased 2% to $9.7 million.

"Since early last year, we have been placing intense focus on expanding the scale and profitability of our premium services businesses," said TheStreet's CEO, Daryl Otte, in a written statement. "We are glad these efforts already have been yielding strong results and we look forward to continuing our focus on this area."

Advertising sales in the first quarter amounted to $3.8 million, up 20% from a year ago, a figure that also excludes the impact of Promotions.com.

The company said its adjusted earnings before interest, taxes, depreciation and amortization for the first quarter was $600,000, up from an EBITDA loss (excluding Promotions.com) of $100,000 a year ago.

On the balance sheet, the company remained debtless, with a cash position of $81.7 million, which is lower by $1.4 million from Dec. 31, reflecting dividends, capital expenditures and employee stock compensation.

"We expect to benefit from the ongoing secular shift of advertising dollars towards digital media, as well as to benefit from any cyclical strengthening of the advertising market," Otte said in the statement.

In a conference call with investors after the closing bell Wednesday, Otte disclosed the company's subscriber churn rate, or the percentage of its paying audience that cancels subscriptions over the course of a certain period.

For the first quarter, the churn rate was 3.8%, down from more than 5% in the corresponding 2009 period. By comparison, he said,

Netflix

(NFLX) - Get Report

has a churn of about 4.2%.

Otte also highlighted the company's growing audience -- comparable in size to that of

Reuters

or

CNBC

in terms of unique visitors, according to comScore, a marketing firm that tracks Internet traffic -- and said this has led to an increased number of "non-endemic" advertisers, or companies outside the finance industry on TheStreet's Web sites.

So far in the second quarter, Otte said, the company has booked ads from

Infinity

,

Jaguar

,

Cadillac

and

Frontier Airlines

(FRNT)

, among others.

As part of an effort to boost its subscription business by rationalizing sometimes disparate product offerings, said Otte, the company will be launching at the end of May a new premium service that bundles several "personality driven" options-investing products into one package.

Also Wednesday, TheStreet completed the sale of a ratings service covering the banking and insurance industries, in a deal with the Weiss Group. In the conference call, executives said TheStreet would book a $1.6 million gain on the sale, $1.3 million in cash.

TheStreet bought the service from Weiss in 2006, along with a unit that rates mutual funds and equities, which TheStreet still owns.

Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.