TheStreet.com Posts Loss, Revenue Declines

For the fourth quarter ended Dec. 31, revenue fell to $16.5 million from $19.9 million in the same quarter of 2007.
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Updated from 4:04 p.m. EST

TheStreet.com Inc.

(TSCM)

, a New York-based financial media company that publishes this Web site, reported a loss for the fourth quarter and said Thursday that revenue declined 17% from the same period a year earlier.

For the quarter ended Dec. 31, revenue fell to $16.5 million from $19.9 million in the fourth quarter of 2007. Analysts were expecting revenue of $17.3 million.

The company reported a loss of $100,000, excluding a noncash intangible asset impairment charge of $2.3 million and a noncash income tax benefit of $100,000. On a per-share basis, the company broke even, matching the consensus estimate carried by Thomson Reuters. In the final quarter last year, TheStreet.com earned $4.7 million, or 16 cents a share.

The net loss for the quarter was $2.4 million, or 8 cents a share.

Earnings before interest, taxes, depreciation and amortization, excluding the $2.3 million noncash impairment charge and stock compensation costs of $900,000, or adjusted EBITDA, was $1.8 million, a decrease of 69% from last year.

"The market environment is clearly difficult for both our marketing services and our premium research subscription products," said Thomas J. Clarke Jr., chief executive officer of TheStreet.com. "While forward visibility into each business line is extremely limited, we remain focused on ensuring that our costs are in line with the current revenue environment. We have reduced our headcount throughout 2008 by 11%, and our operating expenses declined by 6% sequentially. We will continue to aggressively manage costs and maintain our strong balance sheet."

Fourth-quarter marketing-services revenue, which comprises advertising and interactive marketing services revenue from Promotions.com, totaled $6.6 million, a 30% decrease from the $9.5 million recorded in the last quarter of 2007.

Advertising revenue was $5.3 million, down 21% from a year earlier. Interactive marketing services revenue was $1.3 million for the quarter, a 52% decline from the previous year. Paid services revenue, which is made up of subscription, syndication, licensing and information services revenue, totaled $9.9 million, a 5% year-over-year drop.

Subscription revenue fell to $7.3 million, a decrease of 14%, while syndication, licensing and information services revenue totaled $2.6 million, a 37% increase. Marketing services and paid services revenue in the fourth quarter accounted for 40% and 60%, respectively, of total revenue, compared with 48% and 52%, respectively, in the fourth quarter of 2007.

For the full year, revenue rose to $71.9 million, up 10% from $65.4 million the year before. TheStreet.com reported net income of $3.5 million, or 11 cents a share, excluding an impairment charge and an income tax benefit. In 2007, the company had adjusted earnings of $15.1 million, or 51 cents a share.

Net income attributable to common stockholders for the year, after deducting preferred stock dividends, was $900,000, or 3 cents a share.

Adjusted EBITDA for the year was $11.4 million, down 36% from 2007.

"We expect the difficult market environment to continue in 2009," said Eric Ashman, chief financial officer of TheStreet.com. "Early indications suggest that the year-over-year decline in advertising revenue that we saw in the fourth quarter will increase in the first half of the year, while the pressure on the subscriber base is likely to continue as many investors are no longer market participants, and job reductions in the financial sector reduce the pool of interested consumers. Despite the challenging conditions, we delivered $3.0 million in free cash flow in 2008. We will continue to take decisive and expedient action on expenses with a goal of maintaining at least a free cash flow neutral position for 2009."

Marketing services revenue was $30.7 million, up 14% from last year. Advertising revenue reached the highest total in the company's history at $23.1 million, 5% above last year's $22 million. Paid services revenue for the year was $41.2 million, up 7%, and subscription revenue was $30.4 million, 11% below 2007.

Syndication, licensing and information services revenue was $10.8 million, more than double the previous year's total of $4.3 million.

As of Dec. 31, cash, restricted cash, cash equivalents and debt securities available for sale totaled $76.4 million. The company has no bank debt. For the full year, the company generated cash flow from operations of $8.7 million, while free cash flow totaled $3 million.

Separately, the company said in a filing with regulators that it won't renew existing contracts with Ashman, Editor-in-Chief David Morrow, General Counsel Teresa Santos and certain other executives. They will instead receive new documents detailing the terms of their employment.

The company said the shift away from contracts follows recent trends in corporate governance and executive compensation that are more favorable to both companies and their shareholders.

Shares of TheStreet.com fell 8 cents, or 3%, to $2.57 in after-hours trading.

This article was written by a staff member of TheStreet.com.