Updated from 7:36 a.m. EDT

TheStreet.com

(TSCM)

posted first-quarter results Thursday, highlighted by 48% and 46% year-over-year gains in advertising and commission revenue, respectively.

TheStreet.com, which publishes this Web site and provides online financial commentary, analysis, news and independent research, posted a net loss of $854,000 for the quarter, or 3 cents per share, a 46% improvement over the year-ago loss and a reduction of $1.6 million from the previous quarter's net income.

Analysts were expecting a loss of 2 cents a share, according to consensus estimates reported by Thomson First Call. Shares of TheStreet.com were recently down 29 cents, or 7.8%, to $3.44.

Net revenue increased 13% over the prior year to $8.9 million. Deferred revenue was $7.9 million, a 3% decrease over the same period last year and an increase of 8% from last quarter.

"We are very pleased to report that our strategy of developing multiple revenue streams has enabled the company to increase its net revenue in the quarter over the prior year," said Thomas J. Clarke, Jr., chairman and chief executive officer of TheStreet.com. "Our net revenue gains came primarily from two sources, advertising and commission. Our advertising revenue of $2.1 million was the highest quarterly total for the company since the third quarter of 2000. Just two years ago, the company had no commission revenue, but in the first quarter, commission revenue totaled $1.1 million."

By segment, first-quarter subscription revenue was $5.4 million, a slight increase from a year ago; advertising revenue was $2.1 million vs. $1.4 million a year ago; and commission revenue from Independent Research Group LLC was $1.1 million vs. $777,000 in the year-ago period.

"We are entering a period where we believe the advertising cycle is going to be strong for the remainder of this year," Clarke told analysts on a conference call. "That means subscription revenue probably goes down as we move quality content over to the free site where it can be monetized through advertising."

He also said subscription revenue was hurt by a decline in market sentiment, which could have kept some retail investors from entering the stock market.

Net income for the company's core electronic publishing segment was $981,000, up $1.2 million from the year-ago period and a 55% decrease from the fourth quarter.

"Our core electronic publishing segment continues to perform well," said Lisa A. Mogensen, chief financial officer of TheStreet.com. "This marks the fourth consecutive quarter of profitability for our core business. This strength will allow us to continue to explore and build upon our solid revenue base with opportunities such as the addition of video programming capabilities, which are attractive to national advertisers."

Total cash burn for the quarter was $3.6 million vs. cash flow of $1.5 million in the year-ago period and $1.1 million in the prior quarter; the company attributed the swing to normal fluctuations in working capital balances.

Expenses in the quarter were $10 million, a 4% increase over the year-ago period and a 12% decrease from the prior quarter. Clarke said costs resulting from Sarbanes-Oxley legislation totaled approximately $2 million a year; that burden plays a role in the company's recent decision to explore strategic opportunities through a consultant.

"We are exploring strategic opportunities and we have talked to a number of parties, but we have no material developments to report at this time," Clarke said.

He told analysts that a buyout was a possibility for TheStreet.com, but it was also possible that the company could be an acquirer, or that it could spin off one of its business units and keep another.

"These talks always take on a life of their own," Clarke said.

As of March 31, cash, restricted cash and investments stood at $28.5 million, a 5% decrease over the same period a year ago and an 11% decrease from last quarter. The company has no bank debt.

With its stock down nearly 27% since late February, Clarke said TheStreet.com was considering more share repurchases as part of a plan previously authorized by the company's board of directors.