TheStreet.com, Inc. (Nasdaq: TST; http://www.t.st), a leading digital financial media company, today reported financial results for the fourth quarter and full year of 2010. The Company reported revenue of $57.2 million, a net loss of $(5.3) million and Adjusted EBITDA (1) of $1.2 million for the year and revenue of $14.7 million, a net loss of $(1.7) million and Adjusted EBITDA of $0.0 million for the quarter.

“TheStreet’s revenue from its ongoing businesses (2) increased 7% in 2010 as compared to the prior year, with advertising revenue up 5% and Premium Services revenue up 7%,” said Daryl Otte, the Company’s Chief Executive Officer. “As we’ve previously announced, the Company embarked on a strategic investment program during the year with the commitment to remain Adjusted EBITDA positive for the year, a promise we have fulfilled.

“Perhaps an even better indicator of our confidence is how the business is currently trending. Starting in the back half of the fourth quarter of 2010 and continuing into the first quarter of 2011, we are clearly seeing that our new strategy and related investments are yielding tangible results. Particularly, the size of the audience to our network of sites is growing nicely in part on the strength of natural search improvements; our subscription counts are up, benefitting strongly from growth in our new services; churn rates are improving, a result of improved product quality, technological improvements and the efforts of our telesales organization; and sequential subscription bookings are rebounding sharply, up 20% in the fourth quarter of 2010 over the prior quarter.

“In addition, the advertising pipeline at year end and into 2011 was the strongest we have seen in some time, on the strength of our investments in the sales teams, the introduction of custom marketing packages for our key advertisers and our investment in improving the quality of our sites’ page views. It is also important to note that our operating expenses are leveling off as our investments in these programs have matured, with the G&A line declining.

“One disappointment is that while our advertising revenue grew in the full year by 5%, we saw a decline of $0.3 million, or 6%, in the fourth quarter, as compared to the prior year periods. We attribute this largely to a mix of general softness in our core category for the quarter and some execution issues on our part. While these circumstances impacted the year-on-year comparison of the fourth quarter, we are very pleased to note that through work undertaken during the fourth quarter, we began the year with a significantly higher level of commitment from our core advertisers for 2011 as part of the annual ‘upfront’ sales cycle as compared to our upfront commitments in 2010. We also are pleased to report that we have won commitments from 100% of the top six online brokerages for advertising this year, the first time since 2007.

“Lastly, we note that there has been widespread discussion about a change that Google announced in late February 2011 to its search algorithm, a change intended to better acknowledge the quality of content when ranking search results. While it is too early to comment on any long-term impact of this change for our network of sites, it is expected that sites that produce in-depth, original, high quality content, like TheStreet, will see their rankings elevated. We have been a leading publisher of original, high quality financial content since our launch 15 years ago – we are pleased to see that Google believes that its users have a strong demand for this type of content and we look forward to continuing to satisfy such demand,” Mr. Otte concluded.

Financial Highlights of Full Year and Fourth Quarter 2010

The Company’s ongoing businesses recorded revenue of $56.7 million during fiscal year 2010, an increase of 7% as compared to the prior year. Including revenue from the Company’s former businesses (2), the Company recorded revenue $57.2 million in fiscal year 2010, a decrease of 5% as compared to the prior year. For the fourth quarter of 2010, the Company’s revenue was $14.7 million, as compared to revenue in 2009 of $15.0 million (excluding former businesses) and $16.5 million (including former businesses).
  • Premium Services revenue from ongoing businesses increased 7% in fiscal year 2010 and 1% in the fourth quarter of 2010, as compared to the respective prior year periods. As the majority of the Company’s Premium Services products are sold on an annual subscription basis, Premium Services revenue is largely a function of prior period bookings.
  • Premium Services bookings from ongoing businesses increased 1% each in fiscal year 2010 and in the fourth quarter of 2010, as compared to the respective prior year periods. Bookings grew sequentially by 20% in the fourth quarter of 2010 over the third quarter of 2010.
  • The average number of paid subscriptions reached 90,640 in the fourth quarter of 2010, compared to an average of 83,745 in the fourth quarter of 2009, an increase of 8%.
  • Churn declined to 3.6% in fourth quarter of 2010, compared to 3.8% in the third quarter of 2010 and 4.0% in the fourth quarter of 2009.
  • Marketing Services revenue from ongoing businesses increased 5% in fiscal year 2010 and declined by 6% in the fourth quarter of 2010, compared to the respective prior year periods.
  • The average monthly unique visitors to the Company’s network of sites for the fourth quarter of 2010, as measured internally, were up 18% as compared to the prior year period.

The Company’s ongoing businesses recorded adjusted EBITDA of $1.2 million in the fiscal year 2010, down from $6.5 million in the prior year. Including the Company’s former businesses, Adjusted EBITDA was $1.2 million in fiscal year 2010, down from $5.7 million in the prior year. For the fourth quarter of 2010, the Company recorded breakeven EBITDA compared to $3.0 million in the prior period.

The Company had a net loss from its ongoing businesses of $(5.4) million and $(1.7) million in fiscal year 2010 and the fourth quarter of 2010, respectively, as compared to a net loss from its ongoing businesses of $(46.9) million and $(0.8) million during the respective prior year periods. Including the Company’s former businesses, the Company had a net loss of $(5.3) million and $(1.7) million in fiscal year 2010 and the fourth quarter of 2010, respectively, as compared to a net loss of $(47.7) million and $(0.8) million during the respective prior year periods.

The Company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of $78.6 million, a decrease of $1.1 million as compared to September 30, 2010.

TheStreet will conduct a conference call Thursday, March 10, 2011, at 4:30 p.m. Eastern Time to discuss these preliminary results. To participate in the call, dial (866) 578-5801 (domestic) or (617) 213-8058 (international). The passcode for the call is 54007907.

To access the Web cast of the call please visit: http://www.thestreet.com/investor-relations/index.html?detailInclude=IROL-IRhome

(Due to its length, this URL may need to be copied/pasted into your Internet browser’s address field. Remove the extra space if one exists.)

About TheStreet

TheStreet.com, Inc. is a leading digital financial media company that distributes its content through online, social media, tablet and mobile channels. The Company's network of brands include: TheStreet, RealMoney, Stockpickr, Action Alerts PLUS, Options Profits, ETF Profits, MainStreet and Rate-Watch. For more information on TheStreet’s business, visit www.t.st. For financial and business news, actionable trading ideas, stock quotes and more, visit TheStreet.com via your web browser, follow TheStreet on Facebook and Twitter, visit TheStreet.mobi from your mobile device and access TheStreet through all major tablet platforms.

(1) To supplement the Company’s financial statements presented in accordance with generally accepted accounting principles (“GAAP”), TheStreet.com, Inc. uses non-GAAP measures of certain components of financial performance, including “EBITDA” and “Adjusted EBITDA”. EBITDA is adjusted from results based on GAAP to exclude interest, income taxes, depreciation and amortization. This non-GAAP measure is provided to enhance investors’ overall understanding of the Company’s current financial performance and its prospects for the future. Specifically, the Company believes that the non-GAAP EBITDA results are an important indicator of the operational strength of the Company’s business and provide an indication of the Company’s ability to service debt and fund capital expenditures. EBITDA eliminates the uneven effect of considerable amounts of noncash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations. Adjusted EBITDA further eliminates the impact of noncash stock compensation and impairment expenses, restructuring charges and other non-standard one-time charges. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s businesses. Management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets and investment spending levels. The Company believes that this non-GAAP financial measure is an important indicator of the Company's financial results because it gives investors a view of the Company's ability to generate cash.

The above information with respect to the Company’s ongoing businesses is presented as a non-GAAP measure for illustrative purposes regarding the exclusion of the former businesses. These excluded results are not meant to represent a reflection of the operating activities of the divested Promotions.com subsidiary or the divested B&I Business (defined below) as if either was on a fully stand-alone basis. Promotions.com was a legal subsidiary of the Company whose activities were part of the combined results of the Company and the B&I Business was operated by the Company directly. Historically, neither Promotions.com nor the B&I Business were considered an operating segment and management did not measure and maintain certain separate discrete financial information for Promotions.com or the B&I Business, including cash flows for the activities of either.

The above measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measure included in this press release has been reconciled to the nearest GAAP measure.

(2) The Company’s ongoing businesses exclude (i) the Company’s former Promotions.com subsidiary, which the Company divested in December 2009; (ii) the banking and insurance ratings business (“B&I Business”) of TheStreet Ratings, which the Company divested in May 2010; and (iii) revenue derived from the global research legal settlement that expired in July 2009 (collectively, the “former businesses”).

All statements contained in this press release other than statements of historical facts are deemed forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, including those described in the Company’s filings with the Securities and Exchange Commission, that could cause actual results to differ materially from those reflected in the forward-looking statements. All forward-looking statements contained herein are made as of the date of this press release. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results or occurrences. The Company disclaims any obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise.
 
THESTREET.COM, INC.
CONSOLIDATED BALANCE SHEETS
   
ASSETS December 31, 2010 December 31, 2009
Current Assets:
Cash and cash equivalents $ 20,089,660 $ 60,542,494

Accounts receivable, net of allowance for doubtfulaccounts of $238,228 at December 31, 2010 and$276,668 at December 31, 2009
6,623,261 5,963,209
Marketable securities 26,502,945 2,812,400
Other receivables 663,968 2,774,898
Prepaid expenses and other current assets   1,785,007     1,691,038  
Total current assets 55,664,841 73,784,039
 

Property and equipment, net of accumulated depreciationand amortization of $12,845,359 at December 31, 2010and $13,263,460 at December 31, 2009
10,887,732 7,493,020
Marketable securities 30,302,428 17,515,687
Long term investment - 555,000
Other assets 243,611 167,477
Goodwill 24,057,616 24,286,616
Other intangibles, net 6,725,462 8,210,105
Restricted cash   1,660,370     1,702,079  
Total assets $ 129,542,060   $ 133,714,023  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,455,894 $ 2,164,809
Accrued expenses 8,239,064 7,894,136
Deferred revenue 17,431,381 17,306,737
Other current liabilities 184,328 132,682
Liabilities of discontinued operations   1,871     223,165  
Total current liabilities 28,312,538 27,721,529
Deferred tax liability 288,000 288,000
Other liabilities   2,948,181     1,230,591  
Total liabilities   31,548,719     29,240,120  
 
Stockholders' Equity:

Preferred stock; $0.01 par value; 10,000,000 sharesauthorized; 5,500 shares issued and 5,500 sharesoutstanding at December 31, 2010 and December 31, 2009;the aggregate liquidation preference totals $55,000,000 as ofDecember 31, 2010 and December 31, 2009
55 55

Common stock; $0.01 par value; 100,000,000 sharesauthorized; 37,775,381 shares issued and 31,667,600shares outstanding at December 31, 2010, and 37,246,362shares issued and 31,164,628 shares outstanding atDecember 31, 2009
377,754 372,464
Additional paid-in capital 270,644,658 271,715,956
Accumulated other comprehensive income 331,311 344,372

Treasury stock at cost; 6,107,781 shares at December 31, 2010and 6,081,734 shares at December 31, 2009
(10,478,838 ) (10,411,952 )
Accumulated deficit   (162,881,599 )   (157,546,992 )
Total stockholders' equity   97,993,341     104,473,903  
 
Total liabilities and stockholders' equity $ 129,542,060   $ 133,714,023  
 
       
THESTREET.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
For the Three Months Ended December 31, For the Year Ended December 31,
2010 2009 2010 2009
Net revenue:
Premium services $ 9,432,205 $ 9,678,530 $ 38,597,877 $ 37,988,579
Marketing services   5,253,194     6,833,174     18,588,502     22,251,432  
Total net revenue   14,685,399     16,511,704     57,186,379     60,240,011  
 
Operating expense:
Cost of services 6,584,437 6,433,677 25,557,162 29,100,204
Sales and marketing 4,551,870 3,309,492 15,841,470 12,077,546
General and administrative 4,049,472 5,730,964 18,052,633 18,916,456
Depreciation and amortization 1,466,552 1,099,934 4,692,520 4,985,297
Asset impairments - - 555,000 24,137,069
Restructuring and other charges - 732,412 - 3,460,914
Loss (gain) on disposition of assets   -     529,708     (1,318,607 )   529,708  
Total operating expense   16,652,331     17,836,187     63,380,178     93,207,194  
Operating loss (1,966,932 ) (1,324,483 ) (6,193,799 ) (32,967,183 )
Net interest income 203,674 173,831 846,157 949,727
Gain on sales of marketable securities - - - 295,430
Other income   -     -     20,374     153,677  
Loss from continuing operations before income taxes (1,763,258 ) (1,150,652 ) (5,327,268 ) (31,568,349 )
Benefit (provision) for income taxes   -     381,113     -     (16,133,964 )
Loss from continuing operations (1,763,258 ) (769,539 ) (5,327,268 ) (47,702,313 )
Discontinued operations:
Gain (loss) from discontinued operations   16,091     (4,868 )   (7,339 )   (15,321 )
Net loss (1,747,167 ) (774,407 ) (5,334,607 ) (47,717,634 )
Preferred stock cash dividends   96,424     96,424     385,696     385,696  
Net loss attributable to common stockholders $ (1,843,591 ) $ (870,831 ) $ (5,720,303 ) $ (48,103,330 )
 
Basic net loss per share:
Loss from continuing operations $ (0.06 ) $ (0.03 ) $ (0.17 ) $ (1.56 )
Gain (loss) from discontinued operations   0.00     (0.00 )   (0.00 )   (0.00 )
Net loss (0.06 ) (0.03 ) (0.17 ) (1.56 )
Preferred stock dividends   (0.00 )   (0.00 )   (0.01 )   (0.01 )
Net loss attributable to common stockholders $ (0.06 ) $ (0.03 ) $ (0.18 ) $ (1.57 )
 
Diluted net loss per share:
Loss from continuing operations $ (0.06 ) $ (0.03 ) $ (0.17 ) $ (1.56 )
Gain (loss) from discontinued operations   0.00     (0.00 )   (0.00 )   (0.00 )
Net loss (0.06 ) (0.03 ) (0.17 ) (1.56 )
Preferred stock dividends   (0.00 )   (0.00 )   (0.01 )   (0.01 )
Net loss attributable to common stockholders $ (0.06 ) $ (0.03 ) $ (0.18 ) $ (1.57 )
 
Weighted average basic shares outstanding   31,660,752     30,622,363     31,593,341     30,586,460  
Weighted average diluted shares outstanding   31,660,752     30,622,363     31,593,341     30,586,460  
 
 
THESTREET.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
   
For the Year Ended December 31,
2010 2009
Cash Flows from Operating Activities:
Net loss $ (5,334,607 ) $ (47,717,634 )
Loss from discontinued operations   7,339     15,321  
Loss from continuing operations (5,327,268 ) (47,702,313 )
Adjustments to reconcile loss from continuing operations
to net cash provided by operating activities:
Stock-based compensation expense 2,336,443 2,739,566
Provision for doubtful accounts 62,559 408,425
Depreciation and amortization 4,692,520 4,985,297
Valuation allowance on deferred taxes - 16,404,790
Impairment charges 555,000 24,137,069
Restructuring and other charges - 451,695
Deferred rent 1,703,614 1,233,700
Gain on disposal of equipment (20,600 ) -
(Gain) loss on disposition of assets (1,318,607 ) 529,708
Changes in operating assets and liabilities:
Accounts receivable (672,611 ) 2,386,497
Other receivables 314,054 (275,665 )
Prepaid expenses and other current assets (129,121 ) (5,316 )
Other assets (97,115 ) 18,616
Accounts payable 292,477 1,865,890
Accrued expenses 659,907 4,722,270
Deferred revenue 488,571 2,143,804
Other current liabilities 50,455 194,847
Other liabilities   15,167     (11,206 )
Net cash provided by continuing operations 3,605,445 14,227,674
Net cash used in discontinued operations   (228,633 )   (18,081 )
Net cash provided by operating activities   3,376,812     14,209,593  
Cash Flows from Investing Activities:
Purchase of marketable securities (130,963,472 ) (29,204,799 )
Sale of marketable securities 94,473,125 11,169,263
Sale of Promotions.com 1,746,876 1,000,000
Purchase of Kikucall, Inc. - (3,816,521 )
Sale of certain assets of TheStreet Ratings 1,348,902 -
Capital expenditures (6,717,749 ) (1,956,355 )
Proceeds from the sale of fixed assets   43,300     -  
Net cash used in investing activities   (40,069,018 )   (22,808,412 )
 
Cash Flows from Financing Activities:
Cash dividends paid on common stock (3,349,755 ) (3,200,949 )
Cash dividends paid on preferred stock (385,696 ) (385,696 )
Restricted cash 41,709 516,951
Purchase of treasury stock   (66,886 )   (230,287 )
Net cash used in financing activities   (3,760,628 )   (3,299,981 )
Net decrease in cash and cash equivalents (40,452,834 ) (11,898,800 )
Cash and cash equivalents, beginning of period   60,542,494     72,441,294  
Cash and cash equivalents, end of period $ 20,089,660   $ 60,542,494  
 

Supplemental disclosures of cash flow information:
 
Cash payments made for interest $ 1,720   $ 9,803  
Cash payments made for income taxes $ -   $ 85,000  
 

Noncash investing and financing activities:
Stock issued for business combinations $ -   $ 1,425,382  
Receipt of note for sale of Promotions.com $ -   $ 2,127,184  

Treasury shares received in settlement ofPromotions.com working capital and debt adjustment
$ -   $ 281,381  
 
           
THESTREET.COM, INC.
SCHEDULE OF PRO FORMA ADJUSTMENTS AND RECONCILIATION TO ADJUSTED EBITDA
 
For the Three Months Ended December 31, 2010 For the Three Months Ended December 31, 2009

Pro Forma

Pro Forma

Pro Forma

Pro Forma
As Reported

Adjustments

Results
As Reported

Adjustments

Results
Net revenue:
Premium services $ 9,432,205 $ 2,000 $ 9,430,205 $ 9,678,530 $ 318,444 $ 9,360,086
Marketing services   5,253,194     -   5,253,194     6,833,174     1,231,329     5,601,845  
Total net revenue   14,685,399     2,000   14,683,399     16,511,704     1,549,773     14,961,931  
Operating expense:
Cost of services 6,584,437 - 6,584,437 6,433,677 1,017,706 5,415,971
Sales and marketing 4,551,870 - 4,551,870 3,309,492 167,919 3,141,573
General and administrative 4,049,472 - 4,049,472 5,730,964 351,625 5,379,339
Depreciation and amortization 1,466,552 - 1,466,552 1,099,934 - 1,099,934
Restructuring and other charges - - - 732,412 - 732,412

Loss on disposition of assets
  -     -   -     529,708     -     529,708  
Total operating expense   16,652,331     -   16,652,331     17,836,187     1,537,250     16,298,937  
Operating loss $ (1,966,932 ) $ 2,000 $ (1,968,932 ) $ (1,324,483 ) $ 12,523   $ (1,337,006 )
 
Net loss $ (1,747,167 ) $ 2,000 $ (1,749,167 ) $ (774,407 ) $ 12,523   $ (786,930 )
 
 
Net loss $ (1,747,167 ) $ 2,000 $ (1,749,167 ) $ (774,407 ) $ 12,523 $ (786,930 )
Net interest income (203,674 ) - (203,674 ) (173,831 ) - (173,831 )

Provision for income taxes
- - - (381,113 ) - (381,113 )
Depreciation and amortization   1,466,552     -   1,466,552     1,099,934     -     1,099,934  
EBITDA (484,289 ) 2,000 (486,289 ) (229,417 ) 12,523 (241,940 )
Noncash compensation 529,360 - 529,360 580,751 (172 ) 580,923
Restructuring and other charges - - - 732,412 - 732,412

Loss on disposition of assets
- - - 529,708 - 529,708
Transaction related costs   (28,374 )   -   (28,374 )   1,412,046     -     1,412,046  
Adjusted EBITDA $ 16,697   $ 2,000 $ 14,697   $ 3,025,500   $ 12,351   $ 3,013,149  
 
Note: Pro forma adjustments for 2010 exclude TheStreet Ratings revenue from global research. Pro forma adjustments for 2009 also exclude the Company's December 2009 divesture of our Promotions.com subsidiary and the May 2010 divestiture of our Banking and Insurance Ratings product line.
 
           
THESTREET.COM, INC.
SCHEDULE OF PRO FORMA ADJUSTMENTS AND RECONCILIATION TO ADJUSTED EBITDA
 
For the Year Ended December 31, 2010 For the Year Ended December 31, 2009

Pro Forma

Pro Forma

Pro Forma

Pro Forma
As Reported

Adjustments

Results
As Reported

Adjustments

Results
Net revenue:
Premium services $ 38,597,877 $ 465,008 $ 38,132,869 $ 37,988,579 $ 2,391,900 $ 35,596,679
Marketing services   18,588,502     -   18,588,502     22,251,432     4,614,188     17,637,244  
Total net revenue 57,186,379 465,008 56,721,371 60,240,011 7,006,088 53,233,923
Operating expense:
Cost of services 25,557,162 345,205 25,211,957 29,100,204 4,852,263 24,247,941
Sales and marketing 15,841,470 41,510 15,799,960 12,077,546 934,579 11,142,967
General and administrative 18,052,633 18,774 18,033,859 18,916,456 2,013,672 16,902,784
Depreciation and amortization 4,692,520 - 4,692,520 4,985,297 - 4,985,297
Asset impairments 555,000 - 555,000 24,137,069 - 24,137,069
Restructuring and other charges - - - 3,460,914 - 3,460,914

(Gain) loss on disposition of assets
  (1,318,607 )   -   (1,318,607 )   529,708     -     529,708  
Total operating expense   63,380,178     405,489   62,974,689     93,207,194     7,800,514     85,406,680  
Operating loss $ (6,193,799 ) $ 59,519 $ (6,253,318 ) $ (32,967,183 ) $ (794,426 ) $ (32,172,757 )
 
Net loss $ (5,334,607 ) $ 59,519 $ (5,394,126 ) $ (47,717,634 ) $ (794,426 ) $ (46,923,208 )
 
 
Net loss $ (5,334,607 ) $ 59,519 $ (5,394,126 ) $ (47,717,634 ) $ (794,426 ) $ (46,923,208 )
Net interest income (846,157 ) - (846,157 ) (949,727 ) - (949,727 )
Gain on sales of marketable securities - - - (295,430 ) - (295,430 )
Provision for Income taxes - - - 16,133,964 - 16,133,964
Depreciation and amortization   4,692,520     -   4,692,520     4,985,297     -     4,985,297  
EBITDA (1,488,244 ) 59,519 (1,547,763 ) (27,843,530 ) (794,426 ) (27,049,104 )
Noncash compensation 2,336,443 - 2,336,443 2,739,566 30,392 2,709,174
Asset impairments 555,000 - 555,000 24,137,069 - 24,137,069
Restructuring and other charges - - - 3,460,914 - 3,460,914
(Gain) loss on disposition of assets (1,318,607 ) - (1,318,607 ) 529,708 - 529,708
Other income (20,374 ) - (20,374 ) (153,677 ) - (153,677 )
Transaction related costs   1,177,868     -   1,177,868     2,834,672     -     2,834,672  
Adjusted EBITDA $ 1,242,086   $ 59,519 $ 1,182,567   $ 5,704,722   $ (764,034 ) $ 6,468,756  
 
Note: Pro forma adjustments for 2010 exclude the Company’s May 2010 divestiture of our Banking and Insurance Ratings product line and TheStreet Ratings revenue from global research. Pro forma adjustments for 2009 also exclude the Company's December 2009 divesture of our Promotions.com subsidiary.
 

Copyright Business Wire 2010