TheStreet.com Has Record Profit on 43% Rise in Revenue

Advertising and subscription sales both rise sharply in the first quarter.
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Updated from 7:50 a.m.

TheStreet.com

(TSCM)

posted a record quarterly profit of $2.6 million Tuesday on a 43% rise in revenue, as big gains in both subscriptions and advertising drove growth on the top and bottom lines in the first quarter.

TheStreet.com, which publishes this Web site and provides online financial commentary, analysis and news, earned 9 cents a diluted share in the latest quarter. A year ago, the company lost $854,000, or 3 cents a share, which included a loss from discontinued operations of $1.8 million.

First-quarter revenue rose 43% from a year ago to $11.1 million, reflecting a 41% rise in subscription revenue to $7.6 million and a 54% increase in advertising revenue to $3.2 million. The company had $12.5 million of deferred revenue in the quarter, up 58% from a year ago and 26% from the fourth quarter of 2005.

"With both our advertising and subscription revenue up 54% and 41% respectively over the same period a year ago, we look forward to a strong year of performance based on the robust demand for TheStreet.com's increasing range of services," said Thomas J. Clarke Jr., the chief executive.

Driving gains in subscription revenue was a jump of 13,100, or 15%, in the number of paid subscribers to the company's premium services. Subscription bookings for the quarter totaled $10.1 million, an increase of 70% from a year ago and 44% from the previous quarter.

Pacing the improvement in advertising, overall page views rose 111% from a year ago and 55% from the fourth quarter of 2005, while total average monthly unique visitors was 4.5 million, up 68% from a year ago and 31% from the fourth quarter.

TheStreet.com generated $5.8 million of cash flow in the quarter, reversing a year-ago cash burn of $3.6 million. It ended the quarter with cash, restricted cash and marketable securities of $39.8 million, up 40% from a year ago and 17% from the end of 2005.

Operating expenses rose 27% from last year to $9.8 million in the first quarter.

On a conference call, Clarke told analysts that a variety factors were driving more readers to the site, including new editorial products and the increasing popularity of Jim Cramer's "Mad Money" show on

CNBC

. Cramer was a co-founder of TheStreet.com, and he remains a regular contributor.

"We enjoy a perfect world situation with Jim, where he is both a content contributor and a promotional vehicle for us that's very positive," Clarke said.

The company has expanded its advertising base from mostly financial brokerages, to advertisers from the technology, auto, retail and travel industries. With roughly $34 million in cash and no debt on its balance sheet, Clarke said it would consider various ways to deploy cash, including new marketing vehicles and share repurchases.

"We're in a very strong position," he said.

Shares of TheStreet.com were recently up 72 cents, or 9%, to $8.71.