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| 8-K - FORM 8-K - THESTREET, INC. | s100271_8k.htm |
TheStreet Reports Second Quarter 2014 Results
NEW YORK August 4, 2014 – TheStreet, Inc. (NASDAQ: TST), a leading digital financial media company, today reported financial results for the second quarter of 2014. The Company reported revenue of $14.8 million, a net loss of ($0.6) million and Adjusted EBITDA(1) of $0.5 million.
Revenue in the second quarter of 2014 was $14.8 million, an increase of 9.5% from $13.5 million in the prior year period. Adjusted EBITDA was $0.5 million in the second quarter compared to Adjusted EBITDA of $0.3 million in the prior year period.
Subscription Services revenue in the second quarter was $11.6 million, an increase of 7.4% compared to the prior year period primarily due to increased subscribers for the investing newsletters. Media revenue in the second quarter was $3.2 million, an increase of 17.5% compared to the prior year period primarily due to increased demand from new and repeat advertisers.
Net loss in the second quarter was ($0.6) million compared to a net loss of ($1.1) million in the prior year period. The Company reported basic and diluted net loss per share attributable to common stockholders of ($0.02) in the second quarter of 2014 compared to ($0.03) in the prior year period. “We are pleased by our revenue growth for the quarter along with a significant year-over-year increase in Adjusted EBITDA,” said Elisabeth DeMarse, Chairman, President and Chief Executive Officer. “We continue to execute on our long-term growth strategy and remain focused on driving profitable revenue from our retail and institutional platforms and building shareholder value,” concluded DeMarse.
Operating expenses in the second quarter were $15.4 million, an increase of 5.5% compared to the prior year period.
The Company generated $2.0 million in operating cash flow for the six months ended June 30, 2014, compared to $1.2 million in operating cash flow for the prior year period. The Company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of $59.1 million.
Selected Operating Metrics
| · | For total Subscription Services: |
| o | Bookings were $12.4 million for the second quarter, an increase of 7.1% from the prior year period. |
| · | For Subscription Newsletters(2): |
| o | The number of paid subscriptions at the end of the period was 82,300, an increase of 18.3% from the prior year. |
| o | Average revenue per user for the second quarter decreased 8.5% compared to the prior period and 0.8% sequentially. |
| o | Average monthly churn was 3.7% for the second quarter, compared to 3.3% in the prior year period(3). |
Conference Call Information
TheStreet will discuss its financial results for the second quarter today at 4:30 p.m. ET.
To participate in the call, please
dial (800) 649-5127 (domestic) or (914) 495-8549 (international).
The Conference ID number is 72484709. This call is being webcast and can be accessed in the
Investor Relations section of TheStreet website at
http://investor-relations.thestreet.com/events.cfm.
A replay of the webcast will be available approximately two hours after the conclusion of the call and remain available for approximately ninety calendar days.
About TheStreet
TheStreet, Inc. (www.t.st) is a leading independent digital financial media company providing business and financial news, investing ideas and analysis to personal and institutional investors worldwide. The Company's portfolio of business and personal finance brands includes: TheStreet, RealMoney, RealMoney Pro, Stockpickr, Action Alerts PLUS, Options Profits, MainStreet and RateWatch. To learn more, visit www.thestreet.com. The Deal, the Company's institutional business, provides intraday coverage of mergers and acquisitions and all other changes in corporate control. To learn more, visit www.thedeal.com.
Non-GAAP Financial Information
(1) To supplement the Company's financial statements presented in accordance with United States generally accepted accounting principles ("GAAP"), the Company uses non-GAAP measures of certain components of financial performance, including "EBITDA," "Adjusted EBITDA" and "free cash flow." 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 acquisitions and capital expenditures. EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations. Adjusted EBITDA further eliminates the impact of non-cash stock compensation, restructuring, transaction related costs and other charges affecting comparability. 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. "Free cash flow" means net loss plus non-cash expenses net of gains/losses on dispositions of assets, less changes in operating assets and liabilities and capital expenditures. 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.
(2) Subscription newsletters includes investing newsletters and excludes subscriptions from The Deal, DealFlow Media and Rate Watch.
(3) Average monthly churn rate is defined as subscriber terminations/expirations in the quarter divided by the sum of the beginning subscribers and gross subscriber additions for the quarter, then divided by three. Subscriptions that are on a free-trial basis are not regarded as added or terminated unless the subscription is active at the end of the free-trial period.
Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding the impact of the Company's growth initiatives and expectations for 2014. Such forward-looking statements are subject to risks and uncertainties, including those described in the Company's filings with the Securities and Exchange Commission ("SEC") that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might contribute to such differences include, among others, economic downturns and the general state of the economy, including the financial markets and mergers and acquisitions environment, our ability to drive revenue, and increase or retain current subscription revenue, our ability to optimize our free site and generate new subscription revenue; our ability to successfully integrate The Deal and other acquisitions; our ability to develop new products; competition and other factors set forth in our filings with the SEC, which are available on the SEC's website at www.sec.gov. 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.
Contacts:
John Ferrara
Chief Financial Officer
TheStreet, Inc.
212-321-5234
ir@thestreet.com
Erica Mannion
Investor Relations
Sapphire Investor Relations, LLC
415-471-2700
ir@thestreet.com
THESTREET, INC.
CONSOLIDATED BALANCE SHEETS
| June 30, 2014 | December 31, 2013 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 50,224,059 | $ | 45,443,759 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $237,138 at June 30, 2014 and $202,207 at December 31, 2013 | 4,713,200 | 4,502,344 | ||||||
| Marketable securities | 6,106,800 | 9,426,875 | ||||||
| Other receivables | 387,492 | 299,687 | ||||||
| Prepaid expenses and other current assets | 1,244,573 | 1,167,029 | ||||||
| Restricted cash | 139,750 | 139,750 | ||||||
| Total current assets | 62,815,874 | 60,979,444 | ||||||
| Property and equipment, net of accumulated depreciation and amortization of $16,648,899 at June 30, 2014and $16,035,351 at December 31, 2013 | 4,588,330 | 4,400,404 | ||||||
| Marketable securities | 1,500,000 | 3,670,860 | ||||||
| Other assets | 9,180 | 21,800 | ||||||
| Goodwill | 27,997,286 | 27,997,286 | ||||||
| Other intangibles, net of accumulated amortization of $7,838,597 at June 30, 2014 and $6,994,772 at December 31, 2013 | 9,819,158 | 10,662,983 | ||||||
| Restricted cash | 1,161,250 | 1,161,250 | ||||||
| Total assets | $ | 107,891,078 | $ | 108,894,027 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 2,187,092 | $ | 2,352,521 | ||||
| Accrued expenses | 4,039,167 | 4,338,423 | ||||||
| Deferred revenue | 24,630,753 | 22,122,763 | ||||||
| Other current liabilities | 735,225 | 957,741 | ||||||
| Total current liabilities | 31,592,237 | 29,771,448 | ||||||
| Deferred tax liability | 288,000 | 288,000 | ||||||
| Other liabilities | 4,767,618 | 4,671,421 | ||||||
| Total liabilities | 36,647,855 | 34,730,869 | ||||||
| Stockholders' Equity: | ||||||||
| Preferred stock; $0.01 par value; 10,000,000 shares authorized; 5,500 shares issued and 5,500 shares outstanding at June 30, 2014 and December 31, 2013; the aggregate liquidation preference totals $55,000,000 as of June 30, 2014 and December 31, 2013 | 55 | 55 | ||||||
| Common stock; $0.01 par value; 100,000,000 shares authorized; 41,407,691 shares issued and 34,380,749 shares outstanding at June 30, 2014, and 41,058,246 shares issued and 34,044,339 shares outstanding at December 31, 2013 | 414,077 | 410,582 | ||||||
| Additional paid-in capital | 272,875,976 | 273,861,536 | ||||||
| Accumulated other comprehensive income | (312,809 | ) | (178,183 | ) | ||||
| Treasury stock at cost; 7,026,942 shares at June 30, 2014 and 7,013,907 shares at December 31, 2013 | (12,400,092 | ) | (12,364,460 | ) | ||||
| Accumulated deficit | (189,333,984 | ) | (187,566,372 | ) | ||||
| Total stockholders' equity | 71,243,223 | 74,163,158 | ||||||
| Total liabilities and stockholders' equity | $ | 107,891,078 | $ | 108,894,027 | ||||
THESTREET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net revenue: | ||||||||||||||||
| Subscription services | $ | 11,557,413 | $ | 10,757,647 | $ | 23,007,280 | $ | 21,010,319 | ||||||||
| Media | 3,204,841 | 2,726,732 | 6,144,052 | 5,054,261 | ||||||||||||
| Total net revenue | 14,762,254 | 13,484,379 | 29,151,332 | 26,064,580 | ||||||||||||
| Operating expense: | ||||||||||||||||
| Cost of services | 7,676,619 | 6,903,838 | 15,414,584 | 13,146,584 | ||||||||||||
| Sales and marketing | 3,758,584 | 3,702,606 | 7,859,869 | 7,118,753 | ||||||||||||
| General and administrative | 3,278,484 | 3,011,825 | 6,257,054 | 6,475,600 | ||||||||||||
| Depreciation and amortization | 721,511 | 935,467 | 1,457,372 | 1,878,523 | ||||||||||||
| Restructuring and other charges | - | - | - | 385,610 | ||||||||||||
| Gain on disposition of assets | - | 73,020 | - | 16,434 | ||||||||||||
| Total operating expense | 15,435,198 | 14,626,756 | 30,988,879 | 29,021,504 | ||||||||||||
| Operating loss | (672,944 | ) | (1,142,377 | ) | (1,837,547 | ) | (2,956,924 | ) | ||||||||
| Net interest income | 31,457 | 65,968 | 69,935 | 137,831 | ||||||||||||
| Net loss | (641,487 | ) | (1,076,409 | ) | (1,767,612 | ) | (2,819,093 | ) | ||||||||
| Preferred stock cash dividends | 96,424 | - | 192,848 | - | ||||||||||||
| Net loss attributable to common stockholders | $ | (737,911 | ) | $ | (1,076,409 | ) | $ | (1,960,460 | ) | $ | (2,819,093 | ) | ||||
| Basic net loss per share: | ||||||||||||||||
| Net loss | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.08 | ) | ||||
| Preferred stock cash dividends | (0.00 | ) | - | (0.01 | ) | - | ||||||||||
| Net loss attributable to common stockholders | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.06 | ) | $ | (0.08 | ) | ||||
| Weighted average basic and diluted shares outstanding | 34,367,669 | 33,784,114 | 34,287,410 | 33,532,692 | ||||||||||||
| Reconciliation of net loss to adjusted EBITDA - see note (1): | ||||||||||||||||
| Net loss | $ | (641,487 | ) | $ | (1,076,409 | ) | $ | (1,767,612 | ) | $ | (2,819,093 | ) | ||||
| Net interest income | (31,457 | ) | (65,968 | ) | (69,935 | ) | (137,831 | ) | ||||||||
| Depreciation and amortization | 721,511 | 935,467 | 1,457,372 | 1,878,523 | ||||||||||||
| EBITDA | 48,567 | (206,910 | ) | (380,175 | ) | (1,078,401 | ) | |||||||||
| Restructuring and other charges | - | - | - | 385,610 | ||||||||||||
| Stock based compensation | 417,429 | 377,902 | 864,059 | 798,424 | ||||||||||||
| Gain on disposition of assets | - | 73,020 | - | 16,434 | ||||||||||||
| Transaction related costs | 35,656 | 53,188 | 35,656 | 141,118 | ||||||||||||
| Adjusted EBITDA | $ | 501,652 | $ | 297,200 | $ | 519,540 | $ | 263,185 | ||||||||
THESTREET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2014 | 2013 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (1,767,612 | ) | $ | (2,819,093 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Stock-based compensation expense | 864,059 | 798,424 | ||||||
| Provision for doubtful accounts | (22,284 | ) | (22,331 | ) | ||||
| Depreciation and amortization | 1,457,372 | 1,878,523 | ||||||
| Restructuring and other charges | - | 393,195 | ||||||
| Deferred rent | (162,573 | ) | (161,265 | ) | ||||
| Noncash barter activity | - | 20,000 | ||||||
| Loss on disposition of assets | - | 16,434 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (194,955 | ) | 908,735 | |||||
| Other receivables | (81,422 | ) | 717,201 | |||||
| Prepaid expenses and other current assets | (77,543 | ) | (40,007 | ) | ||||
| Other intangibles | - | - | ||||||
| Other assets | 12,620 | (8,688 | ) | |||||
| Accounts payable | (165,429 | ) | (1,483,037 | ) | ||||
| Accrued expenses | (239,147 | ) | (1,104,486 | ) | ||||
| Deferred revenue | 2,627,428 | 2,088,296 | ||||||
| Other current liabilities | (223,843 | ) | (19,326 | ) | ||||
| Net cash provided by operating activities | 2,026,671 | 1,162,575 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Sale and maturity of marketable securities | 5,356,309 | 14,887,132 | ||||||
| Purchase of assets from DealFlow Media, Inc. | - | (1,764,716 | ) | |||||
| Capital expenditures | (801,474 | ) | (504,457 | ) | ||||
| Proceeds from the disposition of assets | - | 62,881 | ||||||
| Net cash provided by investing activities | 4,554,835 | 12,680,840 | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Cash dividends paid on common stock | (1,720,553 | ) | - | |||||
| Cash dividends paid on preferred stock | (192,848 | ) | - | |||||
| Proceeds from the exercise of stock options | 147,827 | - | ||||||
| Shares withheld on RSU vesting to pay for withholding taxes | (35,632 | ) | (125,067 | ) | ||||
| Net cash used in financing activities | (1,801,206 | ) | (125,067 | ) | ||||
| Net increase in cash and cash equivalents | 4,780,300 | 13,718,348 | ||||||
| Cash and cash equivalents, beginning of period | 45,443,759 | 23,845,360 | ||||||
| Cash and cash equivalents, end of period | $ | 50,224,059 | $ | 37,563,708 | ||||
| Noncash investing and financing activities: | ||||||||
| Stock issued for business combination | $ | - | $ | 780,863 | ||||
| Reconciliation of net loss to free cash flow - see note (1): | ||||||||
| Net loss | $ | (1,767,612 | ) | $ | (2,819,093 | ) | ||
| Noncash expenditures | 2,136,574 | 2,922,980 | ||||||
| Changes in operating assets and liabilities | 1,657,709 | 1,058,688 | ||||||
| Capital expenditures | (801,474 | ) | (504,457 | ) | ||||
| Free cash flow | $ | 1,225,197 | $ | 658,118 | ||||