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TheStreet Reports Fourth Quarter & Full Year 2013 Results

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SOURCE TheStreet, Inc.

FY 2013 Revenue of $54.5M, up 7.4%, with Adjusted EBITDA(1) of $2.1M

NEW YORK, Feb. 27, 2014 /PRNewswire/ -- TheStreet, Inc. (NASDAQ: TST), a leading digital financial media company, today reported financial results for the fourth quarter and full year 2013.  For the fourth quarter, the Company reported revenue of $14.8 million, net income of $213 thousand and Adjusted EBITDA of $1.6 million. For the full year, the Company reported revenue of $54.5 million, net loss of $3.8 million and Adjusted EBITDA of $2.1 million.

"Two years into our multi-year plan of building a profitable twenty-first century media company, TheStreet's 2013 performance demonstrates that our strategy is working. We are pleased to have exceeded our annual revenue expectations of $53-$54 million," said Elisabeth DeMarse, Chairman, President and Chief Executive Officer. "In 2014, we will continue to focus on growing subscriptions across our institutional and retail platforms, as well as improving user experience on our free site. With financial markets near record highs and M&A activity heating up, we anticipate increased interest from retail and institutional audiences for our 'must-have' actionable insights," concluded DeMarse.

Fourth Quarter Results
Revenue in the fourth quarter of 2013 was $14.8 million, an increase of 7.1% from $13.8 million in the prior year period. Subscription Services revenue in the fourth quarter was $11.4 million, an increase of 9.7% compared to the prior year period. The increase in Subscription Services revenue was primarily due to organic growth in subscription newsletters and The Deal, as well as revenues from the DealFlow acquisition. Media revenue in the fourth quarter was $3.4 million, a decrease of 0.9% compared to the prior year period.

Operating expenses in the fourth quarter were $14.6 million, a decrease of 8.9% compared to the prior year period. Excluding restructuring and other charges and gain on disposition of assets, operating expenses decreased 5.9% compared to the prior year period.

Net income in the fourth quarter was $213 thousand compared to a net loss of $2.2 million in the prior year period. The Company reported basic and diluted net income per share attributable to common stockholders of $0.01 in the fourth quarter of 2013 compared to a net loss per share of $0.07 in the prior year period. Adjusted EBITDA was $1.6 million in the fourth quarter compared to $453 thousand in the prior year period.

Full Year Results
Revenue for the full year 2013 was $54.5 million, an increase of 7.4% from $50.7 million in the prior year. Subscription Services revenue for the full year was $43.5 million, an increase of 17.2% compared to the prior year. The increase in Subscription Services revenue was primarily due to the acquisitions of The Deal and DealFlow. Media revenue for the full year was $10.9 million, a decrease of 19.7% from the prior year.

Operating expenses for the full year were $58.4 million, a decrease of 8.4% compared to the prior year. Excluding restructuring and other charges and gain/loss on disposition of assets, operating expenses increased 0.8% compared to the prior year.

Net loss for the year was $3.8 million compared to a net loss of $12.7 million in the prior year. The Company reported basic and diluted net loss per share attributable to common stockholders of $0.11 for the full year compared to a net loss per share of $0.38 for the prior year. Adjusted EBITDA for the full year was $2.1 million compared to $1.3 million for the prior year.

The company generated $2.5 million in operating cash flow for year ended December 31, 2013, compared to the use of $6.2 million in operating cash flow for the prior year. The Company ended the year with cash and cash equivalents, restricted cash and marketable securities of $59.8 million.

Selected Operating Metrics

  • For total Subscription Services:
    • Bookings were $11.6 million for the fourth quarter, an increase of 6.6% from the prior year period.
    • Bookings for the full year were $45.0 million, which includes the impact of acquisitions, compared to $36.6 million in the prior year. 
  • For Subscription Newsletters(2):
    • The number of paid subscriptions at the end of the period was 78,400, an increase of 20.9% from the prior year and 5.3% sequentially.
    • Average revenue per user for the fourth quarter decreased 10.1% compared to the prior period and 3.2% sequentially. 
    • Average monthly churn was 2.3% for the fourth quarter, compared to 2.7% in the prior year period and 2.1% in the third quarter(3).

Conference Call Information

TheStreet will discuss its financial results for the fourth 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 2948072. 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 the 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.

TheStreet, Inc. Logo.

Non-GAAP Financial Information

(1) To supplement the Company's financial statements presented in accordance with 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 restructuring, 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






ASSETS


December 31, 2013


December 31, 2012

Current Assets:





Cash and cash equivalents


$         45,443,759


$         23,845,360

Marketable securities


9,426,875


18,096,091

Accounts receivable, net of allowance for doubtful 





   accounts of $202,207 at December 31, 2013 and $165,294 at





   December 31, 2012


4,502,344


5,750,753

Other receivables


299,687


1,134,142

Prepaid expenses and other current assets


1,167,029


1,450,742

Restricted cash


139,750


-

      Total current assets


60,979,444


50,277,088






Property and equipment, net of accumulated depreciation





   and amortization of $16,035,351 at December 31, 2013





   and $14,633,037 at December 31, 2012


4,400,404


5,672,000

Marketable securities


3,670,860


17,298,227

Other assets


21,800


69,957

Goodwill


27,997,286


25,726,239

Other intangibles, net of accumulated amortization of $6,994,772





   at December 31, 2013 and $6,699,283 at December 31, 2012


10,662,983


11,190,557

Restricted cash


1,161,250


1,301,000

      Total assets


$       108,894,027


$       111,535,068






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$           2,352,521


$           3,813,955

Accrued expenses


4,338,423


5,921,152

Deferred revenue 


22,122,763


21,080,759

Other current liabilities


957,741


632,618

      Total current liabilities


29,771,448


31,448,484

Deferred tax liability


288,000


288,000

Other liabilities


4,671,421


4,340,749

      Total liabilities


34,730,869


36,077,233






Stockholders' Equity:





Preferred stock; $0.01 par value; 10,000,000 shares





   authorized; 5,500 shares issued and 5,500 shares





   outstanding at December 31, 2013 and December 31, 2012;





   the aggregate liquidation preference totals $55,000,000 as of





   December 31, 2013 and December 31, 2012


55


55

Common stock; $0.01 par value; 100,000,000 shares





   authorized; 41,058,246 shares issued and 34,044,339





   shares outstanding at December 31, 2013, and 39,855,468





   shares issued and 33,027,752 shares outstanding at





   December 31, 2012


410,582


398,555

Additional paid-in capital


273,861,536


270,943,151

Accumulated other comprehensive income


(178,183)


(128,994)

Treasury stock at cost; 7,013,907 shares at December 31, 2013





   and 6,827,716 shares at December 31, 2012


(12,364,460)


(11,974,261)

Accumulated deficit


(187,566,372)


(183,780,671)

      Total stockholders' equity


74,163,158


75,457,835






      Total liabilities and stockholders' equity


$        108,894,027


$        111,535,068






 

 

THESTREET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS












For the Three Months Ended December 31,


For the Year Ended December 31,



2013


2012


2013


2012

Net revenue:









Subscription services


$   11,369,956


$   10,364,766


$   43,549,359


$    37,149,143

Media


3,431,147


3,461,299


10,901,052


13,571,660

   Total net revenue


14,801,103


13,826,065


54,450,411


50,720,803










Operating expense:









Cost of services


6,824,032


7,051,806


27,431,566


24,886,142

Sales and marketing


3,809,192


3,318,426


14,453,465


13,395,328

General and administrative


2,988,348


3,395,043


12,218,964


13,637,895

Depreciation and amortization


1,006,253


1,771,650


3,768,536


5,512,299

Restructuring and other charges


-


549,995


385,610


6,589,792

(Gain) loss on disposition of assets


-


(27,000)


187,434


(232,989)

     Total operating expense


14,627,825


16,059,920


58,445,575


63,788,467

     Operating income (loss)


173,278


(2,233,855)


(3,995,164)


(13,067,664)

Net interest income


39,579


57,497


209,463


352,713

Net income (loss)


212,857


(2,176,358)


(3,785,701)


(12,714,951)

Preferred stock cash dividends


-


-


-


192,848

Net income (loss) attributable to common stockholders


$        212,857


$   (2,176,358)


$   (3,785,701)


$  (12,907,799)










Basic net income (loss) per share:









  Net income (loss)


$              0.01


$            (0.07)


$            (0.11)


$             (0.38)

  Preferred stock cash dividends


-


-


-


(0.01)

     Net income (loss) attributable to common stockholders


$              0.01


$            (0.07)


$            (0.11)


$             (0.39)










Diluted net income (loss) per share:









  Net income (loss)


$              0.01


$            (0.07)


$            (0.11)


$             (0.38)

  Preferred stock cash dividends


-


-


-


(0.01)

     Net income (loss) attributable to common stockholders


$              0.01


$            (0.07)


$            (0.11)


$             (0.39)










Weighted average basic shares outstanding


33,936,814


32,893,274


33,725,317


32,710,018

Weighted average diluted shares outstanding


34,704,620


32,893,274


33,725,317


32,710,018





































Net income (loss)


$        212,857


$   (2,176,358)


$   (3,785,701)


$  (12,714,951)

Net interest income


(39,579)


(57,497)


(209,463)


(352,713)

Depreciation and amortization


1,006,253


1,771,650


3,768,536


5,512,299

EBITDA


1,179,531


(462,205)


(226,628)


(7,555,365)

Restructuring and other charges


-


549,995


385,610


6,589,792

Stock based compensation


465,946


566,308


1,681,988


2,198,713

(Gain) loss on disposition of assets


-


(27,000)


187,434


(232,989)

Transaction related costs


(20,000)


(174,342)


121,118


344,305

Adjusted EBITDA


$     1,625,477


$        452,756


$     2,149,522


$      1,344,456










 

 

THESTREET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS








For the Year Ended December 31,



2013


2012

Cash Flows from Operating Activities:





Net loss


$    (3,785,701)


$  (12,714,951)

Adjustments to reconcile net loss to net cash provided by (used in)





   operating activities:





Stock-based compensation expense


1,681,988


2,198,713

Provision for doubtful accounts


81,392


329,870

Depreciation and amortization


3,768,536


5,512,299

Restructuring and other charges


393,195


1,396,695

Deferred rent


(322,533)


(319,958)

Noncash barter activity


20,000


183,270

Loss (gain) on disposition of assets


187,434


(232,989)

Changes in operating assets and liabilities:





    Accounts receivable 


1,450,605


1,125,158

    Other receivables


951,116


(677,601)

    Prepaid expenses and other current assets


296,012


(294,567)

    Other assets


(6,675)


39,556

    Accounts payable


(1,463,684)


1,116,374

    Accrued expenses


(1,384,257)


(2,519,154)

    Deferred revenue


517,882


(1,100,272)

    Other current liabilities 


114,950


(240,830)

    Other liabilities


(21,908)


24,000

          Net cash provided by (used in) operating activities


2,478,352


(6,174,387)






Cash Flows from Investing Activities:





Purchase of marketable securities


-


(41,151,130)

Sale and maturity of marketable securities


22,247,394


34,812,021

Capital expenditures


(1,118,679)


(1,327,746)

Proceeds from the disposition of assets


71,881


249,300

Purchase of assets from DealFlow Media, Inc.


(1,764,716)


-

Purchase of The Deal, LLC


-


(5,430,063)

          Net cash provided by (used in) investing activities


19,435,880


(12,847,618)






Cash Flows from Financing Activities:





Cash dividends paid on common stock


-


(1,636,236)

Cash dividends paid on preferred stock


-


(192,848)

Proceeds from the exercise of stock options


74,366


-

Proceeds from the sale of common stock


-


135,000

Restricted cash


-


660,370

Shares withheld on RSU vesting to pay for withholding taxes


(390,199)


(964,112)

          Net cash used in financing activities


(315,833)


(1,997,826)

Net increase (decrease) in cash and cash equivalents


21,598,399


(21,019,831)

Cash and cash equivalents, beginning of period


23,845,360


44,865,191

Cash and cash equivalents, end of period


$   45,443,759


$   23,845,360






Supplemental disclosures of cash flow information:





Cash payments made for interest


$                    -


$          30,028






Noncash investing and financing activities:





Stock issued for business combination


$        780,863


$                    -






Net loss


$    (3,785,701)


$  (12,714,951)

Noncash expenditures


5,810,012


9,067,900

Changes in operating assets and liabilities


454,041


(2,527,336)

Capital expenditures


(1,118,679)


(1,327,746)

Free cash flow


$     1,359,673


$    (7,502,133)






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