NEW YORK, March 10, 2017 /PRNewswire/ --
TheStreet, Inc. (Nasdaq: TST) a leading financial news and
information company, today reported financial results for the
fourth quarter and full year ended December
31, 2016.
![](https://mma.prnewswire.com/media/472411/TheStreet_Logo.jpg)
For the fourth quarter of 2016, the Company reported
revenue of $15.9 million, net loss
attributable to common stockholders of $11.6
million, or ($0.33) per basic
and diluted share, and an Adjusted EBITDA(1)
of $1.2 million. For the full
year 2016, the Company reported revenue of $63.5 million, net loss attributable to common
stockholders of $17.5 million, or
($0.50) per basic and diluted share,
and Adjusted EBITDA of $2.8 million.
Drivers of the fourth quarter and full year net loss are a non-cash
goodwill impairment in the amount of $11.6
million, an additional non-cash depreciation charge of
$1.5 million, restructuring charges
related to severance as well as lower premium subscription revenue,
all partially offset by a $1.8
million non-cash contingent consideration reduction from the
purchase of Management Diagnostics Limited ("MDL").
"This was an investment year and the seeds of our
turnaround efforts began to take hold in the fourth quarter on both
our institutional side and our consumer businesses," said
David Callaway, President and CEO.
"The rally in financial markets since November helped us begin to
put Brexit and the declines in our premium subscription business
behind us. We still maintain a strong cash position, have
aggressively been cutting costs, and have started offering new
products and revenue strategies to our B2B clients and B2C readers
and customers alike." Callaway continued, "As mentioned earlier in
the year, our goal is to allow greater transparency and insight to
our investors with the breakout of the business to business and
business to consumer products we offer."
Fourth Quarter Results
Revenue for the fourth quarter of 2016 was $15.9 million, a decrease of $1.0 million, or 6%, from $17.0 million in the prior year.
Business-to-business ("B2B") revenue including The Deal, BoardEx
and RateWatch totaled $7.4 million,
up $27,000 as compared to the fourth
quarter of 2015. Adjusting for the exchange rate losses, B2B
revenue was up 6% compared to the fourth quarter of 2015.
Business-to-consumer ("B2C") revenue was $8.5 million, down 11%, compared to the fourth
quarter of 2015.
Operating expenses for the fourth quarter of 2016 were
$28.2 million, which include an
$11.6 million non-cash goodwill
impairment, a cumulative adjustment of a non-cash depreciation
charge of $1.5 million and a non-cash
reduction of a contingent consideration of $1.8 million from the purchase of MDL in 2014
(collectively "Charges"), severance of $1.4
million, partially offset by the reversal of $0.7 million recorded in Q1 as a one-time sales
tax provision. The Company recorded a goodwill impairment charge
related to a series of acquisitions made in 2012 and 2014 that have
since produced results that were lower than expected at the time of
the acquisitions. In addition, the company took measures to reduce
costs and incurred a $1.4 million
severance related charge. Excluding these Charges, severance and
reversal of the one-time sales tax provision, operating expenses
for the fourth quarter decreased $0.3
million as compared to the fourth quarter of 2015. Net loss
attributable to common stockholders for the fourth quarter of 2016
was $11.6 million compared to net
loss attributable to common stockholders of $0.3 million in the prior year period. The
Company reported a basic and diluted net loss per share
attributable to common stockholders of ($0.33) for the fourth quarter of 2016, compared
to net loss per share attributable to common stockholders of
($0.01) for the prior year
period. Adjusted EBITDA for the fourth quarter of 2016 was
$1.2 million compared to $2.0 million from the prior year period. The
decline in Adjusted EBITDA primarily resulted from the decline in
B2C subscription revenue offset by lower operating expenses from
cost controls instituted during this year.
Business-to-Business Revenue
B2B revenue for the fourth quarter of 2016 was $7.4 million, an increase of $27 thousand compared to the fourth quarter of
2015. The increase was the result of increased event revenue
generated at The Deal and subscription revenue growth in BoardEx,
completely offset by FX losses at BoardEx. Total B2B revenue was
$7.8 million, up $0.4 million adjusted for the FX impact.
Business-to-Consumer Revenue
B2C revenue for the fourth quarter of 2016 was $8.5 million, a decrease of $1.1 million, or 11%, from $9.6 million in the fourth quarter of 2015.
B2C subscription revenue for the fourth quarter of 2016 was
$5.3 million, a decrease of
$1.1 million, or 16%, from
$6.4 million in the fourth quarter of
2015. This decrease primarily related to a 17% decline in the
weighted-average number of subscriptions offset by a 1% increase in
the average revenue recognized per subscription. Average
monthly churn (2) improved 10% from the fourth quarter
of 2015. B2C media revenue for the fourth quarter of 2016 was
$3.1 million, flat compared to the
prior year period.
Full Year Results
Revenue for the full year 2016 was $63.5
million, a decrease of $4.2
million, or 6%, from $67.7
million in the prior year.
B2B revenue including The Deal, BoardEx and RateWatch totaled
$29.3 million up $0.3 million or 1% from the prior year. Exchange
rate declines related to the depreciation of the Pound sterling,
negatively impacted BoardEx revenue by $1.0
million. Adjusted for the negative impact of FX, total B2B
revenue increased 5%. B2C revenue was $34.2 million, down 12%, compared to the prior
year. Substantially all the revenue decline occurred in premium
newsletters which declined $4.2
million year over year primarily from a 14% decline in the
number of subscriptions and a 2% decline in average rate per
subscriber. B2C advertising revenue of $10.1
million remained flat as compared to full year 2015.
Operating expenses for the full year 2016 were $80.7 million, an increase of $12.8 million, or 19%, from $67.9 million in the prior year. Excluding the
Charges mentioned in the Fourth Quarter Results above, severance of
$1.6 million, restructuring charges
of $1.0 million and a one-time sales
tax expense of $0.7 million,
operating expenses for full year 2016 decreased by $2.2 million, or 3%, as compared to the same
period of the prior year. Net loss attributable to common
stockholders for the full year 2016 was $17.5 million compared to a net loss attributable
to common stockholders of $1.9
million in the prior year. The Company reported basic
and diluted net loss per share attributable to common stockholders
of ($0.50) for the full year 2016
compared to a net loss per share attributable to common
stockholders of ($0.06) for the prior
year. Adjusted EBITDA for the full year 2016 was $2.8 million compared to $5.0 million for the prior year.
Net cash used in operating activities for the full year ending
December 31, 2016 totaled
$2.8 million, down $3.6 million as compared to the same period
during the prior year. The change in net cash used in operating
activities over the periods included an increased net loss which
was partially offset by non-cash charges related to the goodwill
impairment, deferred taxes, change in accrued earnout related to
the purchase of MDL in 2014, and higher depreciation, all partially
offset by the change in the balances of accrued expenses, and other
receivables over the period. The Company ended the quarter with
cash and cash equivalents, restricted cash and marketable
securities of $23.4 million, as
compared to $30.7 million at
December 31, 2015.
Conference Call Information
TheStreet will discuss its financial results for the fourth
quarter and full year ending December 31,
2016 today at 11:00 a.m.
EST.
To participate in the call, please dial 877-591-4951 (domestic)
or 719-325-4745 (international). The conference code is 8199940.
This call is being webcast and can be accessed on 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 90 calendar days.
About TheStreet
TheStreet, Inc. (www.t.st) is a leading financial news and
information company providing business and financial news, market
data, investing ideas and analysis to personal and institutional
investors worldwide. The Company's collection of digital services
provides users, subscribers and advertisers with a variety of
content and tools through a range of online, social media, tablet
and mobile channels. The Company's portfolio of business and
personal finance brands includes: TheStreet, RealMoney and Action
Alerts PLUS. 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, and through its BoardEx product, director and
officer profiles. To learn more, visit www.thedeal.com and
www.boardex.com. RateWatch provides rate
and fee data from banks and credit unions across the U.S. for a
wide variety of banking products. To learn more, visit
www.rate-watch.com.
Non-GAAP Financial Information
(1) To supplement the Company's financial statements
presented in accordance with generally accepted accounting
principles ("GAAP"), the Company also uses "EBITDA" and "Adjusted
EBITDA", non-GAAP measures of certain components of financial
performance. "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, impairment charges, restructuring,
transaction related costs, severance 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 income/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) Average monthly churn is defined as subscriber
terminations/expirations in the quarter divided by the sum of the
beginning subscribers and gross subscriber additions for the
quarter, and 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 planned investments in our business, improved premium
subscription products and expectations for 2017. 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, particularly
in light of the investments in our expanded news operations; 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: Eric Lundberg,
Chief Financial Officer, TheStreet, Inc., ir at thestreet.com;
John Evans, Investor
Relations, PIR Communications, 415-309-0230, ir at
thestreet.com
THESTREET,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net
revenue:
|
|
unaudited
|
|
|
|
|
Business to
business
|
|
$
7,443,532
|
|
$
7,416,463
|
|
$
29,323,401
|
|
$
28,992,120
|
business to
consumer
|
|
8,480,186
|
|
9,550,825
|
|
34,176,130
|
|
38,663,780
|
Total
net revenue
|
|
15,923,718
|
|
16,967,288
|
|
63,499,531
|
|
67,655,900
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
Cost of
services
|
|
8,484,313
|
|
7,998,845
|
|
32,440,598
|
|
33,615,867
|
Sales and
marketing
|
|
4,062,663
|
|
3,862,520
|
|
15,697,065
|
|
16,190,749
|
General and
administrative
|
|
3,226,628
|
|
3,755,159
|
|
16,157,151
|
|
15,000,439
|
Depreciation and
amortization
|
|
2,685,442
|
|
1,124,255
|
|
5,681,563
|
|
4,309,094
|
Impairment of
goodwill
|
|
11,583,000
|
|
-
|
|
11,583,000
|
|
-
|
Change in fair value
of contingent consideration
|
|
(1,807,945)
|
|
-
|
|
(1,807,945)
|
|
-
|
Restructuring and
other charges
|
|
(805)
|
|
-
|
|
959,686
|
|
(1,221,224)
|
Total operating
expense
|
|
28,233,296
|
|
16,740,779
|
|
80,711,118
|
|
67,894,925
|
Operating (loss)
income
|
|
(12,309,578)
|
|
226,509
|
|
(17,211,587)
|
|
(239,025)
|
Net interest
expense
|
|
(9,848)
|
|
(25,341)
|
|
(34,121)
|
|
(122,637)
|
Net (loss) income
before income taxes
|
|
(12,319,426)
|
|
201,168
|
|
(17,245,708)
|
|
(361,662)
|
(Recovery) provision
for income taxes
|
|
(680,650)
|
|
450,425
|
|
269,007
|
|
1,181,341
|
Net loss
|
|
(11,638,776)
|
|
(249,257)
|
|
(17,514,715)
|
|
(1,543,003)
|
Preferred stock cash
dividends
|
|
-
|
|
96,424
|
|
-
|
|
385,696
|
Net loss attributable
to common stockholders
|
|
$
(11,638,776)
|
|
$
(345,681)
|
|
$
(17,514,715)
|
|
$
(1,928,699)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share:
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders
|
|
$
(0.33)
|
|
$
(0.01)
|
|
$
(0.50)
|
|
$
(0.06)
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared and paid per common share
|
|
$
-
|
|
$
0.025
|
|
$
-
|
|
$
0.100
|
|
|
|
|
|
|
|
|
|
Weighted average
basic and diluted shares outstanding
|
|
35,257,706
|
|
34,873,511
|
|
35,236,113
|
|
34,839,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
net loss to adjusted EBITDA - see note (1):
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
(11,638,776)
|
|
$
(249,257)
|
|
$
(17,514,715)
|
|
$
(1,543,003)
|
Provision for income
taxes
|
|
(680,650)
|
|
450,425
|
|
269,007
|
|
1,181,341
|
Net interest
expense
|
|
9,848
|
|
25,341
|
|
34,121
|
|
122,637
|
Depreciation and
amortization
|
|
2,685,442
|
|
1,124,255
|
|
5,681,563
|
|
4,309,094
|
EBITDA
|
|
(9,624,136)
|
|
1,350,764
|
|
(11,530,024)
|
|
4,070,069
|
Impairment of
goodwill
|
|
11,583,000
|
|
-
|
|
11,583,000
|
|
-
|
Change in fair value
of contingent consideration
|
|
(1,807,945)
|
|
-
|
|
(1,807,945)
|
|
-
|
Restructuring and
other charges
|
|
(805)
|
|
-
|
|
959,686
|
|
(1,221,224)
|
Stock based
compensation
|
|
366,628
|
|
440,886
|
|
1,518,698
|
|
1,570,142
|
One-time sales tax
provision
|
|
(700,000)
|
|
-
|
|
665,198
|
|
-
|
Recovery of
previously impaired investment
|
|
(40,593)
|
|
(50,197)
|
|
(206,791)
|
|
(197,190)
|
Severance
|
|
1,425,926
|
|
269,912
|
|
1,618,308
|
|
745,625
|
Transaction related
costs
|
|
-
|
|
-
|
|
-
|
|
25,847
|
Adjusted
EBITDA
|
|
$
1,202,075
|
|
$
2,011,365
|
|
$
2,800,130
|
|
$
4,993,269
|
THESTREET,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
December
31,
|
ASSETS
|
|
2016
|
|
2015
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
21,371,122
|
|
$
28,445,416
|
Accounts receivable,
net of allowance for doubtful
|
|
|
|
|
accounts
of $316,204 at December 31, 2016 and $357,417 at
|
|
|
|
|
December
31, 2015
|
|
5,119,959
|
|
5,102,464
|
Other
receivables
|
|
358,266
|
|
790,148
|
Prepaid expenses and
other current assets
|
|
1,416,956
|
|
1,205,708
|
Restricted
cash
|
|
-
|
|
161,250
|
Total current
assets
|
|
28,266,303
|
|
35,704,986
|
Noncurrent
Assets:
|
|
|
|
|
Property and
equipment, net of accumulated depreciation and
|
|
|
|
|
amortization of $5,682,286 at December 31, 2016 and
|
|
|
|
|
$4,804,411 at December 31, 2015
|
|
3,550,007
|
|
2,773,737
|
Marketable
securities
|
|
1,550,000
|
|
1,590,000
|
Other
assets
|
|
285,843
|
|
329,885
|
Goodwill
|
|
29,183,141
|
|
43,318,670
|
Other intangibles,
net of accumulated amortization of $20,134,178
|
|
|
|
|
at
December 31, 2016 and $15,674,328 at December 31, 2015
|
|
15,127,818
|
|
18,674,376
|
Restricted
cash
|
|
500,000
|
|
500,000
|
Total
assets
|
|
$
78,463,112
|
|
$
102,891,654
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
2,526,034
|
|
$
2,494,341
|
Accrued
expenses
|
|
5,115,558
|
|
5,161,981
|
Deferred
revenue
|
|
22,476,962
|
|
24,738,780
|
Other current
liabilities
|
|
983,799
|
|
1,235,551
|
Total current
liabilities
|
|
31,102,353
|
|
33,630,653
|
Noncurrent
Liabilities:
|
|
|
|
|
Deferred tax
liability
|
|
2,036,487
|
|
1,906,295
|
Other
liabilities
|
|
3,274,816
|
|
5,360,467
|
Total
liabilities
|
|
36,413,656
|
|
40,897,415
|
|
|
|
|
|
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, 2016 and December 31, 2015;
|
|
|
|
|
the
aggregate liquidation preference totals $55,000,000 as
of
|
|
|
|
|
December
31, 2016 and December 31, 2015
|
|
55
|
|
55
|
Common stock; $0.01
par value; 100,000,000 shares
|
|
|
|
|
authorized; 42,936,906 shares issued and 35,421,217
|
|
|
|
|
shares
outstanding at December 31, 2016, and 42,458,779
|
|
|
|
|
shares
issued and 35,123,132 shares outstanding at
|
|
|
|
|
December
31, 2015
|
|
429,369
|
|
424,588
|
Additional paid-in
capital
|
|
271,143,445
|
|
269,524,415
|
Accumulated other
comprehensive loss
|
|
(5,898,305)
|
|
(1,999,026)
|
Treasury stock at
cost; 7,515,689 shares at December 31, 2016
|
|
|
|
|
and
7,335,647 shares at December 31, 2015
|
|
(13,211,141)
|
|
(13,056,541)
|
Accumulated
deficit
|
|
(210,413,967)
|
|
(192,899,252)
|
Total stockholders'
equity
|
|
42,049,456
|
|
61,994,239
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
78,463,112
|
|
$
102,891,654
|
THESTREET,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
For the Year Ended
December 31,
|
|
|
2016
|
|
2015
|
Cash Flows from
Operating Activities:
|
|
|
|
|
Net loss
|
|
$
(17,514,715)
|
|
$
(1,543,003)
|
Adjustments to
reconcile net loss to net cash provided by
|
|
|
|
|
operating activities:
|
|
|
|
|
Stock-based
compensation expense
|
|
1,518,698
|
|
1,570,142
|
Provision for
doubtful accounts
|
|
54,625
|
|
280,383
|
Depreciation and
amortization
|
|
5,681,563
|
|
4,309,094
|
Deferred
taxes
|
|
130,192
|
|
1,177,396
|
Impairment of
goodwill
|
|
11,583,000
|
|
-
|
Change in fair value
of contingent consideration
|
|
(1,807,945)
|
|
-
|
Restructuring and
other charges
|
|
105,113
|
|
-
|
Deferred
rent
|
|
(678,064)
|
|
(120,400)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable
|
|
(226,980)
|
|
(304,156)
|
Other receivables
|
|
421,843
|
|
(242,563)
|
Prepaid expenses and other current assets
|
|
(231,310)
|
|
(223,375)
|
Other assets
|
|
26,271
|
|
(66,556)
|
Accounts payable
|
|
41,541
|
|
22,452
|
Accrued expenses
|
|
67,540
|
|
(1,146,629)
|
Deferred revenue
|
|
(1,916,494)
|
|
(1,109,538)
|
Other current liabilities
|
|
(138,187)
|
|
(311,049)
|
Other liabilities
|
|
125,264
|
|
(1,401,639)
|
Net cash (used in) provided by operating activities
|
|
(2,758,045)
|
|
890,559
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Sale and maturity of
marketable securities
|
|
-
|
|
2,005,484
|
Adjustment to
purchase of Management Diagnostics Limited
|
|
-
|
|
50,494
|
Restricted
cash
|
|
161,250
|
|
639,750
|
Capital
expenditures
|
|
(3,676,051)
|
|
(3,365,509)
|
Net cash used in investing activities
|
|
(3,514,801)
|
|
(669,781)
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Cash dividends paid
on common stock
|
|
(12,762)
|
|
(3,539,477)
|
Cash dividends paid
on preferred stock
|
|
-
|
|
(385,696)
|
Proceeds from the
exercise of stock options
|
|
-
|
|
839
|
Shares withheld on
RSU vesting to pay for withholding taxes
|
|
(154,600)
|
|
(147,598)
|
Net cash used in financing activities
|
|
(167,362)
|
|
(4,071,932)
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(634,086)
|
|
(162,439)
|
|
|
|
|
|
Net decrease in cash
and cash equivalents
|
|
(7,074,294)
|
|
(4,013,593)
|
Cash and cash
equivalents, beginning of period
|
|
28,445,416
|
|
32,459,009
|
Cash and cash
equivalents, end of period
|
|
$
21,371,122
|
|
$
28,445,416
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
net loss to free cash flow - see note (1):
|
|
|
|
Net loss
|
|
$
(17,514,715)
|
|
$
(1,543,003)
|
Noncash
expenditures
|
|
16,587,182
|
|
7,216,615
|
Changes in operating
assets and liabilities
|
|
(1,830,512)
|
|
(4,783,053)
|
Capital
expenditures
|
|
(3,676,051)
|
|
(3,365,509)
|
Free cash
flow
|
|
$
(6,434,096)
|
|
$
(2,474,950)
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/thestreet-reports-fourth-quarter-and-full-year-2016-results-300421779.html
SOURCE TheStreet, Inc.