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TheStreet.com (ticker: TSCM) reported Q4 results that beat the consensus EPS estimate but matched the consensus revenue estimate. Details and 4 quick comments:


Q4 Results
(all percentages changes and comparisons are year on year, unless stated otherwise)

  • EPS was $0.03 versus consensus of break-even.
  • Revenue of $9.5 million, up 29%, was in line with consensus of $9.51 million.
  • Net income was $0.73 million, $0.6 million higher.
  • Cash flow was $1.1 million.
  • Deferred revenue was $7.3 million.
  • Subscription revenue was $5.58 million, up from $5.05 million.
  • Commission revenue was $1.5 million, up from $325,000.
  • Advertising revenue was $2.05 million, up from $1.70 million.
  • Electronic publishing contributed $2.2 million in profit.
  • 12 new advertisers added.
  • Independent Research Group had 75 companies under coverage, 9 analysts and over 200 clients.
  • Sales and marketing was $3.57 million, up from $1.86 milllion.
  • Operating expenses rose 24% exluding a one-time lease charge.
  • Average annual revenue per subscriber was $315, up 5% from $300 a year earlier.
  • Total subscribers: 70,300, up from 68,400, but down sequentially from 71,500.

Q1 Guidance
None. Current consensus is ($0.03) on revenue of $10.1 million.

Full Year 2005 Guidance
None. Current consensus is EPS of $0.13 on revenue of $42.18 million.

Quick Comments

  1. Another victim of rising online ad prices? The reason why operating expenses rose 24%: "The increased spend has been driven primarily from long-term strategic initiatives, such as online marketing and personnel buildup at IRG Research and the Electronic Publishing segment, increased variable costs related to higher revenue, and the higher incentive compensation accrual."
  2. Subscription revenue, not online advertising revenue, dominates this business. Note that subscription revenue rose by only 10% year over year and fell by 3% sequentially, and the number of subscribers grew by only 1,900 year over year.
  3. TSCM matched revenue expectations but exceeded EPS estimates. More profit squeezed out of the same level of revenues on anemic subsciber growth - looks like the company is really dressing itself up for a sale.
  4. No mention of the fact that TheStreet.com is for sale and discussion of how the sale is going. Are there no takers?

TSCM chart below.
Tscm_1

Full disclosure: at the time of writing I'm short TSCM.

Source: TheStreet.com (TSCM) beats by $0.03 but subscribers decline sequentially